Aspo Oyj : Sustainability Report 2023

Aspo sustainability report 2023

Socially, financially and environmentally sustainable business is a requirement for creating long-term value. A responsibly led growing company can create jobs, tax revenues and wellbeing.

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Year 2023:

Aspo's key focus areas include reducing emission intensity and improving occupational safety. These targets showed good progress in 2023 and the development work in sustainability continued on several fronts.

The long-term goal of Aspo's businesses is to be frontrunners in sustainability in their respective sectors. Each business has separate focus areas in their sustainability activities.

CARBON INTENSITY	INJURY FREQUENCY RATE
CO2 (tn) / net sales (t€)	TRIF

0.37	4.8
2022: 0.33	2022: 8.1

Zero tolerance for corruption

Aspo's Code of Conduct prohibits corruption and bribery in all their forms. Aspo's Code of Conduct and Compliance trainings include anti-corruption issues and provide guidance for identifying any suspicious situations and practices considered unethical.

SHARE OF ASPO'S EMPLOYEES WHO

COMPLETED THE TRAININGS IN 2023

Code of Conduct

Compliance

100% 100%

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■ SUS TA IN A BIL I T Y

A year of progress in sustainability

The long-term goal of Aspo's businesses is to lead the way in sustainability in their respective sectors. Each business has separate focus areas in their sustainability activities, and the development of sustainability continued on several fronts in 2023.

While sustainability is an integral part of Aspo's strategy, we have strengthened the company's sustainability expertise and resources to lead and coordinate sustainability activities even more closely at a Group level. During 2023, the monitoring of key sustainability targets and development projects was incorporated more systematically into the continuous activities of the Board of Directors and the Group Executive Committee.

Our operations are guided by the Group's sustainability policy, and the implementation of the sustainability targets integrated into the remuneration plan is monitored on a shared reporting platform. Sustainability also guides Aspo's management system and the process of investigating new investment objects. We continued to develop ESG assessment criteria for potential acquisitions.

Aspo's key joint focus areas in sustainability include reducing emission intensity and improving occupational safety. We made excellent progress in occupational safety in 2023: our total recordable injury frequency decreased from 8.1 in the previous year to 4.8.

Also, with our emission intensity of 0.37, we were very close to the target of 0.36 set for 2023, and we are quickly approaching the long-term target set for 2025 to reduce emission intensity by 30% from the 2020 baseline. The energy -efficient electric hybrid vessels ordered by ESL Shipping, the first of which was deployed in December 2023, will play a significant role in reducing emission intensity in the future.

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ESL Shipping has actively reduced its environmental footprint by bringing down its fleet's emissions and energy consumption. At the end of 2023, ESL Shipping joined the Science Based Targets initiative (SBTi) and committed to setting short- and long-termscience-based emissions reduction targets that are in line with the Paris Agreement to limit global warming to 1.5 degrees. ESL Shipping develops and validates its targets using the SBTi.

For Telko, a link between industrial customers and international raw material manufacturers, product safety is especially important in terms of sustainability. In addition to food safety, Leipurin focuses on reducing waste

We continued our active preparations for the entry into force of the EU Corporate Sustainability Reporting Directive. At the end of the year, we conducted a double materiality assessment at both Group and segment levels to identify material sustainability aspects for compliant reporting. Several development projects are in progress to ensure CSRD reporting capabilities for 2024.

Since 2018, Aspo has been a member of the UN's Global Compact initiative, and the Group's operations are steered by the ten Global Compact principles related to human rights, working life principles, the environment and the prevention of corruption. Aspo will report its progress in implementing the Global Compact principles

Aspo and its businesses share the following sustainability commitments:

The UN's Sustainable Development Goals that have been defined

to be the most significant for Aspo and on which Aspo can have the most impact.

and emissions from product transport, and on favoring a plant-based product range.

In the People Power index, an indicator of the person- nel's job satisfaction, more sustainability-related questions were added in 2023, and the development of its results is monitored. In 2023, job satisfaction remained at the fairly high target level: the Group as a whole achieved the targeted AA rating, and there were no significant differences between the businesses.

In total, 100% of the Group's all employees completed Code of Conduct and Compliance training during the year, which includes, for example, anti-corruption issues and provides guidance for identifying any suspicious situations and practices considered unethical.

