GN Store Nord

Board of Directors and Executive Leadership Team

Corporate Governance Structure

GN's corporate governance structure ensures effective oversight of sustainability matters:

Board of Directors: The Board of Directors oversees risk management across the value chain and ensures risks are managed effectively. Risk governance at GN is overseen by the Board of Directors, who ensure risks are managed across the value chain.

Executive Leadership Team: The Executive Leadership Team collectively challenges, validates, and prioritizes risks and risk handling activities. Risks are identified and governed by a risk department and the Executive Leadership Team for each division and selected functions.

Risk Management and Sustainability Governance

The Board of Directors annually reviews and approves a comprehensive risk report that has been reviewed and prioritized by the Executive Leadership Team. The Board conducts an annual Top Risk Review in December, where the Board of Directors' risk review takes place.

Sustainability Integration

Sustainability has become increasingly integrated into GN's business strategy over the past years. GN's approach to sustainability is driven by a desire to create real and lasting value for all stakeholders. GN has not set up a separate sustainability governance structure but uses existing business processes to drive the sustainability agenda.

Sustainability is integrated into how GN runs the company, as a consideration in key decisions on how they design products and run operations.

Information Provided to Administrative, Management and Supervisory Bodies

Risk Reporting to the Board

The Board of Directors receives comprehensive information on sustainability matters through GN's risk management process:

• Annual Risk Review: A comprehensive risk report, reviewed and prioritized by the Executive Leadership Team, is presented to the Board of Directors annually for approval
• Top Risk Review: The Board conducts an annual Top Risk Review in December
• ESG Risk Integration: Environmental, social, and governance risks are integrated into the overall risk assessment process

Executive Leadership Team Engagement

The Executive Leadership Team meets to collectively challenge, validate, and prioritize risks and risk handling activities, including sustainability-related risks. This information is then consolidated and presented to the Board.

Audit Committee Oversight

The Audit Committee reviews the Organization Risk Governance process, ensuring proper oversight of risk management including sustainability matters.

Sustainability Strategy Communication

The Board and management receive information on GN's sustainability strategy, which focuses on three key areas where GN has the most impact:

1. Sustainable design – developing product designs that impact the experience of products, not the environment
2. Decarbonization – reducing carbon footprint as fast as the science tells us
3. Supply chain responsibility – safeguarding human rights across the full value chain

Risk Management and Internal Controls Over Sustainability Reporting

Risk Management Framework

GN has established a comprehensive risk management framework that encompasses sustainability-related risks:

Risk Governance Structure:

• Risk governance at GN is overseen by the Board of Directors
• Risks are identified and governed by a risk department and the Executive Leadership Team for each division and selected functions
• Risks are evaluated based on their impact and likelihood

Risk Assessment Process:

Sustainability Risk Categories Managed

GN systematically manages several categories of sustainability-related risks:

Environmental Risks:

• Climate change impacts on operations
• Supply chain environmental risks
• Product lifecycle environmental impacts

Social Risks:

• Human rights in the value chain
• Workforce development and retention
• Product quality and safety

Governance Risks:

• Cybersecurity and data protection
• Regulatory compliance
• Geopolitical environment impacts

Internal Controls

GN has implemented internal controls over sustainability reporting through:

• Integration of sustainability considerations into existing business processes
• Regular monitoring and assessment of sustainability performance
• Annual review and approval of sustainability-related risks by the Board of Directors

GN's approach ensures that sustainability risks are not managed separately but are integrated into the overall business risk management framework.

Strategy, Business Model and Value Chain

Business Purpose and Strategy

GN's purpose is Bringing People Closer. For more than 155 years, GN has developed technology solutions with the purpose of bringing people closer to one another. Today, GN develops, manufactures, and markets innovative hearing aids for people with hearing loss; headsets, speakerphones, and video equipment for collaboration at work; and a broad range of gear for gaming aficionados.

Business Model

GN operates as an innovation-focused company with deep digital sound and visual processing competencies. As an integrated hardware, software, and AI enabled innovation powerhouse, GN delivers personalized and customer-centric experiences by providing the seamless interface between the user and technology ecosystems.

Three Focused Divisions:

1. Hearing Division: Develops and markets hearing aids and accessories for people with hearing loss
2. Enterprise Division: Provides audio and video collaboration equipment and services for businesses
3. Gaming Division: Creates gaming peripherals and software solutions for gamers

Shared Capabilities Model

GN's business model leverages shared capabilities across divisions:

• Customer-centric innovation: Unified R&D organization utilizing scale, talent, processes, and facilities
• Multiplying impact through partnerships: Strategic partnerships with technology leaders like Microsoft, Zoom, Google, and Apple
• Agile and scalable operations: Integrated manufacturing, sourcing, and supply chain operations
• People and culture: Fostering engaged employees who thrive, grow, and perform

Value Chain Overview

Research & Development:

• R&D centers in Denmark, United States, Netherlands, Poland, France, Italy, and China
• Unique blend of expertise in human ear, audio, video, speech, gaming, wireless technologies, miniaturization, software, and AI
• DKK 1.9 billion invested in R&D in 2024

Manufacturing:

• Central and regional manufacturing sites for hearing aids in Australia, China, Denmark, Japan, Malaysia, South Korea, Spain, and United States
• Enterprise and gaming products produced by carefully selected manufacturers mainly in Asia
• Components sourced from suppliers primarily in Asia
• Works with tier 1 manufacturers supported by more than 100 sub-suppliers

Sales and Distribution:

• Hearing aids sold in around 100 countries with own customer teams in 30+ countries
• Enterprise products sold via distributors, retailers, and own webstores in 80+ countries
• Partners handle logistics, local customization, and final packaging from four regional centers in Mexico, Poland, China, and Hong Kong

Value Creation

GN's business model creates value by:

For Customers:

• Hearing: Helping 11.2 million people with hearing loss lead better lives
• Enterprise: Improving productivity, performance, and efficiency for businesses
• Gaming: Enhancing gaming experiences for 160 million gamers globally

For Society:

• Supporting remote collaboration to reduce carbon emissions from travel
• Advancing hearing health awareness through initiatives like LISTEN TO THIS
• Providing active entertainment that builds social connections

For Shareholders:

• Asset-light business model generating solid cash flows
• Strong margin focus supported by group-wide synergies
• Financial targets: 5-8% organic revenue growth and 16-17% EBITA margin by 2028

Interests and Views of Stakeholders

Stakeholder Engagement Approach

GN is committed to consistently creating value for customers, employees, shareholders, and the communities in which we operate. Building on our long history of responding to changing demands from our stakeholders, sustainability has over the past years become increasingly integrated into GN's business strategy.

