Kone

KONE's governance model for sustainability and corporate responsibility within the organization is designed to ensure that sustainability is embedded into all levels of decision-making, from strategic oversight to operational execution. The key governance bodies for sustainability at KONE include the Board of Directors, the President and CEO and the Executive Board, Sustainability Disclosure Board, Safety, Quality and Sustainability Board, and Global Sustainability Forum.

The Board of Directors holds the overall responsibility for overseeing the company's sustainability strategy. The Board regularly reviews sustainability performance, addresses potential risks, impacts and opportunities, and ensures that the company complies with all relevant regulations and standards. The Board members' strong conviction in the strategic importance of sustainability for KONE's business places significant weight on it in KONE's overall strategy. The board is well-versed in key sustainability matters relevant to the industry and products, such as carbon neutrality. The Board of Directors consists of non-executive members with a gender ratio of 67% male and 33% female. The Vice Chair of the Board, Jussi Herlin has a separate employment contract for his role as Executive Vice Chair of the Board at KONE. There are no other separate employment contracts for the members of the Board of Directors. Of the Board members, 78% are independent of the Corporation and 67% are independent from significant shareholders.

The President and CEO is responsible for integrating the sustainability strategy approved by the Board of Directors into the company's daily operations. The Executive Board implements the sustainability strategy across all business units. Each executive member is responsible for embedding sustainability within their respective areas, ensuring that initiatives are effectively executed and aligned with the company's overall objectives.

Specific sustainability-related executive boards have been established to focus on critical areas such as environment, safety, quality, global compliance and sustainability governance. Various sustainability related forums act as platforms that bring together representatives from various areas, business lines and global funcions to share best practices, discuss challenges, and align on global sustainability priorities.

The Board members are experienced in addressing sustainability-related impacts, risks, and opportunities, for instance related to carbon neutrality and health and safety topics, within the company's industry, products and operating environment. The Board's annual review cycle and governance structure are established to ensure continuous monitoring of progress towards sustainability targets, associated risks and opportunities as well as development of relevant skills. These reviews are conducted by KONE's or external subject matter experts.

KONE's Global Compliance Committee, which comprises four Executive Board members, the Corporate Controller and VP, Global Compliance, assists the Executive Board in ensuring that KONE has an effective program to conduct business in an ethical and compliant manner. The Global Compliance Committee has expertise in topics critical to compliance, and provides advice to the Executive Board, management and audit committee in meetings and through reports. The Audit Committee monitors compliance matters which are reviewed by the Board of Directors at least annually.

The Executive Board reviews and evaluates the risk assessment results minimum twice a year and agrees on risk management priorities. The Executive Board and the President and CEO receive updates on material IROs or other relevant risk assessments bi-annually by the global risk management function. The Board of Directors are informed on the material risks and opportunities on an annual basis by the General Counsel.

The Board of Directors monitors and evaluates the effectiveness of KONE's risk management systems according to their role defined in KONE Risk Management Policy, in addition to the review of key risks and action plans. The Board's Audit Committee monitors the efficiency and functioning of the internal control environment, including internal controls over sustainability reporting. The Board's Audit Committee is informed on internal control findings on an annual basis.

KONE drives sustainability performance also through compensation. KONE's long-term incentive plan, approved and updated by the Board of Directors, emphasizes sustainability alongside profitable growth to ensure a strong focus in driving transformation towards the achievement of KONE's sustainability ambitions. KONE's Sustainability KPIs have a total 20% weight in the long-term incentive plan and are related to KONE's targets to reduce its Scope 1, 2 and 3 carbon emissions (10% weight), as well as diversity and safety related targets (10% weight).

KONE integrates due diligence into its governance and strategy by adhering to the Finnish Corporate Governance Code and embedding sustainability into its operations. The company's due diligence and its integration to key processes are supported by KONE Global Management System, Health and Safety Policy Statement, Environmental Policy Statement, Human Rights Policy, Code of Conduct, and Supplier and Distributor Codes of Conduct, which are detailed in the policy sections of the material sustainability topics. KONE emphasizes engagement with stakeholders, including employees, suppliers, and communities.

Supporting KONE's sustainability due diligence, the continuous assessment and identification of impacts, risks, and opportunities is embedded into its processes and policies. In addition to complying with applicable laws, rules, and regulations, KONE has established internal requirements to uphold high environmental and social standards in global activities, as well as for its suppliers and partners.

KONE's sustainability reporting is based on the group-level principles of risk management and internal control. The aim of risk management is to identify risks and opportunities in relation to the achievement of sustainability objectives and assess the likelihood and magnitude of the impacts these may have, as well as to identify actions to manage the impacts. The identified risks and opportunities are managed through KONE's sustainability, risk management and internal control governance models.

