MTU Aero Engines

The role of the administrative, management and supervisory bodies

The Supervisory Board carried out, fully and with due care, the duties of oversight and advice entrusted to it by law, the articles of association, and rules of procedure. It advised the Executive Board on the running of the company on an ongoing basis, continually supported and monitored the management of the business activities and assured itself that the Executive Board's dealings were proper and lawful. The Supervisory Board and its committees were informed and consulted in a direct and timely manner on all decisions of consequence for the company.

The Executive Board provided the members of the Supervisory Board with regular, prompt and comprehensive information on the company's situation. The Supervisory Board received written monthly reports on the company's net assets, financial position and results of operations. At its meetings, the Supervisory Board also discussed the business performance of all of MTU's affiliated companies.

The Executive Board discussed the strategy and all important projects with the Supervisory Board. After examination and careful deliberation, the Supervisory Board endorsed the company's strategic orientation with its focus on sustainable and profitable organic growth. The Supervisory Board passed resolutions on all transactions for which its approval was required in accordance with the law, the company's articles of association or the Executive Board's rules of procedure after reviewing and discussing them with the Executive Board.

Supervisory Board Committees

By convention, the Supervisory Board has three committees with equal numbers of employee and shareholder representatives: an Audit Committee, a Personnel Committee and – in compliance with Section 27 (3) of the German Codetermination Act (MitbestG) – a Mediation Committee. Each of these committees presents regular reports on its activities at the plenary meetings of the Supervisory Board.

A Nomination Committee, which meets on an ad hoc basis, has been set up in accordance with the recommendations of the GCGC. The task of the Nomination Committee is to find suitable candidates for election to the Supervisory Board.

Personnel Committee The Personnel Committee is responsible, among other things, for concluding contracts with the Executive Board, including on their compensation, and for proposing candidates for the Executive Board. The members of this committee are Gordon Riske and Ute Wolf (since May 8, 2024) / Dr. Joachim Rauhut (until May 8, 2024) and the employee representatives Josef Mailer and Daniele Frijia.

Audit Committee The Audit Committee is composed of Ute Wolf (Chair; since May 8, 2024) / Dr. Joachim Rauhut, (Chair; until May 8, 2024), Dr. Christine Bortenlänger, Claudia Sowa-Frank, and Josef Mailer. The Audit Committee focused on reviewing the annual financial statements, the consolidated financial statements and the combined management report, including the non-financial statement.

Mediation Committee The Mediation Committee, whose members are identical with those of the Personnel Committee, did not have to convene in 2024.

Nomination Committee Its members are Gordon Riske (Chair) and Ute Wolf (since May 8, 2024) / Dr. Joachim Rauhut (until May 8, 2024).

Information provided to and sustainability matters addressed by the undertaking's administrative, management and supervisory bodies

The Supervisory Board held five regular meetings in 2024. Four of these meetings were held in person and one meeting was held as a hybrid meeting. In addition, there were two extraordinary meetings – one was a hybrid meeting, the other was completely virtual. The members took part in all meetings. Attendance was thus 100%.

At its meetings, the Supervisory Board discussed sustainability reporting, particularly the CSRD (Corporate Sustainability Reporting Directive) reporting, and adjustments to the Supervisory Board's profile of skills.

The Audit Committee discussed the implementation of the Corporate Sustainability Reporting Directive (CSRD) at MTU and the regular provision of information on the status of the project to prepare the CSRD reporting. It also discussed the development of a plan for adjusting financial performance indicators.

Between official meetings, the Chairman of the Supervisory Board was regularly briefed on the company's current situation, significant business transactions and important pending decisions. This entailed regular meetings with the Executive Board, including consulting on strategy, the status of planning, the progress of business, the company's risk situation, the risk management system and compliance.

In 2024, as in previous years, the Supervisory Board examined and oversaw the internal control mechanisms at MTU, especially the risk management system, internal control system, internal auditing and legally compliant corporate governance. With the support of the Audit Committee and in dialogue with the Executive Board, it addressed these systems on a regular basis, as well as their appropriateness and effectiveness. Furthermore, the Supervisory Board looked extensively at the company's compliance.

Integration of sustainability-related performance in incentive schemes

"At the proposal of the Personnel Committee of MTU Aero Engines AG, the Supervisory Board decides on a system of compensation for the members of the Executive Board, including the material contractual elements such as the total amount of the compensation and its breakdown into non-performance-related and performance-related components. The Personnel Committee reviews the appropriateness and market alignment of the Executive Board compensation on a regular basis. For this, it also uses the expertise of independent external compensation experts with regard to both the compensation system and the structure of the target direct compensation compared with relevant stock market segments. In the case of MTU, cross-comparisons are made by reference to the DAX stock market segment (peer group for cross-group or horizontal comparison). In accordance with the statutory requirements, the compensation system is resubmitted to the Annual General Meeting for approval no later than every four years or, in deviation from this, in the event that the Supervisory Board identifies a need for modifications. (ESRS 2 GOV-3-29e)"

"The share of the ESG targets in the variable compensation is 20% for both the STI and the LTI, regardless of a possible strategic multiplier. (ESRS-2 GOV-3 29d)"

ESG Integration in Compensation Components:

Short-term incentive (STI):

• 50% EBIT (adjusted)
• 30% free cash flow (adjusted)
• 20% ESG targets Capped at 0%-200% Strategic targets taken into account by multiplier (0.8-1.2) Cap: 240% of the target amount

Performance Share Plan (PSP/LTI): Performance period: 4 years

• 40% relative total shareholder return (rTSR)
• 40% earnings per share (EPS) (adjusted)
• 20% ESG targets Capped at 0%-200% Cap (incl. share price performance and dividend payments): 250% of the target amount

ESG targets – non-financial performance criterion The ESG performance criteria are defined by the Supervisory Board for each fiscal year, taking into account MTU's sustainability strategy. To this end, the Supervisory Board selects up to three non-financial performance criteria (ESG targets) and defines quantifiable target values to be achieved within the STI assessment period (performance period). The inclusion of ESG targets in the STI underscores the ambition of the company's management and Supervisory Board to achieve sustainable business development that takes appropriate account of the interests of all ESG stakeholders and thus boosts the MTU Group's future viability.

List of ESG criteria:

• Environmental management
• Innovation
• Social commitment
• Employer attractiveness
• Compliance
• Employees & diversity
• Growth & resilience
• Responsible procurement
• Product responsibility & quality
• Digital

Risk management and internal controls over sustainability reporting

In 2024, as in previous years, the Supervisory Board examined and oversaw the internal control mechanisms at MTU, especially the risk management system, internal control system, internal auditing and legally compliant corporate governance. With the support of the Audit Committee and in dialogue with the Executive Board, it addressed these systems on a regular basis, as well as their appropriateness and effectiveness.

In accordance with statutory requirements, the Audit Committee monitored the accounting process, the accounting-related internal control and risk management system and the internal auditing system, and addressed their appropriateness and effectiveness. It oversaw the company's compliance activities and received reports from the internal auditors.

The Audit Committee discussed the implementation of the Corporate Sustainability Reporting Directive (CSRD) at MTU and the regular provision of information on the status of the project to prepare the CSRD reporting. It also discussed the development of a plan for adjusting financial performance indicators.

Furthermore, the Audit Committee discussed the implementation of the Corporate Sustainability Reporting Directive (CSRD) at MTU and the regular provision of information on the status of the project to prepare the CSRD reporting.

Strategy, business model and value chain

Description of products/services and key markets

MTU's portfolio covers the entire lifecycle of commercial and military aircraft engines and aero-derivative industrial gas turbines. The company's activities range from development, manufacturing and marketing to maintenance. MTU has technological expertise in low-pressure turbines, high-pressure compressors and turbine center frames, and in repair techniques and manufacturing processes. Through risk- and revenue-sharing partnerships, it is involved in important national and international technology programs, including with GE Aerospace and Pratt & Whitney. In the military sector, it has been the leading industrial partner to the German armed forces for decades.

MTU operates in two segments: the OEM business (Original Equipment Manufacturing) and MRO business (Maintenance, Repair and Overhaul). The OEM segment covers new commercial engines, including spare parts, and the whole of the military sector. The MRO segment comprises the commercial maintenance activities.

Significant groups of products/services

No explicit revenue share data by product group was disclosed in the provided excerpts.

Significant markets/geographies

Number of employees by region

Revenue by significant ESRS sustainability matter

Not disclosed in the provided excerpts.

Sustainability-related goals embedded in the business model

In 2021, MTU launched the 2025+ sustainability program, which is divided into the following six areas of action: corporate governance, product, procurement, production, maintenance, and employees and society. The strategy addresses upcoming challenges, critical solutions and projects to be implemented that relate to material sustainability matters. Innovation plays an important role in the company; for example, the Claire technology roadmap aims to realize the vision of climate-neutral flying. MTU's sustainability targets are aligned with the EU Green Deal, which is based on the Paris Agreement and aims to achieve climate neutrality by 2050 in order to limit global warming to 1.5 °C.

The company has defined sustainability targets that cover its product and service groups, customer categories, geographical areas and relationships with stakeholders. The aim is to achieve the following objectives: comprehensive sustainability management and further development of a culture of compliance, including the adoption of a Group-wide climate strategy; top priority for product quality and flight safety; human and employee rights as central components of MTU's business relationships, a resource- and environment-friendly value chain; continuous improvement of resource efficiency; active and targeted employee development at all hierarchy levels; a responsible role in society and development of research collaborations for joint knowledge building.

MTU's ecoRoadmap climate strategy has been applied globally at all MTU-controlled production sites in Germany and abroad since 2023 and is designed to reduce CO2 emissions by 60% by 2030 relative to the reference year of 2019.

Specific performance indicators ("CO2" with the components "CO2 abatement realized through sustainable measures" and "remaining CO2 emissions", "training days per employee" and "women in leadership positions") are anchored in the Executive Board's targets.

Description of the upstream and downstream value chain

MTU value chain

Upstream value chain:

• Raw materials (indirect suppliers)
• Intermediate products (direct suppliers)

MTU's own operations:

• Manufacturing and maintenance

Downstream value chain:

• Processing by engine OEMs and cell manufacturers
• Use phase (airlines)
• End of life

MTU's position in the value chain encompasses research and development, component production, module assembly, quality control and testing, sales and marketing, and maintenance. Key players in the value chain include mines and smelters (raw materials), suppliers of engine parts (intermediate products), customers (engine OEMs, airlines), airframe manufacturers and end users (passengers).

MTU's sales channels vary depending on the business segment. In the OEM business, MTU uses its strategic partnerships and joint ventures with other companies in the aviation industry, such as Pratt & Whitney and General Electric. These partnerships enable MTU to jointly develop and market engines and components. In the MRO business, MTU operates a sales network of maintenance centers around the world, including locations in Europe, Asia and North America. MTU works directly with airlines to sell its maintenance services.

Supplier categories

The majority of MTU's direct contractual partners for production materials and indirect materials are based in the EU or the US, where social matters are highly regulated by law. A small proportion of the goods are sourced from other regions of the world. Care is taken to ensure that any production materials purchased are of high quality and the products generally require a high degree of technical expertise for their manufacture.

Customer types

Customers include engine OEMs, airlines, and airframe manufacturers. In the OEM business, MTU serves customers through strategic partnerships with companies like Pratt & Whitney and General Electric. In the MRO business, MTU works directly with airlines.

Key inputs and outputs

Key inputs

Specialized technology partners are among the most important business relationships in MTU's value chain, both on the supplier and customer side. MTU secures necessary input via a global network of universities, research institutes and companies. To maintain its technological expertise, it is essential for MTU to have a strong presence in research and to develop propulsion systems designed to reduce emissions. MTU follows a comprehensive approach to gathering, developing, and securing its value chain inputs. The company endeavors to maintain its leading market position by reliably sourcing high-quality materials, investing in research and development, protecting intellectual property and promoting a skilled workforce.

Key outputs

MTU creates outputs in several ways to provide current and expected benefits for customers, investors, and other stakeholders. New engine designs or components can result in higher efficiency, lower fuel consumption and lower emissions for customers. These developments improve aircraft operation and reduce operating costs, which also benefits society and the environment. MTU supports its customers with individual engine-related services aimed at optimizing costs for customers over the engine's useful life and extending maintenance cycles. This leads to fewer shop visits and shorter downtimes for the customers during engine removal and installation on the aircraft. The focus here is on achieving sustainable profitability and generating shareholder value. These outputs enable MTU to win and retain customers and secure ongoing capital for future investments.

Interests and views of stakeholders

Overview

MTU engages in continuous dialogue with its key stakeholders, focusing on knowledge sharing, networks, and collaboration. The aim is to better understand stakeholders' needs and expectations in order to take these into account in MTU's strategy and objectives. This dialogue makes it possible to find common interests and strengthen innovation and competitiveness. Dialogue with partners in order to work together on future-oriented solutions for more sustainable aviation is an elementary process here. Stakeholder engagement is characterized by continuous and open dialogue that addresses the company's activities and their impact on the environment and society. The results of this are primarily incorporated into the double materiality process (see Description of the process to identify and assess material impacts, risks and opportunities (IRO-1)). The Executive Board, Corporate Sustainability Board and Supervisory Board are involved in this process. The Boards are also informed of the feedback and views of stakeholders.

Communication channels

MTU takes a cross-media approach to its sustainability communication, using various channels and platforms to regularly communicate with stakeholders. The choice of format and frequency depends on the communication and information requirements or the respective platform. Stakeholder dialogue allows to include relevant interests and take feedback. It is also an opportunity for direct exchange with company representatives, particularly for local residents, those in the immediate vicinity and other stakeholder groups that could be affected by potential impacts of the company's business activities.

Stakeholder analysis

MTU analyzes stakeholders to identify relevant stakeholder groups whose interests are directly or indirectly affected by its activities. This stakeholder engagement gives the Group a comprehensive understanding of key stakeholders' interests and perspectives concerning MTU's strategy and business model. Their views are reflected in the double materiality assessment (see the chapter Description of the process to identify and assess material impacts, risks and opportunities (IRO-1)). MTU recognizes the diverse interests of its key stakeholders and integrates these into its strategic framework.

Classification of stakeholders

The company has identified several stakeholder groups and utilizes various forms of engagement with each group. In general, MTU's key stakeholders can be clustered into two groups: affected stakeholders and users of the sustainability statement.

Affected stakeholders are individuals or groups whose interests are affected or could be affected – positively or negatively – by MTU's activities and its direct and indirect business relationships across its value chain. Affected stakeholders include, for example, workers in the upstream value chain and nature as a silent stakeholder.

Users of MTU's sustainability statements are primary users of general financial reporting (existing and potential investors, lenders, capital markets, associations and organizations, policymakers and authorities, scientists and researchers as well as the media).

In addition, a large number of affected stakeholders are also users of the sustainability statement, such as business partners and customers, analysts and rating agencies, trade unions and social partners, employees, suppliers and regional stakeholders.

Key stakeholder groups

Integration into strategy and business model

Own workforce (S1)

MTU's own workforce are affected stakeholders, as they can be significantly influenced by MTU's activities and, pursuant to ESRS, include both employees (hereinafter also referred to as "MTU employees") and non-employees. The interests, opinions and rights of the workforce play an important role in MTU's business model and strategy. They are actively incorporated in operational planning through regular dialogue formats such as employee surveys and internal media information. As part of the annual double materiality assessment, MTU evaluates, with the involvement of stakeholders and their representatives, whether its corporate strategy and business model have material impacts on its workforce. With regard to employees, this means regularly analyzing how strategic decisions and the business model affect employees' working conditions and well-being. By taking this into account in strategic and operational planning, adjustments and actions can be included in order to address material impacts. MTU also pays explicit attention to respecting human rights within the organization and aligns its corporate practices accordingly.

MTU relies on a corporate culture that is open to change, strengthens employees' decision-making powers ("empowerment") and promotes entrepreneurial thinking and a digital mindset. Innovative strength and long-term success are based on a willingness to change and on cooperation characterized by trust and reliability.

In the coming years, MTU's strategic roadmap for employee development will focus on promoting entrepreneurial action at all levels, strengthening a global mindset and internationality, expanding digital skills and driving a value-based transformation.

