Examples of Supplier Engagement in 2024

Energy Efficiency and CO₂ Reduction

Our supply partners are critical to the success of NSG Group. They help us to be competitive not only in terms of cost but also in other critical aspects such as quality, supply chain resilience, sustainability, innovation, risk mitigation, ethics and diversity. The importance of suppliers to our success is enshrined in our Procurement mission statement "Leveraging our Supply Chains, Improving our World".

For over a decade NSG Group has committed to energy efficiency programs globally. Since 2021 Procurement has focused on Scope 3 emissions and engaged with key suppliers to better understand supply chain CO₂ and to identify and share best practice with partners. NSG Group is committed through SBTi to a 30% reduction in Scope 3 by 2030. Details of Scope 3 emissions in 2024 are shown in the chart below.

Working within key material categories with supply partners NSG Group has undertaken a number of initiatives. For example, raw materials, which account for around 15% of the Group's total CO₂ emissions, we have worked with key raw material suppliers to identify low-carbon raw materials, successfully proven in glass manufacturing operations with the focus in 2024 on improvement of material properties. Together with process optimization the initial CO₂ reduction is further improved by a 50% volume reduction to the low iron batch additive. CO₂ reduction will be further enhanced by transport savings driven by lower volumes.

Energy

NSG Group is committed to advancing energy efficiency and sustainability across all aspects of its operations. A strong focus remains on reducing energy consumption, enhancing energy management systems, and integrating renewable energy sources. By leveraging cutting-edge technologies and innovative practices, NSG Group strives to minimize its carbon footprint and contribute to a more sustainable future. A continued focus on energy efficiency not only supports environmental stewardship but also drives operational excellence and long-term value creation for the Group's stakeholders.

Energy costs continued to fall, especially in Europe, from their highs in FY23 in line with global market trends. The Group's long-term focus on energy efficiency and hedging has helped to minimise impacts from these higher input costs.

The proportion of the Group's electricity coming from renewable sources increased from 35% in 2023 to 36% in 2024.. A new Power Purchase Agreement (PPA) began in January 2024 providing 100% renewable electricity to NSG Group's sites in Finland. The Finland PPA helped to reduce carbon emissions by 2,750 tonnes in 2024.

Onsite solar projects began operations in Suzhou, China (0.75MWp), Sungai Buloh, Malaysia (1.8MWp) and Cacapava, Brazil (0.4MWp) during 2024 helping to directly reduce emissions as well as reliance on grid supplied electricity. Further projects are approved and under construction in Maizuru (Japan), Ottawa (USA) and Sandomierz (Poland) with commercial operation dates expected in 2025.

Synergies with Strategic Raw Material Suppliers

The manufacture and processing of glass making raw materials for use in NSG manufacturing lines makes up around 35% of scope 3 emissions or 15% of total NSG Group CO₂ emissions. NSG is working closely with key supply partners to understand in detail the current primary emission factors of the raw materials to ensure the most accurate result of Scope 3 impact, including calculation method and third party verification. In addition, NSG will evaluate supplier roadmaps to 2030 and 2050 carbon reduction targets to ensure alignment with NSG targets. This work will inform the NSG sourcing strategy and drive the transition to a fully sustainable supply chain that can meet the published Science Based Targets for 2030 and beyond. There are different levels of maturity in this regard, but the majority of the suppliers with the largest scope 3 impact are already making the energy transition away from fossil fuels to renewables, with further supporting technology changes to come.

Low carbon raw materials

For an average float line approximately 17% of CO₂ emissions result from the decomposition of carbonate raw materials. Therefore a focus on low carbon alternatives is a priority for NSG and is led by a dedicated Decarbonization Technology Team in R&D. They work directly with Procurement to identify viable low carbon batch materials that can be used to minimise CO₂ emissions and reduce the energy required for melting. As an example NSG demonstrated successful glass manufacturing trial operations using calcined dolomite. including and processing handling and processing to ensure a safe and controlled delivery of the material to the furnace and multiple KPI's monitored the impact. This results in a reduction of CO₂ emissions and a lower energy requirement to melt the batch. In 2024 NSG focused on improvements to material properties with key suppliers to ensure calcined dolomite can be a viable long term raw material for glassmaking, producing stable and high quality flat glass. The use of calcined dolomite allows a 50% reduction in material volume therefore development work also considered sites that have a long supply chain to reduce the transportation burden in terms of carbon and cost.

In 2024 NSG continued to investigate sodium hydroxide as a source of low carbon flux to support glass melting. Sodium carbonate decomposes on melting to release CO₂ and is a significant contributor to Scope 3 emissions. However, sodium hydroxide decomposes to form water as the by-product and therefore eliminates the CO₂ impact. Having already proven feasibility of replacing sodium carbonate with sodium hydroxide, work focussed on reviewing the market dynamics and supply availability of sodium hydroxide, and the associated costs to use at higher volumes.

NSG has made significant progress to increase the use of recycled glass (cullet) in the production process. This includes not just the cullet generated during glass manufacturing and tertiary processing, but more importantly returns from NSG Customers and end users to maximise the recycled content of the batch supporting material circularity. This in turn reduces the amount of carbonate raw materials necessary, thus reducing CO₂ emissions. Agreements with customers include the return of cullet generated from their manufacturing process, in addition to the development of new sources of post-consumer cullet for direct use or for cleaning by one or our strategic partners. NSG is also partnering with certain Automotive customers to supply specific products made from 100% recycled automotive glass to meet their sustainability targets.

