AB Sagax : Sustainability report 2023

Sustainability Report

2023

This document is an in-house translation of the Swedish annual report. In the event of discrepancies, the Swedish original will supersede the translation.

Contents

The sustainability year in brief	3
Sustainability strategy and governance	4
Sustainability targets	6
Sagax's focus areas	7
EU taxonomy	11
Reporting according to TCFD	12
Detailed information on sustainability	14
Auditor's statement	26

Sagax follows the definition of sustainability

found in the UN report "Our Common Future," which defines sustainable development as "development that meets the needs of the present without compromising

the ability of future generations to

meet their own needs."

AB SAGAX 2023 SUSTAINABILITY REPORT

The sustainability year in brief

ENERGY CONSUMPTION

Sagax's goal is to reduce energy consumption in the property portfolio by 2% per year until 2030 in comparable portfolios with energy consumption data for the last two years. Energy use in comparable portfolios decreased 1% in 2023.

Energy consumption reduced 1% in 2023

SOLAR POWER FACILITIES

Sagax installed ten solar power facilities in 2023. Annual production for the 48 solar power facilities installed in the property portfolio totalled 10,002 MWh. Installed output totalled 10 MWp.

10 solar power facilities were

installed in 2023

ENVIRONMENTAL CERTIFICATIONS

In total, 48 environmental certifications encompassing 482,000 square metres were completed during the year. 32 environmental certifications encompassing 420,000 square metres were ongoing at year end. At the end of 2023, properties corresponding to 777,000 square metres of the property portfolio had an environmental certification.

Environmental

certifications

corresponding to

1,197,000 square metres

were completed or

are ongoing

New build at the 13 Rue Gutenberg property in Bussy-Saint-Georges, France.

The property is located 30 km east of central Paris and will have a BREEAM New Construction certification, with the aim of attaining the Very Good level.

Tulkinitie 29, in Vantaa outside Helsinki,

Finland. The property is certified under

BREEAM In-Use Very Good.

AB SAGAX 2023 SUSTAINABILITY REPORT	This document is an in-house translation of the Swedish annual report. In the	3
	event of discrepancies, the Swedish original will supersede the translation.

Sustainability strategy

and governance

SUSTAINABILITY TRENDS AND DRIVING FORCES

Changes in the area of sustainability are largely driven by global agreements with associated goals, such as the EU sustainability agenda, the Global Compact's ten principles, the UN Sustainable Development Goals and the Paris Climate Agreement. Under the latter, the countries that have signed the Agreement undertake to limit global warming to 2°C and pursue efforts to limit it to 1.5°C by reducing greenhouse gas emissions. In addition, there are several regulations and standards that provide guidelines on how companies can measure and follow up their sustainability activities, for example, the Task Force on Climate-related Financial Disclosures (TCFD), Greenhouse Gas protocol (GHG protocol) and EU taxonomy for sustainable activities (EU taxonomy). The EU is also preparing revisions and even stricter sustainability reporting requirements through the Corporate Sustainability Reporting Directive (CSRD). Sagax will be subject to the reporting requirements under CSRD, which will come into effect in 2026 and apply to the 2025 financial year. Sagax reports its annual carbon emissions according to the GHG protocol.

The EU taxonomy is part of the EU action plan on financing sustainable growth. This action plan has three overriding objectives: Reorienting capital flows towards a more sustainable economy, mainstreaming sustainability into risk management and fostering transparency and long-termism. The EU taxonomy will be central for financial institutions and banks for identifying sustainable investments. The EU taxonomy and how it affects Sagax is described in more detail on page 163.

The construction and property sector accounts for about one fifth of Sweden's climate impact and, under the framework of the EU taxonomy, is highlighted as one of the sectors with the greatest environmental impact. A building impacts the climate over its life cycle through con- struction, demolition, management, renovations and remodelling. The largest climate impact is when new buildings are constructed. Sagax's investment activities primarily focus on acquiring existing buildings. Sagax carries out few new build projects. Accordingly, it is primarily the choice of energy sources, supply systems and materials in remodelling

that are most significant as regards Sagax's climate impact. Sagax's tenants are largely responsible for their supply of energy.

