Annual Report 2023

SMA Solar Technology AG

SMA Solar Technology AG at a glance

SMA Group		2023	2022	2021	2020	2019
Sales	€ million	1,904.1	1,065.9	983.4	1,026.6	915.1
Export ratio	%	63.4	68.8	74.9	79.6	76.1
Inverter output sold	MW	20,454	12,225	13,584	14,416	11,409
Capital expenditure1	€ million	95.1	65.8	56.4	57.1	54.4
Depreciation	€ million	41.5	38.1	41.7	43.6	46.0
EBITDA	€ million	311.0	70.0	8.5	71.5	34.2
EBITDA margin	%	16.3	6.6	0.9	7.0	3.7
Net income	€ million	225.7	55.8	–23.2	28.1	–8.6
Earnings per share2	€	6.50	1.61	–0.67	0.81	–0.25
Employees3, 7		4,377	3,635	3,510	3,264	3,124
in Germany		3,039	2,610	2,506	2,293	2,207
abroad		1,338	1,025	1,004	971	917

SMA Group		2023/12/31	2022/12/31	2021/12/31	2020/12/31	2019/12/31
Total assets	€ million	1,621.9	1,110.0	1,053.7	1,051.2	1,107.3
Equity	€ million	686.2	463.5	408.0	439.1	416.9
Equity ratio	%	42.3	41.8	38.7	41.8	37.6
Net working capital4	€ million	392.1	238.5	257.5	210.6	159.5
Net working capital ratio5	%	20.6	22.4	26.2	20.5	17.4
Net cash6	€ million	283.3	220.1	221.7	226.0	303.0

¹ Investments including additions of rights of use in accordance with IFRS 16

² Converted to 34,700,000 shares

³ Reporting date; including trainees and learners; excluding temporary employees

⁴ Inventories and trade receivables minus trade payables and liabilities from advanced payments received for orders

⁵ Relating to the last twelve months (LTM)

⁶ Total cash minus interest-bearing financial liabilities to banks

⁷ The distribution of employees in Germany and abroad was adjusted for the years 2018 to 2021 due to a change in allocation.

ENERGY THAT CHANGES

As a leading global specialist in system technology, the SMA Group is setting the standards for the decentralized and renewable energy supply of tomorrow.

More than 4,300 SMA employees in 20 countries have devoted themselves to this task.

Our innovative solutions for the sustainable generation, storage and use of energy enable people and companies around the world to meet their energy needs with greater independence.

In collaboration with our partners and customers, we are helping the world transition to a digital, decentralized and renewable energy supply. Our energy inspires the world's most important customer. Our future.

DR.-ING. JÜRGEN REINERT Chief Executive Officer SMA Solar Technology AG

FOREWORD BY THE MANAGING BOARD

A look back on the past year reveals a mixed picture. We have seen that geopolitical tensions have not dissipated in 2023, but have instead become even more acute. The effects of the global climate crisis are also becoming increasingly noticeable: Severe droughts, forest fires and floods seemed to be the order of the day in 2023.

If we look at Germany and the current political situation, we can see that important political decisions have yet to be made. The German economy's urgently necessary path toward climate neutrality needs a stable and reliable framework in order to be successful. The government is called upon to courageously and resolutely join forces with the democratic opposition to facilitate the transformation that is essential for Germany's competitiveness.

We are increasingly concerned about the rise of antidemocratic and populist movements and parties – both in Germany and globally. Democracy and freedom are the foundation on which our company is built. SMA employs people from a wide variety of origins and backgrounds. This diversity and openness is a key value for us, which we see as part of our culture and our success. That is why it is important to us to take a clear stance against xenophobia and intolerance at all times.

A STRONG YEAR FOR RENEWABLES AND SMA

So what gives us hope in the face of so many challenges? For us at SMA, it is clearly the progress of the global energy transition. We saw in 2023 that the age of fossil fuels is coming to an end. At the climate conference in Dubai, the world agreed to move away from coal, oil and gas. Countries are being called upon to triple their renewable energy capacities by 2030. At the same time, the proportion of renewable energies in the German fuel mix has risen above the 50% mark for the first time.

There are therefore many reasons to be optimistic about the future.

Renewable energies are making unstoppable inroads around the world. The PV industry has a key role to play here. According to our estimates, PV installations worldwide increased by over 70% to a total of around 368 to 374 GW in 2023.

