Colt CZ : Sustainability report 2022

COLT CZ GROUP SE SUSTAINABILITY REPORT

2022

June, 2023

CONTENTS

Colt CZ Group SE Sustainability Report 2022
1.	CEO Foreword	4
2.	Essence of Colt CZ	6
2.1	Who we are	6
2.2	Key moments in the Group's history	18
3.	Colt CZ Sustainability Strategy	25
3.1	Sustainability is integral to Colt CZ's Strategy	25
3.2	How we approach Sustainability	27
3.3	Materiality: Identifying activities with the greatest impact	31
3.4	UN's Sustainable Development Goals	33
3.5	Stakeholder engagement	34
3.5.1	External Associations	36
4.	Environment: Promote operational eco-efficiency	38
4.1	Coming together as a Group to start our environmental journey	39
4.2	Environmental Management System and regulatory compliance	40
4.3	Energy and emissions	41
4.4	Water, pollution and waste	47

5. People: Be the employer of choice and an active participant in the community

1. Occupational Health, Safety and Well-being
2. Employment Practices

1. Training and Education
2. Attracting young talent
3. Listening to our employees
4. Inclusion, Diversity and Equality
5. Fair and equal pay

1. Social responsibility

6. Product: Embed innovation, reliability, and durability into the DNA of our products and processes

1. Produce innovative and high-quality products that our customers can rely on in any situation

1. Focus on R&D
2. Investments in new technologies to improve efficiency, minimize errors and support sustainability goals
3. Quality Management Systems (QMS) - Ensuring the highest quality of our products
4. Safety and reliability - Improving testing
5. Deploying Digital Technology
6. ESG impacts of our products

49	7.	Governance: Promote responsible business practices	79
50	7.1	Business Ethics and Transparency	79
52	7.1.1	Colt CZ Compliance Program	80
52	7.1.2	Compliance Management System (CMS)	85
53	7.1.3	Whistle-blowing	85
54	7.1.4	Governance Structure /Board Independence	86
55	7.2	Sustainable supply chain	91
59	7.3	Cybersecurity and Data Privacy	92
61	7.3.1	Data privacy	93
69	7.4	ESG Reporting	93
69	8.	EU Taxonomy	95
71	8.1	Framework	95
72	8.2	EU Taxonomy and the defense sector	95
74	8.3	Colt CZ Group reporting approach	96
74	9.	Methodology	100
77		GRI Content Index	101
78

The report is published in Czech and English language. In case of text inconsistencies, the Czech version of the document prevails.

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1. CEO FOREWORD

Colt CZ Group SE builds on the foundations established by the companies that form today's group. We respect the contributions of those who came before us, proudly building on the traditional craft that has been passed down from generation to generation. Our companies have always been at the center of innovation in the industry, deploying modern technologies and designing successful products that are copied worldwide. Our commitment to provide innovative and high-quality products that our customers can rely on in any situation stands even stronger as we actively address their constantly evolving expectations and security environment.

We continue to play an important role in national security, supplying the necessary tools to countries to ensure national security and defense of their citizens. The Group's vision of becoming the undisputed leader of the small arms industry also means responsibility. It is therefore important that we operate in a transparent and accountable manner, balancing the Group's growth with environmental and social duties, while contributing to the growth of local economies.

Following the acquisition of Colt in 2021, we have started our journey as a truly global company. We are stronger together as a Group - financially, product-wise and from the perspective of talent

• but there is a lot of work ahead of us to deliver on our vision. In our quest to create long-term value for our shareholders, as well as for

our employees, customers, and other stakeholders, we are helping to build a more resilient company and equitable future.

To become an impactful and truly sustainable Company, we believe that the concept of sustainability needs to be embedded in our business strategy and that we must integrate sustainable practices into all aspects of our thinking and operations. We see engagement with sustainability as an opportunity to transform our business operations by promoting change, accelerating innovation, and encouraging cooperation, while building the trust of our people, customers, and the wider society.

We are committed to lowering our impact on the planet by making continuous investments in new technologies and the modernization of our operating and manufacturing capabilities, with the goal

of reducing consumption of energy and other natural resources, utilizing renewable energy, minimizing the waste we generate, preserving water, and reducing the use of hazardous materials. We ensure that their use and disposal would minimize the risk of contamination to the water and soil.

Our long-term success depends on the buy-in of our people, including those who work with us and those we work for. By actively engaging with our employees, listening to their expectations

and needs, and striving to meet those needs in our actions and

investments, we aim to create conditions for a positive and rewarding working environment that contributes to equality and fairness, while ensuring their health and well-being. Attracting the best talent, embracing diverse perspectives and promoting collaboration to drive innovation are among our top priorities.

The cornerstone of our work is the customer. To stay relevant and competitive on the world market necessitates an ability to anticipate our customers' expectations and adapt quickly to new trends and regulatory changes, as well as integrate modern materials and new technologies in our products, manufacturing, and internal processes. We will continue to invest in research and development, fostering

a culture that will help us achieve operational excellence, while adhering to the highest standards of quality and integrity.

We are well aware of the responsibility we have to communities where our companies operate. We will work towards improving the lives of those who are less fortunate or in need of aid, through employee volunteerism, charitable contributions, and sponsorships.

To enhance the trust of our stakeholders, we aim to further advance the Group's policies and standards, and strengthen internal controls and competencies for ethical business conduct to support transparent customer relationships, supplier partnerships, and workplace integrity. All with the goal of ensuring that we uphold our

COLT CZ GROUP SE SUSTAINABILITY REPORT 2022

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CEO Foreword

business ethics to the highest standards, which are in accordance with applicable laws and regulations, and build a business culture based on integrity.

In our effort to increase transparency, we are proud to present Colt CZ Group's first comprehensive Sustainability Report for the year 2022. This report introduces the new Group's ESG Strategy, which was adopted by the Board of Directors in February 2023.

The report summarizes the progress we have made so far and communicates the direction for our sustainable journey. We recognize that we are still at the beginning and need to step up our efforts. Among our priorities is to calculate the entire Group's carbon footprint for Scope 1 and 2 type emissions, and prepare a decarbonization plan that includes setting targets for their reduction. Additional areas that are fundamental to our efforts include improving data collection and tracking to introduce meaningful metrics in other areas, such as waste and recycling, as well as ensuring our employees' education and well-being.

We will continue to work on delivering our other key sustainability commitments. I am confident that we have established a solid foundation for our sustainability strategy that addresses key priorities and main objectives. I understand the challenges we face but have full confidence in our action plan and the support our employees, customers, investors, and other stakeholders.

Jan Drahota

CEO and Chairman of the Board of Directors

Foto: Matej Slávik/Economia

COLT CZ GROUP SE		5
SUSTAINABILITY REPORT 2022