Key Stakeholder Groups and Their Interests

Customers:

• Hearing customers: Seek innovative hearing solutions that improve quality of life and social connections
• Enterprise customers: Require reliable, secure, and efficient collaboration tools that enhance productivity
• Gaming customers: Demand high-performance gaming peripherals that enhance their gaming experience
• Interests: Product quality, innovation, reliability, customer service, and value for money

Employees:

• Interests: Safe and inclusive workplace, career development, fair compensation, work-life balance
• GN's approach: Fostering a great workplace where aspirations meet opportunities, where talent comes to fuel their professional passion, and where employees feel they truly belong regardless of who they are

Shareholders and Investors:

• Interests: Competitive returns, sustainable growth, transparent communication, strong governance
• GN's approach: Delivering competitive shareholder return through combination of dividend payments and share price appreciation, maintaining active dialogue with existing and potential shareholders

Communities and Society:

• Interests: Positive societal impact, environmental responsibility, local economic development
• GN's impact: 11.2 million people benefit directly from hearing solutions; supporting remote collaboration to reduce carbon emissions; advancing hearing health awareness

Partners and Suppliers:

• Interests: Fair business practices, long-term partnerships, mutual growth opportunities
• GN's approach: Building strong partnerships across the value chain, including technology partnerships with Microsoft, Zoom, Google, and Apple

Healthcare Professionals:

• Interests: Access to innovative hearing solutions, professional development, patient outcomes
• GN's initiatives: LISTEN TO THIS initiative to raise awareness of hearing loss and support hearing care professionals with insights into hearing health, brain health, and quality of life

Stakeholder Engagement Methods

Investor Relations:

• Active dialogue through investor meetings, conferences, and presentations
• Regular financial reporting and company announcements
• Roadshows following interim and annual results
• Coverage by sell-side analysts with research reports

Customer Engagement:

• Customer-centric innovation approach across all divisions
• Direct customer teams in 30+ countries for hearing business
• Channel network of 20,000 resellers for enterprise business
• Close collaboration with e-sports teams and gaming communities

Industry and Professional Engagement:

• LISTEN TO THIS global initiative uniting industry leaders, academic institutions, and NGOs
• Partnerships with major technology companies
• Collaboration with hearing care professionals through education and training programs

Stakeholder Value Creation

GN's stakeholder engagement is guided by the principle of creating shared value:

• Customer value: Through innovative products that solve real problems and enhance experiences
• Employee value: Through inclusive culture, professional development, and meaningful work
• Shareholder value: Through sustainable growth and strong financial performance
• Societal value: Through products that improve lives and contribute to social connection and productivity

Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model

Material Impacts Overview

GN has identified several material impacts, risks, and opportunities that significantly influence our strategy and business model:

Positive Impacts of GN's Business Model

Social Positive Impacts:

• Hearing health improvement: GN's hearing instruments help users lead better lives – currently, more than 11.2 million people across the world benefit directly from our hearing solutions
• Health risk mitigation: As connections between hearing loss, cognition, and health become clearer, untreated hearing loss becomes much more than a daily nuisance but rather a serious health risk
• Enhanced collaboration: Audio and video solutions help customers choose remote collaboration over carbon-emitting travel or commuting, improving work-life balance with increased workplace flexibility
• Social connection: Gaming solutions support people of all ages in their social interactions with other gamers, representing a more active form of entertainment than passive viewing

Environmental Positive Impacts:

• Reduced carbon emissions: Enterprise solutions enable switching from long-distance travel to virtual meetings, reducing enterprises' climate footprint
• Sustainable design focus: Developing product designs that impact the experience of products, not the environment

Material Risks and Their Strategic Integration

Geopolitical Environment Risks:

• Impact: Economic uncertainty may decrease discretionary spending; supply chain dependencies in China/Asia face escalating geopolitical instability
• Strategic Response: Pursuing operations and supply chain strategy to increase agility and resilience; reducing dependency on manufacturing in China; diversifying to serve almost entire U.S. market from manufacturing outside China

Market and Competitiveness Risks:

• Impact: Highly competitive dynamics, market consolidation, product commoditization, and new competitors
• Strategic Response: Embedding brand awareness into regional planning; proactive competitive modeling; nurturing relationships and unique propositions through customer-centric innovations; strengthening partnerships

Technology and Innovation Risks:

• Impact: Need to access and deploy latest technologies in hardware, software, and services; maintain product quality throughout lifecycle
• Strategic Response: Merged R&D teams into one organization for better scale and utilization of common technologies; customer-first innovation approach; centralized quality function

Cybersecurity Risks:

• Impact: Products connecting to internet have inherent compromise risks; poor availability or data breaches could impact operations and reputation
• Strategic Response: Secure practices in software development; Product Security Framework implementation; comprehensive training and risk management

Strategic Opportunities

Market Growth Opportunities:

• Hearing: Aging population and health awareness drive growth; adoption still relatively low with opportunities for expansion
• Enterprise: Hybrid work normalization creates demand for collaboration technology; AI integration opportunities through voice interaction
• Gaming: Gaming becoming mainstream entertainment with growing global market