SMA is ideally positioned in this growth market. This is also shown by our extraordinary results for the 2023 fiscal year. With sales of €1,904.1 million (2022: €1,065.9 million), operating earnings before interest, taxes, depreciation and amortization (EBITDA) of €311.0 million (2022: €70.0 million) and EBIT of €269.5 million (2022: €31.9 million), we are closing an extraordinarily successful year. In the past fiscal year, we sold a total of 20.5 GW (2022: 12.2 GW) of inverter output and thus grew faster than the market as a whole.

In the second half of 2023, we saw a slight decline in order volumes in the Home Solutions and Commercial & Industrial Solutions segments. We had already forecasted this development at the beginning of the year, but like the majority of experts, we assume that this is not a trend reversal but a temporary effect. On the contrary, the market for photovoltaic solutions will continue to grow globally.

CONSISTENTLY ON COURSE FOR FURTHER GROWTH

We see the best opportunities in the market for large-scale PV power plants and storage solutions in particular. We are ideally prepared for this development with our new GIGAWATT FACTORY, which will double our production capacity to 40 gigawatts. We broke ground here in April 2023, and from 2025, we will be supplying innovative system solutions for large-scale PV power plants all over the world from our Niestetal site. We are also strengthening our production internationally. We will build a production capacity of 3.5 GW in North America and put it into operation in 2025.

The significant year-on-year increase in sales reflects the strong demand for SMA products and the improved delivery situation since the beginning of the year. For the 2024 fiscal year, the Managing Board is optimistic that we will be able to continue our success story and grow further with our segment-specific platform strategy. At the same time, further development will be influenced by important factors for our industry such as the speed of expansion, functioning supply chains, inventory management on the customer side and overall economic momentum. In light of this, for the current fiscal year, we are anticipating sales of between €1,950 million and €2,220 million and an operating result (EBITDA) of between €220 million and €290 million.

OUR STRATEGY FOR THE FUTURE

2023 was also the year in which we continued to consistently position SMA as an energy transition company in a future-oriented and customer-centric manner. In line with our Strategy 2025, we strengthened the three segments, aligned processes and structures with customer needs and anchored the new ways of working in the company. Our primary goal here was to develop and deliver our solutions faster, more seamlessly and in a more needs-oriented manner. The implementation of this goal took a major step forward last year. We have structured the company along the added value processes, strengthened our international focus and, at the same time, set up central functions such as Sales, HR, Communication and Sustainability in a powerful way.

We are also consistently implementing the requirements of a modern, global and networked energy market in our products. SMA is developing into a solution provider with a strong focus on comprehensive system solutions for grid stability, virtual service options as well as power supply solutions for green hydrogen applications.

We achieved a lot in 2023, and we have big plans for 2024. To achieve this, all of more than 4,300 SMA employees worldwide will need to pull together and consistently exploit the opportunities offered by the market in the interests of our customers.

Our thanks therefore go first and foremost to SMA's employees, who work with passion and commitment every day in 20 countries to make the energy transition a reality. They are the ones who make our company not only successful but also unique.

Dear Shareholders, we would like to thank you for your trust and would be pleased if you continued to accompany the SMA Group on its path in the future.

Dr.-Ing. Jürgen Reinert Chief Executive Officer SMA Solar Technology AG

The Managing Board Team
Supervisory Board Report

CONSOLIDATED FINANCIAL STATEMENTS

Notes SMA Group
Responsibility statement
Independent Auditor's Report
Note about the Audit of the combined non-financial statement

REMUNERATION REPORT

Remuneration Report
Report on the Audit of the Remuneration Report

OTHER INFORMATION

Financial glossary
Registered trademarks
Disclaimer
Financial calendar
Publication information, contact

THE MANAGING BOARD TEAM

BARBARA GREGOR

Board Member for Finance and Legal

Barbara Gregor (b. 1970) started her career at the thyssenkrupp group after graduating in business management. She held a number of positions in Germany and abroad as well as at the group headquarters (central corporate function of controlling). Between 2002 and 2013, she worked in the group's stainless steel segment, where she supported the establishment of the Shanghai Krupp Stainless joint venture in Shanghai. Her last role was head of controlling and authorized officer for the thyssenkrupp Stainless International Group. From 2013 to 2015, she was CFO of the apt Hiller Group where she spearheaded international growth and M&A projects. Before joining SMA, Barbara Gregor was CFO of the international operating unit thyssenkrupp Materials Trading and Managing Director (CFO) of thyssenkrupp Materials Trading GmbH, where she was responsible for managing and further developing the areas of Finance, Controlling, Accounting, Risk Management, Human Resources and IT. Since December 1, 2022, Barbara Gregor has been responsible for Finance, Investor Relations and Real Estate Management, Digitalisation/IT, Legal, Governance, Compliance, Risk Management and Internal Audit on the SMA Managing Board.