KONE's internal control framework is built and based on corporate values, the KONE Code of Conduct, a culture of honesty and high ethical standards. The framework is supported by a dedicated leadership, training programs, a positive and diligent corporate culture and working environment as well as by attracting and promoting dedicated and competent employees. Global and local policies and principles are a key part of the internal control framework.

KONE's internal controls are designed to manage relevant sustainability reporting risks, as part of KONE's processes and employee job roles. Internal controls over sustainability reporting are supported by global and local policies and principles that are continuously maintained by incorporating changes and developments from the business operations and information systems.

KONE's Global Risk Management function facilitates risk assessments which includes the assessment of risks and opportunities in relation to sustainability reporting. Dedicated sustainability risk and impact or materiality assessments are conducted to ensure systematical identification, assessment, and treatment of risks, impacts and opportunities. Risks and opportunities are prioritized according to KONE's Risk Management Policy which applies to sustainability reporting.

KONE's Global Risk Management function facilitates sustainability risk assessments, including double materiality analysis (DMA) and the assessment of impacts, risks and opportunities (IROs), which are reviewed and managed jointly with relevant functions. Internal control activities to manage the identified material risks related to the accuracy and timeliness of sustainability reporting are adopted as part of KONE's processes that produce sustainability information.

The management is responsible for establishing and maintaining adequate internal controls and for monitoring their effectiveness as part of operative management.

In 2024, KONE launched a new strategy 'Rise' for years 2025–2030 where leading in sustainability is part of the strategic ambition and 'Cut Carbon' is one of the four strategic shifts. In this strategic shift, the focus is both on reducing KONE's own emissions as well as on helping KONE's customers to decarbonize with sustainable solutions. Sustainability continues to also be one of KONE's core principles together with safety and quality.

Progress toward the sustainability-related strategic ambition is measured using an internal sustainability index. Under the 'Cut Carbon' strategic shift, KONE measures emission reductions in the value chain, revenue from sustainable solutions, and market share in sustainable opportunities.

With the new strategy, KONE remains committed to provide the most sustainable solutions to its customers and help them decarbonize throughout the buildings' life cycle with the following key objectives: • Overall reduction of product related Scope 3 emissions: Reducing emissions related to the materials used and lifetime energy consumption per product ordered • Smart use of materials and circularity: Optimizing material use and reducing the materials, energy, and other resources used in KONE's solutions and operations • Extending product lifetime: Extending lifetime of equipment through service and modernization including intelligent KONE 24/7 Connected Services and predictive maintenance • End-user safety: Having safety as KONE's top priority in all operations • Accessibility: Providing accessible, safe, and convenient solutions for all groups of End-users

Business model and value chain

KONE has a lifecycle business model where it provides elevators, escalators, building doors and related smart solutions for buildings and urban mobility. KONE maintains and modernizes the equipment to ensure the longevity, safety, and efficient operation of equipment, thereby contributing to sustainability by extending the product life cycle. By offering energy-efficient and sustainable products, KONE aims to reduce environmental impact throughout the entire product life cycle, from raw material sourcing to end-of-life. Furthermore, KONE requires that its supply chain partners adhere to sustainability requirements, including ethical sourcing and minimizing environmental impact.

A significant part of the value KONE creates is the result of collaboration with the large network of customers, partners, and suppliers, as well as through the use of elevators and escalators manufactured and/or maintained by KONE. Key customer groups include construction companies, building owners, facility managers, developers, and housing associations. Architects, authorities, and consultants are also key influencers in the decision-making process regarding elevators and escalators.

KONE creates value to its customers by providing innovative, safe, and energy-efficient solutions that enhance the flow of people in urban environments. The company's digital solutions, such as predictive maintenance and smart elevators, offer improved user experience, safety and uptime. KONE strives to ensure health and safety for employees through high safety standards and practices. For its employees, KONE promotes diversity, inclusion, and continuous learning within its workforce. For its shareholders, KONE creates value through its resilient, sustainable and capital light business model, which creates strong and stable cash flow.

KONE has identified the following strategic inputs that are crucial in creating value for customers, shareholders and society: • Competent and engaged people and strong leadership • Innovative sustainable offering and global processes and systems • Best partners • Efficient manufacturing and delivery chain • A solid financial position • Environmentally sustainable operations • High safety record, strong brand, solid reputation and commitment to safety • Life cycle business model and the existing maintenance base

KONE ensures the availability of key inputs in its value chain through a combination of strategic sourcing, supplier management, and risk mitigation. To secure key talent, KONE invests in continuous employee development, diversity and inclusion, and retention through a supportive and innovative culture.

In this Sustainability Statement, KONE's value chain is defined to cover upstream activities related to component and raw material production, and downstream activities related to the use of KONE's products and to the disposal and recycling of equipment at the end of the building's life cycle.