Workers in the value chain (S2)

The majority of MTU's direct contractual partners for production materials and indirect materials are based in the EU or the US, where social matters are highly regulated by law. A small proportion of the goods are sourced from other regions of the world. Care is taken to ensure that any production materials purchased are of high quality and the products generally require a high degree of technical expertise for their manufacture. Consequently, the selection of suppliers is constrained. This results in purchasing processes and strategies being predominantly influenced by quality considerations, which are the primary focus of decisions. Due to these circumstances, respect for human rights and the interests of rights holders in the upstream value chain have less of an impact on the direction of the strategy or the business model but are a prerequisite for a business relationship, regardless of the purchasing region.

The processing steps in the higher tiers of the upstream value chain are known, but there is a lack of transparency with regard to the country and company in which they take place. The importance of transparency in the upstream value chain has already been acknowledged and will play a pivotal role in the strategic focus on the topic of sustainability, as it is a prerequisite for ensuring compliance with human rights and social standards throughout the entire upstream value chain.

Product quality and flight safety

Safety first – MTU emphasizes the importance of product quality and flight safety as key corporate goals that are anchored in its mission statement and linked to high customer satisfaction and the Group's competitiveness. To achieve these goals, MTU uses an integrated management system (IMS) to address the interests of the stakeholder groups affected by product quality and flight safety. These include customers, technology partners and suppliers as well as airline passengers, regulatory authorities and MTU employees.

With its quality vision for 2025, MTU is aiming to achieve flawless product quality and product safety in flight and a high level of customer satisfaction.

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

Summary of Material IROs

MTU assesses the effect of the material impacts, risks and opportunities on the corporate strategy and business model in order to reduce negative impacts and risks, reinforce positive impacts and take advantage of opportunities. A complete overview of the material impacts, risks and opportunities and their position in the value chain can be found in the list of material impacts, risks and opportunities in the Notes. All material impacts, risks and opportunities and their current and expected effect on the business model, value chain, strategy and decision-making, and the way in which MTU responds to these influences or takes action to deal with certain material impacts or risks and opportunities, are explained in detail in the topic-specific chapters.

Material Environmental Matters

There are material negative impacts due to GHG emissions, in relation to both MTU's own operations and the product use phase. The emissions, which mainly consist of CO₂, along with non-CO₂ effects from NOₓ and contrails, contribute to global warming. These impacts can be found throughout the value chain. One long-term risk is the possibility of failing to meet climate targets, which could affect the ESG rating and customer perception.

Adapting MTU's business model to the challenges of climate change is a key component of the corporate strategy, currently operationalized through the Claire agenda and the ecoRoadmap. MTU has created a comprehensive sustainability management system and invests in research and development to promote low-emission technologies and improve the sustainability of its products. A specific performance indicator ("CO₂" with the components "CO₂ abatement realized through sustainable measures" and "remaining CO₂ emissions") is incorporated into the targets for the Executive Board.

MTU makes a positive contribution to the circular economy through its MRO services. Their quality and efficiency ensure that only parts that cannot be repaired are replaced, which extends the service life of the engines and reduces the consumption of resources.

MTU uses its expertise in the MRO sector to optimize resource use and contribute to the circular economy. The use of intelligent repair methods and the reuse of components reduces resource consumption. The continuous development of innovative methods enables damage to be detected more efficiently and helps optimize maintenance costs, which also has a positive effect on MTU's strategy and business model.

Material Social Matters

Both potentially negative and actual positive and negative impacts exist, as well as a risk in relation to the company's own workforce. Inadequate measures to ensure occupational health and safety – including ineffective training measures – could lead to an increased likelihood of work-related accidents and potential negative impacts on occupational health and safety. Potential cases of discrimination and bullying could also have negative consequences for the workforce and the corporate culture. By contrast, there are positive effects from structures that promote the well-being and work flexibility for employees and from training programs that support personal development and career opportunities.

The positive impacts relate to the improvement of working conditions and the promotion of employee qualifications, which is directly linked to the corporate strategy. Potential negative impacts, such as health risks in production processes, are addressed through targeted action. To address the material long-term risk of restricted working conditions – for example due to insufficiently flexible working time models – MTU aims to create attractive working conditions in order to recruit and retain highly qualified talent. This will remain crucial to the company's success in the future. MTU offers continuous programs for secure employment, fair and adequate wages, equal opportunities and the possibility of professional development. Specific performance indicators ("training days per employee" and "women in leadership positions") are anchored in the Executive Board's targets.

Potentially negative impacts on the workforce have been identified in the upstream value chain. A lack of transparency regarding the higher upstream value chain means that potentially negative impacts, for example in the area of working conditions, cannot be ruled out. Even for direct suppliers, potentially negative impacts in the area of equal treatment and equal opportunities cannot be completely ruled out. The influence on the impacts is limited by the restricted selection of suppliers and a lack of transparency in the higher tiers of the upstream value chain. MTU formulates clear requirements for its suppliers with regard to human rights and social standards and works to continuously improve data quality and availability.

MTU-Specific Aspect of Product Quality and Flight Safety

With regard to its own activities and the downstream value chain, ensuring product quality and flight safety is of crucial importance to MTU. The integrated management system (IMS) is essential in avoiding potentially negative impacts. Ensuring product quality and flight safety is of crucial importance in the aviation industry. To minimize potential impacts on flight safety, defect-free product quality as a key corporate goal – derived from MTU's "Zero Defects" vision – is an integral part of MTU's strategy and business model.

Material Matters Relating to Business Conduct

MTU adheres to strict anti-corruption measures in accordance with European standards, which have a potential positive impact on societal stability and trust in local markets and promote fair competition. Further development of the compliance culture is an integral part of MTU's corporate strategy and business model and is anchored as a goal in MTU's 2025+ sustainability program.

Material Risks

In its double materiality assessment, MTU identified two material risks for the long-term time horizon. Firstly, there is a risk of customers switching to competitors if MTU does not achieve its climate targets and receives lower ESG scores. This could have a negative effect on financial performance, particularly on EBIT and cash flow. Secondly, negative developments with an impact on working conditions could reduce employer attractiveness, lead to higher staff turnover and result in a shortage of skilled workers in the long term.

MTU considers the material risks identified to be manageable and does not anticipate any current financial effects on its net assets, financial situation or results of operations.

Resilience and Scenario Analysis

MTU's strategic planning includes examining the sensitivity of future strategic decisions and the resilience of its strategy and business model-related capacities in order to manage the material impacts and risks.

As part of the double materiality assessment, MTU has considered ESG scenarios derived from selected risks and opportunities, in order to check whether there are any overlaps with the overarching strategy. These scenarios help to identify potential overlaps with MTU's corporate strategy and are combined with disruptive factors such as artificial intelligence and ESG initiatives from the peer group.

In line with ESRS and MTU's long-term time horizon, the "Green Pressure Regulation" ESG scenario has a time frame of around 15 years. This scenario looks at the impacts stricter emissions regulations and flight bans could have on air traffic. Based on the assumptions generally applicable to MTU, a rough estimate is made of the impacts on key figures such as a reduction in the number of shop visits, revenue and gross profit over the next 15 years. As the calculations of the financial effect are based on assumptions, it is important to compare scenarios in terms of the extent of the financial effect and not in terms of exact figures. New scenarios are developed every two years in response to economic, political, social, environmental and legal changes in aviation.

Strategy Adaptation

MTU continuously adapts its strategies and business model to address material impacts, risks, and opportunities. The Group invests in sustainable technologies, enhancing circular economy practices, improving workforce conditions, and strengthening the compliance framework. The aims are to strengthen MTU's resilience and competitiveness and make a positive contribution to society and the environment while ensuring long-term success.

With the exception of the sustainability matter of product quality and flight safety, all material impacts, risks and opportunities are covered by the ESRS disclosure requirements. The topic of product quality and flight safety is included as an entity-specific disclosure in this sustainability statement.

Specific IRO Details by Topic

Own Workforce (S1)

None of the material negative impacts identified in the materiality assessment are considered to be widespread or systemic in the context of the company's business operations.

None of the negative impacts on MTU's own workforce identified for the sustainability matters in the ESRS sub-topics of working conditions, equal treatment and opportunities for all and other work-related rights result directly from the business model or corporate strategy. Actual and potential impacts relating to general working conditions, such as the health and safety of the workforce, arise from the specific procedures and processes within production and maintenance services. These activities are linked to the business model but are not its driving elements. At the same time, ensuring the health and safety of the workforce is a fundamental part of MTU's corporate values, corporate strategy and operating activities.

The link between the material risks, through impacts and dependencies with regard to employees and strategy is based on the strong correlation between highly qualified and motivated employees and the company's success. If MTU is unable to offer sustainably attractive working conditions, including appropriate wages, this could jeopardize its competitive advantage in attracting and retaining talent.

MTU has identified no material impacts on its workforce resulting from the transition to reducing negative environmental impacts and achieving environmental and climate-neutral operations.

With regard to its business activities, MTU did not identify any areas that are exposed to the risk of incidents of forced labor, compulsory labor or child labor.

As part of its double materiality assessment, MTU identified certain groups within its workforce that are or could be negatively affected by certain impacts:

• Employees at MTU sites involved in production or repair and maintenance work, including temporary employees and non-employees, are exposed to physical strain and various occupational hazards.
• With regard to working time, there is a potential negative impact due to the inequality between different working hour models for production and office jobs. Employees required to work shifts and weekends may find it difficult to balance work and private life, which can potentially have a negative impact on their well-being.

The identified material risk of personnel costs in the event of a higher staff turnover rate and low employer attractiveness due to inadequate or constrained working conditions is linked to the aforementioned potential negative impacts, if these were to actually occur, and relates in particular to MTU employees.

Workers in the Value Chain (S2)

Given the nature of the material impacts, there are various particularly vulnerable groups that could be affected, such as women, people with disabilities, and children. However, MTU could not identify any impacts that specifically concentrate on one of these groups. MTU does not yet have processes in place for the detailed analysis of vulnerable groups in the upstream value chain.

Due to the limited flexibility in the selection of suppliers, there may be potential negative impacts associated with the business model. MTU is aware of its responsibility and sets out clear requirements for its direct suppliers regarding human rights and social standards. These should be cascaded up to the higher tiers of the upstream value chain.

For direct suppliers, the risk of potential negative impacts regarding child labor and forced labor is classified as non-material due to the required qualifications of the workforce and the countries of origin. In the higher tiers of the upstream value chain, there is a general risk of child labor and forced labor in the extraction of raw materials in the mines. However, as the raw materials can come from different regions with different legal requirements concerning child labor and forced labor, lack of transparency means that it is not possible to conclusively assess the risk.

For the direct suppliers, potential negative impacts on local workers were identified in relation to working conditions, equal opportunities and equal treatment. The impacts associated with fair pay and working hours are considered to be rather minor due to the countries of production, although no in-depth information is currently available on this.

Due to the transparency achieved in the reporting year, the topics of working conditions, equal opportunities and equal treatment were also identified as material for the higher tiers of the upstream value chain. Since most of the indirect suppliers lack transparency, no conclusions based on the countries of production can be drawn. Given the activities in the higher tiers of the upstream value chain, it can be assumed that hard work, long working hours and unfair pay are prevalent until further information can be collected.

When the risk analysis was carried out, no material impacts were identified as a result of individual incidents or specific business relationships. The material impacts identified are based on aggregated statements from the risk management process or scientific articles and are therefore to be classified as widespread or systemic.

No material opportunities, risks or positive impacts were identified.

Product Quality and Flight Safety (Entity-Specific)

In the aviation industry, ensuring product quality and flight safety is of vital importance. To minimize potential impacts on flight safety, defect-free product quality as a key corporate goal is an integral part of MTU's strategy and business model. Derived from its "Zero Defects" vision, MTU assesses the topic of product quality and flight safety as material in accordance with its self-defined zero-tolerance principle.

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

Methodology

MTU has established a structured process for the double materiality assessment with clear roles and responsibilities, supported by internal controls. Responsibility for the process lies with the Corporate Sustainability Management and Reporting department.

MTU's double materiality assessment for identifying and evaluating impacts, risks and opportunities (IRO) in relation to the entire spectrum of ESRS sustainability matters (in accordance with ESRS 1 AR 16) as well as sector- and company-related topics consists of four phases:

Phase 1: Understanding business context The aim is to create a comprehensive understanding of MTU's business relationships, value chain, and relevant stakeholders. This includes mapping MTU's activities along the value chain and identifying impacts, risks and opportunities connected to its own operations, upstream and downstream value chain, products, services and business relationships (suppliers, customers and partners) and relevant geographical areas. Factors that could give rise to an increased risk of negative impacts are also to be identified.

Phase 2: Identification of impacts, risks and opportunities The impacts, risks and opportunities relating to environmental, social and governance issues are identified and documented depending on the business model, strategy and value chain. The process covers all of the topics set out in ESRS 1 AR16 as well as additional sector- and company-specific matters.

Phase 3: Assessment of impacts, risks and opportunities Once the impacts, risks and opportunities have been identified, they are assessed in a third phase using a standardized method and taking into account the ESRS requirements and the guidelines by EFRAG.

Phase 4: Determination of materiality The materiality threshold is set, and the results of the materiality assessment phases mentioned above are documented in a standardized template that is updated annually. The template contains a description of the individual impacts, risks and opportunities, the stage of the value chain affected, the time horizon, the individual assessment and the persons responsible for the assessment process.

Inputs to the assessment

Sector benchmarks and frameworks:

• MTU has used sector information from the Sustainability Accounting Standards Board (SASB) to identify material impacts, risks and opportunities
• Standards of the International Civil Aviation Organization (ICAO)
• Task Force on Climate-related Financial Disclosures (TCFD) classification
• Task Force on Nature-related Financial Disclosures (TNFD) LEAP approach
• International Aerospace Environmental Group (IAEG) Sustainability Assessment Program
• World Resources Institute's (WRI) Aqueduct Water Risk Atlas
• WWF Risk Filter tool
• Climate projections from climate models derived from the Assessment Report of the Intergovernmental Panel on Climate Change (IPCC)

ESRS guidance:

• ESRS requirements and guidelines by EFRAG
• EFRAG list of datapoints and EFRAG ESRS Q&A

Internal experts:

• An interdisciplinary and cross-location team of experts from various units supports the process steps
• Interdisciplinary team of experts from various areas of the company (production, development & technology, corporate quality & environmental sustainability, purchasing & logistics, human resources, occupational safety, compliance, sales, data privacy and information security, and risk management)
• Internal environmental specialists
• Internal production experts

External consultants:

• External service provider for physical climate risk analysis

Stakeholder consultation:

• The process is supported by the inclusion of perspectives from affected stakeholder groups (such as employees, workers in the value chain, customers and nature as a silent stakeholder)
• Publicly available information and industry-specific analyses
• Use of findings from the International Aerospace Environmental Group (IAEG) Sustainability Assessment Program for workers in the upstream value chain

Scoring criteria for impact materiality

Assessment of impacts: The assessment of impacts includes an assessment of their severity, based on:

• Scale (as part of severity)
• Scope (as part of severity)
• Irremediable character (as part of severity, in the case of negative impacts)
• Likelihood of occurrence in the case of potential impacts

Time horizons: For the materiality assessment, MTU used its predefined entity-specific time horizons, which differ from the time horizons defined in ESRS 1 Section 6.4 paragraph 77:

• Forecast: short-term / below 1 year
• Operational planning: medium-term / from 1 to 3 years
• Strategic planning: long-term / from 4 to 15 years

Treatment of positive and negative impacts: Positive and negative impacts are analyzed separately; negative impacts cannot be offset against positive impacts.

Priority of severity over likelihood: In the event of potential impacts on human rights, the severity pursuant to ESRS 1 Section 3.4 paragraph 45 takes precedence over the likelihood of occurrence.

Scoring criteria for financial materiality

Assessment of risks and opportunities: The materiality of the risks and opportunities identified was assessed on the basis of:

• Financial effect (effects on EBIT and cash flow, which can be correlated with MTU's net assets, financial position and results of operations and indirectly with its access to capital or its cost of capital)
• Likelihood of occurrence

Risks and opportunities are considered to be material based on a combination of likelihood and financial effect (deviation of EBIT or cash flow in euros compared to budget).

Threshold for materiality

Zero-tolerance principle: MTU applies a zero-tolerance principle derived from the management approach as part of its double materiality assessment. It applies to potential negative impacts in the following areas:

• Prevention of corruption
• Breaches of human rights in own workforce
• Violations of export control regulations (trade compliance)
• Product quality and flight safety

If a potential negative impact is identified for one of the aforementioned topics, this is automatically considered material due to the zero-tolerance principle.