Investments in measures to improve energy efficiency and the environment require profitability. In 2023, Sagax continued to report a strong financial performance, creating conditions to continue investing in energy and environmental activities. The return on equity was an average of 17% in the past five years, while profit from property management per Class A and B shares has increased an average of 22% per year during the same period. In 2023, Sagax invested SEK 18 M in, for exam- ple, solar power and geothermal heating facilities, upgrading heating and ventilation control systems, installing LED lighting and providing extra insulation. Securing environmental certifications for properties continued during the year. During the year, 48 environmental certifications were completed and 32 were in progress at the end of the year.

SUSTAINABILITY STRATEGY

Sagax's sustainability strategy is based on the company's business con- cept, policies, external frameworks and materiality assessment, which is updated annually.

Sagax complies with main rule (Chapter 3, Section 3) of the Swedish Companies Act as regards the company's objects. The overriding object of the operations is the long-term - meaning sustainable - generation of the maximum possible risk-adjusted return to the shareholders. To achieve this goal the company operations are consistently conducted with a long-term perspective. Sagax's opinion is that the profit objective does not conflict with sustainable enterprise: Being a good employer, a good supplier and a well-liked customer while ensuring that the compa- ny's decent conduct in society and attempts to limit its environmental impact are all fundamental conditions for Sagax's long-term ability to generate profits for its shareholders.

The long-term approach is illustrated by the inclusion in its asset management strategy to build long-term customer relationships and to limit the number of property transactions in the company's operations.

SUSTAINABILITY ACTIVITIES ARE BASED ON

LAWS	EXTERNAL FRAMEWORKS AND INITIATIVES	INTERNAL GUIDELINES
Companies Act	UN Sustainable Development Goals	Sustainability policy
Environmental Code	UN Global Compact	Health and safety policy
Annual Accounts Act	Global Reporting Initiative (GRI)	Anti-corruption policy
Other applicable laws	Environmental certifications for properties	Code of Conduct for suppliers
	Task force on Climate-related Financial Disclosures (TCFD)	Other policies

4	This document is an in-house translation of the Swedish annaul report. In the	AB SAGAX 2023 SUSTAINABILITY REPORT
	event of discrepancies, the Swedish original will supersede the translation.

The company's policy is to abstain from maximising rent levels at all points of time in favour of signing leases of a longer duration with solvent tenants. This reduces the risk of vacancies, while leading to lower costs for letting premises and adapting premises to tenant needs.

The company is dependent on highly skilled and professional employees. For this reason, it is important that the company is an attractive employer that can attract and has the ability to retain highly skilled personnel in the long term.

Overall, the company's strategies are designed to ensure that Sagax's operations generate a long-term sustainable return and strong cash flows. Sagax's sustainability activities are thus a natural part of the com- pany's business model and contribute to achieve the company's goals. Regarding information about Sagax's performance, position and earn- ings, refer to the 2023 Annual Report.

Sagax's sustainability activities are based on clear internal communication and division of responsibilities.

POLICIES

Sagax's policies are adopted by the company's Board every year. Current policies and guidelines are available on the Sagax website www.sagax.se and include:

■  Non-discrimination policy ■  Anti-corruption policy ■  Health and safety policy ■  Financial policy

■  Information policy ■  Insider policy

■  Policy regarding investments in other companies ■  Policy regarding Board assignments

■  Policy regarding the pledging of shares in Sagax ■  Sustainability policy

■  Guidelines for whistle-blower service ■  Code of Conduct for Suppliers

GOVERNANCE OF SUSTAINABILITY ACTIVITIES

The planning, governance and monitoring of sustainability activities follow the company's organisational structure with well-defined delegation of responsibilities and authorities. This sustainability work is based on policies, guidelines, overall objectives, external laws, rules and regula- tions. The company's Board is ultimately responsible for sustainability and annually adopts the sustainability policy.