Sustainability is embedded into KONE's strategy and business model. KONE collaborates and maintains an active dialogue with its stakeholders to understand their needs and expectations, also related to human rights matters, and to provide input for KONE's planning processes as well as to the continuous improvement of KONE management system, thus creating a predictable business environment for everyone. Applicable administrative, management and supervisory bodies are informed about the outcomes by the responsible topic owners and subject matter experts through various channels, and appropriate actions are taken to address the material impacts.

Stakeholder views have been considered as part of the strategy setting process. To enable employee's participation and to ensure employee consultation in health and safety matters, KONE runs and participates in local safety forums and councils with employees and their representatives. To represent the interests of employees and actively involve them in shaping the company, an employee engagement survey 'Pulse' is conducted annually.

The learnings from the various stakeholder engagement activities including the employee engagement and customer surveys were taken into account in strategy development by lifting the key findings to the relevant Executive Board discussions.

The views of employees, value chain workers and equipment users are also collected through KONE management system which harmonizes safety management practices across KONE and sets minimum requirements to protect the health and address the safety of KONE equipment users, employees and anyone else KONE works with. KONE considers the interests, views, and rights of its value chain workers in KONE's strategy and business model as feasible, mainly through management level discussions.

Stakeholder engagement table:

Current financial effects of KONE's material risks and opportunities do not expose KONE's financial position, financial performance or cash flows to significant risks for material adjustments to the carrying amounts of assets and liabilities. During 2024, KONE's strategy and business models showed resilience in harnessing the material opportunities and addressing material impacts and risks stated in this report, mainly driven by healthy geographic and business line mix, supported by robust supply chain. The conclusion was supported by a qualitative assessment based on KONE reaching the set strategic targets and KPIs during the reporting period.

KONE's material impacts, risks and opportunities have been considered thoroughly in the planning of the new strategy and during strategy implementation in 2024.

KONE has identified material risks and negative and positive impacts related to climate change and energy, negative health and safety impacts related to own employees, value chain workers and end-users, and positive impacts related to corporate culture, protection of whistle-blowers and corruption and bribery.

KONE's double materiality assessment (DMA) approach consisted of four phases to determine material topics and provide input for the strategy development. These phases included value chain mapping, impact assessment, financial assessment, and final materiality determination. The DMA was completed in 2024. The DMA results will be reviewed annually and updated when necessary. KONE's earlier materiality assessment, human rights impact assessment and third-party due diligence process, non-financial risk assessment, and climate change scenario analysis, which have been integrated into KONE's risk management processes, were used as a starting point for the DMA.

The results of the DMA including the material impacts, risks and opportunities (IROs) were reviewed by a management steering group consisting of KONE Executive Board members and other management members. These members were selected based on their ownership, roles and responsibilities in the area of sustainability and reporting. The results of the DMA were reported to the Audit Committee of the KONE Board of Directors. Internal control over the DMA process was ensured through the reviews of the results and the adopted systematic assessment methodology.

In the initial phase of the DMA, KONE mapped its value chain and listed the main business activities across upstream, own operations, downstream, and cross-cutting activities through interviews with key internal stakeholders. The geographical locations and key external stakeholders affected by these activities were identified for each, in line with the reporting principles. Specific geographies, high-risk areas, and at-risk functions were taken into account.

The impacts, risks, and opportunities were evaluated by KONE's subject matter expert teams on a scale from 1 to 5, aligning with the ESRS criteria. These results can be easily compared with KONE's risk management process and tool, allowing for the consideration of sustainability risks alongside other business risks in terms of relative position and priorities. The views of KONE's stakeholders were provided through summarized input by the involved subject matter experts through their interaction with affected stakeholders and engagement with the users of KONE's Sustainability Statement.

During the impact assessment phase, KONE evaluated, scored, and prioritized the various impacts (positive or negative) and activities within its value chain that could affect people or the environment based on their scale, scope, likelihood, and irremediability, which was considered for negative impacts. In case of a potential negative human rights impact, the severity of the impact was prioritized over its likelihood.

The financial assessment phase included identification of key risks and opportunities posing financial implications, together with an assessment of their magnitude and likelihood, as well as the timeframe. The following scales were applied:

Likelihood of occurrence:

1. Highly unlikely to occur: >0–1%
2. Unlikely to occur: >1–10%
3. Possible to occur: >10–30%
4. Likely to occur: >30–60%
5. Highly likely to occur: >60–100%

Magnitude of financial impacts:

1. Nominal financial impact
2. Moderate financial impact
3. High financial impact
4. Significant financial impact
5. Critical financial impact

Timeframe:

• Short: <1 year
• Medium: 1–5 years
• Long: >5 years

The connections between impacts, and dependencies with the risks and opportunities, were considered as part of the identification of IROs, mainly in relation to geographical locations and IRO contents in the subtopics, however not systematically cross-referencing all connections and dependencies. Each prioritized risk, opportunity or impact is assigned to a risk owner. The risk owner appoints a person in a relevant role to be responsible for the specific IRO. The responsible person implements the necessary IRO treatment actions, and reports regarding progress to the risk owner.