General materiality determination: Throughout the entire double materiality assessment process, impacts, risks and opportunities are not initially prioritized based on their relative evaluation compared to other impacts, risks and opportunities. Subsequently, however, any material impacts and risks identified are prioritized within the topic-specific departments for the purpose of determining the appropriate action to be taken.

Frequency / when last reviewed

The double materiality assessment is reviewed on an annual basis and adapted to current developments.

With regard to the annual update of MTU's double materiality assessment, the CS Board is regularly informed of the results of the individual process steps. The CS Board discusses the results of the double materiality assessment together with the Executive Board, including the determination of the threshold value and the resulting material impacts, risks and opportunities. The Supervisory Board and its Audit Committee are also informed about the results of the double materiality assessment, the material impacts, risks, and opportunities, and the planned content of the sustainability reporting.

Use of value chain mapping

Value chain mapping and coverage: This sustainability statement covers not only MTU's own operations but also its upstream and downstream value chain. The double materiality assessment of impacts, risks and opportunities has been carried out for the entire upstream and downstream value chain.

The reporting boundaries within which MTU operates in the process for determining and assessing material impacts, risks and opportunities encompass MTU's own business operations as well as its upstream and downstream value chain.

Value chain structure: MTU's position in the value chain encompasses research and development, component production, module assembly, quality control and testing, sales and marketing, and maintenance.

Upstream value chain: The majority of MTU's direct contractual partners for production materials and indirect materials are based in the EU or the US. A small proportion of the goods are sourced from other regions of the world. The processing steps in the higher tiers of the upstream value chain are known, but there is a lack of transparency with regard to the country and company in which they take place.

Downstream value chain: MTU works directly with airlines to sell its maintenance services. The use phase (airlines) is included in the downstream value chain analysis.

Value chain estimation: For metrics related to data points from other EU legislation, consideration of value chain information is mandatory. For the calculation of Scope 3 GHG emissions value chain estimations have been used.

Topic-specific assessment processes

E1 – Climate change

Climate-related impacts: To determine MTU's impacts on climate change, the following emission sources and underlying energy consumption were assessed: company facilities and vehicles (Scope 1), purchased electricity and heat for own use (Scope 2) and purchased goods and services, capital goods, fuel- and energy-related activities, upstream transportation and distribution, waste generated in operations, business travel, employee commuting, leased assets, downstream transportation, processing of sold products, use of sold products, end-of-life treatment of sold products, and leased assets and investments (Scope 3).

Physical climate risk analysis: A physical climate risk analysis was carried out for the six largest production and maintenance sites with the aid of an external service provider. The analysis was based on climate projections from climate models derived from the Assessment Report of the Intergovernmental Panel on Climate Change (IPCC). Representative Concentration Pathway (RCP) 8.5, the IPCC emissions scenario with high GHG emissions in the 21st century, was chosen for the analysis of physical climate risks.

Time horizons for physical risk analysis:

• Current climate: 20-year period from 2011 to 2030 (short-term)
• Future climate: 20-year period from 2031 to 2050 (long-term)

Scenarios assessed: Four different emission scenarios were used to assess the future climate: RCP2.6, RCP4.5, RCP6.0, and RCP8.5.

Transition scenario analysis: Since 2023, MTU has developed several transition scenarios to model future developments in the aviation sector. One of the scenarios developed and analyzed is based on the political developments of the European Green Deal, which aims to achieve climate neutrality by 2050 and limit global warming to 1.5°C. The magnitude of the transition events was determined on the basis of sector-specific data and comprehensive macroeconomic variables and price metrics.

E2 – Pollution

MTU's assessment approach for conducting the environmental assessment for its own operations and the downstream value chain corresponds to the LEAP (locate, evaluate, assess and prepare) approach of the Task Force on Nature-related Financial Disclosures (TNFD).

MTU first assessed the activities of its business operations and value chain to determine the activities and sites where air, soil and water are polluted, substances of concern and substances of very high concern are used, or other forms of pollution occur. Information from the environmental management system and internal environmental specialists were used in the assessment.

Information from secondary literature and consultations with MTU's internal production experts were used to identify and assess impacts, risks and opportunities in the upstream value chain with regard to pollution. MTU did not hold any consultations with affected communities as part of the materiality assessment.

E3 – Water and marine resources

MTU conducted a comprehensive analysis based on data from its business operations with the support of data from the World Resources Institute's (WRI) Aqueduct Water Risk Atlas and analyzed the downstream value chain for water and marine resource-related impacts. The MTU process was aligned with TFND's LEAP approach.

Using information from the WRI Aqueduct Water Risk Atlas and MTU's water consumption data, activities and sites that could have impacts on water and marine resources were identified. River basins were considered as the relevant level for the assessment of sites in MTU's business operations.

Secondary data and consultations with MTU experts on the use of water and marine resources in production processes were used to identify and assess impacts, risks and opportunities in the upstream value chain. An analysis of supplier locations was not carried out in this context.

The analysis was based on the criteria for determining water status in accordance with the relevant annexes of Directive 2000/60/EC (Water Framework Directive) and the guidelines for implementing the Water Framework Directive. MTU did not hold any consultations with affected communities as part of the materiality assessment.

E4 – Biodiversity and ecosystems

MTU carried out a process based on the first three phases of the TNFD's LEAP approach. The actual and potential impacts and the dependencies on the biodiversity and ecosystems were identified. The local conditions at the operating sites, the business activities and the downstream value chain were taken into account.

MTU has identified three sites near biodiversity-sensitive areas (i.e., within a radius of two kilometers) where MTU's activities could have potential impacts on the habitats of endangered species. The identification of the sites and their specific impacts was carried out in a two-stage process:

1. Sites were evaluated using the WWF Risk Filter tool "Environmental Factors" Risk Filter indicator
2. Sites labeled "high risk" were analyzed for their biodiversity-related impacts, taking into account site-specific activities

As there is no comprehensive transparency of the production sites in the upstream value chain, MTU identified and assessed the impacts, risks and opportunities based on the processes in the upstream value chain using secondary literature and consultations with internal production process experts.

E5 – Resource use and circular economy

The identification of impacts, risks, and opportunities is based on a comprehensive assessment of all MTU OEM and MRO sites on the basis of TFND's LEAP approach. The activities in MTU's own operations and in the upstream and downstream value chain were screened to identify assets and activities that have an impact on resource inflows and resource outflows, including MTU's products, services and waste.

The screening process was conducted using the following methods, assumptions, and tools: LEAP approach, Corporate Carbon Footprint (Scope 3) and Material Flow Analysis (MFA).

In particular, quantity estimates and expert surveys were used to identify material actual and potential impacts, risks and opportunities in MTU's operations and in the upstream and downstream value chain. MTU did not hold any consultations as part of the materiality assessment.

G1 – Business conduct

To identify impacts, risks and opportunities regarding MTU's business conduct, the double materiality assessment used the results of the ongoing and systematic analysis of business relationships and transactions, which is an integral part of the Group-wide risk management and compliance management system. This also includes an analysis of the contextual surroundings for each site.

MTU screens its business relationships, business partners, customers, and suppliers by evaluating the types and durations of contracts and considering country-specific corruption and bribery risks. The foundation for MTU's country risk monitoring and analysis is the latest Corruption Perception Index (CPI) from Transparency International.

S1 – Own workforce

As part of the annual double materiality assessment, MTU evaluates, with the involvement of stakeholders and their representatives, whether its corporate strategy and business model have material impacts on its workforce. This means regularly analyzing how strategic decisions and the business model affect employees' working conditions and well-being.

As part of its double materiality assessment, MTU identified certain groups within its workforce that are or could be negatively affected by certain impacts:

• Employees at MTU sites involved in production or repair and maintenance work, including temporary employees and non-employees, are exposed to physical strain and various occupational hazards
• With regard to working time, employees required to work shifts and weekends may find it difficult to balance work and private life

S2 – Workers in the value chain

The majority of MTU's direct contractual partners for production materials and indirect materials are based in the EU or the US, where social matters are highly regulated by law. A small proportion of the goods are sourced from other regions of the world.

Due to lack of transparency regarding the higher upstream value chain, potentially negative impacts, for example in the area of working conditions, cannot be ruled out. Even for direct suppliers, potentially negative impacts in the area of equal treatment and equal opportunities cannot be completely ruled out.

Use of findings from the International Aerospace Environmental Group (IAEG) Sustainability Assessment Program was used to assess workers in the upstream value chain.

Integration with risk management

The risks and opportunities identified are integrated into the existing risk management system and evaluated on a quarterly basis by the responsible specialist departments. Sustainability risks are evaluated in the risk management system with regard to their expected financial effects and likelihood of occurrence, without being prioritized differently from other risks.

Material sustainability risks reviewed by the CS Board are reported to the Risk Board, and as such included in regular risk management reporting to the Executive Board and the Audit Committee.

Governance of the process

In the reporting period, all material impacts, risks and opportunities identified in MTU's double materiality assessment were addressed by the CS Board and discussed with the Executive Board, the Supervisory Board and its Audit Committee.

Non-material topics

Based on the materiality assessment, MTU concluded that the following topics are not material:

• ESRS E2: Pollution
• ESRS E3: Water and marine resources
• ESRS E4: Biodiversity and ecosystems
• ESRS S3: Affected communities
• ESRS S4: Consumers and end-users

Transition plan for climate change mitigation

Scope of the plan

MTU's transition plan currently consists of two key elements:

• ecoRoadmap: Operational climate strategy for production and maintenance sites
• Clean Air Engine (Claire) technology agenda: Product-level climate mitigation

The ecoRoadmap covers the six largest production and maintenance sites:

• MTU Aero Engines AG (Munich)
• MTU Aero Engines Polska sp. z o. o.
• Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Canada Ltd.
• MTU Maintenance Hannover GmbH
• MTU Maintenance Serbia d.o.o.

These sites account for 89.0% of MTU's Scope 1 and location-based Scope 2 emissions in 2024.

The Claire technology agenda covers the upstream and downstream value chain, focusing on product-level emissions reduction through development of low-emission propulsion systems.

Target year(s) for net zero / carbon neutral

MTU aims to achieve climate-neutral production and maintenance at its sites. When setting its targets, MTU was guided by the EU Green Deal and the underlying objective of the Paris Agreement, which aims to limit global warming to 1.5°C and achieve climate neutrality by 2050.

GHG reduction milestones with baseline years

Scope 1 and 2 reduction target:

• Baseline year: 2019 (87,843 t CO2e)
• Target: 60% reduction by 2030 (compared to 2019)
• Progress in 2024: 42.2% reduction achieved compared to base year 2019

Target breakdown by scope:

Scope 3: MTU calculates Scope 3 GHG emissions along the entire upstream and downstream value chain. In addition to the significant Scope 3 category "Use of sold products," high emissions are also generated in "Purchased goods & services" and "Investments." MTU is endeavoring to improve the data quality for this calculation in order to drive forward the development of reduction targets for Scope 3.

Alignment with 1.5°C / SBTi validation status

MTU's target is science-based and aligned with the Paris Climate Agreement's 1.5°C target. The resources of the Science Based Targets initiative (SBTi) were used to determine the target ambition.

The target is not externally assured. The target was set without direct involvement by stakeholders.

Key levers / decarbonization pillars

Own operations (ecoRoadmap):

The following decarbonization measures were identified:

1. Increasing energy efficiency: Modernizing machinery and building technology systems, switching to LED lighting, eliminating compressed air leaks, optimizing heating networks, using heat pumps, renovating buildings
2. Expanding self-generation of energy: Installation of geothermal-energy and photovoltaic systems
3. Purchasing renewable energy: Purchase of renewable gas (RNG) and green electricity

Expected contribution of decarbonization levers to target achievement:

Products and value chain (Claire technology agenda):

• Development of next-generation geared turbofan (GTF): 16-20% fewer CO2 emissions than previous generation
• Flying Fuel Cell technology: Propulsion system with no harmful emissions other than water
• Support for sustainable aviation fuels (SAF): MTU is a member of aireg (Aviation Initiative for Renewable Energy in Germany e.V.) and conducts SAF tests
• Continuous efficiency improvements in conventional engine technology

CapEx / investment commitments

2024 capital and operating expenditures:

Total financial resources for the implementation of the transition plan amounted to €115 million in 2024. This includes:

• Implementation of energy efficiency measures at MTU's consolidated sites
• Research and development
• Self-generation of renewable energies

Taxonomy-aligned capital expenditures contributing to the transition plan (2024):

The total capital and operating expenditures of the CapEx plan under activity 9.1 amounted to around €49 million in 2024.

Significant progress in 2024:

• Entry into service of MTU's largest photovoltaic system at the Serbia site
• Completion of deep geothermal drilling at the Munich site

Locked-in emissions and stranded asset analysis

Locked-in GHG emissions identified:

1. Production buildings: Measures to reduce emissions at these buildings in parallel with the operating business are associated with technical and logistical challenges. Measures cannot always be implemented in the short term but require more planning and a longer lead time.

2. Kerosene consumption at R&D test stations and maintenance: One challenge is to reduce the GHG emissions released by the consumption of kerosene at the research and development test stations and through maintenance. MTU supports the use of sustainable aviation fuels (SAF) in the needed test operation of the engines. The emissions from the test stations involve potential locked-in GHG emissions. This fuel switch is highly dependent on actual market availability and is therefore a decarbonization lever that will become increasingly important for a long-term target.

3. Product use phase: Relevant locked-in GHG emissions result primarily from the product use phase. Due to the long product cycles in aviation these emissions can only be reduced over the long term. The use of MTU's engines is currently associated with locked-in emissions.

Mitigation: To reduce the risk of non-fulfillment of the reduction target for 2030, MTU updates a detailed plan of ecoRoadmap measures every year and steers towards the respective improvements by prioritizing measures.

Use of carbon credits / removals

No substantive disclosure on the current use of carbon credits for offsetting purposes in the transition plan. The company reports:

• Carbon credits canceled in 2024: Not disclosed in transition plan section
• Carbon credits planned to be canceled in future: Mentioned in E1-7 disclosure requirements but specific amounts not provided in transition plan narrative

MTU's approach focuses primarily on absolute emission reductions through operational measures and product innovation rather than reliance on carbon credits.

Policies related to climate change mitigation and adaptation

MTU has implemented the following central policies with regard to actions for mitigating climate change and saving energy. The policies related to climate change do not currently specifically address the topic of climate change adaptation.

MTU climate protection manual incl. annex

Content: This policy for climate change mitigation within MTU's own business operations aims to keep resource and energy consumption as low as possible and reduce the company's greenhouse gas emissions. The policy encompasses data collection and reporting for the calculation of GHG emissions and describes the general calculation principles and the company's GHG emission reduction targets. Furthermore, the process is defined from the idea to the implementation of actions to achieve the target and is operationalized via the company's ecoRoadmap climate strategy. The policy addresses climate change mitigation, energy efficiency and the deployment of renewable energy.

Target: As part of its climate strategy, MTU has defined a 60% reduction in CO2e emissions by 2030 at the latest, starting from the base year 2019. The target is therefore based on the Paris Agreement on limiting global warming to 1.5 °C.

Associated material impacts, risks and opportunities: As an industrial company that manufactures and maintains parts for aircraft engines, MTU produces GHG emissions in Scope 1 and Scope 2 from production, repair and testing. This has a negative impact on the environment.

Monitoring: The policy is monitored through monthly internal reporting and an evaluation of target achievement during the year. Regular reports are also provided to the CS Board and the CSO.

Scope: Own operations (Scope 1 and Scope 2) of the six largest production and maintenance sites:

• MTU Aero Engines AG (Munich)
• MTU Aero Engines Polska sp. z o. o.
• Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Canada Ltd.
• MTU Maintenance Hannover GmbH
• MTU Maintenance Serbia d.o.o.

They account for 89.0% of MTU's Scope 1 and location-based Scope 2 emissions in 2024.

Responsible organizational level: The climate and environmental protection department and, at management level, the Executive Board and CSO are responsible for implementing the climate protection manual.

Third-party standards or initiatives: GHG Protocol, Paris Agreement

Availability: The policy is not publicly available and can only be accessed via the document management system for MTU employees.

Procedural instructions for evaluating environmentally relevant aspects in product design

Content: These procedural instructions describe how environmentally relevant aspects are considered in product design. During the design of products, environmentally relevant aspects (such as low consumption and reduced emissions in the production and use phase) are evaluated by the designer and consulting departments. MTU's design system ensures that this evaluation is possible and is checked at defined points in the development process. The policy describes, among other things, which environmentally relevant aspects are directly determined or indirectly influenced by product design. This policy addresses climate change mitigation and energy efficiency related to MTU's products.

