Industrivarden AB

Within the framework of active ownership, a significant part of the Board's work in 2022 consisted of hearing reports on as well as discussing and evaluating the portfolio companies' performance as well as Industrivärden's owner agendas for exercising its active ownership, which also included specific investigative projects related to the portfolio companies. During 2022 an important matter for the Board was the distribution in kind of the Sandvik Materials Technology business area from Sandvik, through which Industrivärden has gained a new portfolio company, Alleima. In conjunction with this distribution, it was decided in favor of the purchase of additional shares in Alleima in order to have a larger share of ownership in the company. The CEOs of the portfolio companies give presentations to the Board on their respective companies' operations on a regular basis. During 2022 the CEOs of Skanska, SCA and Essity gave such presentations. [...] The CEO organizes the operations and appoints the senior executives who make up Industrivärden's Executive Management. The Executive Management supports the CEO in her assignment. Decisions on equity transactions in the continuing administration are made by the CEO, where applicable after consideration by the Company's Investment Committee. The Investment Committee, which is made up of relevant members of the Executive Management and representatives of the investment organization, also conducts drafting work on owner agendas for exercising active ownership in the portfolio companies and other specific investigative projects related to the portfolio companies.

Industrivärden continuously evaluates the portfolio companies' respective businesses and operating environments. This work is performed by company teams that are led by a team manager, and employees are normally active on two to three teams. Key areas of evaluation include strategy, market position, business composition, financial development and capital structure, among others. Analysis is conducted with a broad perspective and encompasses everything from customers, competitors and markets to salient megatrends such as digitalization, new technologies and long-term sustainable development. A keen understanding of these shifts is of major importance for the ability to assess the portfolio companies' long-term value potential as well as the opportunities and challenges they face. In this way, Industrivärden builds up a depth of fact-based knowledge about the respective portfolio companies and their business environments. Based on this knowledge, an owner agenda for value creation is continuously updated, which summarizes the strategic value drivers that are considered to be most important for value creation during the coming three to five years. The aim is to identify and describe various opportunities for value growth and strategic measures for realizing this value. [...] The portfolio companies' boards play a decisive role in the companies' governance and the appointment of the right CEO. A suitably composed board is crucial. The portfolio companies' boards must have the combined expertise and experience required to deal with the respective companies' challenges and opportunities over time. Industrivärden therefore actively participates in the portfolio companies' nomination processes, where its representatives in the nominating committees consist of individuals from Industrivärden's board and executive management. Since access to qualified board members is a key success factor, Industrivärden works actively to identify suitable individuals. The portfolio companies conduct business in a wide range of areas, and therefore Industrivärden continuously maintains a broad network of individuals with expertise and experience in a range of different areas.

### Organization and responsibility

Industrivärden's board is responsible for the formulation of the Company's goals and strategy, how active ownership is exercised and the fundamental sustainability principles. Sustainability work is evaluated on a continuous basis within the framework of operations as a whole. Follow-up of and decisions on sustainability work within the own operations are conducted annually at a board meeting and when necessary. The CEO has overarching responsibility for the Company's direct and indirect sustainability work and for integrating sustainability into analysis and ownership processes. The Head of Sustainability is responsible for Industrivärden's direct sustainability work, external communication on sustainability matters and internal collaboration in certain sustainability matters within the framework of the active ownership. Team managers are responsible for integrated sustainability analysis in respective portfolio companies.

### Sustainability analysis

To be able to conduct a qualitative analysis of portfolio companies' sustainability work – and exercise influence when needed – Industrivärden needs to have a depth of knowledge about respective companies' operations and sustainability-related matters. The sustainability analysis is therefore an integral part of company analysis performed by respective portfolio companies. In this way, material sustainability aspects are evaluated from a holistic perspective, with a base in the portfolio companies' respective operations, geographies and stages of development. This means that the sustainability perspective is included in evaluations of the portfolio companies' boards and management teams, strategic issues and financial performance. The sustainability analysis also constitutes a more in-depth evaluation of sustainability issues and encompasses portfolio companies' organizations, structures, risk management, utilization of value-creating opportunities and communication.

The analysis is materiality-oriented and ranks the issues that Industrivärden intends to study further as well as matters over which it wants to exercise influence. Important areas of assessment include climate and environmental impact, social conditions, anti-corruption and prevention of human rights violations. Portfolio companies should have the boards, leadership, organizations and resources needed to integrate sustainable business practices – and thereby long-term value creation – in their business models, processes and offerings.

The sustainability due diligence that is required of all listed companies thus makes up an integral part of Industrivärden's continuing sustainability analysis.

The main focus of the analysis is on sustainability-related risks and opportunities to create value. The analysis is made with a double materiality perspective and looks at both the portfolio companies' sustainability impact on people and society, as well as how they themselves are financially affected by external factors from a sustainability perspective. In cases where Industrivärden identifies strategic conditions, risks, or value creation opportunities in which it wants to exercise influence, these are defined in Industrivärden's respective owner agendas, which form the foundation for Industrivärden's work. The owner agendas are revised at regular intervals and are set by Industrivärden's Investment Committee, which is made up of relevant members of the Executive Management and representatives of the investment organization.