As a result of the DMA, a comprehensive overview of KONE's IROs relating to each sustainability topic was formed. When an impact and/or risk or opportunity score of any topic exceeded a certain threshold, the topic was identified as material to KONE. The treatment of such IROs were prioritized to meet KONE's strategic sustainability objectives and ensure alignment with stakeholder expectations. In principle, all mandatory data points have been included and disclosed following the materiality principle of the ESRS standard. No material entity specific IROs were identified.

KONE's material ESRS topics based on the DMA process:

KONE's first climate change scenario analysis was kicked off in 2022 and finalized in early 2023. Resilience assessment of KONE's critical-to-continuity activities with respect to climate-related risks was part of the analysis. The analysis continues to be reviewed annually as part of KONE's overall risk assessment process and assessed and updated regularly.

In the first phase of the scenario analysis, KONE focused on the qualitative implications of climate-related risks and opportunities in key strategic performance areas of its operations considering the inherent and residual risk after existing treatment actions. KONE aims to quantify the anticipated financial impacts of material physical and transition climate risks upon a future analysis update.

Climate-related risks and opportunities were considered in terms of key strategic performance areas, which covered direct material purchases (representing KONE's upstream value chain), logistics (value chain cross-cutting activity), manufacturing operations and product and service design (representing KONE's own operations). Although KONE's downstream value chain was not directly in the scope, product and service design is closely linked to the downstream value chain. KONE's analysis included how KONE can advise and help customers in preventing damage when their facilities, together with KONE equipment, are exposed to severe weather events, such as hurricanes and floods.

Climate scenarios

The climate scenario assessment utilized several information sources, including the 6th Assessment Report of The Intergovernmental Panel on Climate Change (IPCC) Working Group I, Swiss Re CatNet, and combined SSP-RCP scenarios, i.e. Shared Socioeconomic Pathways (SSPs) informed by the Representative Concentration Pathways (RCPs).

Real world political and societal dynamics may deviate from the assumptions of the SSP-RCP scenarios, such as the level of global cooperation, affecting the feasibility of mitigation and adaptation measures. Other constraints relate to assumptions on the availability and use of natural resources, the feasibility of technological advancements and their implementation and the effectiveness and implementation of policies.

The selected scenarios are considered representative of KONE's risks and uncertainties, as they combine a range of plausible warming pathways and related socio-economic developments, which may influence the global megatrends that support KONE's strategy, and which will have a direct impact in KONE's day-to-day operating environment.

Scenario comparison:

KONE's resilience under the scenarios

KONE has a climate pledge with science-based targets for significant GHG emissions reductions in line with limiting global warming to 1.5°C, which is currently the most ambitious criteria for setting science-based targets.

In the '1.5°C low carbon' scenario, KONE's business strategy is resilient, as demand for energy efficient, sustainable and climate resilient solutions increases already in the short term, and in the medium term there is full transformation to renewable energy and electrification that creates opportunities for KONE. Physical changes may cause occasional disruptions to KONE factories and supply chain. However, KONE's efforts to enhance its ability to anticipate, prepare for, respond to, and adapt to disruptions will keep business interruptions limited and mainly recoverable without material losses.

In the '2.7°C, middle of the road' scenario, in the short to medium term, tighter policies promote demand for KONE's energy efficient product offering, but only in selected markets and countries committed to the Paris Agreement. KONE's business strategy faces some resilience challenges, as with less policy incentive to innovate, the advancement in material efficiency, recycling infrastructure and new materials is slower in the short to medium term, but may accelerate in the long term, when regulators recognize the need to take actions. Global supply chains and logistic routes may face notable disruptions, affecting KONE's business.

In the '4°C high carbon' scenario, emissions continue to rise, the transition to a low-carbon economy is disorganized, economic growth is preferred over climate action and overconsumption of resources continues over the medium to long term. In this scenario, KONE's business strategy faces the most resilience challenges, as the demand for sustainable and climate resilient solutions grows only in advanced economies or among select customer groups. Even so, most of KONE's strategic choices will still be relevant. Particularly in the long term, extreme weather conditions increase disruptions in supply chains and logistic routes, which may lead to significant logistic cost increases. In the medium term, changes may be required in KONE's product design for the equipment to bear extreme heat and humidity in order to operate under such conditions.

KONE considers the current and future projected exposures to acute and chronic physical climate change impacts when investing into and selecting new manufacturing or distribution center locations or expanding existing ones. However, KONE's ability to influence suppliers or customers in the selection of their operating locations is limited. Due to KONE's global footprint, KONE is able to diversify its supply and delivery chain, making KONE less dependent on particularly exposed locations from time to time. Furthermore, KONE utilizes special, location-based software tools to regularly monitor its supply chain locations, including supplier manufacturing locations and physical risks relevant to climate change. This increases KONE 's speed to switch to predefined alternative supply chains, if needed.