Target: Reduction of environmental impacts both in the use phase as well as in manufacturing and maintenance (such as low consumption and reduced emissions). Additionally, the use of more environmentally friendly materials and operating substances.

Associated material impacts, risks and opportunities: MTU's products are modules for engines in the aviation sector. The emissions generated by these products during the use phase have an actual negative impact on the environment by contributing to global warming.

Monitoring: To ensure that environmentally relevant aspects are taken into account in product design, the MTU planning system defines points in product development at which the current state of development is checked (e.g. technical reviews and gate reviews). As part of the provisions, questionnaires containing documentation of the evaluation of the design on the basis of environmentally relevant criteria must be completed.

Scope: The policies are decisive in the development of new products and affect all technical departments in development at the following sites:

• MTU Aero Engines AG (Munich)
• MTU Aero Engines North America Inc.
• MTU Aero Engines Polska sp. z o. o.

Responsible organizational level: The Engineering Office is responsible for implementing and monitoring the procedural instructions for evaluating environmentally relevant aspects in product design.

Availability: The policy is not publicly available and can only be accessed via the document management system for MTU employees.

Actions and resources in relation to climate change policies

MTU discloses actions taken and planned across own operations and the downstream value chain to achieve climate targets and reduce GHG emissions. The company has identified decarbonization measures including increasing energy efficiency, expanding self-generation of renewable energy, and purchasing renewable energy.

Self-generation of renewable energy

Scope: Own operations

Key actions taken and outcomes achieved:

• MTU is constantly seizing opportunities to generate its own renewable energy within its own business area, for example through photovoltaic systems or geothermal energy, in order to reduce the need to purchase externally generated energy
• In 2024, MTU's largest photovoltaic system was put into operation at MTU Maintenance Serbia d.o.o., saving around 241 t CO₂e

Key actions planned and time horizons:

• MTU plans to continuously further expand self-generation of renewable energy by 2030 – e.g., with photovoltaic or geothermal-energy systems
• By generating its own renewable energy, the company aims to reduce GHG emissions by a further 7,600 t CO₂e by 2030

Contribution to policy objectives: The overall objective of the MTU climate protection manual is to reduce Scope 1 and 2 emissions by 60% by 2030. The implementation of the key actions contributes to the reduction of Scope 1 & 2 emissions by helping MTU to reduce the purchase of non-renewable, fossil based energy and self-generate renewable energy instead.

Progress: At MTU Aero Engines AG (Munich), deep drilling was carried out in 2024 for the installation of a geothermal system. The heat from the deep geothermal energy will be used for heating requirements at the site in future. Construction of the technical building should be completed by the second quarter of 2025. The ecoRoadmap is used to continuously evaluate and implement further actions.

Energy efficiency

Scope: Own operations

Key actions taken and outcomes achieved:

• MTU plans to reduce its energy consumption in the long term through continuous energy efficiency measures
• Actions to reduce energy consumption and increase energy efficiency are implemented on an ongoing basis at the six largest operationally controlled production and maintenance locations
• These actions include the ongoing modernization of machinery, process optimization and the implementation of energy efficiency measures in auxiliary equipment and facility management
• In 2024, MTU was able to reduce emissions by 672 t CO₂e through the following key actions:
  • Improvement of temperature control in production areas and offices
  • Switch to LED lighting
  • Refurbishment of the heating system at the MTU Maintenance Hannover GmbH site
  • Optimization and replacement of machines and technical building systems, such as ventilation systems

Key actions planned and time horizons: By means of heat pumps and improvements to the heating network, further improvements that will enable savings of 2,800 metric tons of CO₂e are to be implemented by 2030.

Contribution to policy objectives: The overall objective of the MTU Climate Protection Handbook is to reduce Scope 1 and 2 emissions by 60% by 2030. The implementation of the key actions contributes to the reduction of Scope 1 and 2 emissions and enables MTU to reduce energy consumption and thus emissions in its own operations with the aid of energy efficiency measures.

Progress: The ecoRoadmap is used to continuously evaluate and implement existing and new actions.

Purchase of renewable energy

Scope: Own operations

Key actions taken and outcomes achieved: To achieve a reduction in GHG emissions, high-quality renewable energy is purchased at the six largest MTU sites. In 2024, MTU procured 40.5% of its purchased energy through contractual instruments with unbundled attributes for energy generation.

Key actions planned and time horizons: MTU plans to continuously increase the share of purchased renewable energy at its six largest sites through contractual instruments with bundled and unbundled attributes for energy generation.

Contribution to policy objectives: The overall objective of the MTU Climate Protection Handbook is to reduce Scope 1 and 2 emissions by 60% until 2030. The implementation of the key actions contributes to the reduction of Scope 1 & 2 emissions by helping MTU to reduce the purchase of non-renewable, fossil based energy and purchase renewable energy instead.

Progress: As of 2024, MTU has reduced its emissions by around 35,745 t CO₂e compared to the base year 2019 by purchasing renewable energy at its six largest sites.

Overall savings from ecoRoadmap climate strategy: In total, the energy efficiency measures and expansion of renewable energy as part of the ecoRoadmap climate strategy saved 914 t CO₂e in the reporting year. If the actions planned by MTU are implemented, a further reduction in emissions of 10,400 t CO₂e is expected.

Development of sustainable propulsion systems / Claire technology agenda

Scope: Downstream value chain (use phase)

Key actions taken and outcomes achieved:

• MTU is continuously working on the development of solutions and concepts for sustainable commercial engines, thereby paving the way for low-emission flying (especially as part of the Claire technology agenda)
• All efforts are aimed at reducing climate impact (caused by CO₂ and NOₓ emissions and contrail formation) and lower energy consumption
• Key elements include evolutionary enhancements of the gas turbine engine based on the geared turbofan and completely new, revolutionary propulsion concepts, such as the Flying Fuel Cell

Key actions planned and time horizons: MTU's R&D activities are constantly ongoing, and it plans to continue its efforts in the long-term.

Contribution to policy objectives: Reduction of environmental impacts in use phase (such as lower fuel consumption and fewer emissions) of MTU's products.

Progress:

• The first Claire phase was achieved with highly efficient engines (geared turbofan) from the Pratt & Whitney GTF™ engine family. MTU contributes key technologies to these engines. They are used in modern narrow-body aircraft and reduce fuel consumption and CO₂ emissions by 16–20% per flight compared to previous models. The geared turbofan has been on the market since 2016
• Work has as well already started on the second generation of geared turbofan engines, which boast additional improvements
• When powered by SAF or liquid hydrogen, next generation turbofans could reduce the climate impact of aircraft by as much as 65% compared to a gas turbine from the year 2000

Sustainable Aviation Fuels (SAF)

Scope: Own operations and downstream value chain

Actions:

• MTU supports the use of sustainable aviation fuels (SAF) in the needed test operation of the engines
• One challenge is to reduce the GHG emissions released by the consumption of kerosene at the research and development test stations and through maintenance
• This fuel switch is highly dependent on actual market availability and is therefore a decarbonization lever that will become increasingly important for a long-term target
• MTU is a member of aireg (Aviation Initiative for Renewable Energy in Germany e.V.) and also uses SAF tests to investigate the effects of alternative fuels on the operating behavior and functionality of aircraft engines

Resources allocated

Significant Capital and Operating Expenditures

Significant capital expenditures (CapEx) and operating expenditures (OpEx) on actions to achieve MTU's sustainability targets amounted to €44 million (CapEx) and €71 million (OpEx) in fiscal year 2024.

Taxonomy-aligned capital expenditures contributing to the transition plan for climate change mitigation:

Significant CapEx and OpEx on actions to achieve GHG emission reduction targets:

Total CapEx plan: A total amount of €49 million is part of MTU's CapEx plan in accordance with Delegated Regulation (EU) 2021/2178. This CapEx plan relates to economic activity 9.1 Close to market research, development and innovation.

Key investments:

• In 2024, the focus of R&D activities contributing to MTU's transition plan was on further increasing the efficiency of the next-generation geared turbofan and developing the technology for the Flying Fuel Cell
• In 2024, MTU also invested in self-generation of renewable energy, energy-efficiency measures and the purchase of renewable energy as part of the company's climate strategy
• These capital expenditures contribute to MTU's transition plan and are largely reflected in the taxonomy-aligned CapEx of economic activity 4.22 Production of heat/cool from geothermal energy

Targets related to climate change mitigation and adaptation

Scope 1 & 2 GHG Emissions Reduction Target

Contribution by Decarbonization Lever to 2030 Target

Executive Board Performance Targets (LTI)

The 'remaining CO2 emissions' criterion is included in the Long-Term Incentive (LTI) compensation for the Executive Board with the following parameters:

• Reference period: December 1, 2023 to November 30, 2024
• Target period: December 1, 2026 to November 30, 2027
• Target value (100% payout): 45.30 metric kilotons (9.8% reduction)
• Minimum value (50% payout): 50.20 metric kilotons (0% reduction)
• Maximum value (200% payout): 41.60 metric kilotons (17.2% reduction)
• Weighting: 10% of overall PSP/LTI target achievement (20% ESG targets × 50% for CO2 criterion)

Methodologies and Assumptions

• Target is gross emissions based; does not account for GHG removals, carbon credits, or avoided emissions
• Uses market-based method for Scope 2 emissions
• Gases included: CO2, CH4, N2O, HFCs, PFCs, SF6, and NF3
• SBTi reference pathway indicates 46.2% reduction would be required; MTU's 60% target exceeds this
• Guided by EU Green Deal and Paris Agreement 1.5°C target

Energy consumption and mix

2024 energy consumption and mix

Scope: All consolidated MTU sites as described in the General basis (BP-1) section.

Self-generation: MTU produced a total of 91,711 MWh of energy in 2024. Of this, 91,191 MWh come from non-renewable sources, and 520 MWh from renewable sources.

Contractual instruments: In the reporting year, MTU covered 35.0% of its energy requirements for electricity and district heating through contractual instruments with unbundled attributes for energy generation (green electricity certificates). No contractual instruments with bundled attributes for energy generation were used.

Energy intensity

Methodology: The energy intensity metric represents MTU's total energy consumption in MWh per net revenue in millions of euros. Since MTU's entire business operations fall under the industry sector "30.30 Manufacture of air and spacecraft and related machinery" and are therefore in a high climate impact sector, the total energy consumption is reported for this performance indicator and divided by the net revenue (from contracts with customers/in accordance with IFRS 15).

Methodology and estimation

Energy consumption calculation: To calculate the energy mix, the energy mix data for the relevant energy sources concerned are taken for each site and multiplied by the site's energy consumption. The total energy consumption is determined based on meter readings and/or invoices from energy suppliers.

Estimation methods: Estimation methods were used for sites and energy sources for which no primary data could be collected. MTU's energy consumption is calculated, taking into account all available activity data per square meter. This factor is used for the estimated energy consumption of subsidiaries that do not have energy consumption data. If data is not available in time, MTU uses the previous month's or year's data or calculates the consumption data using the mean value of the available data.

Self-generation measurement: The amount of energy generated is recorded based on meter readings.

Emission factors: Emission factors from the GHG Protocol and MLC (formerly GaBi) databases are used for related calculations.

Gross Scopes 1, 2, 3 and Total GHG emissions

Scope 1 and 2 GHG emissions

MTU reports Scope 1 and 2 GHG emissions for its controlled production and maintenance sites. The following table presents emissions for the reporting year and the baseline year 2019:

Methodology and scope notes:

• MTU monitors greenhouse gas emissions in the production and maintenance of engines and modules at its sites using the internationally recognized Greenhouse Gas (GHG) Protocol.
• Reporting covers all major production and maintenance facilities controlled by MTU: Munich, Hanover, Ludwigsfelde, Rzeszów, Vancouver and Nova Pazova.
• The company's ecoRoadmap climate protection strategy aims to achieve climate-neutral production and maintenance, aligned with the Paris Climate Agreement and the Science Based Targets initiative (SBTi).
• For the PSP/LTI performance criterion "remaining CO₂ emissions", the measurement compares emissions between December 1, 2023 and November 30, 2024 (reference period) with those between December 1, 2026 and November 30, 2027 (target period) on the basis of emission factors from the reporting year (2024).
• Target values for remaining CO₂ emissions (Scope 1+2) for the target period (Dec 2026-Nov 2027):
  • Minimum value (0% reduction): 50.20 metric kilotons
  • Target value (9.8% reduction): 45.30 metric kilotons
  • Maximum value (17.2% reduction): 41.60 metric kilotons

Scope 3 GHG emissions

Scope 3 calculation approach:

• MTU uses value chain estimations for Scope 3 GHG emissions calculations.
• Where possible, MTU uses activity data and industry average estimations from emission factor databases in its carbon accounting.
• Calculations employ indirect sources given data availability constraints in the complex global value chain.

Scope 3 categories: The report confirms that Scope 3 emissions are calculated but does not disclose absolute figures by GHG Protocol category (1-15) for the reporting year. The company notes in its ESRS reconciliation table that E1-6 44(c), E1-6 51, and E1-6 AR 46(g), 46(j) relate to Scope 3 GHG emissions with value chain estimations.

Total GHG emissions

GHG intensity

No GHG intensity metric (e.g., tCO₂eq per million € revenue) was disclosed in the excerpts provided.

Additional notes

• The company participates in the annual CDP rating to make climate impact transparent to stakeholders.
• MTU's sustainability strategy includes ambitious objectives for reducing carbon emissions at production sites globally.
• The ecoRoadmap aims to reduce CO₂ emissions by 60% by 2030 relative to the reference year 2019.
• MTU is utilizing ESRS 1 Section 10.2 transitional provisions for first-time reporting, with incomplete value chain data being a noted challenge.

Anticipated financial effects from material physical and transition risks and potential climate-related opportunities

Use of phase-in exemption

MTU Aero Engines uses the phase-in exemption for ESRS E1-9 (Anticipated financial effects from material physical and transition risks and potential climate-related opportunities).

As disclosed in the table of exemptions:

Scenario analysis and time horizons

While MTU does not provide quantified financial effects under this exemption, the company has conducted climate scenario analysis:

Time horizons defined:

• Short and medium-term period: defined as running until 2038 in view of relevant political goals, such as the European Union's net zero strategy for 2050
• Long-term: recognized that most climate risks materialize over decades

Physical risk analysis:

• Qualitative physical risk analysis based on RCP8.5 scenario
• Conducted for MTU Maintenance Lease Services B.V. site in Amsterdam
• Assessment based on latest IPCC Assessment Report
• Specific supplier sites were not taken into account
• Limitation noted: current generation of climate models cannot simulate all 28 hazards; analysis for some hazards based on historical data instead of climate projections

Transition risk analysis:

• Climate scenario analysis performed using TCFD classification covering policy and law, technology, market and reputation
• Analysis includes expected transition risks aligned with political developments aimed at achieving climate neutrality by 2050 and limiting global warming to 1.5°C
• Key drivers: increasing price of GHG emissions and fuels, gradual introduction of minimum requirements for SAF, partial flight and flight route restrictions, and increasing stakeholder requirements regarding ESG and climate targets
• Scenario developments based on implementation of the EU Green Deal and the EU Fit for 55 package

Assets flagged for transition risk

Locked-in GHG emissions: Relevant locked-in GHG emissions result primarily from the product use phase. Due to the long product cycles in aviation these emissions can only be reduced over the long term.

Transition compatibility: MTU's assets and activities were screened to determine whether they are compatible with the transition to a climate-neutral economy or require significant efforts.

Mitigation approach: MTU has set out ideas for aircraft engines and their potential for reducing climate impact and energy consumption in the Claire technology agenda.

Value chain considerations

Upstream value chain: No scenario-based analysis of transition and physical risks was carried out for the assessment of the upstream value chain. Transition and physical risks related to the upstream value chain were instead considered at a general level, although limited transparency is a challenge.

Pollution of air, water and soil

Disclosure summary

MTU Aero Engines identifies material negative impacts due to GHG emissions and non-CO2 effects from NOx and contrails, which contribute to global warming. These impacts are found throughout the value chain, particularly in the product use phase (aviation engines).

NOx emissions context

The company states that emissions from its products in the use phase "mainly consist of CO2, along with non-CO2 effects from NOx and contrails" that contribute to global warming.

MTU's Claire technology agenda targets include "quantitative climate targets with regard to CO2 and NOx emissions, the formation of contrails and lower energy consumption."

