LM_Sustainability_Report_2022

People and society Carbon neutrality Circularity Introduction LM Wind Power Sustainability Performance 2022 In 2015, world leaders developed the Paris Agreement – an unprecedented step to curb greenhouse gas emissions. LM Wind Power is committed to concrete and ambitious actions to fight climate change. With our products powering wind tur- bines across the world, we work together with our stakehold- ers in the wind industry to lead the energy transition to make the Paris Agreement a reality. Yet our environmental commit- ment goes beyond the green electrons our products gener- ate. We keep account and take responsibility of our own oper- ational emissions such as improving energy efficiency. Carbon neutral operations – scope 1 & 2 emissions Since 2018, LM Wind Power has been a carbon neutral busi- ness for scope 1 and 2 emissions – the first in the wind indus- try. Maintaining carbon neutral status requires us to achieve a net-zero carbon footprint by balancing emissions with an equal number of reductions and offsets every year. Four workstreams form the backbone of our carbon neutral program: 1) Measuring and disclosing our greenhouse gas (GHG) emissions. 2) Optimizing the way in which we use energy and reducing emissions from energy use and other operational activities. 3) Procuring 100% renewable electricity, particularly from wind. 4) Offsetting the remaining unavoidable emissions through verified carbon credits. In 2022, emissions from our own operations – scope 1 and scope 2 – amounted to 102,654 tCO 2 e. We continued to pur- chase 100% renewable electricity in 2022, which saved more than 80,000 tCO 2 e compared to sourcing non-renewable electricity from the grid. Also in 2022, the highest contribu- tion to our carbon footprint was the indirect emissions from energy consumption in our facilities. Though we procure renewable electricity, continuing to reduce energy consump- tion is a critical area of focus for us as our consumption is significant and the indirect emissions remain. Carbon offsets Though we are constantly aiming to reduce emissions internally, we cannot reduce all our emissions in the short term. However, we can act responsibly towards the emissions that we cannot reduce. After reducing our emissions as much as possible, we will balance the remaining scope 1 and scope 2 emissions by investing in carbon reduction projects elsewhere in the world. Energy efficiency As a manufacturing business, our main emissions come from resources and energy used in our operations. Reducing con- sumption reduces emissions and cost. In 2022, our energy efficiency team continued to assist all plants in finding effi- ciency gains. We implemented energy efficiency projects in various plants to achieve an 8.3% reduction in energy con- sumption in kWh/ Cubic meter of operations. Some of the key projects included replacement of old chiller pumps with IE4 pumps, installing adiabatic cooling systems for chillers and adding variable frequency drives (VFD) to our old dust extraction systems. Based on the 2021 project out- comes, we extended the replacement of conventional blower fans with belt drive to EC Fans in more number of air han- dling units, resulting in a 20% reduction in electricity con- sumption. We also replaced conventional induction lamps with LED, which achieved an approximately 30% reduction in electricity consumption. Renewable energy In 2022, 14.8% of our global energy consumption was sourced from renewable energy, in which 4.4% of total energy was covered by green tariffs (contracted renewable electricity from our local utility providers) and 10.4% of total energy consumption was sourced directly from solar and wind projects through PPAs (Power Purchase Agreements) and wheeling options without EACs (Energy Attribute Certifi- cates). LM Wind Power will obtain all necessary EACs for the before-mentioned renewable energy. Our manufacturing sites in India source electricity from wind and solar through long term Power Purchase Agreements (PPAs) and our plant in Fujian, China source electricity from a wind turbine located in their location. This is a strategy we are pursuing wherever feasible, helping to bring new renewa- ble electricity capacity online through the project financing we help secure through our long-term offtake commitment. Our electricity consumption is significant, but the load is spread across different geographies and each country or region where we operate has its own regulations and condi- tions that influence the availability of viable options. We expect we’ll need to continue to purchase EACs for a proportion of our renewable electricity needs in the foreseea- ble future to maintain our carbon neutral commitment, while at the same time pursuing PPAs and onsite installation of renewable generation at our sites wherever it makes sense. Greenhouse gas accounting Carbon footprint is commonly reported in the form of scope 1, scope 2 or scope 3. Scope 1 emissions refer to the emis- sions that are a direct consequence of a company’s own oper- ations. For example, emissions generated by company-owned vehicles or facilities are considered scope 1 emissions. Scope 2 emissions cover indirect emissions from purchased electric- ity, heating, cooling or steam. The emissions are indirect emissions because the actual generation of the emissions physically occurs outside of the company-owned site and takes place at power plants. Scope 3 emissions include other indirect emissions stemming from a company’s suppliers’ operations, such as purchased goods and services, transpor- tation and distribution, business travel and waste disposal. Carbon neutrality means achieving a zero carbon footprint by balancing emissions with an equal amount of reductions and offsets. LM Wind Power’s carbon neutrality pledge covers emissions that we influence directly. We encourage the rest of the value chain to take responsibility for their emissions. Our approach Our boundary Suppliers Customers LMWindPower’soperationalcontrol 26