In 2023, diversity, equity and inclusion (DEI) were selected as specific development themes, and a separate DEI policy was approved for the company. The first steps have been taken to increase DEI awareness and understanding, and they lay the foundation for the continuous development of the operating culture and practices throughout the Group.

annually as part of this Sustainability Report.

In its Management Report, Aspo releases information about environmentally sustainable economic activities in accordance with the non-financial reporting directive (NFRD) as defined in the EU taxonomy, the EU's classification system for sustainable economic activities.

In addition to this Sustainability Report, ESL Shipping publishes a separate sustainability report and Telko releases more detailed information about sustainability in its operations on its website.

Helsinki, February 15, 2024

Aspo Plc

Board of Directors

CEO

Increasing our business operations, while reducing their environmental loads

Improving the Aspo experience for people in our value chain

Advancing the practices of good governance at all levels

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■ SUS TA IN A BIL I T Y

Aspo Group

key sustainability themes

OUR AMBITION	Aspo portfolio companies aim to be sustainability forerunners in their industries

OUR COMMITMENTS/ KEY FOCUS AREAS

MATERIAL THEMES

Growing our business E while lowering pressure to

the environment

To reduce emission intensity

Improving the Aspo			Driving sound governance
experience for people in our
		practices at all levels
S value chain		G

Ensuring employee safety

Sound governance practices

Improving the employee, customer

FOR ALL BUSINESSES

Driving sustainable innovations

and principal experience

Thorough risk management

Improving recycling and waste management

Enhancing product	Continuous development
and service quality	of the Sustainability program

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■ ENVIRONMENTAL RESPONSIBILIT Y

Sustainable shipping as part of the green transition

A more effective use of energy and raw materials play a key role in reducing Aspo's environmental impact.

The key goal related to the Group's environmental sustainability is to reduce emission intensity, CO2 (tn) per net sales (EUR thousand), by 30% by 2025. In 2023, emission intensity increased slightly, being 0.37 (0.33

emissions per transported tonne of cargo increased by 7.5% in 2023, mainly due to longer transportation dis- tances. Absolute CO2 emissions decreased by 7.4% to 204,795 tonnes.

E

LOWERING CARBON INTENSITY

CO2 (tn) / Net sales (t€)

Target 2023	Total 2023	2022

0.36

0.37

0.33

Notable

In 2023 the increase in emission intensity came from the decrease net sales, as absolute emissions decreased during the last 12 months

SDG

in 2022). The slight increase in emission intensity came from the decrease in Aspo's net sales, partly as a result of a drop in fuel prices, as absolute emissions decreased during the last 12 months. The structure of the fleet and weather, including ice conditions and storms, also had a particular impact on ESL Shipping's emission intensity.

A more effective use of energy and raw materials play a key role in reducing Aspo's environmental impact. As ESL Shipping's vessels generate the majority of the Group's carbon dioxide emissions, the most significant environmental aspects for the shipping company are related to the improved energy efficiency and the reduced carbon footprint of its fleet.

TOWARDS FOSSIL-FREE SEA

TRANSPORT FOR CUSTOMERS

Electramar, the first next-generation electric hybrid vessel, was delivered to ESL Shipping's subsidiary Ato- B@C Shipping in India on December 15. Equipped with a shore-side electricity connection and one megawatt -hour batteries, the vessels are the most energy-efficient in the world in their size category, and their greenhouse gas emissions per transported unit of cargo are nearly 50% lower compared with current vessels. The order consists of a total of 12 vessels, with a new vessel being delivered to AtoB@C Shipping roughly every three months. The shipping company's building supervisors are monitoring the construction of the vessels at the shipyard.

In the fall, the shipping company deployed a new por- tal, in which crew members can view their vessel's emis- sions, energy consumption and other operational met-

DRIVING SUSTAINABLE INNOVATIONS

Business-specific development of sustainable innovations.

IMPROVING RECYCLING AND WASTE MANAGEMENT

Business-specific targets have been set for recycling and waste management.

ESL Shipping's goal is to halve its carbon dioxide emissions per transportation unit by the end of the decade. Achieving this goal calls for significant investments in new vessels, fuel solutions and other operating models to improve energy efficiency. Progress can already be seen in various areas. During 2023, ESL Shipping transported 12.8 (14.7) million tonnes of cargo, and its vessels consumed 769,317 (819,988) MWh of energy. CO2

rics, and compare them with the shipping company's other vessels in the same size category. The portal uses the same data that has previously been used in internal reporting and provided for customers through a customer portal. The goal of the portal is to integrate environmental awareness as a key part of daily activities and decision making.