KONE's new strategy, 'Rise', emphasizes actions to cut carbon emissions in alignment with the Paris Agreement and the '1.5°C low carbon' scenario. Sustainability is integrated into the strategy as a key driver of profitable growth and differentiation.

When conducting the scenario assessment, KONE has not identified any assets or business activities that are incompatible with or need significant efforts to be compatible with a transition to a climate-neutral economy. There are no critical climate-related assumptions in KONE's financial statements.

Transition plan

KONE is committed to a 50% cut in the Scope 1 and 2 emissions from its own operations by 2030, compared to a 2018 baseline, and has pledged to have carbon neutral operations by 2030. This target is in line with limiting global warming to 1.5°C, which is currently the most ambitious criteria for setting science-based targets. Additionally, KONE targets a 40% reduction in the emissions related to its products' materials and lifetime energy use (Scope 3 emissions) over the same period, relative to orders received.

In addition, KONE is committed to reduce electricity consumption in its own operations and has set a target to increase the share of renewable electricity to more than 90% by the end of 2023 and to 100% by 2030. KONE has also increased the share of renewable electricity faster than originally planned by reaching 97% already in 2023. Due to this progress and systematic work in 2024, KONE set the target to increase the share of renewable electricity to 98% during 2024. In 2024, KONE reached a 99% share of renewable electricity.

KONE's new strategy has a strong emphasis on emission reduction targets as one of the core strategic shifts. To support the ongoing green transformation, KONE has a Climate and Environmental Excellence Program which is centered around four focus areas: partner with customer, offering, operations, and mindset and behavior.

KONE has identified the following key decarbonization levers to reach its science-based targets by 2030 in its own operations (Scope 1 and 2) and value chain (Scope 3): • Scope 1: fleet transformation to electrical vehicles (EVs) and increasing use of renewable energy • Scope 2: increase use of renewable electricity and other renewable energy sources • Scope 3: increase share of energy-efficient electrification systems and regenerative drives, increase material efficiency, systematically engaging with suppliers, product innovations and partnerships

Climate change adaptation

KONE Business Continuity Management Standard sets company-wide minimum requirements on crisis and disruption preparedness and business recovery and supports KONE's resilience and adaptation to climate change. It guides to identify critical activities, impacts, risks, and mitigation actions to prevent the disruptions or recover within the set time objectives.

The impactful business disruption scenarios including physical climate change are documented in business continuity plans, which include roles and responsibilities relevant to the prevention and preparedness, emergency and crisis response and business recovery of each scenario. The plans and the sufficiency and effectiveness of risk mitigations are reviewed annually at minimum, in connection with crisis and business continuity management exercises and audits.

Climate change mitigation and energy

KONE's commitment to the ten principles of the United Nations (UN) Global Compact initiative are embedded in its strategy, policies, and procedures, including KONE Environmental Policy Statement which emphasizes KONE's pledge to reduce GHG emissions and minimizing the environmental impacts of its solutions through durable, energy-efficient products and maintenance offerings. KONE Executive Board reviews quarterly and Board of Directors reviews annually the progression against the environmental targets.

KONE's business processes are set under the ISO standards. Of these standards, ISO 14001 Environmental management system and ISO 50001 Energy management system specifically relate to enhancing KONE's sustainability performance in climate change mitigation in its own and partners' daily operations and culture in alignment with the UN sustainable development agenda, Paris Pledge for Action climate initiative and KONE's science-based targets.

Although KONE's material topics focus on the impacts of GHG emissions and energy in the value chain, KONE is also committed to reduce emissions and energy consumption in its own operations. KONE Global Facilities Policy demonstrates KONE's dedication to increasing the usage of renewable electricity at its facilities worldwide to 100% by 2030. All KONE units report renewable electricity as part of their quarterly reporting.

KONE's everyday work is guided by KONE Code of Conduct alongside other company policies and guidelines. KONE's Code of Conduct requires compliance with applicable laws and regulations to maintain high environmental standards across KONE's operations, suppliers, and customers. KONE Supplier and Distributor Codes of Conduct mandate KONE's suppliers to comply with all relevant environmental laws and KONE requirements, secure necessary permits, and manage materials, energy, and emissions effectively.

All policies are available on KONE's internal systems, such as intranet, or publicly.

Key policies related to climate change:

Climate change adaptation

KONE aims to adapt to the physical impacts of climate change by harmonizing the engineering, delivery and manufacturing structures of its existing and new products. This helps KONE to maintain and improve its resilience when the delivery chain or logistics routes may be disrupted and material or component suppliers, KONE factories, distribution centers or logistics routes for shipments need to be quickly replaced with feasible alternatives. In 2024, KONE conducted the first phase release of product harmonization which will be followed with selected component harmonization implementations in Europe and Americas in 2025.