Technology Leadership Opportunities:

• AI Integration: Years of combined AI and machine learning expertise across product areas, now utilized in close collaboration
• Personalization: Increasing user demand for personalized technology experiences aligns with GN's capabilities
• Sustainability: Growing focus on sustainability presents opportunities for business development and customer attraction

Integration with Business Strategy

One-Company Transformation: The material risks and opportunities have directly influenced GN's transformation into a one-company setup:

• Simplified organizational structure for stronger resilience
• Shared capabilities across R&D, Operations, and key functions
• ~DKK 600 million in cost synergies identified across COGS and OPEX by 2026
• DKK ~430 million synergies realized in 2024

Financial Targets Aligned with Material Factors:

• 5-8% organic revenue growth (CAGR) targeting market share gains
• 16-17% EBITA margin by 2028 leveraging operational synergies
• 2.0x leverage by 2028 maintaining financial resilience

Sustainability Integration: Material environmental and social impacts drive three focus areas:

1. Sustainable design – addressing product environmental impact
2. Decarbonization – 58% reduction in scope 1 and 2 emissions vs 2021, targeting net-zero by 2050
3. Supply chain responsibility – safeguarding human rights across value chain

Risk-Opportunity Balance

GN's business model balances material risks through:

• Geographic diversification mitigating geopolitical risks
• Technology leadership maintaining competitive advantages
• Partnership strategy multiplying market reach and capabilities
• Operational resilience ensuring supply chain flexibility

The material impacts, risks, and opportunities are systematically integrated into GN's strategic planning, risk management, and operational execution, ensuring the business model remains resilient and value-creating across all stakeholder groups.

Description of the Processes to Identify and Assess Material Impacts, Risks and Opportunities

Risk Identification and Mitigation Process

GN has established a systematic process for identifying and assessing material impacts, risks, and opportunities that operates on an annual cycle:

Annual Risk Assessment Cycle:

Risk Governance Structure

Board Level:

• Risk governance overseen by the Board of Directors
• Annual approval of comprehensive risk report
• Ensure risks are managed across the value chain

Executive Level:

• Executive Leadership Team collectively challenges, validates, and prioritizes risks
• Risk department works with Executive Leadership Team for each division and selected functions
• Risks evaluated based on impact and likelihood

Operational Level:

• Corporate Risk Governance team evaluates and challenges responses
• Managers from prioritized areas participate in consolidation meetings
• Finance function assesses and validates financial risk impacts

Double Materiality Assessment Process

GN conducts a double materiality assessment to identify material impacts, risks, and opportunities:

Impact Materiality Assessment:

• Evaluates actual and potential impacts on people and the environment
• Considers both negative and positive impacts
• Assesses impacts across the entire value chain

Financial Materiality Assessment:

• Evaluates risks and opportunities that affect enterprise value
• Considers short, medium, and long-term time horizons
• Assesses likelihood and magnitude of financial effects

Stakeholder Engagement in Risk Assessment

GN's risk identification process incorporates input from various stakeholders:

Internal Stakeholders:

• Executive Leadership Team participation in quarterly reviews
• Division and functional managers providing area-specific insights
• Corporate Risk Governance team providing oversight and challenge
• Finance team validating financial impact assessments

External Stakeholder Considerations:

• Customer feedback and market analysis informing competitive risks
• Supplier and partner input on supply chain and operational risks
• Regulatory and policy developments affecting compliance risks
• Industry trends and benchmarking informing strategic risks

Risk Categories Systematically Assessed

GN's process covers multiple risk categories:

Strategic and Market Risks:

• Geopolitical environment and trade relations
• Market competitiveness and commoditization
• Technology advancement and innovation gaps

Operational Risks:

• Manufacturing and supply chain disruptions
• IT landscape and cybersecurity threats
• Product quality and security by design

Financial Risks:

• Currency fluctuations and interest rate changes
• Credit risks and liquidity management
• Investment and M&A risks

ESG Risks:

• Climate change and environmental impacts
• Human rights and labor practices in value chain
• Data privacy and cybersecurity

Continuous Monitoring and Updates

The risk identification and assessment process is dynamic:

• Quarterly monitoring of key risk indicators
• Annual comprehensive review and update of risk assessments
• Event-driven updates when significant changes occur
• Regular benchmarking against industry best practices

Integration with Business Strategy

The identified material impacts, risks, and opportunities are systematically integrated into:

• Strategic planning and decision-making processes
• Business model development and transformation initiatives
• Financial planning and target setting
• Operational planning and resource allocation
• Sustainability strategy and reporting

This comprehensive process ensures that GN maintains a thorough understanding of its material impacts, risks, and opportunities, enabling proactive management and strategic alignment across the organization.

Disclosure Requirements in ESRS Covered by the Undertaking's Sustainability Statement

Material ESRS Topics

Based on GN's double materiality assessment, the following ESRS topics have been determined to be material:

ESRS 2 – General Disclosures:

• All general disclosure requirements are covered as they provide the foundation for sustainability reporting

Environment:

• E1 – Climate Change: Material due to GN's climate commitments and carbon reduction targets
• E2 – Pollution: Material due to product lifecycle impacts and manufacturing processes
• E5 – Resource Use and Circular Economy: Material due to focus on sustainable design and product lifecycle management

Social:

• S1 – Own Workforce: Material due to importance of talent retention and employee engagement
• S2 – Workers in the Value Chain: Material due to global supply chain and manufacturing partnerships
• S4 – Consumers and End-Users: Material due to direct impact on users' health and wellbeing through products

Governance:

• G1 – Business Conduct: Material due to global operations and partnership-based business model

ESRS Disclosure Requirements Covered

The following table outlines which disclosure requirements are covered in this sustainability statement:

ESRS 2 – General Disclosures:

• GOV-1: Role of administrative, management and supervisory bodies
• GOV-2: Information provided to administrative bodies on sustainability matters
• GOV-5: Risk management and internal controls over sustainability reporting
• SBM-1: Strategy, business model and value chain
• SBM-2: Interests and views of stakeholders
• SBM-3: Material impacts, risks and opportunities
• IRO-1: Description of processes to identify and assess material impacts
• IRO-2: Disclosure requirements covered by sustainability statement

E1 – Climate Change:

• E1-2: Policies related to climate change mitigation and adaptation
• E1-3: Actions and resources related to climate change policies
• E1-4: Targets related to climate change mitigation and adaptation
• E1-5: Energy consumption and mix
• E1-6: Gross Scopes 1, 2, 3 and Total GHG emissions

E2 – Pollution:

• E2-1: Policies related to pollution
• E2-4: Pollution of air, water and soil
• E2-5: Substances of concern and substances of very high concern

E5 – Resource Use and Circular Economy:

• E5-1: Policies related to resource use and circular economy
• E5-4: Resource inflows
• E5-5: Resource outflows

S1 – Own Workforce:

• S1-1: Policies related to own workforce
• S1-6: Characteristics of the undertaking's employees
• S1-9: Diversity metrics
• S1-13: Training and skills development metrics
• S1-14: Health and safety metrics

S2 – Workers in the Value Chain:

• S2-1: Policies related to value chain workers
• S2-4: Taking action on material impacts on value chain workers

S4 – Consumers and End-Users:

• S4-1: Policies related to consumers and end-users
• S4-4: Taking action on material impacts on consumers and end-users

G1 – Business Conduct:

• G1-1: Business conduct policies and corporate culture
• G1-2: Management of relationships with suppliers
• G1-3: Prevention and detection of corruption and bribery

Topics Deemed Not Material

The following ESRS topics were assessed but determined not to be material for GN:

Environment:

• E3 – Water and Marine Resources: Not material due to limited water-intensive operations
• E4 – Biodiversity and Ecosystems: Not material due to limited direct impact on biodiversity

Social:

• S3 – Affected Communities: Not material due to limited direct community impacts from operations

Materiality Assessment Methodology

The materiality determination was based on:

Impact Materiality:

• Assessment of actual and potential positive and negative impacts on people and environment
• Evaluation across entire value chain including upstream and downstream activities
• Consideration of severity, scope, and likelihood of impacts

Financial Materiality:

• Assessment of sustainability matters that trigger financial effects on the undertaking
• Evaluation of risks and opportunities affecting enterprise value
• Consideration of short, medium, and long-term time horizons

Reporting Framework Compliance

This sustainability statement is prepared in accordance with:

• EU Corporate Sustainability Reporting Directive (CSRD)
• European Sustainability Reporting Standards (ESRS)
• Additional requirements in the Danish Financial Statements Act

The statement constitutes GN's reporting according to Section 99a, 99b, 99d, and 107d in the Danish Financial Statements Act and section §139c in Danish Companies Act.

Policies Related to Climate Change Mitigation and Adaptation

Climate Change Policy Framework

GN has established comprehensive policies related to climate change mitigation and adaptation as part of its commitment to protecting the planet and reaching net-zero emissions by 2050, in line with the scientific consensus on limiting global warming to 1.5 degrees Celsius.

Climate Mitigation Policies

Carbon Reduction Strategy: GN has laid out an ambitious strategy to reduce negative impact from its activities, focusing on:

• Decarbonization: Reducing carbon footprint as fast as the science tells us
• Net-zero commitment: Achieving net-zero emissions by 2050
• Science-based targets: Aligning with 2030 climate goals based on climate science

Sustainable Design Policy: GN focuses on sustainable design as one of three key areas:

• Developing product designs that impact the experience of products, not the environment
• Supporting the transition to a circular economy through design decisions
• Integrating sustainability considerations into product development processes

Supply Chain Climate Policy: Climate considerations are integrated into supply chain decisions:

• Manufacturing and supply chain decisions driven by sustainability ambitions
• Working with suppliers on climate-related improvements
• Pursuing operations strategy to increase resilience against climate-related disruptions

Climate Adaptation Policies

Operational Resilience: GN has implemented policies to adapt to climate-related physical risks:

• Supply chain diversification: Reducing dependency on single geographic regions to increase resilience
• Geographic flexibility: Developing capability to serve markets from multiple manufacturing locations
• Risk mitigation strategies: Implementing robust risk mitigation strategies for extreme weather and climate change impacts

Business Continuity: Policies ensure business continuity in face of climate impacts:

• Balancing operations between different facilities to reduce climate risk exposure
• Regional manufacturing options to enhance resilience
• Enhanced systems for improved stability and capacity during climate-related disruptions

Integration with Business Strategy

Strategic Integration: Climate policies are integrated into business strategy:

• Sustainability viewed as an investment rather than a cost
• Climate considerations drive design, manufacturing, and supply chain decisions
• Policies support business development opportunities through sustainability focus

Stakeholder Engagement: Climate policies consider stakeholder expectations:

• Growing focus on sustainability from customers, employees, and other stakeholders
• Policies designed to attract sustainability-minded customers and employees
• Compliance with growing product-related sustainability legislation

Governance and Implementation

Policy Governance:

• Climate policies integrated into existing business processes rather than separate sustainability governance structure
• Board oversight through risk management framework
• Executive Leadership Team involvement in climate-related decision making

Continuous Improvement:

• Regular assessment of climate policies against evolving scientific consensus
• Updates to policies based on stakeholder feedback and regulatory developments
• Integration of climate considerations into all key business decisions

These policies demonstrate GN's commitment to addressing climate change through both mitigation of its environmental impact and adaptation to climate risks, ensuring long-term business resilience while contributing to global climate goals.