Sagax regards the precautionary approach of the Swedish Environmental Code and laws and regulations as minimum requirements. Sagax follows the UN Global Compact's principles, which encompass human rights, labour, environment and anti-corruption.

An analysis has previously been performed of the UN's 17 Sustainable Development Goals (SDGs) from Agenda 2030 to which Sagax's operations can contribute. It is assessed that the sustainability activities can primarily contribute to achieving the targets in the following SDGs: ■  Good health and well-being (Goal 3).

■  Affordable and clean energy (Goal 7).

■  Decent work and economic growth (Goal 8). ■  Sustainable cities and communities (Goal 11).

■  Responsible consumption and production (Goal 12). ■  Climate action (Goal 13).

■  Peace, justice and strong institutions (Goal 16).

RISK MANAGEMENT

Environmental-policy decisions could affect Sagax, for example, in the form of higher taxes or necessary investments. In addition, the company's operations, earnings and financial position could be affected by higher environmental requirements from super­ visory authorities, investors, tenants or other stakeholders.

The company's long-term supply of capital and capital costs could be negatively affected if Sagax's sustainability activities do not meet market requirements. There is also the risk of additional costs for investments in the property portfolio due to, for example, changes in legislation or changed customer behaviour. In addition, Sagax's property portfolio could be impacted by climate change, such as an elevated risk of flood- ing. Other risks include risk of corruption, environmental pollution or higher energy costs. Furthermore, Sagax is exposed to risks related to non-compliance with Sagax's Code of Conduct among suppliers.

Sagax's handling of environmental and climate risks and other risks and the company's risk management are described in more detail on pages 50-53. Sagax's reporting according to the TCFD framework is presented on pages 164-165.

UN SUSTAINABLE DEVELOPMENT GOALS

The 2030 Agenda and the Sustainable Development Goals (SDGs) are an agenda for sustainable development adopted by the UN General Assembly. Sagax's sustainability activities can primarily affect the following SDGs: 3, 7, 8, 11-13 and 16.

AB SAGAX 2023 SUSTAINABILITY REPORT	This document is an in-house translation of the Swedish annual report. In the	5
	event of discrepancies, the Swedish original will supersede the translation.

Sustainability targets

Environmental and resource efficiency

FOCUS AREAS

TARGET	OUTCOME
Sagax is to reduce energy consumption in the property port-	Decrease 1% in 2023.
folio 2% per year until 2030 in comparable portfolios with
energy consumption data for the last two years.
Sagax is to reduce direct and indirect greenhouse gas emis-	Scope 1 and 2 emissions have reduced by 36% compared to the
sions (Scopes 1 and 2) 42% by 2030 (base year 2022) and	base year. Sagax collected additional Scope 3 data in 2023.
to measure and reduce other indirect emissions (Scope 3).
Sagax's electricity agreements are to be green, as far as	Sagax has signed agreements for green electricity in Sweden, Finland,
possible.	Benelux and France.
Sagax is to strive to implement green leases for new lettings	Green leases have been implemented in all countries since 2023.
and renegotiations.	182 new green leases were signed in 2023. At year end, 10% of
	the total lettable area had green leases.
Sagax is to increase the production of electricity from solar	10 new solar panel installations were completed in 2023. The number
panels in the property portfolio to 15,000 MWh by 2025.	of solar power facilities at year end totalled 48.
Sagax is to consider installing solar panels in all new	Annual estimated electricity production from all solar power facilities
construction projects.	amounts to 10,002 MWh.
Sagax is to increase the share of environmentally certified	48 properties were environmentally certified in 2023 and 32 ratings
properties in the property portfolio to 30% of lettable area by	were in progress at year end. A total of 78 properties had environmen-
2025.	tal certifications, corresponding to 18% of the total lettable area.
	Ongoing environmental certifications represented an additional 10%
All new buildings and large-scale remodelling must have an	of the total lettable area. The majority of these is expected to be
environmental certification under Miljöbyggnad, level Silver at	completed in 2024.
a minimum, Very Good according to BREEAM, LEED Gold or
equivalent.