In 2024, KONE conducted simulated crisis and business continuity management exercises at some of its manufacturing facilities to ensure business continuity and to reduce the impact and likelihood of disruptions within its full delivery chain. While KONE's 10 manufacturing facilities in seven countries, multiple distribution centers and a large supplier network across the globe help to mitigate the impacts from potential disruptions in individual locations or countries, KONE aims to secure the availability of supply by implementing alternative sourcing channels, long-term agreements, and last-buy options for critical components and services. KONE also has a global property damage and business interruption insurance program in place.

In terms of downstream adaptation, KONE continuously develops services, which help its customers with weather event loss prevention, stand-by maintenance during events and post-event status check and repairs.

Climate change mitigation and energy

During the reporting year 2024, KONE has successfully implemented emission reduction activities by investing into the energy efficiency of KONE's solutions, increasing, and expanding the low carbon offering and engaging with suppliers to improve material efficiency in its solutions. The emissions reduction activities will be continued in 2025 and beyond to ensure KONE meets its 2030 targets. All of KONE's emissions reduction activities in 2024 are aligned with its climate change scenario analysis work to ensure long-term success in line with the 1.5°C pathway of the Paris Agreement.

KONE's constant focus is on actual emission reductions both in its own operations and in products and value chain. However, to reach carbon neutral operations by 2030, KONE is planning to compensate the remaining emissions.

Scope 1 and 2 emissions

KONE focuses on decreasing Scope 1 emissions by primarily transitioning to zero and low emission vehicle fleet or no fleet. KONE's vehicle fleet accounts for approximately 95% (2023: 92%) of its Scope 1 and 2 GHG emissions. The total carbon footprint of KONE's vehicle fleet decreased by 2% compared to 2023 and decreased by 4% compared to its 2018 emissions (109,000 tCO2e).

During 2024, KONE developed a comprehensive plan to reduce vehicle emissions in collaboration with its partners by for example identifying the technicians who could utilize electrical vehicles (EVs), incorporating EVs in subsidiaries local car policies, encouraging KONE employees to select low-emission vehicles and providing EV charging points. Accelerating the transition to electric vehicles is imperative to achieve KONE's 2030 reduction targets.

Renewable energy and energy efficiency

KONE's ten global manufacturing units have reduced their net Scope 1 and 2 emissions by 83% (2023: 81%) at the end of 2024 compared to the 2018 baseline. In 2024, solar panels were used in six out of ten manufacturing units and green district heating in one manufacturing unit. All units have been purchasing 100% renewable electricity since the beginning of 2023. In 2024, KONE also increased the use of biofuels in its facilities in North America and continued to optimize energy usage in heating, ventilation, air conditioning and lighting systems in KONE's manufacturing units. KONE has also invested in manufacturing line robotics and automation to further improve both the material and energy efficiency of its manufacturing process.

In addition, KONE has taken significant actions to reduce market-based Scope 2 emissions by systematically improving energy efficiency and increasing the use of renewable electricity across its facilities. KONE's total energy consumption remained stable in 2024 compared to 2023 and increased by 6% compared to 2018.

Product and value chain (Scope 3) emissions: energy and material efficiency

In 2024, KONE's Scope 3 (product and value chain) emissions per product ordered (62.2 tCO2e/order) decreased by 8.7% compared to 2023 (68.2 tCO2e/order) and by 12.8% compared to 2018 (71.4 tCO2e/order). KONE's absolute product and value chain emissions decreased by 8.8% compared to 2023 and 9.8% compared to 2018. KONE's Scope 3 GHG absolute emissions from its products' annual energy consumption decreased by 9.8% compared to 2023 (364,000 tCO2e) and by 15.3% compared to 2018 (387,600 tCO2e).

During 2024 and onward, one of the major contributing emissions reduction factors is further improved energy efficiency of KONE's products. This was achieved, for instance, through an increased share of energy-efficient electrification systems and regenerative drives in ordered elevators and systematically engaging with suppliers to increase the material efficiency of KONE's solutions. KONE also collaborates with its suppliers to increase the recycled content in the materials used for KONE's products. KONE actively looks for new partners and ways of working to find alternative materials with lower embodied carbon emissions and to develop processes to reuse and recycle materials more effectively.

In 2024, KONE launched KONE Energy Management feature which optimizes energy consumption of elevator groups over passenger waiting time and time to destination in off-peak hours while minimizing the waiting time and time to destination during peak hours. This results in annual energy savings in elevator groups due to optimized energy use during low-traffic periods. Additionally, KONE Service Business introduced KONE Remote Services which enables resolving issues remotely. This lowers the need for service site visits and KONE technicians driving between the sites, resulting in GHG emission reductions.