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ESL Shipping improved its performance in the 2023 EcoVadis sustainability assessment from 66 to 72 points, achieving the gold level. In terms of the environ- ment, the shipping company was rated in the top 6%. At the end of 2023, ESL Shipping joined the Science Based Targets initiative (SBTi) and committed to setting short- and long-termscience-based emissions reduction targets that are in line with the Paris Agreement to limit global warming to 1.5 degrees. ESL Shipping develops and validates its targets using the SBTi.

In the EU, emissions trading expanded to shipping at the beginning of 2024, covering vessels of more than 5,000 GT in the first phase, including ESL Shipping's Handy and Supramax class vessels. Preparations for emissions trading were started early in 2023, assisted significantly by comprehensive emissions reporting, which has already been conducted for several years now.

In addition to emissions to air, the shipping company's operations have an impact on seas. International regulation allows cargo hold wash water that is not hazardous to the environment to be pumped into the sea. ESL Shipping's goal is to exceed the level set by regulation and pump all cargo hold wash water onshore. The company invested systematically in this in 2023, as a result of which 43.5% (9.3%) of water was pumped onshore for processing. The shipping company is engaged in an active dialogue with ports to improve arrival procedures.

Virtual Arrival launched by ESL Shipping in summer 2021 is still used successfully in transportation between Luleå and Oxelösund in cooperation with SSAB and the Port of Oxelösund. The idea of Virtual Arrival is to reduce a ship's speed if it is known that its berth at the port will not be available upon arrival. Regardless of the actual

arrival time, a ship's position in the port's line-up is determined based on the arrival time calculated using the normal service speed. Energy savings have been significant: the carbon dioxide emissions of sea transportation have decreased by up to 24% as a result of the optimized service speed. The energy savings equal the annual consumption of roughly 200 Finnish households.

In April 2023, a program was launched to accelerate ESL Shipping's green transition by assessing three alternative measures: the establishment of a new investment pool for fossil-free vessels, the strengthening of ESL Shipping's capital by a minority owner, and the sale of two Supramax vessels of the shipping company. As the first result of this assessment, Aspo signed an agreement with OP Finland Infrastructure in November on an equity investment in ESL Shipping, and Varma joined the agreement in February 2024 by making an investment of its own alongside OP Finland Infrastructure.

We will continue our development by modernizing our fleet and deploying new non-fossil fuels. Playing a significant role in the zero-emission transportation of our industrial partners' zero-emission products is the cornerstone of our shipping company's strategy.

EMISSION REDUCTIONS THROUGHOUT THE VALUE CHAIN AS THE GOAL

The largest environmental impact of Leipurin and Telko, which operate in the fields of trade and logistics, comes from elsewhere in the supply chain. As defined by Aspo's Board of Directors, the goal of these companies is to be the best and the most responsible partners for their customers and principals in their respective fields and to reduce emissions in the entire supply chain through their

expertise. This includes planning logistics flows effectively and ensuring the quality of products. We will continue goal-driven work throughout the value chain to understand our environmental impact more closely, regardless of the party which carries out each type of operation.

Telko is playing its part in improving the circular economy involving plastics and is providing its customers with environmentally sustainable solutions. For example, Telko was the first Finnish distributor to receive the ISCC Plus certificate. ISCC Plus is a certificate granted for bio- based plastics. Accordingly, Telko can provide plastic raw materials produced in line with mass balance principles for its customers. In 2023, Telko achieved the silver level in the EcoVadis sustainability assessment.

SYSTEMATIC RISK MANAGEMENT

Aspo has classified environmental damage resulting from its operations and especially from fuel processing in the shipping company's operations and the practices of its partners, for example, in the transport and storage of chemicals as significant risks associated with the envi- ronment. Changing regulations, such as stricter environmental laws, changes in energy policies or the development of fuel taxation, can also have a significant impact on operating conditions and costs.

Aspo continuously monitors the regulatory situation and aims to develop its operations cost-effectively and at the correct time so that it can keep any investment needs resulting from changing regulations under control. The investigation conducted in recent years to identify the impact of the EU taxonomy for sustainable economic activities on the Group's businesses and reporting prac-

tices took new steps forward during 2023. To address environmental aspects in supply chains, Aspo has prepared the Supplier Code of Conduct.