Rationale for non-quantification

MTU explicitly explains why non-CO2 effects (including NOx) are not quantified:

Non-CO2 effects arising from the use of products in aviation are not currently taken into account for two reasons:

1. Measurement uncertainty: "The consequences of emissions, such as contrails from a mixture of water vapor and emitted particles (SO2, CH, soot), are difficult to estimate and calculate accurately. Depending on climatic conditions, contrails can contribute to the formation of cirrus clouds. A uniform, standardized procedure for estimating their climate impact has not yet been established."

2. Regulatory gap: "There are currently no substantial requirements from various regulatory and environmental organizations, such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), IAEG or SBTi, to include non-CO2 effects in emissions calculations. These organizations have not yet developed comprehensive guidelines or methodologies for assessing or considering any such effects in aviation. MTU will continue to monitor developments in this area and stay informed about any emerging standards or requirements from relevant regulatory and environmental bodies."

E-PRTR disclosure

Under ESRS E2-4 paragraph 28, MTU states:

"Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil" - Not material

Quantified emissions to air, water, and soil

No quantified emissions data for pollutants to air (NOx, SOx, SO2, PM, VOC, heavy metals), water (heavy metals, nutrients, BOD/COD), or soil (heavy metals, microplastics) are disclosed in the sustainability statement.

Not disclosed. Company references substances of concern only in the context of materiality assessment and notes that ESRS E2 (Pollution) is not material. The report states that MTU screened for sites where 'substances of concern and substances of very high concern are used' during the double materiality assessment process, and mentions 'action days on hazardous substances' in the context of health and safety initiatives, but provides no quantitative data on SoC or SVHC tonnages, no breakdown by hazard class, and no specific narrative on REACH compliance or monitoring and management of these substances.

Policies related to water and marine resources

MTU Aero Engines has assessed water and marine resources as not material and has therefore not disclosed a dedicated policy on this topic.

According to the materiality assessment disclosed in the sustainability statement:

• ESRS E3-1 paragraph 9 (Water and marine resources): Not material
• ESRS E3-1 paragraph 13 (Dedicated policy): Not material
• ESRS E3-1 paragraph 14 (Sustainable oceans and seas): Not material

As a result of this materiality assessment, the company has not provided information on policies related to water and marine resources under ESRS E3-1.

Water consumption

MTU has determined that ESRS E3-4 disclosures are not material. The following E3-4 data points have been explicitly identified as not material in MTU's materiality assessment:

• ESRS E3-4 paragraph 28 (c): Total water recycled and reused - Not material
• ESRS E3-4 paragraph 29: Total water consumption in m³ per net revenue on own operations - Not material

No quantitative water consumption, withdrawal, or discharge metrics are disclosed in the sustainability statement.

Materiality assessment approach

MTU conducted a comprehensive water analysis using data from the World Resources Institute's (WRI) Aqueduct Water Risk Atlas and analyzed the downstream value chain for water and marine resource-related impacts. The assessment process was aligned with TFND's LEAP approach.

The analysis utilized information from the WRI Aqueduct Water Risk Atlas combined with MTU's water consumption data to identify activities and sites that could have impacts on water and marine resources. River basins were considered as the relevant level for the assessment of sites in MTU's business operations. The analysis was based on criteria for determining water status in accordance with Directive 2000/60/EC (Water Framework Directive).

No consultations with affected communities were held as part of the materiality assessment.

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

Materiality Assessment

Based on the results of the double materiality assessment, MTU has concluded that biodiversity and ecosystems (ESRS E4) is not material for the company.

Double Materiality Assessment Process

MTU carried out a process based on the first three phases of the TNFD's LEAP approach to identify material impacts, risks, dependencies and opportunities in connection with biodiversity and ecosystems. The local conditions at the operating sites, the business activities and the downstream value chain were taken into account.

The following factors influencing the loss of biodiversity were taken into account:

• climate change
• change of land-use
• change of fresh water-use and change of sea-use
• direct exploitation
• invasive alien species
• pollution
• other impacts on the state of species
• impacts on the extent and condition of ecosystems including through land degradation, desertification and soil sealing
• impacts and dependencies on ecosystem services

Use of Frameworks

The assessment approach for conducting the environmental assessment corresponds to the LEAP (locate, evaluate, assess and prepare) approach of the Task Force on Nature-related Financial Disclosures (TNFD).

Sites Near Biodiversity-Sensitive Areas

MTU identified three sites near biodiversity-sensitive areas (i.e., within a radius of two kilometers) where MTU's activities could have potential impacts on the habitats of endangered species. The identification was carried out in a two-stage process:

1. Sites were evaluated using the WWF Risk Filter tool. The WWF "Environmental Factors" Risk Filter indicator was used to determine the sites. This indicator brings together various biodiversity-related aspects into biodiversity-sensitive areas. The biodiversity-sensitive areas include key biodiversity areas (KBAs) and protected areas listed in the World Database of Protected Areas (WDPA).

2. MTU sites labeled "high risk" were defined as "relevant biodiversity sites." The three sites identified were then analyzed for their biodiversity-related impacts, taking into account site-specific activities.

Assessment Conclusion

The analysis concluded that MTU has no material impacts on endangered species in ecosystems with sensitive biodiversity. According to the directives and frameworks or equivalent national law or international standards, such as 2009/147/EC, 92/43/EEC, 2011/92/EU and Performance Standard 6 of the International Finance Corporation (IFC), no specific mitigation measures are required.

Furthermore, no MTU-specific impacts were identified with regard to land degradation, desertification or soil sealing. MTU's business model has no known impact on endangered species.

Value Chain Assessment

As there is no comprehensive transparency of the production sites in the upstream value chain, MTU identified and assessed the impacts, risks and opportunities based on the processes in the upstream value chain. MTU drew on secondary literature and consultations with internal production process experts for this analysis.

Final Conclusion

The results did not give rise to any material impacts, risks, dependencies or opportunities related to biodiversity or ecosystems.

MTU did not hold any separate consultations with affected communities as part of the process.

Policies related to biodiversity and ecosystems

MTU Aero Engines has assessed the following biodiversity-related policies as not material:

• Sustainable land/agriculture practices or policies (ESRS E4-2 paragraph 24 (b))
• Sustainable oceans/seas practices or policies (ESRS E4-2 paragraph 24 (c))
• Policies to address deforestation (ESRS E4-2 paragraph 24 (d))

No specific policies related to biodiversity and ecosystems are disclosed, as the company has determined these matters to be not material to its operations.

Impact metrics related to biodiversity and ecosystems change

Operations in or near protected areas / Key Biodiversity Areas (KBAs)

MTU has identified three sites near biodiversity-sensitive areas (i.e., within a radius of two kilometers) where MTU's activities could have potential impacts on the habitats of endangered species.

The identification process used the WWF Risk Filter tool with the "Environmental Factors" Risk Filter indicator to determine sites. This indicator includes key biodiversity areas (KBAs) and protected areas listed in the World Database of Protected Areas (WDPA). MTU sites labeled "high risk" were defined as "relevant biodiversity sites."

Species impact assessment

The three identified sites were analyzed for their biodiversity-related impacts, taking into account site-specific activities. The analysis concluded that MTU has no material impacts on endangered species in ecosystems with sensitive biodiversity.

According to directives and frameworks or equivalent national law or international standards, such as 2009/147/EC, 92/43/EEC, 2011/92/EU and Performance Standard 6 of the International Finance Corporation (IFC), no specific mitigation measures are required.

MTU's business model has no known impact on endangered species.

Land degradation and soil impacts

No MTU-specific impacts were identified with regard to land degradation, desertification or soil sealing.

Policies related to resource use and circular economy

MTU discloses one policy addressing material impacts in the context of resource use and the circular economy.

Procedural instructions for evaluating environmentally relevant aspects in product design

Content and key principles:

• Addresses material impacts related to MTU's resource outflows in production and maintenance
• Covers resource-efficient production and repair methods
• Requires use of REACH-compliant materials, recycled materials (in part), and recyclable materials in product design
• Supports the development and design of products with a long service life and useful life

Associated material impacts, risks and opportunities:

• MTU's MRO business ensures high quality in engine maintenance, which prolongs engine efficiency and service life
• Only necessary parts are replaced and the remaining part of the engine is reused
• The MRO business makes a significant contribution to resource efficiency and the circular economy

Cross-reference: For further information on the policy, including the objective, monitoring, scope of application, responsible organizational level and availability, the company refers to the section "Policies related to climate change mitigation and adaptation (E1-2): Procedural instructions for evaluating environmentally relevant aspects in product design".

Context: MTU's long-standing expertise in the maintenance, repair, and overhaul (MRO) of engines and the resulting high quality of customer-specific or needs-based engine MRO services have a positive impact on resource use. The MRO business makes a substantial contribution to the circular economy through only non-repairable parts being replaced while the rest of the engine is reused, thereby contributing to prolonging products' service life.

Actions and resources related to circular economy

MTUPlus Intelligent Solutions: PERFORMPlus (smart repairs) and ValuePlus (smart reuse)

Key actions taken and outcomes achieved:

Smart repairs: MTU's MRO services are tailored to the customer's specific requirements. In addition to the age of the engine, factors including individual use and planned service life are considered to ensure an effective repair and efficient resource use (see also "Smart reuse"). MTU's engine trend monitoring also makes it possible to determine the optimum time for engine maintenance. This is determined on the basis of measurement points such as exhaust gas temperatures, fuel consumption and thrust combined with historical wear data. Furthermore, various factors such as a potential drop in performance on the wing, component wear and the (remaining) service life are taken into account.

The continuous development of innovative measuring methods allows more efficient damage detection and tailored repair. Furthermore, maintenance work is conducted on-wing whenever feasible to extend the time between shop visits, reduce downtime and increase the service life of the engines. Since this year, an innovative measuring system that automatically detects and analyzes damage to critical parts has been in use at the MRO-site in Hanover. Compared to the previous process, a significant reduction in maintenance time is possible.

Smart reuse: For mature engines it can be more effective to prioritize the installation of used spare parts instead of new parts. For this purpose MTU identifies suitable used engines, dismantles them, reconditions the reusable components, installs them in in-service engines and/or sells them at parts level.

Key actions planned and time horizons for implementation:

Key actions planned for the next two years:

• Implementation of the innovative measurement system for automated detection and evaluation of damage to critical components at other MRO sites, where possible.

Key actions planned for the next three to five years:

• Development of a borescope solution for improved inspection of engines directly on site – i.e., on-wing.
• Introduction of an intelligent monitoring system for more efficient identification of suitable spare parts. The system is intended to enable a more precise assessment of the parts-level condition of in-service engines on the basis of use data.

Key actions planned for the next ten years:

• Development and use of digital twins of engines (virtual versions) across all life cycles. This is intended to accelerate the development of new products by minimizing design iterations, improve the recyclability of products and enable the early development of suitable repair processes.

Contribution to the policy objectives and requirements:

The procedural instructions for evaluating environmentally relevant aspects in product design also aim to reduce energy and material consumption for MRO activities. Implementing the aforementioned actions results in significantly shorter maintenance times (with automated measuring systems, early repair concepts using digital twins) and thus lower energy consumption. On-wing inspections reduce material and energy consumption. The consumption of resources is reduced by using spare parts from decommissioned engines and by optimizing the product design, for example to reduce component wear. In summary, all the above actions help to ensure compliance with the requirements of the procedural instructions for evaluating environmentally relevant aspects in product design.

Scope:

Unless explicitly stated otherwise, the actions apply to all MRO sites.

Progress:

The aforementioned actions with regard to the smart repair and reuse of parts are continuously implemented, optimized and expanded. Progress was made in, among other areas, digitalization, which enables more efficient detection and analysis of damage in the MRO business.

Targets related to circular economy

MTU has not yet defined an ESRS-compliant target for its first report.

The company states that the effectiveness of procedural instructions for evaluating environmentally relevant aspects in product design currently relates primarily to the reduction of climate impacts. While the policy also has positive effects on resource use and circular economy, these are not currently recorded due to the wide range of topics.

MTU aims to establish suitable metrics for evaluating actions with regard to the circular economy.

Strategic Objective

MTU pursues the strategic objective of continuous process optimization and resource efficiency in product development, product design, product manufacturing and the MRO business in order to be able to offer more environmentally friendly solutions in the future. However, this objective is not quantified with specific targets, baseline years, or target years.

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

Phase-in exemption

MTU Aero Engines uses the phase-in exemption for ESRS E5-6 (Anticipated financial effects from resource use and circular economy-related risks and opportunities).

Policies related to own workforce

MTU has adopted comprehensive internal regulations to manage the material impacts and risks related to its own workforce. The most important policies affecting the workforce include:

Policy statement on the protection of human rights

Content:
This policy statement expresses an unconditional commitment to respecting and protecting human rights. The principles and values it sets out are an integral part of the systems and processes. MTU has committed to the principles of the UN Global Compact and views human rights protection as an essential component of its sustainable corporate governance and social, environmental, and societal responsibility. Upholding human rights is a stated goal, and MTU is committed to respecting them.

The main topics forming part of the policy statement include the prohibition of child labor, the prohibition of forced labor, freedom of association, fair remuneration and working hours, non-discrimination, equal opportunities, training and qualification, and occupational safety/health and safety at work.

Target:
The policy statement reflects MTU's commitment to upholding human rights and serves as a foundation for its policies and practices. Through this public commitment, MTU aims to encourage all stakeholders to adhere to these principles and to report any potential violations.

Associated material impacts, risks and opportunities:
As all material sustainability matters relating to MTU's own workforce (with the exception of work-life balance) are anchored in the ILO conventions and the Universal Declaration of Human Rights, which MTU has committed to upholding in the policy statement on the protection of human rights, the statement covers all material impacts and risks in the social area.

Monitoring:
The Executive Board bears the responsibility for ensuring that the principles, measures, and requirements defined in this statement are implemented within the respective areas of its own business activities. This includes the identification, prevention, and mitigation of any potential negative impacts of business activities on human rights.

Scope:
The policy statement covers MTU's own business activities (MTU Aero Engines AG and the companies controlled by the MTU Group). Both employees and non-employees fall within the scope of the policy.

Responsible organizational level:
MTU's Executive Board is responsible for the implementation of the principles, measures and requirements defined in the statement within MTU's own operations. The compliance officer and the human rights officer regularly report to the Corporate Sustainability Board and the Executive Board, under the responsibility of the Chief Sustainability Officer.

Third-party standards or initiatives:

• Universal Declaration of Human Rights
• Core Labor Standards of the International Labour Organization (ILO)
• Ten Principles of the UN Global Compact
• UN Guiding Principles on Business and Human Rights
• Sustainable Development Goals of the United Nations (SDG 5/8)

Stakeholder consideration:
The policy statement on the protection of human rights takes into account the interests of key stakeholders. It ensures fair treatment and safe working conditions for the whole workforce, promotes ethical practices, builds trust and maintains high standards of business conduct for investors and supervisory authorities.

Availability:
The policy is publicly available on the MTU website: https://www.mtu.de/fileadmin/EN/1_About_us/5_Compliance/Grundsatzerklaerung_Menschenrechte_V2_final_EN.pdf

Corporate works agreement on Code of Conduct for employees

Content:
MTU's internal Code of Conduct (also available to the public in an abridged version) emphasizes the importance of integrity and responsibility across all business areas. Employees are obliged to comply with legal requirements and internal rules while adhering to ethical standards of conduct. In addition, the Code of Conduct highlights the importance of respectful and fair interactions among colleagues, with business partners and customers. The Code also describes MTU's commitment to human rights, equal opportunities, safe working conditions and environmental sustainability and it also covers fair competition, trade compliance, prevention of insider trading, and outlines enforcement measures and consequences for violations.

Target:
The main objective of the Code of Conduct is to establish clear policies and standards for ethical behavior and decision-making for MTU's workforce. It is designed to ensure consistency, integrity and compliance with laws and regulations. At the same time, the Code of Conduct aims to foster a positive work environment, protect MTU's reputation, and build trust with stakeholders.

Associated material impacts, risks and opportunities:
MTU's Code of Conduct reflects the value the company places on respect for human rights and promotes a respectful and fair working environment. The Code emphasizes the importance of equal treatment by rejecting discrimination in any form and promoting equal opportunities for all employees. In addition, fair and performance-based compensation is offered that is in line with or better than national legal standards and collective bargaining agreements. Overall, the Code of Conduct serves to prevent potential negative impacts on employees and create a positive working environment.

