Yara International : Integrated Report 2023

Yara Integrated Report 2023

Building resilience and a nature- positive food future

From ambition to action

Strategy execution in times of turmoil puts a company's resolve to the test. In 2023, we experienced another year of war, geopolitical instability, volatile markets, and challenges to global supply chains. Once again, due to our flexible business model, we were able to sustain deliveries of crop nutrition and industrial solutions.

The year brought both operational challenges and pressure on margins. However, even under operational turmoil, our strategy remains sound. Further improving operational flexibility and resilience has been a strategic response to the volatility of recent years. Going forward, we know that the focus will be on halting both climate change and environmental degradation, while ensuring a sufficient supply of nutritious food.

This is why our ambition is Growing a Nature-Positive Food Future. We are certain that companies able to support sustainable food production will be positioned for growth and value creation.

For this reason, we were proud to announce the production of the first tonnes of renewable ammonia at the pilot plant in Norway in 2023. We continue to invest in decarbonization of our own production and in solutions to reduce emissions from food production and in the shipping and energy sectors.

Going forward, we will continue to learn and adapt, rising to the challenges ahead. We seek to reach our ambition by leveraging our resilient and flexible business model, our actions guided by these three pillars:

Climate Regenerative Prosperity

neutrality farming

Yara Integrated Report 2023

CONTENT

01 2023‌ IN BRIEF

02 YEAR‌ IN REVIEW

Content

01	02	03	04	05
2023‌ IN BRIEF	YEAR‌ IN REVIEW	GOVERNANCE	SUSTAINABILITY STATEMENTS	FINANCIAL STATEMENTS

03 GOVERNANCE

1. SUSTAINABILITY STATEMENTS
2. FINANCIAL STATEMENTS

Operating with		Acting on our		Managing our		Adapting to new
resilience		ambition		performance		times
CEO message	05	Global presence	13	Corporate governance	53	General information	94
Key figures	08	Our organization	14	Group‌	Executive Board	72	EU taxonomy	114
Highlights from 2023	10	Our strategy	17	Board‌	of Directors	77	Environmental information	128
		Strategy scorecard	24	Risk management	82	Social information	151
		People	25				Governance information	197
		Planet	28				Reporting framework guidance	206
		Profit	31				Signatures‌	from the
		The‌ Yara share	43				Board and the CEO of Yara
					International ASA	213
		Strategic engagement	46

Sections 2-4 constitute the 2023 Report of the Boards of Directors

Reporting transparently

Consolidated‌financial statements 215

‌Financial statements for

Yara International ASA‌306

‌Statement from the Board and

the CEO of Yara International ASA‌334

Auditor's report	335
Sustainability assurance report	340
Reconciliation of Alternative
performance measures in
the Yara Group	343

About the report

This is Yara International ASA's 2023 Integrated Report. It builds on the guiding principles set out in the International Framework from the IFRS Foundation.

The 2023 Integrated Report marks a change in the way we report. It includes, for the first time, our full sustainability reporting and EU taxonomy disclosures. We are preparing for the EU Corporate Sustainability Reporting Directive to come into force and have based our sustainability statements on the core principles and structure described in the European Sustainability Reporting Standards (ESRS). Pending the full transition to ESRS, the Global Reporting Initiative Universal Standards have served as assurance criteria for our 2023 sustainability reporting. For further details about our application of the ESRS, see page 94.

Additional information is available in the following reports for the financial year 2023, both available at the Latest annual report page at yara.com:

Yara Executive Remuneration Report 2023

Yara Country-by-Country Report 2023

Yara Integrated Report 2023

CONTENT

01 2023‌ IN BRIEF

CEO message

Key figures

Highlights from 2023

02 YEAR‌ IN REVIEW

03 GOVERNANCE

1. SUSTAINABILITY STATEMENTS
2. FINANCIAL STATEMENTS

THIS IS YARA

Operating with resilience

Through these times of turmoil, we rely on our global presence and integrated and flexible business model to deliver crop nutrition and industrial solutions to farmers and customers worldwide.