Business ethics

Sagax is to have zero incidents of corruption.	No incidents of corruption were reported in 2023.
Sagax's main suppliers are to implement and comply with the	Sagax has implemented the Code of Conduct for all main suppliers.
Sagax Code of Conduct for Suppliers.	Sagax followed up on compliance with the Code of Conduct in France
	and Spain in 2023.

Economic sus- tainability

Sagax's return on equity, measured over a five-year period,	2023	0%. Five-year average: 17%
should not fall below 15% per year.
Profit from property management per Class A and B share	2023	15 %. Five-year average: 22%
should increase by a minimum of 15% per year.

Professional	dedicated
employees
	and

Sagax is to have zero incidents of discrimination.	No incidents of discrimination were reported in 2023.
Sagax is to have zero accidents among its employees, tenants	No accidents were reported in 2023.
and suppliers related to its properties.

6	This document is an in-house translation of the Swedish annaul report. In the	AB SAGAX 2023 SUSTAINABILITY REPORT
	event of discrepancies, the Swedish original will supersede the translation.

Sagax's four focus areas

FOCUS AREAS

Environmental and

resource efficiency

Business ethics

Economic

sustainability

Professional and

dedicated employees

Sagax's materiality assessment identified four focus areas for Sagax's sustainability activities. For detailed information about the materiality assessment, refer to page 167.

ENVIRONMENTAL AND RESOURCE EFFICIENCY

Energy consumption

Heating of premises and the use of electricity account for the largest share of properties' energy use.

The majority of Sagax's tenants are responsible for their own heating and/or electricity supply. Since tenants pay for these costs themselves, they are directly affected by any savings. Tenants are interested in making energy savings since the use of electricity and heating usually represents a large amount of the tenants' operating expenses for the premises. It is thus important that Sagax, together with tenants, achieve energy savings and enhance the efficiency of tenants' energy use and thereby reduce the climate footprint. Sagax signs so called green leases that aim to promote cooperation on environmental and sustainability issues with the tenants by, for example, improving the conditions for collecting energy data. 182 green leases were signed in 2023. At the end of 2023, 10% of the total lettable area had green leases.

Sagax's aim is to collect energy data for all properties regardless of whether Sagax or the tenant is responsible for the energy supply. Sagax has implemented energy monitoring systems for automated data collection in several countries, and is conducting pilot projects to explore the possibility of collecting data via smart meters. Sagax had available energy data for 44% of the lettable area for 2023. Sagax is also working to develop the monitoring of water consumption in its property portfolio. Remote reading and smart water meters have been installed in parts of the property portfolio, which also reduces the risk of leakage.

About half of Sagax's properties use district heating. At year end

2023, district heating as a heating source had declined to 49% (50) of the company's lettable area, while electric heating had increased to 24% (21). The share of gas and geothermal heating was unchanged at 22% (22) and 3% (3), respectively. The differences in heating sources were due to changes to the composition of the property portfolio. The most common sources of heating are electricity in France and Spain, district heating in Sweden and Finland and gas in Benelux and Germany. Oil heating continued to be phased out in 2023 and replaced with geothermal heating. The proportion of lettable area with oil heating was 1% (1).

The share of renewable energy for the property portfolio is estimated at 40% for 2023. Estimates were used for the parts of the property portfolio for which consumption data was not available.

AB SAGAX 2023 SUSTAINABILITY REPORT

Heating sources in Sagax's property portfolio

District heating 49%

Electricity 24%

Gas 22%

Geothermal heating 3%

Other (incl. waste heat) 2%

Oil 1%

Energy efficiency and investments in renewable energy

A significant share of Sagax's properties have horizontal roofs with floor areas that are particularly suited for solar power facilities. In 2023, ten solar power facilities were installed and pilot studies have been initiated for further investments in solar power. Sagax had a total of 48 solar power facilities installed at year end. Annual electricity production generates an estimated average of 10,002 MWh. This is equivalent to 2.3 kWh/sqm in relation to Sagax total lettable area.