KONE's offering also holds the widest range of externally assured product information in the industry, such as Environmental Product Declarations (EPD) in compliance with the EN 15804 standard, and energy efficiency documentation according to ISO 25745. In 2024, KONE published six (2023: four) EPDs and had in total 27 (2023: 21) third-party verified EPDs. Through Health Product Declarations (HPDs), KONE also provides information about the material content and associated health effects of its products, responding to a growing need for healthier living environments. By 2024, KONE holds a total of six HPDs.

KONE was the first in the industry to launch a carbon neutral service offering, the KONE Care DX, in 2021. By 2024, KONE has introduced a carbon-neutral elevator and escalator and continued to expand its carbon neutral offering to further markets. In the future, KONE aims to increase the number of elevators with regenerative drive-in line with the company's ambitious emission reduction targets, thus also increasing the Taxonomy-aligned share of revenue.

Product and value chain (Scope 3) emissions: supplier engagement, innovations and partnerships

In 2024, KONE identified its suppliers accounting for the majority of KONE's Scope 3 emissions from purchased goods, and actively collaborates with them to reduce these emissions. This collaboration entails actions such as continuous dialogue with suppliers, emissions reporting development, emission reduction targets setting and supplier trainings. From 2025 onwards, KONE will start to measure the commitment of its suppliers in reducing their CO2 emissions.

Requirements for smart and sustainable materials, solutions and buildings are increasing, presenting KONE with sustainable growth opportunities. To understand the emerging needs and technologies in sustainable, resilient urban environments and people's behavior in them, KONE actively participates in large-scale research projects and consortiums, such as Veturi, which is a four-year innovation program, co-funded with Business Finland. In this program, KONE collaborates with customers and partners to tackle climate change and urbanization challenges to create smart and sustainable cities.

Internally, KONE promotes environmental and climate actions, for example, during dedicated theme days. During 2024, KONE continued to grow awareness and ownership of its environmental targets and progress. The company organized for example sustainability and climate-related information sharing and training sessions for various employee groups. KONE also responds to customers' increasing demand for sustainable products and services.

Target setting

KONE's science-based targets for Scope 1 and 2 as well as Scope 3 were set in 2020, validated by the Executive Board and approved by the Board of Directors. The aim was to align KONE's emission reduction activities with the overall business strategy and financial planning.

The science-based targets cover 100% of KONE's Scope 1 and market-based Scope 2 emissions and almost 99% of KONE's Scope 3 emissions (category 1: purchased goods and services and category 11: use of sold products).

The science-based targets coupled with annual renewable electricity and carbon neutral operation targets form KONE's emission reduction plan and its global Climate Pledge to drive the needed emission reduction activities in both KONE's own operations and related to its products and value chain. KONE's strategy and business model are compatible with the transition to a sustainable economy, and with the limiting of global warming to 1.5 °C in line with the Paris Agreement.

The science-based targets were set in collaboration with relevant internal stakeholders and global business units including R&D, Innovation and procurement. In addition, Science Based Target initiative (SBTi) standards and criteria were followed at the time in line with a cross-sector emission pathway compatible with limiting global warming to 1.5°C accounting for business growth in different geographical areas and business lines. The 2018 baseline was chosen in line with SBTi guidelines and criteria for a representative year which covered the most recent period for which the data was available at the time. SBTi has assessed and approved the targets, and the progress against the targets is externally assured annually. The emission reduction roadmap and business growth estimations are also reviewed annually to align with KONE's overall business outlook.

All of KONE's emission reduction targets (Scope 1,2 and 3) and intermediate milestones are presented in the table 'GHG emission reduction targets'. These targets are based on KONE's science-based targets, and the intermediate milestones have been set to ensure that KONE remains on track towards its 2030 targets. During the reporting year 2024, KONE reached net Scope 1 and 2 emission reduction of 29% (2023: 25%) compared to its 2018 emissions of 154,700 tCO2e, exceeding the emission reduction target of -25% (2023: -21%).

GHG emission reduction targets:

Scope 3 emissions decreased by 13% vs. 2018 which was 6 percentage points below the target. However, KONE is confident in reaching the -40% target by 2030, supported by the emission reduction activities and new strategy emphasizing carbon reduction which will be continued in 2025 and beyond. Actions are prioritized to further increase the energy efficiency of KONE's solutions and its materials while also engaging suppliers to improve the material efficiency of KONE's solutions.

Energy consumption by energy sources

The following table shows KONE's energy consumption disaggregated by source:

Energy consumption

Energy intensity

GHG Emissions

GHG emissions intensity

Footnote 6: Gross Scope 1 emissions in 2024 were 78,600 tCO2e (2023: 81,400 tCO2e). The difference between gross and net emissions relates to the use of renewable natural gas with biomethane certificates for which net emissions are reported.