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Yara Integrated Report 2023

CONTENT

01 2023‌ IN BRIEF

CEO message

Key figures

Highlights from 2023

02 YEAR‌ IN REVIEW

03 GOVERNANCE

1. SUSTAINABILITY STATEMENTS
2. FINANCIAL STATEMENTS

CEO MESSAGE

Positioned for a low-carbon future

The race towards a net-zero future ongoing. Here are six building blocks that must be in place, and how Yara is positioned for the change that is underway.

Last year was characterized by high volatility and operational chal- lenges, but also by efforts to drive the energy transition and curb emissions. At Yara, we are balancing the handling of significant disruptions in the short-term with positioning ourselves for the longer term.

The results in 2023 were significantly down from the record results in 2022, as lower selling prices more than offset lower production costs leading to lower margins. Despite the challenging operating environ- ment, we delivered a strong free cash flow of 1 BUSD showcasing the robustness of our business model and our commitment to strict capital allocation. For 2023, the Board of Directors has proposed a dividend of NOK 5 per share, bringing total cash returns for the past four years to 4.5 BUSD.

The resilience of our organization has been impressive - first during the pandemic, and then amid the repercussions of Russia's invasion of Ukraine. Value chain disruptions have become the new normal, and in this situation we have demonstrated to the fullest how we can utilize our global presence and reach, within both production and deliveries, to create value also in times of turmoil.

"Value chain

disruptions have become the new normal, and we have demonstrated to the fullest how we can optimize our global presence and reach, both when it comes to production

and deliveries."

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Yara Integrated Report 2023

CONTENT

01 2023‌ IN BRIEF

CEO message

Key figures

Highlights from 2023

02 YEAR‌ IN REVIEW

03 GOVERNANCE

1. SUSTAINABILITY STATEMENTS
2. FINANCIAL STATEMENTS

06

However, we cannot only adapt to short-term fluctu- ations. Despite the geopolitical turmoil - and because of it - both the push and pull for low-carbon solutions must continue. Contrary to what some are claiming, there is no subsidy race going on, but rather an investment race. Policymakers across the world are actively seeking solutions to counter temporarily non-functioning markets and build a low-carbon economy with long-term growth and job creation.

To get there, at least six fundamentals must be in place. Here is how we view them and act upon the opportunities:

1. Growth in demand for low-carbon solutions

No market will show healthy growth without signifi- cant demand. At the same time, demand will not pick up if there is uncertainty about the quality and availa-

bility of a new product. Although first movers can gain a competitive advantage, a "wait and see"-attitude is often seen as less risky. However, when it comes to the climate emergency, waiting can create a clean-up bill far exceeding any investments being made today.

First Movers Coalition (FMC) is a coalition of companies using their purchasing power to create new markets for innovative clean technologies across eight so-calledhard-to-abate sectors. Around 100 global companies have joined the coalition and, so far, committed USD 16 billion in demand for low-carbon technology and solutions.

Yara was a founding member of FMC, which was pioneered by the US State Department and the World Economic Forum (WEF). Our efforts are initially related to decarbonizing shipping by building demand

for low-emission ammonia as fuel. We have also joined forces with North Sea Container Lines (NCL) to realize the world's first container ship using low-emission ammonia as fuel - named Yara Eyde after one of Yara's founding fathers, Sam Eyde.

2. Growth in supply of low-carbon solutions

Over time, the demand for low-carbon solutions will solidify. A report from Boston Consulting Group and WEF even predicts that there will be a shortage of low-carbon solutions over the next decade‌1). In addition to working systematically on initiatives to increase market demand we are therefore working on develop- ing solutions and building capacity.

Yara is the world's second-largest ammonia producer and has the world's largest ammonia export and trading network and infrastructure. We are leveraging this to take a leading position within low-emission ammonia, which is produced either with renewable energy or with the use of carbon capture and storage. This enables us to deliver fertilizer with a smaller carbon footprint to the food sector and low-emission fuel to the shipping industry. In addition, it can contribute to decarbonizing power production.

We have several ongoing projects, both with the use of renewable energy and carbon capture and storage (CCS). At our Porsgrunn plant in Norway, we have built Europe's largest electrolysis plants to date, and at our Sluiskil plant in the Netherlands, we are investing in CCS.