Aspo prepares for and controls risks through effec-

tive environmental management. For example, ESL Shipping has its own environmental management system, certified by ISO 14001. In 2023, ESL Shipping registered two (2022: 3) minor oil spills from its vessels. As a result of these incidents, some 10 liters of oil or water mixed with oil were released into the environment. These were handled properly and resulted in no consequences from the authorities.

Telko's environmental protection practices are under constant development in accordance with the principles of the ISO 9001 standard. Telko has the ISO 14001 environmental certificate, which covers all of its units in the EU. In addition, Telko is a member of the Responsible Care program for chemical distributors, which guides operational development to be more extensive than the minimum requirements set out in acts and regulations.

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■ ENVIRONMENTAL RESPONSIBILIT Y

Digital solutions improve efficiency and reduce emissions

"We are constantly developing our digital solutions to better leverage the data we are collecting. Our in-house data team has done excellent work developing our solutions on many fronts. One small but concrete example is the automated emission report, which is distributed to all employees every month to increase understanding of where we are in our emission reduction journey"

ESL Shipping is at the forefront of developing digital solutions for more sustainable shipping. For several years, the company has collected comprehensive emission data from our vessel operations and the data is used in several applications across the company.

In 2023, the most significant business intelligence project has been the new fleet scheduling optimiser software, which has been developed together with Finnish software development company Siili Solutions. The first version of the software, which is due to enter the testing phase in early 2024 is aimed to help chartering and operations departments find the most optimal schedule for each vessel and provide opportunities to easily optimise the schedule based on different objectives such as the lowest environmental footprint.

Development of the Customer Portal has continued in 2023 with the addition of a tool to estimate the impact of using renewable fuels as a part of the fuel mix. Providing clients with transparent data on the emissions of their shipments is even more important

now that shipping was included in the EU Emission Trading System from the beginning of January.

VESSEL PORTAL ENHANCES

DECISION-MAKING ONBOARD

In the autumn, ESL Shipping launched the Vessel Portal designed exclusively for vessels' crews. This innovative portal utilises the same advanced platform and data that is accessible to the company's clients in the Customer Portal.

The introduction of this portal marks a significant milestone in the ongoing commitment to seamlessly integrate sustainability into the daily operations and decision-making processes both onboard and ashore. In the portal, the crew has access to comprehensive statistics and data about the performance of their ves- sels. Moreover, they can compare their performance with that of sister vessels, allowing for meaningful benchmarking.

Kirsi Ylärinne

Operations and Environmental Director

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■ SOCIAL RESPONSIBILIT Y

Personnel at the core of our success

At Aspo, work environments range from cargo vessels to chemical warehouses, and specific focus is placed on safety guidelines and training in all businesses.

Aspo is committed to respecting internationally accepted human rights as defined in the Universal Declaration of Human Rights and the UN Guiding Principles on Business and Human Rights. We do not accept any discrimination based on education, competence, position, per- sonality, way of life, work experience, ethnic origin, reli- gion, gender, sexual orientation, age, nationality, abilities or other qualities.

Aspo treats its employees in a just and equal manner in all countries where it operates. The applicable local legislation and regulations are complied with in all contracts of employment. These concern, among other things, working hours, remuneration, development opportunities, human rights and working conditions.

els have been developed to address safety and investments have been made in communication, with the long- term goal being to develop the company's safety cul- ture. Telko continued the new Safety Walk policy in its own and external warehouses and at each of its offices to increase safety and awareness of it. The process has proven an effective and productive way to make observations that improve safety and to carry out corrective measures on the basis of them.

JOB SATISFACTION AT A HIGH LEVEL

Aspo regularly assesses the satisfaction of employees with their own tasks, the quality of management, and Aspo as an employer by conducting an annual atmos-

S

ENSURING EMPLOYEE SAFETY

Total Recordable Injury Frequency (TRIF)

Target 2023	Total 2023	2022

6.0	4.8	8.1

Note

Accident rates remain low. Each individual accident significantly affects the TRIF figure.

SDG

We aim to improve the personnel's engagement and wellbeing at work by promoting employees' professional development at all organizational levels and by building an encouraging atmosphere.