Reduced carbon in the Supply Chain

NSG continues to work closely with key suppliers to reduce carbon in their supply chains. The impact of transporting raw materials to NSG sites is considered in the supply footprint and partners are increasingly considering alternative fuels like electric, hydrogen or biofuel to run their site based vehicles and transport modes. Moving to renewable electricity is coming more into focus with the availability of solar and wind solutions, particularly where suppliers have large areas of reclaimed land or lakes to host the technology. Biofuel and wood chip is being progressed to transition energy sources to lower carbon and in some cases even the production process is being redesigned to minimize emissions. NSG is also investigating options for onsite hydrogen generation with carbon capture technology to reduce the CO₂ impact from bought in gases. Through these strategic partnerships, NSG expect continued progress towards minimizing CO₂ in their supply chain.

Transport & Warehousing

Transport and Warehousing activities account for 9% of the NSG Group's total procurement's spend across its global operations (2% warehousing : 7% transportation).

Regional breakdown as follows: European road transport accounts for 65%, SEA & India 4%, Japan 19%, and the Americas 12%.

Supplier engagement on CO₂ reporting currently equates to ~80% coverage in Europe (primarily through bulk Float Glass partners known as 'Innenlader's', which is a truck trailer for Jumbo Sheets of Float Glass, and also through utilization of reporting within our transport management software Transporeon for curtain sided FTL (Full truckload) & LTL (Less than truckload) shipments), 37% coverage in Japan and 39% in North America. From these engagements we now collate detailed distance travelled data.

Emphasis continues focused on continuous incremental efficiency gains through; reducing empty driven miles, modal shift from road to rail, ship or barge and increasing the relative payload of product carried. All of these initiatives will continue to further reduce our environmental impact.

In Europe, through selection of a consolidated strategic haulier base, enhanced reporting and visibility has led to efficiency gains through better haulier, lane management and flow triangulation, which is a method to calculate optimized transport routes, improvements in our network. We have now introduced a transport initiative project on 6 key lanes delivering empty packaging returns on the outbound load to pick up a confirmed full glass shipment on arrival to go back minimising empty miles.

Our North American automotive business has a return ratio approximately 5:1. We continue to work with our carriers to identify return shipments in order to reduce one-way shipments with our product. Over the past 15 years, our 4PL (4^th party logistics) provider, a logistics partner, have identified their own backhauls for those routes as well. North America has implemented SAP S/4HANA in 2024, including new technology that will allow our automotive business direct communication with our transportation suppliers via EDI (Electronic Data interchange) tendering.

Payload for bulk Float Glass road carriage by reducing TARE weight of the tractor and trailer units on larger proportions of the dedicated fleets has continued to improve. This has resulted in a 1 Tonne per shipment increase over last 2 years.

In Europe we have been working to increase intermodal solutions for freight and raw materials, eg. where possible moving from truck to rail reducing GHG emissions up to 75%. We continue to expand on use of intermodal movements between our automotive operations, San Salvo (IT) to Poland and San Salvo (IT) to Witten (DE). This has increased from 10 shipments per week to 30 shipments.

In North America, routes are continuously reviewed for qualification of intermodal conversions. All routes that qualify for intermodal have been converted.

Our North American Automotive Glass Replacement Division routes their shipments from Distribution Centre to Service Centre for the most optimal routes and then publishes those to the respective 4PL providers (4th party logistics provider) to competitive bid against. A bespoke system ensures all service centre returns are managed properly with efficient backhauls and optimization of routes. Service Centre SOP returns from nine different states o Mexicali also utilize intermodal.

Sustainable Supply Chains

In 2022 NSG established a new Procurement mission fully aligned with the Group's mission "Changing our Surroundings, Improving our World". The Procurement mission "Leveraging our Supply Chains, improving our World" recognizes the vital contribution that our supply partners can make to the planet and society and also to NSG's own goals in the area of Sustainability. This page will set out NSG's ambitions in this area and provide some examples of the initiatives we are working on in partnership with our suppliers.

• Align the supply chain sustainability strategy with the NSG Group's sustainability objectives
• Ensure that NSG is recognized as a leader in sustainability in the supply chain
• Assist in attracting and retaining diverse talent
• Follow international standard, ISO 20400: Principles of sustainable procurement.

As a first step we have published in September 2023 a Sustainable Supply Chain Charter outlining our long-term aspirations and commitments as part of establishing and developing a fully sustainable Supply Chain. The Supply Chain Charter will also list the corresponding commitments expected of our suppliers and the KPIs we will use to measure their progress.

The Supply Chain Charter identified the following eight key sustainability impact themes as having the greatest impact on the supply chain.

1. Reducing Greenhouse Gas Emissions
2. Protecting the Environment
3. Protecting labor and Human Rights
4. Reducing Wastes
5. Conserving Water
6. Improving Transparency
7. Supporting Diversity, Equity, and Inclusion
8. Supporting Communities