In my view, no one is better positioned than Yara to capture value in the low-emission ammonia market.

3. A shift to regenerative agriculture

In addition to the need to decarbonize the upstream part of the food industry - the production of fertilizers - there is an equally strong need to decarbonize the downstream part - the use of fertilizers.

Regenerative agriculture is by far the best systematic approach to adopt sustainable farming practices that affect nature and climate in a positive way. As part of our support for regenerative farming, we develop and deliver low-carbon nitrate fertilizers, specialty products for enhanced crop performance, and organic-based fertilizers.

We also offer a suite of digital tools to optimize yields and minimize environmental impact, including improving nitrogen use efficiency, which is fundamental in regenerative agriculture.

However, regenerative farming will only achieve scale when farmers find it commercially attractive. They are the stewards of the soil and must therefore be rewarded with new green revenue streams. Yara is enabling this through the Agoro Carbon Alliance, which incentivizes farmers to sequester carbon in their soil through carbon credit incentives.

4. Not only a green transition, but a just transition

A green transition can only be viable if it is inclusive and fair. High-income countries account for more than a third of emissions while low-income countries ‌account for less than one percent‌2), and we cannot allow a green transition to be the expense of the most vulnerable.

Yara Integrated Report 2023

CONTENT

01 2023‌ IN BRIEF

CEO message

Key figures

Highlights from 2023

02 YEAR‌ IN REVIEW

03 GOVERNANCE

1. SUSTAINABILITY STATEMENTS
2. FINANCIAL STATEMENTS

07

"In my view, no one is better positioned than Yara to capture value in the low-emission ammonia market. "

Yara has an on-the-ground presence in 60 countries, and we witness every day how the poorest are paying the highest for the climate crisis. Africa is the epicenter of multiple crises threatening food production, economic growth, and regional stability.

US Secretary of state, Antony Blinken, puts it this way: "Soil is literally at the root of many pressing national security challenges that we face".

One of Yara's main contributions to African agriculture is the availability and affordability of quality fertilizers. Our product innovation MiCrop is an upgraded quality commodity and offers 5-7 nutrients instead of the limited 2 nutrients offered by a low-quality commodity. The impact on livelihoods is stunning:

1. WEF/BCG (2023): Winning in Green Markets: Scaling Products for a Net Zero World.
2. Hannah Ritchie (2023): Global inequalities in CO2emissions
3. Yara (2023): Tailored solutions for cultivating prosperous communities

"I've doubled my yield. The increased yield has enabled me to have an income, to do so many things. I can pay school fees for my children in the best school in Kenya. I've been able to open a shop and also to build a new permanent house. And I bought a tractor," says Kenyan farmer, Beatrice Opiyo‌3).

5. Metrics and actions as antidote for greenwashing

There is a classic saying "what's measured gets done" and I'm a believer. We can't pretend that the green transition is easy. It's time to walk the talk and be transparent about it.

At Yara, we have our strategy scorecard with clear targets and quarterly updates on how we are progress- ing. We have grouped these targets under People, Planet and Profit for everyone to see - and to challenge us.

Metrics are also crucial in agriculture and there is enormous potential for improvement. Yara has been working on the issue of data fragmentation and field connectivity for several years, especially in our agriculture technology subsidiary Varda, to come up with a global field ID. Best described as a QR code for fields, it helps to standardize the identification of agricultural land plots and supports traceability, regenerative farming monitoring, and documentation.

6. Ambitious, committed partnerships

None of the five fundamentals mentioned so far are achievable without the sixth: Collaboration.

We are therefore engaged in several partnerships with

companies that share our view on what needs to be done and show an eagerness to get going.

One such project is on carbon capture and storage with Northern Lights, owned by Shell, TotalEnergies and Equinor. We will capture 800,000 tonnes of CO2 annually at our Sluiskil plant in the Netherlands, to be transported and stored below the Norwegian continental shelf in the North Sea. It's an agreement on commercial terms and an example of a profitable, decarbonization business case.

In Norway, we have joined forces with Reitan Retail, Norgesmøllene, and Felleskjøpet Agri to reduce emissions from Norwegian food production. Oats will be the first available product, with between a 25-30 percent lower carbon footprint than oats produced with traditional mineral fertilizers.