Carbon credits

KONE compensates for direct and indirect CO2 emissions of service activities related to KONE Care DX service contracts. KONE also offers its customers the option to compensate the embodied CO2 emissions until handover of selected KONE DX elevators. In addition, after active emission reduction at all manufacturing units, KONE compensates the remaining CO2 emissions to achieve carbon neutral manufacturing units globally.

KONE compensates for its emissions through a third-party partner via carbon credits. KONE has chosen projects from different continents and representing different climate benefits: reforestation in Colombia, solar power in Thailand, hydro power in China and Laos, clean cookstoves that avoid deforestation in Mali. All projects are conducted outside of the EU and are Gold Standard® certified. In addition to having a positive climate effect, the projects support other United Nations Sustainable Development Goals (UNSDG) providing social and environmental benefits to local communities.

A total of 28 tCO2 equivalent outside of KONE's value chain was cancelled in the reporting period covering emissions in 2024 and 2025. KONE does not consider compensation in its science-based GHG emission reduction targets. Compensation is used only as a last measure to support KONE's customers to reach carbon neutrality.

KONE rolled out a pilot program for an internal carbon cost in 2024. The pilot covered KONE's global manufacturing units and some support functions with the purpose to enable climate-conscious business decisions. The internal carbon cost is applied to relevant investments and decisions at KONE's manufacturing units with a starting price of 100 EUR per tonne of CO2 equivalent. The internal carbon cost may be used to incentivize emission reductions and influence business decisions while supporting KONE's path towards its science-based targets.

Based on the assessment, physical climate risks are not considered material. KONE has taken mitigating actions to ensure continued operations globally and actively develops business continuity management capabilities to reduce the impact and likelihood of disruptions within its supply chain.

KONE has performed physical climate risk and vulnerability assessment as part of KONE's annual risk assessment process. KONE's risk and opportunity assessment includes a Climate Change Scenario Analysis based on International Panel for Climate Change RCP scenarios to help to ensure that KONE's strategy is resilient to climate change in a range of possible future states. The risk assessment focused on the qualitative implications of climate-related risks and opportunities in key strategic performance areas of KONE's operations: direct material purchases, manufacturing operations, logistics and product and service design.

Phase-in has been used for this disclosure requirement as permitted under ESRS standards.

KONE's approach to health and safety is based on KONE Health and Safety Policy Statement and KONE Management System (KMS). KONE's Health and Safety Policy Statement is approved by KONE President and CEO, and it sets the direction for health and safety work at KONE. It clearly states that health and safety of employees, customers and other stakeholders working with KONE is a top priority for KONE. The Policy states that all accidents are preventable and is complemented by guidance on how this commitment is realized in practice.

KONE Management System applies across KONE's global organization and harmonizes health and safety management practices and sets minimum requirements. The system addresses the health and safety of KONE equipment users, employees and anyone else KONE works with. It covers KONE's own operations including factories, offices, customer sites and public places with KONE equipment.

KONE has developed and implemented a human rights policy which sets out the company's commitments to respect human rights and to prevent adverse human rights impacts. The Human Rights Policy contains commitments related to due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, including freedom of association and collective bargaining, prohibition of forced or compulsory labor, and prohibition of child labor. The policy applies to KONE's business operations globally and to all KONE companies, employees and management.

KONE Code of Conduct contains provisions related to respect for people, workplace safety, equal treatment, human rights and creating a workplace free from harassment, discrimination and violence. The Code applies to all KONE employees globally and sets the expectation that everyone acts with integrity and follows both the Code and all applicable laws. The Code contains processes and measures for preventing trafficking in human beings through supplier requirements and risk-based assessments.

KONE has workplace accident prevention policy integrated into its management system. The Health and Safety Policy Statement and KONE Management System provide the framework for workplace accident prevention across all KONE operations, including comprehensive risk assessment procedures, safety training programs, and incident reporting and investigation processes.

To enable employee's participation and to ensure employee consultation in health and safety matters, KONE runs and participates in local safety forums and councils with employees and their representatives. These forums provide structured channels for ongoing dialogue about health and safety impacts and allow for meaningful participation in the development and implementation of safety measures.

To represent the interests of employees and actively involve them in shaping the company, an employee engagement survey 'Pulse' is conducted annually. This survey provides a formal mechanism for employees to provide input on various aspects of their work experience, including health and safety matters.

The views of employees are also collected through KONE management system which harmonizes safety management practices across KONE and sets minimum requirements to protect the health and address the safety of KONE equipment users, employees and anyone else KONE works with.

Employee participation in health and safety matters is facilitated through various channels including: • Daily interactions and regular employee performance discussions • Internal channels and forums for company-wide discussions • Training opportunities and innovation tools • Local safety forums and councils with employee representatives

KONE employee headcount

Employees by gender

Employees by age

Employees by employee category

Non-employee workers

Health and safety metrics

Note: KONE did not report the number of days lost to injuries, accidents, fatalities or illness for the reporting period 2024, using the phase-in provisions of the ESRS.