Industrivärden exercises influence through representation in the portfolio companies' nominating committees and boards. The individuals who represent or have ties to Industrivärden are to have a current and pertinent understanding of the value creation measures identified for respective portfolio companies. Against this background, Industrivärden's owner agendas are regularly presented and evaluated by the Industrivärden board. This allows Industrivärden to have an influence on strategic sustainability issues over time.

### Organization and responsibility

Industrivärden's board is responsible for the formulation of the Company's goals and strategy, how active ownership is exercised and the fundamental sustainability principles. Sustainability work is evaluated on a continuous basis within the framework of operations as a whole. Follow-up of and decisions on sustainability work within the own operations are conducted annually at a board meeting and when necessary. The CEO has overarching responsibility for the Company's direct and indirect sustainability work and for integrating sustainability into analysis and ownership processes. The Head of Sustainability is responsible for Industrivärden's direct sustainability work, external communication on sustainability matters and internal collaboration in certain sustainability matters within the framework of the active ownership. Team managers are responsible for integrated sustainability analysis in respective portfolio companies.

### Sustainability analysis

To be able to conduct a qualitative analysis of portfolio companies' sustainability work – and exercise influence when needed – Industrivärden needs to have a depth of knowledge about respective companies' operations and sustainability-related matters. The sustainability analysis is therefore an integral part of company analysis performed by respective portfolio companies. In this way, material sustainability aspects are evaluated from a holistic perspective, with a base in the portfolio companies' respective operations, geographies and stages of development. This means that the sustainability perspective is included in evaluations of the portfolio companies' boards and management teams, strategic issues and financial performance. The sustainability analysis also constitutes a more in-depth evaluation of sustainability issues and encompasses portfolio companies' organizations, structures, risk management, utilization of value-creating opportunities and communication.

The analysis is materiality-oriented and ranks the issues that Industrivärden intends to study further as well as matters over which it wants to exercise influence. Important areas of assessment include climate and environmental impact, social conditions, anti-corruption and prevention of human rights violations. Portfolio companies should have the boards, leadership, organizations and resources needed to integrate sustainable business practices – and thereby long-term value creation – in their business models, processes and offerings.

The sustainability due diligence that is required of all listed companies thus makes up an integral part of Industrivärden's continuing sustainability analysis.

The main focus of the analysis is on sustainability-related risks and opportunities to create value. The analysis is made with a double materiality perspective and looks at both the portfolio companies' sustainability impact on people and society, as well as how they themselves are financially affected by external factors from a sustainability perspective. In cases where Industrivärden identifies strategic conditions, risks, or value creation opportunities in which it wants to exercise influence, these are defined in Industrivärden's respective owner agendas, which form the foundation for Industrivärden's work. The owner agendas are revised at regular intervals and are set by Industrivärden's Investment Committee, which is made up of relevant members of the Executive Management and representatives of the investment organization.

Industrivärden exercises influence through representation in the portfolio companies' nominating committees and boards. The individuals who represent or have ties to Industrivärden are to have a current and pertinent understanding of the value creation measures identified for respective portfolio companies. Against this background, Industrivärden's owner agendas are regularly presented and evaluated by the Industrivärden board. This allows Industrivärden to have an influence on strategic sustainability issues over time.

Within the framework of active ownership, a significant part of the Board's work in 2022 consisted of hearing reports on as well as discussing and evaluating the portfolio companies' performance as well as Industrivärden's owner agendas for exercising its active ownership, which also included specific investigative projects related to the portfolio companies. During 2022 an important matter for the Board was the distribution in kind of the Sandvik Materials Technology business area from Sandvik, through which Industrivärden has gained a new portfolio company, Alleima. In conjunction with this distribution, it was decided in favor of the purchase of additional shares in Alleima in order to have a larger share of ownership in the company. The CEOs of the portfolio companies give presentations to the Board on their respective companies' operations on a regular basis. During 2022 the CEOs of Skanska, SCA and Essity gave such presentations. [...] The CEO organizes the operations and appoints the senior executives who make up Industrivärden's Executive Management. The Executive Management supports the CEO in her assignment. Decisions on equity transactions in the continuing administration are made by the CEO, where applicable after consideration by the Company's Investment Committee. The Investment Committee, which is made up of relevant members of the Executive Management and representatives of the investment organization, also conducts drafting work on owner agendas for exercising active ownership in the portfolio companies and other specific investigative projects related to the portfolio companies. [...] Industrivärden exercises influence through representation in the portfolio companies' nominating committees and boards. The individuals who represent or have ties to Industrivärden are to have a current and pertinent understanding of the value creation measures identified for the respective portfolio companies. Against this background, Industrivärden's owner agendas are continuously presented and evaluated by Industrivärden's board. This allows Industrivärden to have an influence on strategic sustainability issues over time.

Does your organization have a public commitment or position statement to conduct your engagement activities in line with the goals of the Paris Agreement?[…]Yes