Sagax installed charging stations for electric vehicles for tenants in several properties in Sweden, Finland, Benelux, France and Spain during the year. By the end of the year, charging stations had been installed at a total of 97 properties. Sagax also strives to reduce emissions from the company's own vehicles. All of Sagax's company cars are electric or hybrid vehicles. Sagax's travel policy states that short journeys are preferably to be by rail so as to minimise the environmental impact of the business.

Sagax takes regular measures to reduce energy consumption. In 2023, Sagax invested SEK 18 M in projects aimed at reducing its climate­ footprint, such as installing solar power and geothermal heating facil- ities, upgrading heating and ventilation control systems, installing LED lighting and providing extra insulation. Sagax updated its energy efficiency goals in 2022. The goal is to reduce energy consumption in the property portfolio 2% per year until 2030 in comparable portfolios with available data for the last two years. This corresponded to 36% of the lettable area in the property portfolio. Energy consumption in comparable portfolios decreased from 141 kWh per sqm in 2022 to 140 kWh per sqm in 2023, a decrease of 1%. The outcome variations are affected by tenants' use of the premises and tenants moving in or vacating the premises.

This document is an in-house translation of the Swedish annual report. In the	7
event of discrepancies, the Swedish original will supersede the translation.

Carbon emissions and climate impact

In 2022, Sagax updated its carbon emissions target. The target is to reduce direct and indirect greenhouse gas emissions (Scope 1 and 2) 42% by 2030 and to measure and reduce other indirect emissions (Scope 3). The target was validated and approved by the Science Based Targets initiative (SBTi). The SBTi is a collaboration between the UN Global Compact, World Resources Institute (WRI), the World Wide Fund for Nature (WWF) and the Carbon Disclosure Project that aims to set science-based targets aligned with the requirements for achieving the goals of the Paris Agreement. The majority of Scope 1 and 2 emissions are related to energy use at Sagax's own offices. Scope 3 emissions are largely due to upstream leased assets (let premises).

Actions that helped reduce emissions included energy savings and changing to renewable energy.

For district heating, Sagax has to use the local supplier and environmental performance varies greatly. Since 2021, Sagax has signed agreements for renewable district heating for some of the Swedish portfolio as part of efforts to reduce the climate impact of the properties. Only renewable guarantee of origin or carbon-free electricity is used in Sweden, Finland and Benelux for the properties where Sagax provides electricity for tenants. A green electricity contract was also signed in France in 2023. The goal is for all electricity agreements signed by Sagax to be green.

In 2023, Sagax continued to collect data from more sources of emis- sions, specifically for other direct emissions (Scope 3), in order to gain a correct and comprehensive analysis of emissions from both the com- pany's own operations and in the value chain. Emissions from travel, waste and transportation account for a small share of Scope 3 emissions. Emissions from the category of upstream leased assets represented the largest portion of total emissions. Reported emissions are affected by access to data. Energy consumption data for 2023 pertained to 44% of the total lettable area.

Environmental certifications for buildings

Sagax currently has 78 (32) environmental certifications from 77 prop- erties, representing 18% (8) of the total lettable area. 17% of the total lettable area has environmental certifications according to at least the BREEAM Very Good level or equivalent. Two properties have environmental certifications under Green Building, three at the Silver level

of Miljöbyggnad and 74 BREEAM In-Use. At the end of 2023, Sagax had a total of 32 environmental certification processes ongoing for an additional 10% of the lettable area. Most of these are BREEAM In-Use with the aim of achieving a Very Good rating. Other environmental certifications that are in progress are BREEAM for new builds and Miljö­ byggnad.

Sagax's target is that new buildings will be environmentally certi- fied. Sagax also has its existing properties environmentally certified. Sagax evaluates continuously which properties are suitable for an environmental certification. The focus is to secure environmental certifications for properties that have a significant market value or have a let- table area of more than 5,000 square metres. The goal is for 30% of the property portfolio to have a environmental certification by 2025.