Monitoring:
It is the responsibility of every MTU manager to ensure that all employees are aware of this policy and comply with its provisions. MTU regularly trains its employees and managers across all hierarchies on the Code of Conduct. When new employees are taken on, MTU informs them about the Code of Conduct and requires them to sign a declaration committing to uphold it. The Code of Conduct is subject to oversight by the Works Council.

Scope:
The corporate works agreement applies to all employees of the following MTU Group companies:

• MTU Aero Engines AG (Munich)
• MTU Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Hannover GmbH
• eMoSys GmbH

Responsible organizational level:
MTU's Executive Board is responsible for implementing the Code of Conduct. As part of compliance-related regular reporting, the compliance officer regularly reports to the Executive Board on adherence to the Code.

Availability:
The policy is accessible to MTU employees via the document management system and can be viewed publicly in an abridged version: https://www.mtu.de/fileadmin/EN/7_News_Media/2_Media/Brochures/Company/MTU_Verhaltensgrundsaetze_en_2604_150.pdf

Manual for the implementation of human rights risk management at MTU (including corresponding environmental obligations)

Content:
The policy describes the actions and responsibilities that MTU has implemented to prevent, as far as possible, the violation of human rights and corresponding labor and environmental obligations along its upstream value chain and as part of its own business activities.

Target:
The policy is fundamentally designed to fulfill the requirements arising from the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG) and thereby reduce or prevent human rights and environmental risks and violations resulting from the business activities of MTU.

Associated material impacts, risks and opportunities:
As all material sustainability matters relating to MTU's own workforce (with the exception of work-life balance) are anchored in the ILO conventions and the Universal Declaration of Human Rights, which MTU has committed to upholding in its policy statement on the protection of human rights, to which the manual refers, the manual covers all material impacts and risks in the social area. A particular focus here is on freedom of association, equal treatment of employees, appropriate wages and occupational health and safety.

Monitoring:
The approach described in this policy for fulfilling the human rights and environmental due diligence obligations under the German Supply Chain Due Diligence Act is reviewed annually and as needed, particularly when MTU expects a significantly changed or expanded risk situation within its own business operations or with its immediate suppliers. The review is generally carried out in consultation between the MRB (human rights officer) and the MRKK (human rights coordinators Group).

Scope:
In the context of the ESRS-S1, the scope covers MTU's own workforce.

Responsible organizational level:
The Legal, Compliance, Intellectual Property Management & Corporate Audit department is responsible for the policy. The responsibility ensures that the policy is monitored. All departments are responsible for implementing the policy.

Availability:
The policy is not publicly available and can only be accessed via the document management system for MTU employees.

Management manual

Content:
The management manual is the central document containing the requirements and rules pertaining to the integrated management system for quality, occupational health & safety and environmental protection. With regard to health and safety (H&S), the manual sets out the principles of the occupational health and safety management system, explains potential risks to workers' health and safety, emphasizes the importance of training to ensure occupational health and safety and describes the processes for root cause analysis of incidents. It forms the basis for more specific rules and regulations (policies, process descriptions, standards and work instructions) that apply to MTU. The management manual is the overarching document in the IMS for quality, environmental protection and occupational health and safety, and serves as the basis for further regulations (process descriptions, standards, and work instructions) across all business units of MTU.

Target:
MTU considers it its responsibility to make a significant contribution towards helping its employees stay in good health in the long term. The aims are zero accidents and the mitigation of any workplace exposures in a work environment appropriate for this purpose. For this reason, company-wide health and safety management processes and activities have been introduced.

Associated material impacts, risks and opportunities:
The management manual addresses the potential negative impacts and risks for the health and safety of MTU's own workforce.

Monitoring:
The system is part of MTU's integrated management system (IMS) and its ISO 45001 certification for the following sites: MTU Aero Engines AG (Munich), MTU Maintenance Hannover GmbH, MTU Maintenance Berlin-Brandenburg GmbH, MTU Maintenance do Brasil Ltda, MTU Maintenance Australia Pty Ltd. and MTU Maintenance Service Centre Ayutthaya Ltd. It is supported by regular inspections, audits and an annual management review of the IMS. On the operational level, responsibilities for health and safety are assigned to the MTU sites.

Scope:
For the MTU sites covered by the CSRD scope of consolidation, the IMS is valid at the following MTU sites:

• MTU Aero Engines AG (Munich)
• MTU Aero Engines Polska sp. z o. o.
• MTU Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Hannover GmbH
• MTU Maintenance Canada Ltd.

Responsibility in occupational health and safety and environmental protection

Content:
This policy governs the assignment of tasks and responsibilities at MTU in the area of occupational health and safety and environmental protection at the Munich site (MTU Aero Engines AG). It provides an explanation of the roles of the management, appointed representatives and center coordinators.

Target:
The overall aim of the policy is to promote a safe working environment by clearly defining the roles, responsibilities and procedures that are necessary to ensure compliance with the relevant health, safety and environmental regulations. The aim is also to support continuous improvement in these areas.

Associated material impacts, risks and opportunities:
The policy aims to counteract negative impacts on the (physical and mental) health and the safety of MTU's workforce.

Monitoring:
The center objectives in occupational health and safety are included in the annual target agreements between the centers, the site manager, and the department management, and are approved by them. The center objectives are cascaded down to individual departments and are aligned through annual target-setting and target achievement discussions. The policy is subject to oversight by the Works Council.

Scope:
The policy applies to all employees at the MTU Aero Engines AG (Munich) site.

Responsible organizational level:
The Executive Board and managers are responsible for the implementation of the policy.

Availability:
The policy is not publicly available and can only be accessed via the document management system for MTU employees.

Corporate works agreement on collaborative behavior in the workplace

MTU is committed to equal opportunities for all employees and has implemented specific policies including the Code of Conduct and the corporate works agreement on collaborative behavior in the workplace. The policies are intended to prevent discrimination and harassment and promote diversity and inclusion.

Corporate works agreement on disease prevention and the integration of severely disabled individuals

MTU has entered into further obligations in Germany with the corporate works agreement on disease prevention and the integration of severely disabled individuals, which includes specific measures for integration and support (workplace design, work organization, training, etc.).

Alignment with international standards:
The policies with regard to MTU's own workforce are aligned with relevant internationally recognized instruments, including the UN Guiding Principles on Business and Human Rights. By performing regular reviews and updates of its policies, engaging in continuous training and education for employees, and maintaining open channels for feedback and information, MTU ensures that its policies are in line with these international standards.

Human rights commitments:
MTU recognizes the respect and protection of human rights as fundamental values and opposes exploitative working conditions in any form. In particular, MTU strongly condemns child labor in all its forms. MTU is convinced that children need access to education in order to be able to develop without the risk of entering the workforce too early. Employment relationships at MTU are voluntary and can be terminated by employees at any time of their own free will, taking into account statutory or otherwise reasonable notice periods. MTU strongly rejects forced or compulsory labor that is performed involuntarily under threat of disadvantage or intimidation, as well as any other form of modern slavery in line with the ILO's core labor standards.

Health and safety:
Employee health is a top priority for MTU. MTU provides occupational health and safety in the workplace in compliance with national regulations as a minimum standard. At MTU, the health and safety (H&S) management system is documented in the management manual as an integral part of the integrated management system (IMS) and is supplemented by the documentation and reporting of accidents and responsibility for occupational health and safety and environmental protection. The H&S management systems at MTU Aero Engines AG (Munich), MTU Maintenance Hannover GmbH, MTU Maintenance Berlin-Brandenburg GmbH, MTU Maintenance do Brasil Ltda., MTU Maintenance Australia Pty. Ltd. and MTU Maintenance Service Centre Ayutthaya Ltd. are also certified to ISO 45001.

Diversity and non-discrimination:
MTU emphasizes through its policies that it rejects any form of discrimination and actively promotes diversity and inclusion overall. In its Code of Conduct, MTU explicitly rejects any form of discrimination, whether based on the basis of sex or gender, disability, ethnic origin or affiliation, religion or ideology, age or sexual orientation. To this end, MTU provides a complaints procedure and a diversity officer for working conditions and equal opportunities. MTU is also a signatory to the Diversity Charter in Germany and cooperates with the "Impact of Diversity" initiative.

Taking action on material impacts on own workforce

MTU Aero Engines AG is committed to effectively manage its material impacts, risks, and opportunities related to its own workforce through targeted actions. The main initiatives center around:

• Effective health and safety measures to ensure a secure working environment
• Employ and integrate people with disabilities to foster diversity and inclusion
• Effective complaint mechanisms and human rights risk management system

Actions taken to provide or enable remedy in relation to actual material impacts

Health and safety management: Due to MTU's regulatory environment, any impact that affects the health and safety of its workforce is considered an actual negative impact. Actual negative impacts can arise from the risk of injury or accidents during working hours. MTU has a comprehensive occupational health & safety management system in place to provide remedy in case of an incident. This system includes:

• Medical care required in the event of sudden health emergencies at the workplace
• Appointed first-aiders obligated to attend a refresher course every two years
• Additional functions: fire safety assistants and safety officers
• Introduction of safety briefings and training sessions on developing a safety mindset

Training and development opportunities: Deficiencies in employee qualifications can have negative impacts on employees. Those affected can contact their responsible supervisors through various existing channels. MTU is constantly developing its feedback landscape to provide a variety of reporting channels. To remedy these negative impacts, MTU provides a comprehensive and needs-based training program that contributes to the targeted further development of employees.

Actions to improve grievance mechanisms and respect for human rights: In the event of actual negative impacts (e.g., in connection with discrimination), MTU has a systematic process for handling complaints. This process makes it possible to take remedial action quickly and effectively to remedy such incidents and prevent them from occurring in the future.

Employment and inclusion of persons with disabilities: MTU has implemented a variety of actions related to employment and inclusion of people with disabilities regarding accessibility, integration and support. Ongoing and planned enhancements to the physical work environment will better accommodate the needs of people with disabilities. These actions are overseen by an inclusion officer to increase employee satisfaction and prevent discrimination.

Additional actions with primary purpose of delivering positive impacts

Actions to improve grievance mechanisms and respect for human rights:

• Structured reporting processes to handle complaints of discrimination including confidential and anonymous reporting options through systems like iTrust
• Site-specific channels and trained contacts to ensure all complaints are addressed effectively and appropriately

Work-life balance initiatives: MTU promotes work-life balance by offering various flexible work options:

• Flexible hours
• Educational leave
• Mobile working
• Sabbaticals

These initiatives cater to the diverse life phases and needs of employees, supporting a harmonious integration of work and personal life.

Revised feedback landscape: Transformation of the employee survey (PulsCheck) into an integrated feedback system with targeted surveys supplemented by additional tools such as management feedback and team feedback.

Training and development opportunities: MTU invests systematically in training and developing employee talents. The company offers:

• Extensive training programs in aviation and specialized fields (e.g., safety training)
• Online learning portal for self-directed learning
• Resources to enhance skills and advance careers

Implementation and monitoring

Actions are implemented through various roles:

• Executive Board for strategic direction
• Department heads for implementation in their areas
• HR department for employee development and training

Effectiveness is assessed through internal and external audits, benchmarking, and stakeholder feedback.

Additional health and safety measures

The company has implemented effective health and safety measures, such as:

• Ergonomic workstations
• Offering flexible working hours and mobile working options
• Strengthening internal communication through a feedback landscape
• Investing in ongoing training and development opportunities

Targets related to own workforce

MTU has defined three targets in accordance with ESRS minimum requirements to address material impacts, risks and opportunities related to its own workforce. Two targets are disclosed in detail:

1. Employee training and development (ESG short-term incentive)

Relationship to policy objectives: Based on requirements of the corporate works agreement.

Target metric: Average training days per employee

Target value: 3.0 training days per employee

Target period: January 1 to December 6, 2024

Scope: All employees of:

• MTU Aero Engines AG (Munich)
• MTU Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Hannover GmbH

Baseline year: Not disclosed

Baseline value: Not disclosed

Type: Intensity-based (per employee)

External validation: Not disclosed (internal STI target)

Progress to date: Not disclosed

2. Women in leadership positions (ESG long-term incentive)

Relationship to policy objectives: Based on MTU's policy statement on protection of human rights to promote non-discrimination, equal opportunities, training and qualification of women and gender diversity.

Target metric: Proportion of women in leadership positions (from foremen to Executive Board level)

Target value: 16%

Target period: Fiscal years 2024 to 2027

Scope: All employees of:

• MTU Aero Engines AG (Munich)
• MTU Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Hannover GmbH

Baseline year: Not disclosed

Baseline value: Not disclosed

Type: Absolute percentage target

External validation: Not disclosed (internal LTI target)

Progress to date: Not disclosed

3. Women in senior management positions

Relationship to policy objectives: Promoting women into leadership positions.

Target metric: Proportion of women in senior management positions (first management level - center level, senior manager - and second management level - department level, manager - below Executive Board)

Target value: "Significantly increase" (not quantified in excerpts)

Target year: Not disclosed

Approach: Setting specific quotas for female representation and actively promoting women into leadership positions

Baseline year: Not disclosed

Baseline value: Not disclosed

Progress to date: Not disclosed

Characteristics of the undertaking's employees

Total headcount

MTU does not disclose comprehensive ESRS S1-6 employee headcount tables in the excerpts provided. The excerpts are primarily from the letter to shareholders, supervisory board report, corporate governance sections, and management compensation report. While these sections mention employee-related topics, they do not contain the structured employee headcount data required by ESRS S1-6.

Available partial information

From the vertical comparison table in the management compensation report (page 39-40), average compensation data references:

• Employees in Germany (2024): Standardized to full-time equivalents (FTEs), including permanent employees and employees on parental leave working part-time
• This data is limited to compensation analysis purposes and does not provide the full headcount breakdown required by S1-6

Missing disclosures

The following ESRS S1-6 metrics are not disclosed in the provided excerpts:

• Total headcount (current period and prior year)
• Full-time equivalents (FTE)
• Headcount by gender (male/female/other/not disclosed)
• Headcount by country or region
• Headcount by employment contract type (permanent/temporary/non-guaranteed hours)
• Headcount by employment type (full-time/part-time)
• Employee turnover rate or number of employees who left
• New hires (number or rate)

Note: The sustainability statement section is referenced in the table of contents (page 111) but the actual content is not included in the provided excerpts, which may contain the required S1-6 disclosures.

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

Disclosure Status

MTU has identified non-employees as part of its own workforce, defined as self-employed, agency or temporary workers who are not considered direct employees of MTU.

Reporting timeline: Reporting for the group of non-employees is planned from fiscal year 2025.

Workforce Definition

MTU's workforce is divided into two groups in accordance with the ESRS:

• Permanent and temporary employees (detailed definition can be found under S1-6)
• Non-employees (self-employed, agency or temporary workers who are not considered direct employees of MTU)

Positive Impacts

MTU's identified positive impacts relate to:

• Secure employment
• Working time
• Work-life balance
• Health and safety
• Training and skills development

These positive impacts benefit the workforce and are the result of MTU's comprehensive human resources strategy.

Data Availability

No quantitative data on non-employee workers is disclosed for fiscal year 2024. MTU explicitly states that reporting for non-employees will commence in fiscal year 2025.

Collective bargaining coverage and social dialogue

MTU recognizes the right of all employees to form workers' representatives. The corporate culture at MTU with regard to workers' representation is characterized by a trusting and constructive dialogue with the respective representatives. Even in contentious discussions, the goal remains to maintain a viable collaboration for the benefit of the company and the employees. Employees are neither favored nor disadvantaged based on their membership or non-membership in a union or workers' representative by the company.

78.5% of MTU employees at locations in countries in the European Economic Area (EEA) are covered by collective agreements. MTU has three collective bargaining agreements in the EEA.

Regular exchanges between the MTU Works Council and corporate management ensure effective representation of employees. At sites in the European Economic Area, 99.7% of MTU employees have workers' representatives.

Coverage rates by country (significant employment)

The following table shows the coverage rates for collective bargaining agreements and workers' representatives for countries with significant employment (>50 employees and representing >10% of all employees):

European Works Council

MTU does not currently have an agreement with its employees for representation by a European Works Council (EWC), a Societas Europaea (SE) Works Council, or a Societas Cooperativa Europaea (SCE) Works Council.

Phase-in disclosure

MTU is making use of the phase-in option to omit the datapoints with regard to its own employees in non-EEA countries in the Disclosure Requirement ESRS S1-8 for the fiscal year 2024 sustainability statement (first year of preparation).