Actions and Resources Related to Climate Change Policies

Climate Action Implementation

GN has implemented comprehensive actions and allocated significant resources to support its climate change mitigation and adaptation policies:

Carbon Reduction Actions

Achieved Emissions Reductions:

• 58% reduction in scope 1 and 2 carbon emissions vs 2021 baseline
• 26% reduction in scope 3 carbon emissions vs 2021 baseline
• Progress toward 2030 climate goals and net-zero emissions by 2050

Operational Decarbonization:

• Implementation of energy efficiency measures across operations
• Transition to renewable energy sources where feasible
• Optimization of manufacturing processes to reduce energy consumption

Supply Chain Climate Actions

Manufacturing Diversification:

• Reduced dependency on manufacturing in China as part of climate resilience strategy
• Capability to serve almost entire U.S. market from manufacturing outside China
• Diversification strategy ongoing to enable flexible response to climate-related disruptions

Supply Chain Resilience:

• Enhanced inbound logistics visibility to proactively manage climate-related disruptions
• Onboarding new vendors that can produce outside of traditionally climate-vulnerable regions
• Regional manufacturing options investigation to reduce climate exposure
• Risk diversification strategy focused on climate resilience

Sustainable Design Actions

Product Development:

• Integration of sustainability considerations into product design processes
• Focus on developing products that minimize environmental impact
• Support for circular economy transition through design decisions
• Compliance with growing product-related sustainability legislation

R&D Investment:

• DKK 1.9 billion invested in R&D in 2024
• Portion of R&D focused on sustainable technology development
• Innovation in products and services supporting climate goals

Resource Allocation

Financial Resources:

• Significant capital allocated to supply chain diversification and resilience
• Investment in sustainable manufacturing technologies
• Resources dedicated to achieving sustainability certifications

Human Resources:

• Dedicated teams working on sustainability integration across business processes
• Training and development programs on climate-related topics
• Executive Leadership Team involvement in climate-related decisions

Technology Resources:

• Enhanced systems for improved stability and capacity during climate disruptions
• IT infrastructure modernization to support sustainable operations
• Advanced monitoring systems for tracking climate performance

Partnership and Collaboration Actions

Technology Partnerships:

• Collaboration with technology partners on sustainable solutions
• Integration with partners' sustainability initiatives
• Joint development of climate-friendly technologies

Supply Chain Collaboration:

• Working with tier 1 manufacturers and more than 100 sub-suppliers on climate initiatives
• Long-term strategic partnerships with focus on sustainability
• Proactive communication and problem-solving for climate-related supply chain issues

Operational Climate Actions

Facility Management:

• Balancing operations between different facilities to optimize climate performance
• Energy efficiency improvements across global facilities
• Transition to sustainable facility management practices

Transportation and Logistics:

• Optimization of distribution networks from four regional centers in Mexico, Poland, China, and Hong Kong
• Reduction of transportation-related emissions through efficient logistics
• Partners responsible for final packaging to optimize lead-time and reduce emissions

Monitoring and Reporting Actions

Performance Tracking:

• Regular monitoring of emissions reduction progress
• ESG ratings tracking: AA rating from MSCI, 10.6 (low risk) from Sustainalytics, B rating from CDP Climate Change
• Annual reporting on climate performance in accordance with CSRD requirements

Continuous Improvement:

• Annual review and update of climate action plans
• Integration of climate performance into business decision-making
• Benchmarking against industry best practices and scientific recommendations

These comprehensive actions and resource allocations demonstrate GN's commitment to implementing its climate policies effectively and achieving its ambitious climate targets while building operational resilience against climate-related risks.

Targets Related to Climate Change Mitigation and Adaptation

Climate Targets Overview

GN has established ambitious climate targets aligned with scientific consensus on limiting global warming to 1.5 degrees Celsius:

Carbon Emissions Reduction Targets

Long-term Target:

• Net-zero emissions by 2050 in line with scientific consensus on limiting global warming to 1.5 degrees Celsius

Medium-term Targets:

• 2030 climate goals for significant emissions reduction (baseline year: 2021)

Achieved Progress (as of 2024):

Adaptation Targets

Supply Chain Resilience:

• Target: Capability to serve almost entire U.S. market from manufacturing outside China
• Status: Implementation ongoing as part of diversification strategy

Operational Resilience:

• Target: Achieve resilient global supply chain able to withstand climate-related disruptions
• Actions: Ongoing diversification of manufacturing footprint and distribution networks

Supporting Targets

Sustainable Design:

• Target: Integrate sustainability considerations into all product design processes
• Focus: Develop products that impact user experience, not environment
• Support: Transition to circular economy through design decisions

Supply Chain Engagement:

• Target: Work with all tier 1 manufacturers and key sub-suppliers on climate initiatives
• Current scope: Working with tier 1 manufacturers supported by more than 100 sub-suppliers

Performance Monitoring

ESG Performance Tracking:

• External validation through ESG ratings:
  • MSCI: AA rating (indicating strong climate performance)
  • Sustainalytics: 10.6 (low risk) rating
  • CDP Climate Change: B rating

Internal Monitoring:

• Annual tracking of emissions reduction progress against 2021 baseline
• Regular assessment of climate target achievement
• Integration of climate performance into business reporting

Target Alignment

Science-based Alignment:

• Targets aligned with 1.5°C global warming limitation as per scientific consensus
• 2021 established as baseline year for climate targets
• Regular review against evolving climate science

Business Integration:

• Climate targets integrated into overall business strategy
• Financial targets towards 2028 consider climate resilience
• Operational planning incorporates climate target achievement

Future Target Development

Continuous Enhancement:

• Regular review and potential enhancement of climate targets
• Alignment with evolving regulatory requirements
• Integration with industry best practices and stakeholder expectations

Scope Expansion:

• Potential expansion of targets to cover additional scopes and activities
• Enhanced granularity in target setting across business divisions
• Integration with circular economy targets

These targets demonstrate GN's commitment to achieving significant climate impact reduction while building resilience against climate-related risks, supporting both global climate goals and long-term business sustainability.