Such certifications lead to better environmental performance. The relevant environmental certifications for Sagax are: a minimum Silver rating according to Miljöbyggnad, Very Good according to BREEAM and Gold according to LEED. BREEAM assesses environmental per-

8 This document is an in-house translation of the Swedish annaul report. In the event of discrepancies, the Swedish original will supersede the translation.

formance, such as energy use, indoor climate, water control, waste management, land use and impact on the local environment. BREEAM also analyses and scores the location of the building in relation to public transport, the choice of building materials and the pollution that may be generated. The environmental certification Miljöbyggnad sets requirements for energy, use of materials and indoor environment. LEED scores a number of criteria in the areas of energy consumption, choice of building materials, water control and waste management, which are aggregated to provide an assessment of the property's environmental impact. Environmental certifications are an independent review and rating.

In addition to environmental certifications, energy performance certificates (EU-EPC) are another way to follow up on energy performance at properties. The standards and regulations for implementing EU-EPC vary by country. Sagax strives to increase the share of properties in the property portfolio that have energy classifications. At year end, 81% of the total lettable area had an energy performance certificate. The percentage of the property portfolio that had an energy performance certificate and had a EPC A or B rating at the end of the year was 18%.

Certified properties

Lettable area, sqm	Share of Sagax property portfolio, %
1,400,000		35
1,200,000			30
				25
1,000,000
800,000					20
600,000					15
400,000					10

200,000				5
0				0
2019	2020	2021	2022	2023

Certified		Ongoing
% of total portfolio			% of total (incl. ongoing)

Material and resource efficiency

Sagax's properties are mainly located in established industrial zones with relatively low natural values and limited biodiversity. In addition to environmental certifications, Sagax carries out inspections to check any existence of hazardous substances and pollutants in buildings and land in connection with new builds, extensions and remodelling. If hazardous substances are detected, such as asbestos or PCB, Sagax takes the necessary sanitisation measures.

Waste at construction sites is sorted into fractions, enabling the recycling and reuse of non-hazardous waste. Sagax aims to ensure that at least 70% of non-hazardous waste from new builds and large-scale remodelling is sorted so that it can be reused.

In Sweden, Sagax applies the Byggvarubedömningen criteria to perform an environmental impact assessment of building products and materials used in large-scale remodelling and new build projects. The aim is to promote environmentally sound choices of materials.

In 2023, Sagax used recycled materials in several remodelling projects and one new build project. Examples of materials that were able to be reused are fittings, glass doors and windows, and purchased reinforcement for recycled steel. Besides reducing carbon emissions, reuse can also lead to lower costs of materials.

AB SAGAX 2023 SUSTAINABILITY REPORT

BUSINESS ETHICS

Anti-corruption

Sagax complies with laws and regulations in the company's various mar- kets. The company's aim is to be transparent and credible.

A high level of sound business ethics is fundamental to Sagax's long- term maximisation of value. The company does not conduct any operations in countries with extensive corruption problems. Sagax works actively to counteract the risk of bribery, corruption, discrimination and crimes against human rights. Sagax's anti-corruption policy has been adopted by the Sagax Board and encompasses all employees. The company must never be involved in or permit corruption. The company does not accept that employees receive gifts that can be equated with bribes. The limit for receiving and giving gifts follow established guidelines on gifts in the company's anti-corruption policy. The anti-corruption policy is communicated to the organisation at the annual employee conference and is always available to employees. Corruption has not historically been a problem in the operations and the company is not aware of any incidents of corruption in 2023.

Whistle-blower function

Sagax has an anonymous whistle-blower function on the Group's website that is administered by an external party. The purpose of the whistle-blower function is to enable both employees and external partners to report any wrongdoing. All whistle-blower cases are handled in accordance with established procedures. Sagax management, in consultation with a representative from the external whistle-blower func- tion, assesses matters submitted. An item is not investigated by anyone affected by the reported suspicion. Individuals investigating the item can communicate with the whistle-blower via the whistle-blower function. The company's aim is to provide swift feedback to the person making a report through the whistle-blower function. All cases are handled confi- dentially.

