Examples of Supplier Engagement in 2023

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 2023 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 tested in our South American Float Trials in FY23 have been reconfirmed in FY24 with an extended test period. 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. Other ongoing projects related to Soda Ash show positive early test results reducing CO₂.

Energy

Energy costs, especially in Europe, were higher in 2022 than previous years. The long-standing Energy and Carbon Management programme has continued with several transformative energy and water projects identified and implemented. The implemented projects, especially those concerning energy efficiency, have helped to partially reduce the impact of the record high market prices.

The proportion of the Group's electricity coming from renewable sources grew from 26% in 2021 to 32% in 2022. The commitment to increase this to 50% by 2024 remains. The Power Purchase Agreement (PPA) which began in January 2022 for electricity demand in Poland made a major contribution towards this improvement. The Poland PPA helped to reduce carbon emissions by 57,000 tonnes in 2022. Further offsite PPA's were implemented in Argentina to support the existing operations and the business expansion as part of a strategy to manage cost and carbon emissions simultaneously.

Renewable electricity is planned to support Scope 1 emission reductions through the use of electric boost systems in future float furnaces and rebuilds. By combining these electricity systems with renewable electricity it will be possible to significantly further reduce carbon emissions.

An onsite solar project began operation in Rossford, USA in 2022 and construction was underway for projects in Aken (Germany), Maizuru (Japan), Sungai Buloh (Malaysia) and Rossford Phase 2 (USA) with these projects expected to be commissioned during 2023 and 2024. Carbon emissions will be reduced by producing renewable electricity onsite which is then directly consumed by NSG Group's operations. These projects will utilise solar modules from NSG Group's customer First Solar therefore demonstrating products from within NSG Group.

Following on from the world first trials using hydrogen as a furnace fuel in the UK in August 2021, a similar trial was completed in February 2022 using biofuel. Here a liquid biofuel was supplied from Argent Energy, who are located close to the Greengate site in the UK, for a multi-day 100% furnace fuel conversion. The trial was supported by UK Government's Industrial Fuel Switching programme and helped to prove that this type of fuel is another option for future long-term decarbonisation.

To build on the successes in 2021 with hydrogen firing trials, a series of agreements have been signed with partners to identify and develop projects. One example of this would be the Memorandum of Understanding signed with Vertex Hydrogen Limited in UK in late 2022. This project will see the delivery of low-carbon hydrogen to the Greengate site in St Helens later in the decade.

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. In 2023 NSG completed a second successful glass manufacturing trial using calcined dolomite for a longer period. Further optimisations were made to handling and processing to ensure a safe and controlled delivery of the material to the furnace and multiple KPI's were monitored to evaluate the impact. Results confirmed a reduction in CO₂ emissions and a lower energy requirement to melt the batch. Improvements to material properties and specification indicate 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 future work will focus on sites that have a long supply chain to reduce the transportation burden in terms of carbon and cost.

In 2023 NSG also successfully replaced a portion of soda ash with sodium hydroxide in the batch. Soda ash 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. Several important health and safety improvements were necessary to handle sodium hydroxide through the process, but the short trial demonstrated a reduction in overall emissions and a lower energy requirement to melt the batch. Further work is necessary to determine if this new material is feasible for longer term production, particularly with respect to furnace degradation.

NSG is taking steps 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 also returns from Customers and end users to maximise the recycled content of the batch. This in turn reduces the amount of carbonate raw materials necessary, thus reducing CO₂ emissions. Agreements with customers will 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. We are 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 progresses 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. It has also resulted in improvement of Track & Trace oversight. Through our Control Tower, which is a management of real-time transport data to improve decision making, we optimize return load opportunities with other clients, which means return load available from outbound destination resulting in lower overall transport cost for outbound and inbound loads. We have also developed governance and checks with the control tower across multiple NSG Business Units, to ensure we have standardized trailer types with direct and subcontracted hauliers.

Our North American automotive business has a return ratio approximately 5:1. We have worked 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, had identified their own backhauls for those routes as well. North America will be implementing SAP S4 HANA 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.

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).

Our Innenlader provider in Germany also operates an external warehouse on our behalf and now reports the facility achieves CO₂ Neutrality with electrification throughout.

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 (4^th 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. Returns from our Florida/Georgia service centres to 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