Diversity metrics

Gender distribution at top management level

The top management levels comprise the management levels below the Executive Board: Level 1 at MTU mid-level with first-level managers (OFK) and Level 2 at MTU departmental level with second-level managers (FK).

Reporting date: December 31, 2024

Distribution of employees by age group

Reporting date: December 31, 2024

Executive Board composition

In the reporting period, MTU's Executive Board consisted of:

• 1 female member
• 3 male members
• Gender ratio: 33% female
• Total members: 4

Supervisory Board composition

In the reporting period, the Supervisory Board consisted of:

• 5 female members (2 employee representatives, 3 shareholder representatives)
• 7 male members
• Female representation: 41.7%
• Male representation: 58.3%
• Total members: 12

Management levels below Executive Board (targets and achievement)

First management level (below Executive Board):

• Target for December 31, 2027: 15% / 3 women
• Achievement as of December 31, 2024: 8.7% / 2 women

Second management level (below Executive Board):

• Original target for December 31, 2027: 20% / 18 women
• Revised target for December 31, 2027: 22% / 26 women
• Achievement as of December 31, 2024: 15.5% / 20 women

Scope: Applies to employees of MTU Aero Engines AG (Munich), MTU Maintenance Berlin-Brandenburg GmbH, and MTU Maintenance Hannover GmbH.

Methodology notes

Gender categories: In some EU Member States it is possible for persons to legally register themselves as having a third, often neutral, gender, which is categorized as "other". The gender category "other" is not applicable in the following countries with MTU sites, as it is not possible to legally register a third gender there: Brazil, China, Poland, Serbia, Singapore, USA (state of Texas).

Data source: Primary data is provided by the HR IT environment or, in the case of smaller sites, by local HR business partners.

Adequate wages

Disclosure statement (S1-10)

All MTU employees in EEA countries are paid an adequate wage in comparison to European minimum wage directives. All MTU employees in non-EEA countries receive an adequate wage in line with the applicable national minimum wage or living wage benchmark.

Benchmark used

The company references:

• EEA countries: European minimum wage directives
• Non-EEA countries: National minimum wage or living wage benchmark

No specific living wage benchmark methodology is named (e.g. Fair Wage Network, WageIndicator, Anker Methodology, MIT Living Wage Calculator, Global Living Wage Coalition).

Coverage

Not explicitly stated as a percentage. The statement implies 100% of own workforce is covered by the assessment.

Methodology

Primary data on remuneration components is extracted from MTU's payroll system or, for countries with smaller sites, requested from payroll service providers. The respective hourly rates were analyzed for each payroll cycle if required (change in the minimum wage or remuneration during the year).

Geographic scope

• EEA countries: All employees
• Non-EEA countries: All employees

Targets and commitments

No forward-looking targets or commitments disclosed.

Value chain coverage

The S1-10 disclosure applies only to own workforce. The Supplier Code of Conduct requires suppliers to comply with "minimum wage" standards, but no specific living wage assessment or target for the value chain is disclosed under S1-10.

Persons with disabilities

Employment and inclusion of persons with disabilities

MTU has implemented a variety of actions related to employment and inclusion of people with disabilities regarding accessibility, integration and support. Ongoing and planned enhancements to the physical work environment will better accommodate the needs of people with disabilities. These actions are overseen by an inclusion officer in order to increase employee satisfaction and prevent discrimination.

Scope

This applies to all employees of the following MTU Group companies:

• MTU Aero Engines AG (Munich)
• MTU Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Hannover GmbH
• eMoSys GmbH

Progress

MTU has not yet reached the planned quota of severely disabled employees within its own workforce in Germany. The aim is to recruit more candidates in order to achieve the statutory quota of 5% severely disabled employees.

Methodology

Reporting relates to severely disabled employees in Germany, based on the statutory quota requirement.

Health and safety metrics

MTU is committed to maintaining a robust health and safety management system to ensure the well-being of its workforce. The company discloses the extent to which all MTU employees are covered by the health and safety management system, which corresponds to the Integrated Management System of MTU Aero Engines or ISO 45001. The following sites are certified in accordance with ISO 45001: MTU Aero Engines AG (Munich), MTU Maintenance Hannover GmbH, MTU Maintenance Berlin-Brandenburg GmbH, MTU Maintenance do Brasil Ltda., MTU Maintenance Australia Pty. Ltd. and MTU Maintenance Service Centre Ayutthaya Ltd.

Phase-in and scope limitations:

MTU is making use of the phase-in option to omit all datapoints related to non-employees and the datapoints on cases of work-related ill-health and on number of days lost to injuries, accidents, fatalities, and work-related ill-health in the Disclosure Requirement ESRS S1-14 for the fiscal year 2024 sustainability statement (first year of preparation).

Methodology:

The rate of work-related accidents is calculated by dividing the respective number of cases in categories 3 and 4 by the total working hours of the employees (in contrast to the disclosures in accordance with ESRS S1-6, including interns, apprentices, trainees and working students) and standardized to one million working hours (corresponds to 500 full-time employees in the period of one year). A category 3 case corresponds to an accident at work with an injury that results in one to three days' absence from work; a category 4 case corresponds to an accident at work with an injury resulting in more than three days' absence from work.

Due to legal requirements for data privacy and data protection, MTU cannot obtain and report any data for the indicator work-related ill health.

Compensation metrics (S1-16)

Pay gap

MTU reports a gender pay gap for the first time in the 2024 sustainability statement. Equal opportunity is reflected in the compensation system, which is designed non-discriminatorily and independently of gender and gender identity, aiming for gender equitable pay.

For calculating the gender pay gap, the gross annual remuneration and the gross hourly wage extrapolated from this are taken into account. The (unadjusted) gender pay gap is calculated at Group level based on the following formula:

(Average gross hourly wage of male employees – Average gross hourly wage of female employees)
───────────────────────────────────────────────────────────────────────────── × 100
Average gross hourly wage of male employees

Gender pay gap: 2%

Remuneration ratio

In addition to its commitment to equal pay, MTU is committed to fair remuneration and providing transparent information. MTU discloses the ratio of the annual total remuneration of the highest paid individual to the median annual total remuneration of all employees. Members of the Executive Board, including the highest-paid individual, are not taken into account in the median remuneration. At MTU, the CEO is regarded as the highest paid individual.

Total remuneration ratio: 1:41

Methodology

Gender pay gap: The gross hourly wages of all male and female employees are based on the gross annual amount subject to payroll tax, which is divided by the annual working hours (adjusted for the reporting period from Jan. 1 – Dec. 31 if the payroll period differs). Primary data on the remuneration components relevant to the annual total remuneration for each employee is extracted from MTU's payroll system or, for countries with smaller sites, requested from payroll service providers. The KPI is calculated at Group level. Hourly wages at foreign sites are converted into euros accordingly.

Remuneration ratio: The calculation of the median total remuneration of employees follows the definition of ESRS S1-6 (i.e. members of the Executive Board are not included as employees) and is based on the gross annual amount subject to payroll tax (for different payroll periods, adjusted to the reporting period Jan. 1 – Dec. 31). To ensure the comparability of the remuneration data, it was extrapolated to an annual working time of 2,080 hours. Primary data on the remuneration components relevant to the annual total remuneration for each employee is extracted from MTU's payroll system or, for countries with smaller sites, requested from payroll service providers. The KPI is calculated at Group level. The annual gross wage or equivalent for the foreign sites is converted into euros accordingly.

Further information on management remuneration can be found in the Management compensation report section of the annual report.

Incidents, complaints and severe human rights impacts

As part of its commitment to transparency and accountability, MTU aims to provide a clear picture of complaints, work-related incidents and severe human rights incidents affecting its workforce. Eleven incidents of discrimination were registered during the reporting period. The reported cases involved cases of sexual harassment and racism. All confirmed cases resulted in consequences under labor law. Furthermore, MTU received five complaints through internal grievance mechanisms, separate from the incidents reported above.

Incidents, complaints and penalties

Severe incidents and penalties related to human rights

Reporting methodology: The figures include work-related incidents of discrimination reported or identified in the reporting period from Jan. 1 - Dec. 31 that relate to MTU's own workforce. Available reporting channels include: (i) the internet-based whistleblower system (iTrust), which offers both employees at MTU and third parties the opportunity to submit information about suspected unlawful behavior, anonymously if desired; (ii) direct communication channels to the responsible management level or the equal treatment officer. Reports submitted via the National Contact Point for the OECD Guidelines at the Federal Ministry for Economic Affairs and Climate Action are also taken into account, provided MTU is aware of the report. Complaints raised and incidents reported are assessed by the Group Compliance Office in consultation with the General Equal Opportunities Office.

Severe human rights violations (e.g. forced labor, human trafficking, or child labor) reported or identified in the reporting period are assessed by the Compliance Office directly.

Policies related to value chain workers

MTU has implemented several policies that address value chain workers as part of its commitment to human rights and sustainability across its supply chain. MTU recognizes the interconnectedness of social and environmental impacts and has implemented policies that cover multiple ESRS topics, with the Supplier Code of Conduct being specifically included under policies related to value chain workers.

Policy Statement on the Protection of Human Rights

Scope: Covers MTU's own business activities (MTU Aero Engines AG and the companies controlled by the MTU Group). Both employees and non-employees fall within the scope of the policy. Also extends to the upstream value chain through the Supplier Code of Conduct.

Governance: MTU's Executive Board is responsible for the implementation of the principles, measures and requirements defined in the statement within MTU's own operations. The compliance officer and the human rights officer regularly report to the Corporate Sustainability Board and the Executive Board, under the responsibility of the Chief Sustainability Officer.

Key content and principles:

• Commitment to the principles of the UN Global Compact
• Human rights protection as an essential component of sustainable corporate governance
• Prohibition of child labor
• Prohibition of forced labor
• Freedom of association
• Fair remuneration and working hours
• Non-discrimination
• Equal opportunities
• Training and qualification
• Occupational safety/health and safety at work

Links to international standards:

• Universal Declaration of Human Rights
• Core Labor Standards of the International Labour Organization (ILO)
• Ten Principles of the UN Global Compact
• UN Guiding Principles on Business and Human Rights
• Sustainable Development Goals of the United Nations (SDG 5/8)

Public availability: The policy is publicly available on the MTU website: https://www.mtu.de/fileadmin/EN/1_About_us/5_Compliance/Grundsatzerklaerung_Menschenrechte_V2_final_EN.pdf

Monitoring: The Executive Board bears the responsibility for ensuring that the principles, measures, and requirements defined in this statement are implemented within the respective areas of its own business activities. This includes the identification, prevention, and mitigation of any potential negative impacts of business activities on human rights.

Supplier Code of Conduct

Scope: The Supplier Code of Conduct is a contractual component of cooperation with direct suppliers and is intended to have a cascading effect on the higher tiers of the upstream value chain. The scope covers all regions and activities of these suppliers.

Governance: Responsibility is held by the management of the respective purchasing department; if necessary in collaboration with the human rights officer or the compliance officer.

Key content and principles:

• Human rights standards including prohibition of child labor, slavery, human trafficking, forced and compulsory labor
• Labor standards: freedom of association, right to collective bargaining, prohibition of discrimination, equal pay, compliance with minimum wage
• Occupational health and safety
• Creation of a grievance mechanism
• Reduction of greenhouse gas emissions
• Energy efficiency
• Use of renewable energy
• Resource-conserving measures
• Chemical management
• Governance matters: corruption and bribery, money laundering, terrorism financing, fair competition, antitrust laws, avoidance of conflicts of interest

Links to international standards:

• UN Global Compact, derived from the Universal Declaration of Human Rights
• International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work
• Rio Declaration on Environment and Development
• United Nations Convention against Corruption
• UN Guiding Principles on Business and Human Rights (UNGPs)

Public availability: The policy is publicly available on the MTU website: https://www.mtu.de/fileadmin/EN/7_News_Media/2_Media/Brochures/Company/06_Code_of_Conduct_Lieferanten_EN.pdf

Monitoring: Compliance with the required standards is monitored by an ESG assessment carried out by an external service provider. Violations of the principles can be reported at any time through the iTrust reporting channel. In addition, compliance is monitored through regular on-site visits by MTU employees to suppliers of OEM production materials.

Terms and Conditions of Purchase (TCP)

Scope: The terms and conditions of purchase regulate fundamental topics for all purchasing processes and are used for every order. The scope covers all regions and activities of direct suppliers.

Governance: Responsibility is held by the management of the respective purchasing department.

Key content and principles:

• Compliance with the Code of Conduct
• Data privacy provisions
• Requirements for suppliers regarding conflict minerals
• Ensuring that potential conflict minerals come from responsible smelters/suppliers

Links to international standards:

• UN Global Compact, derived from the Universal Declaration of Human Rights
• International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work
• Rio Declaration on Environment and Development
• United Nations Convention against Corruption
• UN Guiding Principles on Business and Human Rights (UNGPs)

Public availability: The policy is publicly available on the MTU website: https://www.mtu.de/fileadmin/EN/9_Privacy-Statement_Terms-Conditions/AGB-EN/Terms_and_Conditions_of_Purchase_of_German_MTU_Sites_-_No_Russia_10.12.2024.pdf

Monitoring: Contractual assurance by the supplier.

Manual for the Implementation of Human Rights Risk Management at MTU (including corresponding environmental obligations)

Scope: The scope of this policy covers MTU Aero Engines AG and the controlled companies of the MTU Group with regard to the requirements of the German Supply Chain Due Diligence Act (LkSG) along the upstream value chain and the company's own business operations.

Governance: The Legal, Compliance, Intellectual Property Management & Corporate Audit department is responsible for the policy. The responsibility ensures the monitoring and implementation of the policy.

Key content and principles:

• Actions and responsibilities to identify potential and actual human rights violations
• Definition and implementation of preventive and remedial actions
• Internal and external communication of results
• Focus on Tier 1 suppliers and the upstream value chain
• All material impacts at direct suppliers are covered

Links to international standards: The manual refers to the policy statement on the protection of human rights, which commits to ILO conventions and the Universal Declaration of Human Rights.

Public availability: The policy is not publicly available and can only be accessed via the document management system for MTU employees.

Monitoring: The approach described in this policy for fulfilling the human rights and environmental due diligence obligations under the LkSG is reviewed annually and as needed. This applies in particular if MTU expects a significantly changed or expanded risk situation along the upstream value chain. The review is generally carried out in consultation between the HRO (human rights officer) and the MRKK (human rights coordinators Group).

Additional Policy Information

MTU confirms that the policies for workers in the upstream value chain explicitly address topics such as:

• Working hours
• Adequate wages
• Freedom of association
• The existence of works councils and collective bargaining
• Health and safety
• Gender equality and equal pay for work of equal value
• Employment and integration of people with disabilities
• Measures to prevent violence and harassment at work
• Diversity
• Data privacy

Particular focus is placed on Tier 1 suppliers in this context.

MTU has established grievance mechanisms including the iTrust reporting channel, available in several languages and anonymously, accessible to all MTU employees, third parties and other stakeholders, such as suppliers and their workers. The Supplier Code of Conduct also requires suppliers to implement a dedicated complaints channel that enables workers or other stakeholders to report potentially illegal practices in the workplace or misconduct.

In 2024, MTU was not informed of any cases of non-respect of the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work or the OECD Guidelines for Multinational Enterprises that involve value chain workers reported in its upstream and downstream value chain.

Taking action on material impacts on value chain workers

MTU has taken the following actions in the upstream value chain to identify and minimize the risk of negative impacts from human rights violations and non-compliance with MTU's social standards:

• Risk analysis
• ESG assessment
• Contractual safeguarding
• Training for buyers
• Supplier visits
• Conflict minerals survey

Most of the actions listed result from the implementation of the requirements of the German Supply Chain Due Diligence Act (LkSG) and therefore primarily relate to the identified material impacts, risks and opportunities that affect direct suppliers, with the exception of the conflict minerals survey. Actions that relate to material impacts, risks and opportunities in the higher upstream value chain are reviewed and, if necessary, implemented as part of the implementation of the CSDDD.

Since no opportunities, risks or material positive impacts on workers in the value chain were identified, no actions were taken to manage these impacts, risks or opportunities.

Risk analysis

Action description: An annual risk analysis is conducted for direct suppliers of fully consolidated Group companies using a standardized tool, taking into account the likelihood of occurrence and the extent of damage. This is based on defined ESG-relevant criteria such as product groups and their sourcing countries. Building on this, other criteria such as the ESG assessment of a third-party provider are included in the evaluation in order to map a supplier-specific risk in relation to sustainability.

