CORPORATE SUSTAINABILITY POLICY

It is the policy of Magellan Aerospace (“the Corporation”) to uphold the principles of good environmental, social, and corporate governance (ESG) in the conduct of its business.

The Corporation is establishing a framework that promotes collecting and sharing of information critical to sustainability efforts, within recognized ESG disclosure standards and appropriate reporting structures. Reporting on the Corporation’s ESG activities and programs allows the Corporation to evaluate its progress and identify areas of excellence and opportunities for improvement. The Board of Directors (the “Board”) and Committees of the Board have responsibility for oversight of ESG. The key ESG priorities and plans of action of the Corporation include ensuring systems are in place for the disclosure of its performance in accordance with applicable law on such topics as human rights, diversity and inclusion, pay equity, health and safety, scope 1 and 2 greenhouse gas emissions, environmental protection, energy, water and waste management, supply chain management, community outreach, and data stewardship. The Corporation’s programs and goals as they pertain to the three main pillars of ESG: Environmental Stewardship, Social Responsibility, and Corporate Governance, are provided below.

1. ENVIRONMENTAL STEWARDSHIP

1.1 Organizational Structure

An environmental organization structure is in place at each of the Corporation’s divisions that ensures the division’s ISO 14001 certification is maintained and its operations are in compliance with applicable environmental laws, compliance obligations, and corporate requirements.

1.2 Environmental Goals

Environmental objectives shall be established at each division to achieve the Corporation’s top level environmental goals to:

  • Reduce greenhouse gas (GHG) emissions by 55% by year 2030 based on a 2008 baseline. Scope 1 and 2 emissions of the Corporation shall be included.  The Corporation’s longer term goal is net zero by 2050, including its value chain as practicable.
  • Reduce waste, including hazardous, nonhazardous, recyclable and non-recyclable wastes by 5% as a waste-to-sales ratio by year 2025 based on a 2018 baseline.
  • Reduce water usage by 10% as a water-to-sales ratio by year 2025 based on a 2015 baseline.

Each objective is measurable and includes an action plan assigning responsibilities for actions and target completion dates, and identifying resources or capital purchases that may be required. The action plans are regularly reviewed for efficacy. Action plans being implemented by the Corporation may include:

Additional environmental goals may be established at the divisions in line with the Corporation’s Environmental Policy (Policy 6.01) and in accordance with the requirements of ISO 14001.

1.3 Environmental Action Plans and Tracking

Action plans being implemented by the Corporation may include:

GHG Reduction

    • Evaluation of the installation of EV charging stations for company vehicles
    • Exploring the option of utility contracts with 100% renewable energy providers
    • Evaluation of solar panels / roofs
    • Equipment on maintenance schedules and Total Productive Maintenance for efficiency and longevity
    • Exploring alternate technology / material to eliminate SF6 cover gas used in magnesium melting
    • Exploring more efficient use of lighting, computers, and machines
    • Improvements in building envelope
    • Reduction in building footprint, as appropriate
    • Tree planting
    • Exploring eligibility for tax incentives or rebates for green initiatives
    • Supplier engagement, and
    • Other divisional initiatives

Waste Reduction

  • Process improvements to eliminate / reduce waste streams
  • Sizing of billets to minimize swarf generation from machines
  • Metal waste recycling
  • Evaporation of water to reduce liquid waste disposal volumes
  • Recyclable shipping containers, and
  • Other divisional initiatives

Water Conservation

  • Process improvements to eliminate / reduce water usage
  • Recycling systems, such as coolant recycling, and
  • Other divisional initiatives

1.3 Environmental Reporting Standards and Protocols

The Corporation shall monitor applicable ESG disclosure and sustainability reporting frameworks (International Financial Reporting Standards (IFRS) – International Sustainability Standards Board (ISSB), Task Force on Climate Related Financial Disclosures (TCFD), Canadian Securities Administrators (CSA) – National Instrument 51-107), and adopt initiatives in line with these frameworks.

1.4 Performance Verification

Environmental performance data is collected and consolidated from across the Corporation using standardized collection tools and methods and evaluated annually.

Third party verification of greenhouse gas emissions is periodically conducted by an ISO 14065 accredited verification body in accordance with the applicable requirements of The Climate Registry (TCR), CDP (formerly Carbon Disclosure Project), World Resources Institute (WRI) Greenhouse Gas Protocol, ISO 14064-1, and ISO 14064-3 amongst others.

1.5 Climate Transition Plan

The Corporation is establishing, implementing and will maintain its Climate Transition Plan (the “Plan”) to align with the Paris agreement target of 1.5ºC for global warming above pre-industrial levels with a view to enabling a thriving economy for people and planet in the long term. The Plan relies on specific strategies and clear accountability mechanisms to track progress and covers all divisions of the Corporation and its value chain, as practicable.

