Iochpe Maxion S A : Sustainability Report-2020

SUSTAINABILITY Report

2020

Photo: Luke Oslizlo

CONTENTS

1. ABOUT THIS REPORT
2. CEO LETTER
3. ABOUT IOCHPE-MAXION

1. BUSINESS RESILIENCE

1. INNOVATION AND DIGITAL TRANSFORMATION

1. CORPORATE GOVERNANCE AND ETHICS

1. PRODUCT QUALITY AND SAFETY

1. CLIMATE CHANGE AND ENVIRONMENTAL FOOTPRINT

1. ORGANIZATION CULTURE AND PEOPLE MANAGEMENT

GRI 102-54

GRI 102-1

3 SUSTAINABILITY Report 2020

ABOUT

THIS REPORT

ABOUT	CEO	ABOUT	BUSINESS	INNOVATION AND	CORPORATE GOVERNANCE	PRODUCT QUALITY	CLIMATE CHANGE AND	ORGANIZATION CULTURE
THIS REPORT	LETTER	IOCHPE-MAXION	RESILIENCE	DIGITAL TRANSFORMATION	AND ETHICS	AND SAFETY	ENVIRONMENTAL FOOTPRINT	AND PEOPLE MANAGEMENT

This report was developed by Iochpe-Maxion and covers the Company's environmental, social and governance (ESG)

structure and performance between January 1, 2020 and December 31, 2020, unless noted otherwise.

In this report, Iochpe-Maxion, "we," "our" or "the Company," refers to the company globally, while Maxion Wheels and Maxion Structural Components refers to the Company's divisions.

The structure and content of this report was developed in alignment with the Global Reporting Initiative (GRI) Standards Core Option, the United Nations Sustainable Development Goals (SDGs) and the Sustainability Accounting Standards Board's (SASB) material issues for the Auto Parts sector.

MATERIAL TOPICS

The content of this report is defined based on the Company's and its stakeholders' material topics.This report discloses Iochpe-Maxion'smanagement approach, along with a set of the indicators monitored for each material topic.

The Company identified its material topics in 2019 by reviewing internal documents; interviewing senior leadership, Company officers, managers and investors; conducting peer benchmarks; and assessing sector reports and guidelines (i.e. 2019 Sustainability Development Yearbook, Auto Components; The Sustainable Development Framework: International Council on Mining & Metals (ICMM) Principles; Automated Industry Action Group; The Aluminum Association (USA); and European Aluminum).

In 2021, the Company revised its 2019 materiality results to include the SASB's material issues for auto parts sector, the Morgan Stanley Capital International (MSCI) material topics for the sector and relevant aspects from the Task Force on Climate-Related Financial Disclosure (TCFD). The findings were presented and discussed in a meeting with subject matter experts from each division. The final material topics that guide this report are presented below.

	List of material topics GRI 102-47
	MATERIAL TOPICS	SCOPE (Description)
	HEALTH & SAFETY (H&S)	Asset protection and risk management
		Occupational health and safety
	PRODUCT QUALITY AND SAFETY	Product safety, quality and efficiency
		Client satisfaction
	CLIMATE CHANGE	Carbon footprint
	AND ENVIRONMENTAL	Water
	FOOTPRINT	Energy
		Materials, circular economy
		Waste
	ORGANIZATIONAL CULTURE	Promoting Company culture
	AND PEOPLE MANAGEMENT	Talent retention
		Employee engagement
		Inclusion and diversity
		Developing career, training and education
		Future of work
	INNOVATION & DIGITAL TRANSFORMATION	Research and development
		Digitalization
		Artificial intelligence
		New vehicles model
		Innovative solutions
		Partnership with other institutions
	CORPORATE GOVERNANCE AND ETHICS	Business ethics
		Integrity and anti-corruption
	BUSINESS RESILIENCE	COVID-19
		Business continuity
		Employee H&S

4 SUSTAINABILITY Report 2020

ABOUT	CEO	ABOUT	BUSINESS	INNOVATION AND	CORPORATE GOVERNANCE	PRODUCT QUALITY	CLIMATE CHANGE AND	ORGANIZATION CULTURE
THIS REPORT	LETTER	IOCHPE-MAXION	RESILIENCE	DIGITAL TRANSFORMATION	AND ETHICS	AND SAFETY	ENVIRONMENTAL FOOTPRINT	AND PEOPLE MANAGEMENT

CEO	The year of 2020 will always be
LETTER	remembered for the impacts of the
coronavirus pandemic.

Since the beginning of the COVID-19 pandemic, our priority has been to take care of the health and safety of our employees, their families and the 32 communities in which our plants operate, in 14 countries. We remain attentive to the pandemic and continue to strengthen our procedures to increase and ensure the safety of our employees and the continuity of our business.

In order to safeguard the health of all employees and their families, and fight the spread of the virus, we followed authority and agency guidelines in each location where we operate. Since the beginning of the pandemic, the Company established frequent leadership for discussion and learning of health and safety best practices, and how to implement them effectively throughout the Company while considering the singularities of each location. We monitor our facilities on a daily basis to adapt our activities to the volume demanded by our customers-meeting their expectations responsibly.