Policies Related to Pollution

Pollution Prevention Policy Framework

GN has established policies to address pollution risks and impacts across its operations and value chain as part of its commitment to minimize negative environmental impact:

Product-Related Pollution Policies

Sustainable Design Policy:

• Focus on developing product designs that impact the experience of products, not the environment
• Integration of pollution prevention considerations into product development processes
• Compliance with growing product-related sustainability legislation
• Support for circular economy transition to minimize waste and pollution

Product Quality and Safety:

• Comprehensive quality management to ensure products operate without defects throughout lifecycle
• Centralized quality function enhances teamwork and ensures high-quality results
• Product security framework implementation to prevent environmental and safety risks

Manufacturing and Operations Pollution Policies

Manufacturing Standards:

• Implementation of pollution prevention measures across:
  • Central and regional manufacturing sites for hearing aids in Australia, China, Denmark, Japan, Malaysia, South Korea, Spain, and United States
  • Careful selection of manufacturers for enterprise and gaming products mainly in Asia
• Working with tier 1 manufacturers supported by more than 100 sub-suppliers on environmental standards

Supply Chain Environmental Standards:

• Integration of pollution prevention requirements into supplier selection and management
• Long-term strategic partnerships include environmental performance criteria
• Enhanced monitoring systems to track environmental performance across supply chain

Chemical and Material Management

Substances of Concern Management:

• Policies addressing substances of concern and substances of very high concern in products
• Compliance with chemical regulation requirements across global markets
• Material selection criteria incorporating pollution prevention considerations

Waste Management:

• Implementation of waste reduction and proper disposal practices
• Focus on resource efficiency and circular economy principles
• Balancing operations between different facilities to optimize environmental performance

Air, Water and Soil Protection

Emission Control:

• Policies to minimize air emissions from manufacturing and operations
• Integration with broader carbon reduction strategy achieving 58% reduction in scope 1 and 2 emissions
• Monitoring and control of industrial emissions across global facilities

Water and Soil Protection:

• Implementation of measures to prevent water and soil contamination
• Proper handling and disposal of potentially harmful substances
• Environmental management systems at key facilities

Regulatory Compliance

Multi-jurisdictional Compliance:

• Policies ensure compliance with pollution-related regulations across:
  • Global operations in 30+ countries with direct sales
  • Manufacturing locations across multiple continents
  • Distribution networks covering 100+ countries

Continuous Monitoring:

• Regular assessment of regulatory requirements and policy updates
• Integration of new pollution-related regulations into business processes
• Annual review of environmental policies and performance

Integration with Business Strategy

Strategic Integration:

• Pollution prevention integrated into existing business processes
• Board oversight through risk management framework
• Executive Leadership Team involvement in environmental policy decisions

Innovation and Development:

• DKK 1.9 billion R&D investment includes focus on sustainable technology development
• Research into cleaner production technologies and processes
• Development of products with reduced environmental impact throughout lifecycle

Stakeholder Engagement

Supply Chain Collaboration:

• Working with suppliers and manufacturing partners on pollution prevention
• Enhanced communication and problem-solving capabilities for environmental issues
• Integration of environmental requirements into partnership agreements

Customer and Community Engagement:

• Transparent communication about product environmental performance
• Response to growing stakeholder focus on environmental responsibility
• Sustainability-minded customer and employee attraction through environmental policies

These comprehensive pollution-related policies demonstrate GN's commitment to minimizing negative environmental impacts across its operations and value chain while maintaining compliance with global environmental regulations.

Substances of concern and substances of very high concern

Policy and management approach

GN's Environmental Policy addresses pollution-related negative impacts in terms of substances used during both production in our own operations and outsourced manufacturing. Our policy commitments include compliance with all pollution-related legislation related to the use of substances of concern and very high concern, such as REACH and RoHS, and the substitution of substances with less harmful alternatives that can fulfil the same purpose, even when not legally required. This policy is supported by internal procedures on controlling and limiting the impact of incidents and emergency situations.

The implementation of these policy commitments is managed by senior management functions in our quality and legal functions. In support of achieving our policy intentions, we continuously evaluate and test performance to ensure compliance with legal requirements. Products that are manufactured in our own operations (hearing aids) are subject to medical regulatory requirements, which include obligations on material use. For products for which manufacturing is outsourced, all suppliers providing products or components to GN are required to complete a declaration of compliance to conform with our policies.

During 2024, all relevant suppliers have completed a declaration of compliance to show adherence to our policies in this area. This has enabled a better view of any high-risk areas in our value chain, as well as a better understanding of potential negative impacts relating to pollution of water, soil, and food, driven as a result of the use of hazardous substances.

Own operations actions

To support our policy objectives in this area, as well as moving beyond compliance with our internal policies through our health and safety processes, we phased out the use of dichloromethane as a cleaning agent in 2024, replacing it with a more effective and less harmful alternative.

As another action in 2024, at our manufacturing facility in Xiamen, we have significantly reduced our consumption of isopropyl alcohol (estimated annual reduction of 69% in liters consumed in 2024 versus 2023) by installing onsite recycling capability.

In 2025, we aim to work with stakeholders in our R&D, quality and legal functions to understand additional areas where we can take actions in substituting substances with less harmful alternatives throughout our production processes.

Value chain actions

As part of our policy objectives, a key focus is the continuous evaluation of compliance regarding the use of harmful substances by our suppliers. During 2024, all relevant suppliers have completed a declaration of compliance to show adherence to our policies in this area.

For products for which we depend on outsourced manufacturing, our focus is on phasing out halogens, specifically bromine, chlorine and fluorine. For Jabra products, we set requirements for suppliers and verify compliance through in-house testing. We expect to phase out bromine and chlorine in 2025 (where we have set a control limit that these substances cannot exceed 900 parts per million (ppm) individually or 1,500 ppm when combined) for flame-retardant parts, where phase out of these halogens in batteries will likely take longer. We have completed phase out of these substances for all other parts. We expect to phase out fluorine by 2026 for the same parts (where this substance cannot exceed 50 ppm).