The Corporation’s Climate Transition Plan shall be reviewed and updated annually. The review shall include ESG-related developments, what regulations are being considered, changing legislative timelines and requirements, new steps industry groups and other stakeholder groups are taking.

 1.6 ISO 14001 Certification

Each Magellan division is registered to ISO 14001:2015, the International Standard on Environmental Management Systems. Newly acquired facilities shall have an implementation plan in place and target date for registration. The Corporation’s established method of identifying and controlling environmental aspects posing significant environmental risks and opportunities shall be utilized, and processes shall be in place to address:

  • Needs and expectations of interested parties in the context of environmental management
  • Leadership and commitment
  • Environmental policy
  • Environmental risks and opportunities
  • Compliance obligations
  • Environmental planning, objectives and targets
  • Communication
  • Operational control
  • Performance evaluation, and
  • Continual improvement

2. SOCIAL RESPONSBILITY

The dignity and equality of people, the health and well-being of employees and visitors, respect, innovation, and working together to succeed are all core values of the Corporation. The Corporation is committed to ensuring a safe and productive workplace, serving its local communities, protecting personal data for employees globally, and encouraging its suppliers to uphold these same principles.

Progress on the Corporation’s social-related efforts is reported regularly to the Board and discussed in detail annually with the respective Committees of the Board.

 2.1 Diversity, Equity & Inclusion

The Corporation is committed to a diverse and supportive work environment that allows employees to maximize their potential and contribute fully to the success of the company. The Corporation recognizes the strength of diversity, equity, and inclusion (“DEI”) in its business and believes that its employees should reflect the diversity of the regions in which it operates. The Corporation opposes all forms of unlawful discrimination.

The Corporation’s commitment to diversity, equity, and inclusion includes recruiting, developing and retaining employees from diverse backgrounds and experiences, creating awareness of diversity issues and fostering a supportive work environment. The Corporation prioritizes equitable inclusion of people of all ages, races, ethnicities, national and aboriginal origins, sex, sexual orientations, gender identities, disabilities, socio-economic background, religious or political beliefs, and veterans.

The Corporation regularly tracks DEI metrics, including the compensation ratios and hiring rates for underrepresented groups and employee turnover from underrepresented groups, and disclosing publicly in compliance with the law. The Corporation is further developing its social-related commitments and DEI framework.

2.2 Employee Wellness and Safety

The Corporation employs worker consultation in improving overall health and safety performance, in standardizing methods to manage health and safety risk, and in establishing best practices.

An occupational health and safety management system that aligns with the ISO 45001 standard is being implemented across the corporation. This has facilitated initiatives to improve employee wellness and safety and led to the establishment of the Corporation’s top level goals to:

  • Reduce the rate of occupational health and safety accidents by 10% over the next 5 years, based on a 2022 baseline, and
  • Strengthen its near miss program by year end 2023.

The near miss program, which identifies preventive controls before an accident occurs, is fundamental to the success of lowering the Corporation’s accident rate and promoting a culture of engagement. Each division shall have a documented process in place addressing:

  • Training and Awareness
  • Reporting
  • Root Cause Analysis
  • Corrective Action
  • Monitoring

3. CORPORATE GOVERNANCE

The Board of Directors’ oversight and strategic direction allow the Corporation to effectively set targets, manage actions, and create positive, sustainable ESG impacts. The Corporation maintains high standards of corporate governance consistent with its core values and commitments to its shareholders, employees, customers and other stakeholders.

The Board Mandate and the Corporation’s Ethics and Business Conduct Policy, among other documents, are fundamental to its sound corporate governance, and protect and promote the interests of its stakeholders.

These key documents address:

  • Board independence, including changes to board structure and compensation
  • Anti-corruption policies
  • Communications to stakeholders including processes for consistent, transparent, regular, and timely public disclosure
  • Significant risks to the Corporation and the procedures to monitor and mitigate the risks
  • Supply chain policies, such as ethical, environmental, and compensation standards for business partners
  • Supply chain awareness of the ISO 14001 and ISO 45001 standards, and its scope 1 and 2 emissions
  • Long-term relationships with contractual partners, sharing a culture of integrity, performance and transparency

4. REVIEW OF CORPORATE SUSTAINABILITY POLICY

The Corporate Sustainability Policy shall be reviewed and updated annually. The review shall include ESG-related developments, what regulations are being considered, changing legislative timelines and requirements, new steps industry groups and other stakeholder groups are taking.