A third example is the long-term agreement with Simpsons Malt in the UK, which also includes our unit Varda. It is aimed at dramatically reducing the carbon footprint in malting barley and distilling wheat for leading global beer and whisky brands.

Humankind's ability to find solutions, when faced with danger and crisis, is almost limitless. If we get these six fundamentals right, we will have come a long way in safeguarding our planet and ourselves.

Svein Tore Holsether

President and CEO

Yara Integrated Report 2023

CONTENT

01 2023‌ IN BRIEF

CEO message

Key figures

Highlights from 2023

02 YEAR‌ IN REVIEW

03 GOVERNANCE

1. SUSTAINABILITY STATEMENTS
2. FINANCIAL STATEMENTS

About Yara

Yara grows knowledge to responsibly feed the world and protect the planet. Supporting our vision of a world without hunger and a planet respected, we pursue a strategy of sustainable value growth, promoting climate-friendly crop nutrition and zero-emission energy solutions. Yara's ambition is focused on growing a nature-positive food future that creates value for our customers, shareholders, and society at large and delivers a more sustainable food value chain.

To achieve our ambition, we have taken the lead in developing digital farming tools for precision farming and work closely with partners throughout the food value chain to improve the efficiency and sustainability of food production. Through our focus on low-emission ammonia production, we aim to enable the hydrogen economy, driving a green transition of shipping, fertilizer production and other energy intensive industries.

Understanding ammonia and GHG emissions

Ammonia is the key intermediate for all nitrogen fertilizer. It is produced by combining nitrogen from the air with hydrogen, most commonly from natural gas. This process creates GHG emissions through both chemical reactions and combustion of fuel for energy. Emissions from ammonia production can, however, be eliminated by producing the hydrogen through electrolysis of water based on renewable energy, or by capturing CO2 from the production process with carbon capture and storage (CCS) technology.

In this report, we use the following terms for ammonia with lower GHG emissions:

Founded in 1905 to solve the emerging famine in Europe, Yara has established a unique position as the industry's only global crop nutrition company. We operate an integrated business model with around 18,000 employees and operations in over 60 countries, with a proven track record of strong returns. In 2023, Yara reported revenues of USD 15.5 billion.

Renewable ammonia:

Ammonia based on hydrogen produced through electrolysis based on renewable energy, often referred to as "green ammonia"

Low-carbon ammonia:	Low-emission ammonia:
Ammonia based on hydrogen	Collective term for renewable
from natural gas, with CO2	and low-carbon ammonia
captured and permanently
stored after a CCS process,
often referred to as "blue
ammonia"

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Yara Integrated Report 2023

CONTENT

Key figures

ROIC (Percent)

TRI

01 2023‌ IN BRIEF

CEO message

Key figures

Highlights from 2023

02 YEAR‌ IN REVIEW

03 GOVERNANCE

1. SUSTAINABILITY STATEMENTS
2. FINANCIAL STATEMENTS

18,000 employees

22.3

Million tonnes

Crop nutrition delivered (22.7 in 2022)

,

.

,

.

.

,

.

.

.

.

.

.

,

.

,

2.9%

312

75%

3.0

Return on invested capital (25.7% in 2022)‌1)

USD millions Operating income (3,827 in 2022)‌1)

Diversity and inclusion index (75% in 2022)

GHG intensity‌7) (3.1 in 2022)

		2023	2022
Profit performance
Revenue and other income	MUSD	15,547	24,051
Operating income‌1)	MUSD	312	3,827
EBITDA‌ ‌	MUSD	1,709	4,959
1)2)
Net income	MUSD	54	2,782
Capex‌3)	MUSD	1,219	987
Debt/Equity ratio‌ ‌		0.49	0.37
1)4)
Net cash flow from operations	MUSD	2,288	2,391
Basic earnings per share‌5)	USD	0.19	10.90
People performance
Engagement rate	percent	77	78
TRI rate‌6)	per million	1.1	1.1
hours worked
Planet performance
Scope 1+2 CO2e emissions‌7)	million tonnes	15.6	15.9
Energy use	million GJ	249	246

