SSAB : Sustainability-Linked Finance Framework

Sustainability-Linked Finance Framework

"With the future in mind"

2021-05-20

Background & Rationale

SSAB is a highly specialized global steel producer driven by close relationships with our customers. We develop high-strength steels and provides services for better performance and sustainability.

SSAB is a leading producer in the global market of Advanced High-Strength Steels (AHSS) and Quenched & Tempered Steels (Q&T), strip, plate and tube products, as well as construction solutions. Our steels and services help to make end products lighter and stronger with a longer lifespan.

We have a cost-efficient and flexible production system with production plants in Sweden, Finland and the US, with an annual steel production capacity of approximately 8.8 million tonnes. SSAB also has capacity to process and finish various steel products in China, Brazil and many other countries. In Sweden and Finland, production is iron-ore based with a blast furnace process whereas in the US, electric arc furnaces are used for a scrap-based production process.

The world needs steel and the global demand for steel increases every year. Steel has many advantages; it is fully recyclable, strong, durable and, compared to other materials, requires relatively low amounts of energy to make.

However, the steel industry is also a significant source of CO2 emissions. Climate change, resource scarcity and continuing urbanization, combined with the increasing need for new infrastructure, create a growing need for more sustainable solutions. We believe that SSAB and steel are part of the solution.

SSAB is at the forefront of sustainability in many ways. We aim at being the first in the world with fossil-free steel on commercial terms and lead the transition of the steel industry. Our plan is to offer fossil-free steel to the market in 2026 and to eliminate all of our own CO2 emissions by 2045.

In order to accomplish this we have undertaken a strategic roadmap to revolutionize steelmaking, including an active leadership role in the HYBRIT joint venture initiative with LKAB and Vattenfall as well as short- and long-term ambitions and goals.

Our Sustainability-Linked Finance Framework provides an opportunity for investors to learn about our position to drive positive transformation within the steel industry and support us in this journey.

Stockholm 2021-05-20

CEO	CFO	Head of Sustainability
Martin Lindqvist	Håkan Folin	Christina Friborg

Contents

Approach to Sustainability .............................................................................................. 4

1. Sustainability Strategy ..................................................................................................... 4

2. United Nations Global Compact and Sustainability Development Goals ........................ 5

3. Materiality ....................................................................................................................... 6

4. Governance ..................................................................................................................... 8

5. Commitments and Engagements .................................................................................... 9

Sustainability-Linked Finance Framework ..................................................................... 10

1. Selection of the Key Performance Indicator (KPI) ......................................................... 11

2. Calibration of Sustainability Performance Targets (SPTs) ............................................. 12

3. Security Characteristics ................................................................................................. 14

4. Fallback mechanisms ..................................................................................................... 15

5. Reporting ....................................................................................................................... 15

6. Verification .................................................................................................................... 16

7. Second Party Opinion .................................................................................................... 17

Appendix ........................................................................................................................... 18

Approach to Sustainability

1. Sustainability Strategy

Managing business in a sustainable way strengthens SSAB's ability to deliver strong financial and operational results. Our renewed sustainability strategy has its basis in the corporate strategy while also building on the SSAB Way, SSAB's core values and the First in fossil-free steel ambition.

The strategy, "With the future in mind" has two main themes: to be first in fossil-free steel and to have a leading sustainability performance, which are equally important. SSAB wants to become the first fossil-free steel company in the world and this ambition is at the core of our entire operation. Sustainability is a key business driver for both us and our customers.

First in fossil-free steel

Use better steel

SSAB is committed to minimizing any adverse environmental impacts from our operations. Therefore, SSAB focuses on continuous improvement to minimize emissions and improve productivity, as well as material and energy efficiency. Our blast furnace-based production is among the most CO2 efficient in the world. This gives our customers and us a competitive advantage. For example, our cold-rolled steel production emits approximately 6% less CO2e than the European average and as much as 17% less than the Chinese average.

Use steel better

The core of SSAB's business is to develop and produce Advanced High-Strength Steels (AHSS) and

Quenched & Tempered (Q&T) steels that are stronger than ordinary steels. This in turn enables our customers to produce lighter and stronger products, thereby reducing their environmental footprint. By using our high-strength steels, which results in lower weight and improved fuel economy, customers can achieve significant CO2 savings during their end products' use-phase.

Go fossil-free

SSAB works toward a fossil-free steelmaking process through the HYBRIT initiative and by eliminating other fossil related emissions, with a goal to offer fossil-free steel to the market in 2026. In cooperation with LKAB, our iron ore supplier, and Vattenfall our energy provider, we form a fossil-free value chain. Various milestones for SSAB and HYBRIT are outlined for the coming years. Our new GHG emissions target has been approved by the Science Based Targets initiative (SBTi). We are committed to reducing GHG emissions by 35% by 2032 (2018 as a base year, measured as CO2e according to Greenhouse Gas Protocol1). The target applies to direct and indirect emissions (Scope 1 and 2) and is in line with the Paris Agreement and the objective of keeping global warming well below 2°C.

1 "The Greenhouse Gas Protocol", A Corporate Accounting and Reporting Standard published by the World Business Council for Sustainable Development and the World Resources Institute.

Leading sustainability performance

Safety first

SSAB is determined to become the world's safest steel company, with the objective of achieving zero accidents, work-related injuries and illnesses. Everyone has the right to a healthy, accident free work environment in SSAB. Our goal is to prevent all injuries and work-related illnesses. We will minimize, as far as possible, health and safety risks everywhere we operate.

Resource efficient operations

For SSAB, circularity is a key factor in increasing efficiency to help mitigate environmental impact. We continuously work to optimize the value of our by-products, scrap and waste, with a focus on sustainability and value creation. SSAB is committed to the efficient use of raw materials and energy. To further improve energy efficiency, energy flows are recycled in the production process.

Responsible sourcing

SSAB has approximately 20,000 active suppliers in more than 60 different countries. SSAB works actively with particularly high-risk suppliers to ensure sustainability throughout the supply chain.

Suppliers must comply both with SSAB's standards and with international ethical, social and environmental guidelines in order to remain qualified suppliers for SSAB.

Zero tolerance for bribery and corruption

The Code of Conduct is the way we act. It forms the basis for our ethical, environmental and social responsibility. The tone from the top is clearly communicated and all employees must take an e-learning in business ethics. Anti-corruption compliance in business is important. SSAB has implemented clear instructions for our employees in order to guide us through our daily operations and our conduct in relation to business partners. SSAB has implemented a whistle-blower system called the Ethics Line. Employees can file a report anonymously online or by calling a global hotline 24 hours a day, seven days a week.

Inclusion & diversity

A key element of SSAB's business strategy is to build a high-performing organization with strong employee engagement globally. SSAB will continue to work with leadership and competence development, and strive to enhance inclusion and diversity in the workforce.

2. United Nations Global Compact and Sustainability Development Goals SSAB is a signatory to the UN Global Compact and continually enhance efforts to protect and respect its 10 principles, and promote its spirit within the areas of human rights, labor standards, the environment and anti-corruption.