No whistle-blower cases were reported in 2023 or earlier.

Code of Conduct and follow-up of supplier requirements

Sagax has prepared a Code of Conduct for Suppliers to ensure that working conditions at the companies that deliver products and services to Sagax fulfil Sagax's requirements in terms of health and safety and ethical standards as well as that the assignments are conducted in an environmentally responsible manner. The Code of Conduct is signed and added as an appendix to framework agreements that are entered into.

The Code of Conduct has been implemented for the company's main suppliers in all countries of operation since 2023. The main suppliers have been identified based on a risk assessment according to the size of purchases and operations. Sagax also carried out a follow-up of compliance with the Code of Conduct among its main suppliers in France and Spain in 2023. The investigation included all areas of the Code of Conduct, such as business ethics, anti-corruption,anti-discrimination, occupational health and safety, work environment, the environment, loyalty and service.

The investigation showed that all of the audited suppliers had procedures and work processes in place to ensure compliance with the Code of Conduct. Over the last three years, Sagax has reviewed the compliance of its main suppliers in all countries.

AB SAGAX 2023 SUSTAINABILITY REPORT

ECONOMIC SUSTAINABILITY

Business model

Sagax is a listed property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industrial segment.

Sagax's business model is characterised in all areas by a long-term approach. Short-term gains are subordinate to the company's long-term, meaning sustainable, value creation. Accordingly, sustainability work is integrated into the business model.

Properties designed as warehouses and for light industries are attractive investment opportunities, since they generate a high yield combined with a low rate of new production and stable occupancy rates. Sagax invests in add-on acquisitions and in existing properties. Property acquisitions and investments in the existing portfolio aim to increase cash flow and diversify rental revenue, thereby reducing the company's operational and financial risks.

Sagax's financial structure is designed with a clear focus on operating cash flow and interest coverage ratio. This is expected to create both good prerequisites for expansion and attractive return on equity.

Sagax pursues efficiency and sustainability in its management strat- egy. The asset management strategy includes working actively to build long-term customer relationships. The company's policy is to abstain from maximising rent levels at all points of time in favour of signing leases of a longer duration with solvent tenants. This is regarded as being advantageous since it reduces the risk of vacancies, while leading to lower costs for letting premises and adapting premises to tenant needs.

Sagax endeavours to attract reputable and creditworthy tenants. The company mainly enters into net leases under which the tenant pays property expenses that would otherwise have been paid by the property owner.

Sagax invests primarily in regions experiencing stable population growth and that have diversified business activities.

Direct value generated and distributed

Long-term value creation is key to the company's strategy. Financial targets include that Sagax's return on equity over a five-year period shall exceed 15% per year and profit from property management per Class A and B share shall increase by a minimum of 15% per year.

The Board has overall responsibility for guiding operations towards the financial targets allowed by the scope of the company's policies. The outcome is followed up every quarter in conjunction with interim reports.

Detailed information about Sagax's financial position is available in the company's financial statements on pages 73-119. The economic value generated amounted to SEK 1.8 billion (4.9) in 2023 and mainly comprised rental revenue and profit from joint ventures and associated companies. For detailed information, refer to page 169.

Green framework

Sagax established a green finance framework in 2019. The framework was updated in 2023 to reflect current market practices and to broaden the asset base for green finance. The framework was produced in accordance with the ICMA Green Bond Principles and 2023 LMA, APLMA and LSTA Green Loan Principles. ISS ESG Corporate Solutions Inc. conduced a review and confirmed that the updated framework is aligned with these standards.

This document is an in-house translation of the Swedish annual report. In the	9
event of discrepancies, the Swedish original will supersede the translation.

Assets that can be financed under the green framework are mainly green buildings, such as environmentally certified or energy-efficient proper- ties. In addition, the framework enables the financing of investments in energy efficiency, charging points and renewable energy such as solar power facilities. For further information about the green framework, refer to Sagax's website www.sagax.se.