INVESTING EVEN MORE

IN OCCUPATIONAL SAFETY

The most significant social risks are associated with occupational safety and health, and the availability and commitment of the personnel. At Aspo, work environments range from cargo vessels to chemical warehou-

phere survey. Aspo measures its employees' job satisfaction through the People Power index which is part of the Group's sustainability goals. In 2023, job satisfaction remained at the fairly high target level: the Group as a whole achieved the targeted AA rating, and there were no significant differences between the businesses.

In addition to employees, Aspo Group also monitors the satisfaction of other stakeholders actively, and it has set business-specific goals to ensure the quality of products and services. The businesses regularly monitor the satisfaction of stakeholders and the likelihood that they

IMPROVING THE EMPLOYEE, CUSTOMER AND PRINCIPAL EXPERIENCE

Employee satisfaction is measured by the People Power index

Target 2023	Total 2023	2022	Note

AA	AA	AA	No significant differences between the businesses

PRODUCT AND SERVICE QUALITY

Business-specific targets have been set to ensure the quality of products and services. The net promoter score is used in each business.

SDG

ses, and specific focus is placed on safety guidelines and training in all businesses. The goal is that there are zero occupational accidents.

In 2023, the total recordable injury frequency (TRIF) was 4.8, significantly better than in the previous year (8.1), and the target set for 2023 (6.0) was achieved. Aspo has several projects in progress to improve occupational safety and health, focusing especially on ESL Ship- ping's operations, in which occupational accident risks are higher than in our other subsidiaries. Operating mod-

would recommend each business to others using the net promoter score (NPS), a broadly used international market research metric. The NPS surveys conducted in 2023 showed that customer satisfaction is at least at a high level in all businesses.

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Developing safety culture at ESL Shipping

Suvi-Tuuli

Lappalainen

HSEQ Manager, DPA, CSO at ESL Shipping

"I embarked as an apprentice aboard MS Arkadia, ESL Shipping's biggest vessel, 24 years ago. The experience was enchanting, sailing the seas and exploring ports across Europe and Africa.

Safety and emergency protocols were practiced among the crew, but there was hardly any emphasis on occupational safety back then. Helmets were nonexistent, awareness of high visibility clothing was lacking, and risky activities such as climbing on top of hatch coamings without safeguards was not uncom- mon. Sometimes we worked 24 hours without rest during crane operations. Jokes were made about the aftermath of cleaning holds, with dust in our eyes, ears, and throats. Signs like 'enclosed space' were seen, but preventive measures were not implemented when entering. Sadly, some incidents resulted in serious injuries, casting a shadow over our experiences.

HUGE LEAPS IN SAFETY

DEVELOPMENT OVER THE YEARS

In 2023, I assumed the role of Safety Manager at ESL Shipping after 18 years elsewhere. A remarkable transformation had taken place! A strong safety mindset

now prevails in the company, with management actively steering the development of a safety culture by setting targets and monitoring progress.

Ship masters demonstrate strong commitment to safety leadership, and the crew earnestly adheres to their responsibilities. Feasible safety procedures and tools supporting documentation, incident analysis, and root cause identification are in place. Violations of rest hours and alcohol policy are closely monitored, with thorough analysis conducted alongside the crew. The persistent long-term effort invested in instilling a safety mindset and ensuring vessel operations are conducted safely is bringing great results.

SAFETY REQUIRES CONTINUOUS FOCUS

In safety, there is always room for further improve- ment. Deep-rooted habits persist, such as some crew members still need to be reminded of the use of helmets due to decades of sailing without them. Safety procedures exist to ensure the well-being of the crew, not for satisfying the inspectors.

Some vessels excel in proactive safety manage- ment, while others might be more reactive in their

mindset. For example risks relating to new cargo acquisitions highlight the continuous need for careful safety planning. Despite preventive measures, slips and trips sometimes still occur, prompting the necessity for continuous improvement.

Proactive measures such as risk assessments and structured management of change are crucial steps towards achieving excellence in safety leadership. Leading indicators show an effective avenue for suc- cesses, while lagging indicators provide valuable feedback on our shortcomings.

Better communication with ship masters and the entire crew at safety meetings and internal audits fosters deeper commitment to safety. Management's safety walks ensure that onboard operations are in the core of safety leadership.

Over the past year, injury and safety results have improved. Although setbacks and mistakes may occur, the collective dedication to striving for a high safety culture is motivating. Together, we aim for a shared goal - ensuring everyone returns home from work safely."

"Together, we aim for

a shared goal - ensuring everyone returns home from work safely."