Scope: Direct suppliers (Tier 1) of fully consolidated Group companies

Time horizon: Annual review; in the coming years, the existing risk management system will be reviewed regarding the requirements of emerging regulations such as the Corporate Sustainability Due Diligence Directive (CSDDD) and adapted where necessary.

Effectiveness/outcomes: Identifies material impacts and risks at supplier level

ESG assessment

Action description: MTU requires an ESG assessment by an external provider from key suppliers. Key suppliers are defined on the basis of an increased ESG risk and/or purchasing volume. In addition to environmental, human rights and ethical issues, this also covers sustainable procurement. The statements in the questionnaire must be supported by evidence in order to validate the information provided and to be able to reliably assess the supplier's sustainability activities.

Scope: Key direct suppliers based on increased ESG risk and/or purchasing volume

Time horizon: Current; scope of application is currently being expanded

Resources: External ESG assessment provider (third-party service)

Effectiveness/outcomes: Supports the monitoring of the contents of the MTU Supplier Code of Conduct and helps to identify material impacts and risks at supplier level

Link to policy: Monitors compliance with Supplier Code of Conduct

Contractual safeguarding

Action description: The content of the Supplier Code of Conduct is a binding component of the contract templates and the terms and conditions of purchase. This means that fundamental requirements on human rights and environmental issues are included in the negotiations before the contract is signed. By signing the contract, each supplier commits to adhering to these principles and passing them on to their subcontractors. In the event of serious violations such as corruption, extortion, favoritism, or child labor in the execution of orders for MTU, the company reserves the contractual right to terminate the collaboration with immediate effect.

Scope: All direct suppliers

Link to policy: Supplier Code of Conduct; Terms and conditions of purchase

Training for buyers

Action description: MTU purchasers receive regular training on the topic of ESG, the requirements in this field and possible preventive measures. The aim of the training is to ensure that the content can be implemented by the suppliers. They also create an understanding of the importance of the issues among the people involved.

Scope: MTU purchasers/procurement organization

Time horizon: Regular training

Resources: Non-financial resources (training provision)

Supplier visits

Action description: MTU employees generally visit the production sites of all OEM production material suppliers several times a year, which means that serious violations of the Supplier Code of Conduct are also monitored.

Scope: All OEM production material suppliers

Time horizon: Several visits per year

Resources: Non-financial resources (MTU employee time)

Effectiveness/outcomes: Monitoring of serious violations of the Supplier Code of Conduct

Conflict minerals survey

Action description: To avoid the use of conflict minerals, MTU conducts an annual survey of OEM suppliers of products containing the following raw materials: tantalum, tin, gold and tungsten. Procurement of these minerals can be problematic because some of them come from Central African mines where the profits may be used specifically to fund armed conflicts that violate human rights. The relevant suppliers of components containing minerals named in the Dodd-Frank Act are required to provide information once a year on the origin of minerals and only to procure minerals from certified mines and smelters (compliant smelter list) in order to minimize the risk of conflict minerals in the supply chain.

Scope: OEM suppliers of products containing tantalum, tin, gold and tungsten (upstream value chain, not limited to Tier 1)

Time horizon: Annual survey

Effectiveness/outcomes: Minimize the risk of conflict minerals in the supply chain

Future actions

CSDDD implementation: MTU falls under the scope of the Corporate Sustainability Due Diligence Directive (CSDDD). In order to implement the requirements of this EU directive, MTU plans to expand the scope of corporate due diligence obligations with regard to human rights, with a particular focus on the higher tiers of the upstream value chain.

As described above for the policies, the current actions are focused mainly on direct suppliers. However, as part of the implementation of the Corporate Sustainability Due Diligence Directive (CSDDD), actions that relate to material impacts, risks and opportunities in the higher upstream value chain are reviewed and, if necessary, implemented.

Targets related to value chain workers

For the upstream value chain, no quantitative targets can be reported that meet the requirements of the ESRS. Nevertheless, the implementation of actions and their progress are regularly monitored and actions for improvement are defined. However, these are not based on fixed targets.

Due to the risk situation and the general maturity of the topic of sustainability, the policies and actions implemented to manage and promote the material impacts, risks and opportunities identified did not have the strategic importance in the purchasing departments in the past required for defining quantitative targets (see statements under Interests and views of stakeholders (SBM-2)). However, qualitative targets were set for the implementation of sustainability criteria in the procurement processes.

Qualitative targets

Implementation of sustainability criteria in procurement processes

• Type: Qualitative target
• Scope: Procurement processes (value chain)
• Status: No quantitative metrics, baseline years, or target years disclosed

Policies related to affected communities

MTU Aero Engines has assessed policies related to affected communities as not material.

According to the materiality assessment disclosed in the excerpts:

• ESRS S3-1 paragraph 16 (Human rights policy commitments): Not material
• ESRS S3-1 paragraph 17 (Non-respect of UNGPs on Business and Human Rights, ILO principles or OECD guidelines): Not material
• ESRS S3-4 paragraph 36 (Human rights issues and incidents): Not material

As a result of this materiality assessment, MTU Aero Engines has not disclosed specific policies related to affected communities under ESRS S3-1. The company has indicated "--/--" in the section reference column for these disclosure requirements, confirming that no policies are reported for this topic.

Policies related to consumers and end-users

MTU Aero Engines has assessed ESRS S4-1 paragraph 16 (Policies related to consumers and end-users) as not material.

According to the materiality assessment disclosed in the sustainability statement, the disclosure requirement regarding policies related to consumers and end-users has been determined to be not material to the company's operations and impacts. No specific section addressing this disclosure requirement is provided in the sustainability statement.

As a result, MTU Aero Engines has not disclosed specific policies related to consumers and end-users under ESRS S4-1.

Business conduct policies and corporate culture

MTU's corporate culture is characterized by trust and mutual respect. Compliance with legal requirements and adherence to ethical principles are fundamental components embedded in MTU's Code of Conduct. The Code of Conduct serves as the Group-wide policy for lawful business conduct and demands responsible and ethical behavior from both employees and management.

Corporate works agreement on Code of Conduct for employees

Policy name: Corporate works agreement on Code of Conduct for employees (also referred to as "Code of Conduct")

Key content/principles:

• Emphasizes the importance of integrity and responsibility across all business areas
• Employees are obliged to comply with legal requirements and internal rules while adhering to ethical standards of conduct
• Highlights the importance of respectful and fair interactions among colleagues, with business partners and customers
• Describes MTU's commitment to human rights, equal opportunities, safe working conditions and environmental sustainability
• Covers fair competition, trade compliance, prevention of insider trading
• Outlines enforcement measures and consequences for violations
• MTU rejects any form of discrimination based on sex or gender, disability, ethnic origin or affiliation, religion or ideology, age or sexual orientation

Target/objectives: The main objective is to establish clear policies and standards for ethical behavior and decision-making for MTU's workforce. It is designed to ensure consistency, integrity and compliance with laws and regulations. At the same time, the Code of Conduct aims to foster a positive work environment, protect MTU's reputation, and build trust with stakeholders.

Scope: The corporate works agreement applies to all employees of the following MTU Group companies:

• MTU Aero Engines AG (Munich)
• MTU Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Hannover GmbH
• eMoSys GmbH

Governance and oversight:

• MTU's Executive Board is responsible for implementing the Code of Conduct
• It is the responsibility of every MTU manager to ensure that all employees are aware of this policy and comply with its provisions
• As part of compliance-related regular reporting, the compliance officer regularly reports to the Executive Board on adherence to the Code
• The Code of Conduct is subject to oversight by the Works Council

Monitoring implementation:

• MTU regularly trains its employees and managers across all hierarchies on the Code of Conduct
• When new employees are taken on, MTU informs them about the Code of Conduct and requires them to sign a declaration committing to uphold it
• Malus and clawback clauses enable the Supervisory Board to reduce or claim reimbursement of performance-related compensation components in the event of serious breaches of the Code of Conduct or compliance guidelines

Public availability: The policy is accessible to MTU employees via the document management system and can be viewed publicly in an abridged version at: https://www.mtu.de/fileadmin/EN/7_News_Media/2_Media/Brochures/Company/MTU_Verhaltensgrundsaetze_en_2604_150.pdf

Rules of procedure for complaints and whistleblowing

Policy name: Rules of procedure for complaints and whistleblowing

Key content/principles:

• Communication and transparency about the available reporting channels for complaints and reports
• Can be used to report any information on possible violations of laws and/or regulations, including human rights or environmental risks or violations in MTU's own operations and throughout the entire value chain
• The complaints procedure is available to MTU employees, external individuals and external organizations alike

Target/objectives: Transparency and easy access to the various reporting channels

Scope: The rules of procedure for complaints and whistleblowing applies worldwide, regardless of the person involved

Governance and oversight: The Group compliance officer is responsible for implementing the rules of procedure

Monitoring implementation: It is the responsibility of every MTU manager to ensure that all employees are aware of this policy and comply with its provisions

Public availability: The policy is publicly available on the MTU website at: https://www.mtu.de/fileadmin/EN/7_News_Media/2_Media/Brochures/Company/Rules_of_procedure.pdf

Whistleblower protection policy (Corporate works agreement on the protection of whistleblowers)

Policy name: Whistleblower protection policy

Key content/principles:

• Sets out the fundamentals of the whistleblower reporting office along the reporting office's process steps (including receiving reports, processing and investigation, deriving measures, information and communication)
• Basic requirements for confidentiality, investigation and information
• MTU does not tolerate retaliatory measures and appreciates reports and associated interest in protecting the company and its stakeholders

Target/objectives: Documentation of MTU requirements and process steps for whistleblowers in accordance with the requirements for the internal reporting office procedure pursuant to Section 16 of the German Whistleblower Protection Act (HinSchG)

Scope: The corporate works agreement applies to all employees of the following MTU Group companies:

• MTU Aero Engines AG (Munich)
• MTU Maintenance Berlin-Brandenburg GmbH
• MTU Maintenance Hannover GmbH
• eMoSys GmbH

Governance and oversight: The Group compliance officer is responsible for implementing the policy

Monitoring implementation:

• It is the responsibility of every MTU manager to ensure compliance with the policy
• Process monitoring is the responsibility of the compliance function
• MTU's iTrust system provides a platform that employees and stakeholders can use to report compliance concerns and potential misconduct securely, confidentially and anonymously

Public availability: The policy is not publicly available and can only be accessed via the document management system for MTU employees

Compliance Management System

MTU has established a compliance management system (CMS) designed to ensure compliance with legislation and internal policies. It is intended to promote ethical conduct and prevent misconduct. It encompasses risk identification, preventive measures, and continuous monitoring to maintain regulatory compliance and support corporate integrity and is characterized by a continuous improvement process.

Link to international standards:

• As a member of the UN Global Compact, MTU is committed to complying with the Ten Principles, which include the protection of human rights, fair working conditions, environmental protection and anti-corruption
• Participates in TRACE International
• Follows the standards of the IDW AsS 980 assurance standard published by the Institute of Public Auditors in Germany
• Follows the Good Practice Guidance on Internal Controls, Ethics, and Compliance issued by the Organization for Economic Co-operation and Development (OECD)
• Signed the standards issued by the Aerospace and Defense Industries Association of Europe (ASD), which aim to prevent corruption and bribery and encourage fair competitive conditions (also supported by the German Aerospace Industries Association - BDLI)
• The policies are aligned with the United Nations Convention against Corruption

Training and implementation:

• MTU has established a training concept on relevant corporate governance topics
• Includes role-specific expectations for managers and fundamental business conduct principles in line with MTU's Code of Conduct
• Covers requirements for business and contractual relationships with third parties, trade compliance, data security and potential conflicts of interest
• Training program includes basic training on the MTU Code of Conduct and other training courses, some of which are function-specific
• Basic training on the Code of Conduct was redesigned in the reporting year as web-based training with gamification approaches

Oversight structure:

• The compliance officer is responsible for handling allegations or incidents of corruption and bribery, irrespective of the management level involved
• Systematic process through which the compliance officer and the Compliance Board provide information to the Executive Board and the Audit Committee
• Regular monthly report to the Executive Board on current compliance issues
• Quarterly Compliance Board meetings
• Ad hoc reporting as required
• The Supervisory Board's Audit Committee oversees the Executive Board's compliance activities
• The compliance officer submits quarterly reports to the Executive Board and the Supervisory Board's Audit Committee

Prevention and detection of corruption and bribery

MTU has implemented a comprehensive anti-corruption and anti-bribery framework as part of its company-wide strategy, pursuing a zero-tolerance principle for preventing corruption and bribery.

Code of Conduct

Scope:

• Group-wide guide to ethical business relations
• Applies to all employees throughout the Group
• Part of onboarding for new hires

Key content/principles:

• Embodies MTU's corporate culture and reflects the company's resolve to comply strictly with relevant laws and internal regulations
• Includes MTU values and guidance on resolving ethical conflict situations, including under pressure, that could lead to corruption or bribery
• Detailed information on corruption and public authorities

Governance:

• CEO bears responsibility for the company's business ethics and anti-corruption policy
• Compliance Officer responsible for implementation
• Compliance Board provides oversight
• Supervisory Board's Audit Committee oversees the Executive Board's compliance activities

International standards:

• MTU is a member of the UN Global Compact and committed to complying with the Ten Principles, which include anti-corruption
• Participates in TRACE International (topic-specific anti-corruption initiative)
• Follows IDW AsS 980 assurance standard published by the Institute of Public Auditors in Germany
• Follows Good Practice Guidance on Internal Controls, Ethics, and Compliance issued by the OECD
• Signed standards issued by the Aerospace and Defense Industries Association of Europe (ASD), which aim to prevent corruption and bribery and encourage fair competitive conditions
• Standards supported by German Aerospace Industries Association (BDLI)

Monitoring:

• Compliance Officer submits quarterly reports to the Executive Board and Supervisory Board's Audit Committee
• Compliance Board meetings held quarterly, with ad hoc reporting as required
• Global whistleblower system allows employees and external stakeholders to report suspected misconduct confidentially
• Corporate Audit organizational unit assesses appropriateness and effectiveness of MTU's Compliance Management System (CMS) and internal control system
• Compliance officer reviews all sales-related consultancy contracts for potential risks before conclusion or renewal
• Training certificate valid for three years

Training programs:

• Web-based training on Code of Conduct (duration approx. 45 min), redesigned in reporting year with gamification approaches
• In-person or virtual anti-bribery/anti-corruption training (duration approx. 60 min), 3-4 times per year, with employees in functions-at-risk as particular target group
• 71% training coverage for functions-at-risk achieved in reporting year
• Functions-at-risk include purchasing and sales, accounting, IT, legal department, compliance, senior employees, management, Executive Board, and Works Council

Public availability:

• Not explicitly disclosed

Incidents of corruption or bribery

Confirmed incidents

No confirmed incidents of corruption or bribery were reported in the reporting period (2024).

Convictions and fines

MTU reported no convictions for violations of anti-corruption and anti-bribery laws in the reporting period. The amount of fines paid for violations of anti-corruption and anti-bribery laws was €0.

Value chain incidents

No incidents were recorded with actors in the value chain in which MTU or its employees were involved.

Investigation procedures and speak-up mechanisms

MTU has established investigation procedures and reporting channels for suspected misconduct:

• Whistleblower system (iTrust): A web-based whistleblower system available globally in multiple languages, accessible 24/7 to all MTU employees, non-employees, third parties and stakeholders including suppliers and their workers. The system allows anonymous reporting.

• Direct reporting channels: Employees can report concerns directly to the compliance officer by email or post.

• Investigation process: The compliance officer is responsible for receiving reports, providing acknowledgment, following up for additional information, and initiating or coordinating subsequent actions. In cases of violations, the human rights officer is informed and involves Group and site human rights coordinators as required.

• Whistleblower protection: MTU does not tolerate any form of retaliation against individuals using reporting channels. This is documented in the whistleblower protection policy (corporate works agreement) and the rules of procedure for complaints and whistleblowing.

• Reporting to governance bodies: The compliance officer submits quarterly reports to the Executive Board and the Supervisory Board's Audit Committee, which in turn reports to plenary meetings of the Supervisory Board.

• Zero-tolerance principle: MTU applies a zero-tolerance principle to prevention of corruption, derived from its management approach. Any allegations or suspicions are taken seriously and thoroughly investigated, with full cooperation with law enforcement agencies and regulatory bodies.

• Effectiveness review: The effectiveness of the complaints procedure is reviewed annually and on an ad hoc basis if significant changes in the risk situation are expected.