Our current setup ensures compliance with our control limits but does not give us precise volumes of substances used in our value chain. With the aim of being able to report actual volumes in accordance with phased in data points in ESRS E2 for substance use in the value chain in future, we have commenced an action in 2024, running until 2026 to change our processes so that we obtain full material declarations from all suppliers for substances of very high concern.

Accounting policies

Total amount of substances of concern and substances of very high concern used in own operations

To report the total volume of substances of (very high) concern for production sites, we have collected usage or purchasing data for the substances that are in scope at our manufacturing sites in China, Malaysia, Denmark, and Spain. The total quantities used at these sites have been extrapolated to account for the remainder of our manufacturing sites where we have similar activities. Total amounts have been grouped by their respective hazard class as well as the level of severity within a given hazard class. All volumes are reported in litres. The metrics and use of substances of (very high) concern is externally verified at all sites and in accordance with local environmental legislation.

The hazard of a substance divides health, environmental and physical hazards into separate hazard classes such as reproductive toxicity, skin sensitization, carcinogenicity etc. The severity of the hazard within each class is described by the category. Some classes have five categories; other classes have only one category. Category 1 always represents the most severe hazard within that class. The higher the category number, the lower the severity of the hazard. Each substance can have more than one hazard class and several of the substances used will therefore be accounted for in more than one hazard class.

We include all substances used in the production process within our own operations, including any applicable substances which leave our facilities.

We will not report this metric for substances products or components for which manufacturing is outsourced, as these fall under the phase in provision given that these substances are added to components or products in our value chain. As such, our reported metric only includes substances added to products or components in our own operations, i.e., as part of manufacturing of hearing aids.

Quantitative data

Overview of substances of very high concern

*Refers to the REACH regulation and covers substances that have Persistent, Bioaccumulative and Toxic properties or substances that have very Persistent and very Bioaccumulative properties. Very small amounts of substances that has these properties, are used.

**Very small amounts of substances are used.

Overview of substances of concern

Policies Related to Resource Use and Circular Economy

Circular Economy Policy Framework

GN has established comprehensive policies related to resource use and circular economy as part of its commitment to sustainable design and minimizing environmental impact:

Sustainable Design Policies

Design for Sustainability:

• Focus on sustainable design as one of three key sustainability areas
• Developing product designs that impact the experience of products, not the environment
• Support for transition to circular economy through design decisions
• Integration of circular economy principles into product development processes

Product Lifecycle Approach:

• Consideration of resource use throughout entire product lifecycle
• Design for durability, repairability, and end-of-life management
• Minimization of material use while maintaining product performance and quality

Resource Efficiency Policies

Manufacturing Resource Optimization:

• Resource efficiency measures across global manufacturing operations:
  • Central and regional manufacturing sites in Australia, China, Denmark, Japan, Malaysia, South Korea, Spain, and United States
  • Optimization of resource use in contract manufacturing partnerships
• Balancing operations between different facilities to optimize resource utilization

Supply Chain Resource Management:

• Integration of resource efficiency requirements into supplier management
• Working with tier 1 manufacturers and more than 100 sub-suppliers on resource optimization
• Long-term strategic partnerships include resource efficiency criteria

Waste Reduction and Circular Practices

Waste Minimization:

• Implementation of waste reduction practices across operations
• Focus on circular economy principles to minimize waste generation
• Proper waste management and disposal practices at all facilities

Material Recovery and Recycling:

• Policies supporting material recovery and recycling initiatives
• Integration of recycled materials where technically and economically feasible
• End-of-life product management to support circular economy

Operational Resource Policies

Facility Resource Management:

• Resource efficiency measures across global operations:
  • R&D centers in Denmark, United States, Netherlands, Poland, France, Italy, and China
  • Office locations in 30+ countries with direct sales presence
  • Distribution centers in Mexico, Poland, China, and Hong Kong

Logistics Optimization:

• Regional distribution strategy to optimize resource use in logistics
• Partners responsible for local logistics to minimize transportation resource consumption
• Supply chain diversification to improve resource efficiency

Technology and Innovation Policies

R&D Resource Focus:

• DKK 1.9 billion R&D investment includes focus on resource-efficient technologies
• Innovation in materials and processes to reduce resource consumption
• Unified R&D organization enables sharing of resource efficiency expertise across divisions

Digital Solutions:

• Development of digital solutions that reduce physical resource requirements
• Software and AI innovations that extend product lifecycles
• Remote collaboration solutions helping customers reduce resource consumption

Regulatory and Standards Compliance

Regulatory Alignment:

• Compliance with growing product-related sustainability legislation related to resource use
• Adherence to circular economy regulations across global markets
• Integration of resource-related regulatory requirements into business processes

Industry Standards:

• Implementation of industry best practices for resource use and circular economy
• Participation in circular economy initiatives and standards development
• Annual review of resource use policies and performance

Business Integration Policies

Strategic Integration:

• Resource use and circular economy integrated into business strategy
• Board oversight through risk management framework
• Executive Leadership Team involvement in resource-related decisions

Value Chain Integration:

• Resource efficiency considerations throughout entire value chain
• Integration with broader sustainability strategy including climate goals
• Alignment with one-company transformation synergies for resource optimization

Stakeholder Engagement Policies

Customer Engagement:

• Communication about product resource efficiency and circular economy features
• Response to growing stakeholder focus on sustainability including resource use
• Sustainability-minded customer attraction through circular economy policies

Supply Chain Collaboration:

• Enhanced communication and problem-solving capabilities for resource efficiency initiatives
• Collaboration with partners on circular economy practices
• Integration of resource efficiency into partnership agreements

Performance and Monitoring Policies

Resource Use Monitoring:

• Systematic tracking of resource consumption across operations
• Integration of resource efficiency metrics into business performance measurement
• ESG performance tracking includes resource use indicators

Continuous Improvement:

• Regular assessment and enhancement of resource use policies
• Integration of circular economy best practices
• Innovation in resource efficiency and circular economy approaches

Product-Specific Resource Policies

Hearing Aids:

• Focus on miniaturization to reduce material requirements
• Long product lifecycles and repairability considerations
• Battery efficiency and sustainable battery management

Enterprise Equipment:

• Durable design for professional use environments
• Resource-efficient manufacturing of audio and video equipment
• Software solutions extending hardware lifecycles

Gaming Peripherals:

• Resource-efficient design of gaming hardware
• Focus on product longevity and user upgradability
• Material selection for reduced environmental impact

These comprehensive policies demonstrate GN's commitment to resource efficiency and circular economy principles across its operations, products, and value chain, supporting both environmental goals and business sustainability.

ESRS E5-4: Resource Inflows

Overview

Resource use associated with the manufacture of GN's products and packaging is a highly material topic. Multiple material types, including plastics, metals, textiles, cardboard and adhesives, are required to make GN products and packaging. GN purchases intermediary and finished products from suppliers. The total weight of these products that are used across GN's own product and packaging portfolio is reported below, including breakdown of broad material types to provide greater insight into GN's resource consumption and management of transition risks related to critical raw materials.

An estimated 20% of the materials used in GN's products and packaging was either recycled or sustainably sourced biological materials in 2024.

Total Resource Inflows

Resource Inflows by Material Type (by weight)

Recycled and Certified Materials

Biological Materials

For GN, biological materials refer to paper, cardboard and bio-based plastics used in products and packaging. Within this, GN sources FSC-certified packaging and ISCC Plus-certified biocircular plastics. The percentage of biological materials that have either of these certifications is reported above (17% of total materials are FSC-certified).

Recycled Materials

Secondary intermediary products are used in the form of post-consumer recycled plastic pellets, with varying percentages of recycled content, depending on the product. Total recycled materials used amounted to 309 metric tons in 2024, representing 3% of total material weight.

Methodology

All resource inflows metrics are estimated using GN's product lifecycle assessments (LCAs), as these contain verified component-level data, including material composition and measured weight. The LCAs available are allocated at the item level across the product portfolio. All LCAs are third-party verified according to ISO 14067.

For products currently lacking an LCA, a reference LCA is allocated. Professional judgement is applied in the selection of a reference that will best represent the product or part. An uplift is conducted for items that cannot be represented by an LCA, based on the calculated average per unit volume purchased or produced. For Enterprise, Gaming & Consumer products, one unit packaging per unit product has been assumed.

Note on data limitations: The general basis for preparation section notes that "for resource inflows, due to lack of data, manufacturing waste and tertiary packaging for some products are not included."

Resource outflows

Recyclability and repairability

GN has established targets related to resource outflows:

• Recyclability target: Increase the rate of recyclable content across products and packaging to 80% by 2030 (from 64% in 2021 baseline)
• Repairability target: Increase the rate of repairable products to 100% by 2030 (from 56% in 2021 baseline)

2024 Performance:

• Rate of recyclable content in products and packaging: 75% (up from 74% in 2023)
• Rate of repairable products: 72% (up from 70% in 2023)

Design for circularity approach

GN's approach to resource outflows focuses on three key areas:

1. Repairability: Designing products to be repaired and refurbished to ensure extended product lifetimes
2. Recyclability: Designing products for disassembly and recovery of valuable materials at end-of-life
3. Service-based models: Offering services that enable product return for sustainable processing

Product durability

GN products are designed for durability with typical product lifetimes varying by division:

• Hearing aids: Designed for multi-year use with typical warranty periods
• Enterprise products: Built for professional use with extended service life
• Gaming products: Designed for intensive use by gamers

Repairability initiatives

In 2024, GN:

• Released updated versions of Jabra Evolve 65 and several Jabra Engage headsets, making them compatible with EU regulation around batteries and repairability
• Operates repair centers to enable product repair (see page 48 value chain diagram)
• Offers spare parts through CE 5.2 Sale of spare parts (eligible under EU Taxonomy)

Recyclability methodology

The rate of recyclable content is calculated using recyclability assessments based on material composition, not accounting for ease of sorting or local recycling capabilities. This represents a high-level assessment subject to measurement uncertainty (see page 41).

Waste

Waste generation and management

GN's waste management approach follows the waste hierarchy, prioritizing prevention, reuse, recycling, and recovery over disposal. The company has established targets to minimize waste directed to disposal.

Target: Reduce the total amount of waste directed to disposal to <10% of waste generated by 2030 (from 17% in 2021 baseline)

2024 Performance: 9% of waste directed to disposal (down from 10% in 2023)

Waste data

Waste diverted from disposal breakdown:

• Preparation for reuse: 61 tonnes
• Recycling: 969 tonnes
• Other recovery operations: 202 tonnes

Waste directed to disposal breakdown:

• Incineration: 93 tonnes
• Landfill: 32 tonnes
• Other disposal operations: 0 tonnes

Hazardous waste

GN generated 33 tonnes of hazardous waste in 2024 (down from 36 tonnes in 2023), representing approximately 2.4% of total waste.

Waste management approach

Waste generation data covers GN's major production sites and offices. For sites without complete pollution data, estimates are made using data from sites with similar activities (see page 41 for measurement uncertainty). The waste management hierarchy guides GN's approach, with focus on:

1. Prevention and reduction at source
2. Reuse and preparation for reuse (61 tonnes in 2024)
3. Recycling (969 tonnes, representing 71% of total waste)
4. Recovery operations (202 tonnes)
5. Disposal as last resort (125 tonnes, or 9% of total)

GN's waste reduction initiatives are integrated into operational processes at manufacturing facilities and offices globally.