PROFESSIONAL AND DEDICATED EMPLOYEES

The development of the company is dependent on highly skilled employ- ees. For this reason, it is important that the company is an attractive employer that can recruit and has the ability to retain highly skilled per- sonnel. In exchange, Sagax expects employees to assume responsibility of their work duties and also serve as good representatives of the compa- ny's values and culture.

Attractive employer

Sagax attaches great value to offering favourable employment conditions for its employees. In addition to offering competitive employment condi- tions, the company has since 2011 also offered all employees the opportunity to participate in an Incentive Plan, refer to page 59 in the 2023 Annual Report. The purpose is to increase employee involvement in the development of the company. It is positive that employees own shares in the company and the diversity policy for the Sagax Board highlights the importance of Board members also having significant shareholdings in the company.

In 2023, five (15) employees were recruited and three (eight) employees left the company. The Group had 96 employees (94) at year end.

Flexible and creative work environment

Sagax offers a flexible and creative environment where decision paths are short and there is a great deal of individual responsibility for planning and carrying out work tasks and, wherever possible, also their own working hours.

Skills development and provision of skills

An important aspect for the operations is ensuring that employees have the right skills and opportunities to develop. Sagax employees have an average of 11 years of experience from relevant work duties, of which six years of experience at Sagax. The expertise of the organisation is central to the development of the company and skills development is an aspect that could be crucial for retaining high performance employees at the company. It is a natural operational risk for a company such as Sagax that key personnel may leave the company. The company endeavours to minimise this risk through market-based remuneration and a continuous dialogue with the company's employees.

10 This document is an in-house translation of the Swedish annaul report. In the event of discrepancies, the Swedish original will supersede the translation.

Appraisals were held with every employee in 2023. The topics discussed at these appraisals included the employee's development during the year and the need for continued skills development. Employees who express a wish to participate on courses or otherwise develop their skills are encouraged to do so by the company.

Sagax holds an annual conference for all of its employees, where the company's development, challenges and opportunities are discussed for two days. The aim of the conference is to create a shared foundation of values and knowledge for the entire organisation and to provide information about Sagax's policies. This year's conference was held in September. Sagax also holds quarterly presentations of interim reports for employees.

Non-discrimination

The ability to attract and retain skilled and competent employees is important to Sagax's development. Beyond the principle reasons against discrimination, it is consequently important that no discrimination exist for the reason that it could otherwise lead to the risk of highly skilled employees leaving Sagax. When hiring, great importance is attached

to skills and relevant experience as well as personal qualifications and qualities. Recruitment always takes place in competition. As part of Sagax's recruitment process, the final candidates always meet employees from various parts of the company, and key individuals are also evaluated by the CEO and at least one Board member. Sagax has a clear anti-discrimination policy according to which Sagax must regularly take measures to combat discrimination and victimisation and promote equal rights and opportunities regardless of sex, transgender identity or expression, ethnicity, religion or other expression of faith, disability,

sexual­ orientation or age. This applies, for example, to recruitment, salary structure, opportunities for promotion and skills development.

No reports of discrimination based on the grounds of discrimination were made in 2023.

Employee survey

An employee survey was carried out in connection with the employee appraisals to investigate whether any discrimination or victimisation exists, or the risks pertaining to this, and to monitor and evaluate the work environment. The survey and follow-up were based on Sagax's occupational health and safety policy, anti-discrimination policy and anti-corruption policy. Employees responded to a number of questions on job satisfaction, teamwork, stress, workload, equal opportunities, diversity and equal treatment, and assigned a score of 1 to 5 to their answers, with 1 being very good and 5 very poor. The average score in the survey was 1.7 (1.7). None of the respondents had experienced discrimi- nation. 91% (95) of those surveyed know what to do if they themselves or a colleague experiences discrimination.

AB SAGAX 2023 SUSTAINABILITY REPORT