Beyond the basic measures, such as social distancing and masks, we implemented quarantine protocols for employees who had contact with someone infected. We evaluated successes and adopted new measures such as reducing working hours and collective and/or selective vacations. Additionally, domestic and international travel was cancelled; face-to-face meetings were replaced with videoconferences; third-party access to the Company's units was restricted; and the work

regime was adjusted to avoid the assembly of people as much as possible.

In light of the challenges posed by the pandemic, we focused on financial and operational management with the goal of preserving liquidity and recovering operating margins. In 2020, despite the drop in global automotive production of more than 20.0% and the net loss of R$ 491.8 million, our net operating revenue grew 21.8% in the 4th quarter of 2020, supported by the recovery of the markets where we operate and positively influenced by the exchange rate variation.

Despite the recovery in industry volumes in the second semester of 2020, the Company continued its efforts to reduce costs and maximize cash generation, including the closure of the Akron plant in the United States.

Regardless of the sector scenario, we remain focused on productivity gains and operational efficiency, launching new programs in 2020, strengthening

our balance sheet, producing new products in our advanced engineering and promoting continuous digital transformation and innovation to keep adding value to our products.

Our Company holds a high level of technical knowledge, and permanently seeks to provide innovative solutions in the areas it operates, using global macro-trends that guide the development of new products, technologies and processes, whether independently or in cooperation with strategic partners.

During 2020, we increased our participation in new mobility by winning business in wheels and structural components for electric vehicles, with both large

automakers and newcomers in the automotive sector. And overall, our two divisions maintained their new business trends demonstrating the confidence our customers have in the quality of our products, and in our ability to meet their immediate and future needs with competitive and technologically innovative products and solutions.

I would also like to acknowledge what our plant teams accomplished during this very dynamic and challenging year. In spite of all the challenges imposed by COVID-19, our teams remained committed to meeting our customers' expectations and living our core values, while not sacrificing safety and sustainability. We are proud of our teams, and applaud their outstanding performance.

Marcos

Oliveira

President

and CEO

GRI 102-2, 102-3, 102-7

5 SUSTAINABILITY Report 2020

ABOUT	CEO	ABOUT	BUSINESS	INNOVATION AND	CORPORATE GOVERNANCE	PRODUCT QUALITY	CLIMATE CHANGE AND	ORGANIZATION CULTURE
THIS REPORT	LETTER	IOCHPE-MAXION	RESILIENCE	DIGITAL TRANSFORMATION	AND ETHICS	AND SAFETY	ENVIRONMENTAL FOOTPRINT	AND PEOPLE MANAGEMENT

ABOUT IOCHPE- MAXION

GRI 102-2,102-3,102-4,102-6,102-7,102-9

Iochpe-Maxion is an international company, leading globally in the production

of automotive wheels and in the Americas for the production of automotive

2009

Acquisition of the

Wheels Division

of ArvinMeritor.

2008 Single class of shares - Novo Mercado

BM&FBOVESPA.

2018

Iochpe-Maxion

celebrates 100

structural components. Headquartered in São Paulo, Brazil, we employ approximately 15,000 people across our 32 manufacturing plants in the 14 countries in which we operate. As a result of our international reach, we are equipped to serve our global customers according to their delivery terms, quality standards and competitiveness requirements.

Iochpe Family started in 1918 as a lumbering company in the State of Rio Grande do Sul.

Over the years, our activities expanded to the financial sector, and subsequently, to the industrial sector.

		1984
1918		Listed on
	BM&FBOVESPA.
Origin of the
Company		1990
Lumbering
Activities.	1980

1940

1900

1940

Diversification of Activities (financial and industrial sectors).

Geographic diversification (Industrial plant in China).

Early 2000's Creation of Amsted Maxion for the railway equipment business.

2010

2000

90's

Focus on auto parts and railway equipment.

		2012		years.
		Acquisition of
		Hayes Lemmerz
		(Wheels).
		Acquisiton of
		Grupo Galaz
		(side rails for	2019
		commercial
		vehicles).	2018
			2017
2012		2017
				Equity increase
2010				through capital
			injection and debt
Acquisition of
	conversion.
wheel assets
from Nugar in
Mexico.
2011
Acquisition of
Montich (50%)
(Chassis -
Argentina).

2019 Partnership with Dongfeng in China (Construction of aluminum wheels plant).

In the 1990s, the Company began focusing on auto parts and railway equipment segments, with the disposal of a major portion of assets and equity interest not linked to these segments. In early 2000, 50% of our railway equipment business was transferred to Amsted Industries, which established the joint venture Amsted Maxion.

In January 2008, the Company converted the preferred shares into common shares to enter the Novo Mercado trading segment of B3 (prior BM&F BOVESPA), the São Paulo Stock Exchange.

In August 2009, the Company purchased the wheels business from ArvinMeritor in Brazil, Mexico and the United States.

In December 2010, the Company purchased assets of the wheels business from Nugar S.A.P.I. de C.V., a Mexican company controlled by the CIE Automotive group, to increase their production capacity in Mexico.

In May 2011, the Company acquired 50% of shares of Montich S.A., an Argentine manufacturer of side rails and chassis. As part of this acquisition, Montich S.A. changed its name to Maxion Montich S.A.

In early 2012, the Company acquired the Galaz Group, a Mexican manufacturer of side rails for commercial vehicles, and Hayes Lemmerz, a US global manufacturer of steel wheels for light and commercial vehicles and aluminum automotive wheels for light vehicles.