1. See page 343for definitions, explana- tions and reconciliations of Alternative Performance Measures (APMs).
2. EBITDA, as defined by Yara, includes operating income, interest income, other financial income and share of net income in equity-accounted investees. It excludes depreciation, amortization and impairment loss, as well as amortization of excess values in equity-accounted investees.
3. Cash outflows from investing activities, see consolidated cash flow statement on page 221for specification.
4. Net interest-bearing debt divided by share- holders' equity plus non-controlling interests.
5. Yara currently has no share-based compen- sation program that results in a dilutive effect on earnings per share.
6. TRI: Number of Total Recordable Injuries per million hours worked, contractors included.
7. The GHG intensity indicator covers scope 1, 2 and parts of scope 3 emissions from suppliers, but does not represent a complete carbon footprint. Measured against tonnes nitrogen in Yara's products. See details on page 129.

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Yara Integrated Report 2023	2023
	Highlights

CONTENT

01 2023‌ IN BRIEF

CEO message

Key figures

Highlights from 2023

02 YEAR‌ IN REVIEW

03 GOVERNANCE

1. SUSTAINABILITY STATEMENTS
2. FINANCIAL STATEMENTS

Developing world-scalelow-carbon ammonia plants in the US

MARCH/JUNE

Yara's strategic ambition is to develop two world-scalelow-carbon ammonia plants in the US Gulf Coast region. Each ammonia plant will have a capacity of approximately 1.2-1.4 tonnes annually. About 95 percent of the carbon dioxide (CO2) generated from the production process will be captured and transported for permanent geological storage. This will allow us to serve our customers with low-emission ammonia and meet the growing global demand within existing and emerging markets. Yara is expected to offtake the vast majority of the production volumes, which further enhances the strategic value and commercial viability of the projects.

Delivering growth and decarbonization with capital discipline

JUNE

On our Capital Markets Day, we presented our ambition to grow our low-carbon ammonia operations. Coupling the potential investments in the US with our leading global ammonia position, we can profitably decarbonize our premium product operations in Europe while also diversifying our energy position and growing in new market segments like shipping and power generation. Together with our farmer-centric approach and initiatives within regenerative agriculture, this will help us deliver on our ambition of Growing a Nature- Positive Food Future.

Opening digital crop nutrition expertise to third parties

JUNE

We announced that we are opening our AgTech portfolio to third parties through the new agricultural API-solution, YaraFX Insight. This tool will make recommendations based on our more than 100 years of crop nutrition knowledge, global field trials, and the input of over 800 agronomists worldwide, and will be available for integration into third-party digital plat- forms. Farmers worldwide will be able to benefit from these capabilities to increase yields, on the digital platform of their choice.

Connecting southern and northern

Europe with hydrogen

JUNE

Yara Clean Ammonia and Cepsa entered a strategic partnership to establish the first low-emission hydrogen maritime corridor between the ports of Algeciras and Rotterdam. This initiative aims to decarbonize European industry and maritime transport by providing a safe and cost-efficient supply chain for low-emission ammonia and hydrogen. It is well aligned with the EU's Fit for 55 package and FuelEU maritime initiative, which aims to cut GHG emissions from maritime transport by 2 percent in 2025, 6 percent in 2030, and 75 percent in 2050 compared to 2020.

Conclusion of 65 years of research

SEPTEMBER

Since 1958, Yara has systematically studied the long-term effects of nutrient management in farming. The conclusions of this long-term trial emphasized the pivotal role of balanced nutrition in maintaining soil health. The application of mineral fertilizer and supplementing farmyard manure with mineral fertilizer has had social, economic, and environmental benefits indicative of sustainable crop production. Farmyard manure alone or unbalanced nutrition reduced crop yield and revenue and led to inefficient use of resources and nutrients as well as a depletion of soil fertility. The trial was conducted at Yara's Hanninghof research center in Dülmen, Germany.

• Jate, M., & Lammel, J. (2022). Effect of Balanced and Integrated Crop Nutrition on Sustainable Crop Production in a Classical Long-Term Trial. IntechOpen. doi: 10.5772/ intechopen.102682

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