DR.-ING. JÜRGEN REINERT

Chief Executive Officer

After studying electrical engineering in South Africa, Dr.-Ing. Jürgen Reinert (b. 1968) received his doctorate at the Institute for Power Electronics and Electrical Drives (ISEA) at RWTH Aachen, Germany, and began his career as senior engineer there. From 1999 to 2011, he worked for Emotron AB in Sweden, where in his last position, as General Manager, he was responsible for Technology and Operations. From 2011 to 2014, as Executive Vice President, he was responsible for the division Power Plant Solutions at SMA. Under his leadership, SMA was successful in expanding its worldwide project business and developing turnkey system solutions for large-scale PV power plants. Since April 2014, Dr. Reinert has been a member of the Managing Board. He was appointed Chief Executive Officer in October 2018. With the extension of his contract in July 2023, the Supervisory Board appointed him Chairman of the Managing Board. Dr. Reinert is responsible for Strategy, Research & Development, Operations, the Home Solutions, Commercial & Industrial Solutions and Large Scale & Project Solutions segments as well as Sales & Service, Communication & Sustainability and Human Resources and also serves as labor director of SMA. He is a member of the Supervisory Board at Danfoss A/S.

SUPERVISORY BOARD REPORT

Dear Shareholders,

Prospects for renewable energy sources continuing to become positive and the progressing development of the SMA Group into a solutions provider have enabled SMA to increase its profitability. This is particularly pleasing in view of the simultaneous significant growth of the SMA Group and the associated challenges.

In the reporting year, collaboration within the Supervisory Board and between the Supervisory Board and Managing Board was characterized by openness, intensity and constructiveness. The Supervisory Board assisted the Managing Board in an advisory capacity and continuously monitored the Managing Board with regard to the management of the company in accordance with the law, Articles of Incorporation and Rules of Procedure. For its part, the Managing Board involved the Supervisory Board and its committees early on in all decisions of fundamental importance to the SMA Group. Furthermore, the Supervisory Board was kept informed, both in writing and verbally, of all strategy issues relevant to the company, the market and competitive situation, and business developments. The Managing Board also regularly updated the Supervisory Board on the SMA Group's sales, earnings and general situation. Furthermore, the Managing Board presented detailed information on proposed business policies and other important questions concerning corporate planning, in particular financial, investment, production and personnel planning, as well as significant business transactions to the Supervisory Board. Deviations in how events actually transpired in comparison to planned projects or objectives were provided, including reasons for the variances. Plus, the Supervisory Board was informed about the SMA Group's profitability, above all the return on equity, risk and opportunity management, risk status and compliance.

The Supervisory Board closely scrutinized and discussed business transactions requiring the approval of the Supervisory Board as well as instances where business performance deviated from corporate planning. Even beyond the regular Supervisory Board and Audit Committee meetings, the Chairman of the Supervisory Board and his deputy as well as the Audit Committee Chairwoman were in frequent contact with the Managing Board and discussed subjects concerning strategy, planning, business development, position of risk, risk management and compliance, as well as significant business transactions and upcoming decisions. The Supervisory Board members took general and specialized training necessary for their tasks of their own accord, and in doing so, they received appropriate support from the company if needed. No Supervisory Board or Managing Board members reported any conflicts of interest to the Supervisory Board.

Focus of Supervisory Board consultations

The Supervisory Board examined all material events and discussed them with the Managing Board at five meetings in person and adopted necessary resolutions in accordance with the law, Articles of Incorporation and Rules of Procedure. Kim Fausing participated in three meetings. Roland Bent, Martin Breul, Oliver Dietzel, Alexa Hergenröther and Yvonne Siebert participated in four meetings. The other Supervisory Board members participated in all five meetings.

In preparation for the meetings, the Supervisory Board received written reports from the Managing Board on a regular basis and on time. At each regular meeting, the subject matter of the deliberations were current business developments, the evolution of markets of particular importance to the SMA Group and corporate planning. Members of the Managing Board participated in all regular Supervisory Board and Audit Committee meetings, but were not present for discussions of matters relating to the Supervisory Board or Managing Board itself.

At its meeting on February 8, 2023, the Supervisory Board dealt with the Corporate Governance Report included in the 2022 Annual Report, the Remuneration Report and the Supervisory Board Report for 2022. In addition, the Supervisory Board discussed the contents of the combined non-financial statement presented by the Managing Board and possible proposals to the Annual General Meeting on profit appropriation. The competence profile of the Supervisory Board, proposals to amend the company's Articles of Incorporation and the composition of the Managing Board were also the subject of deliberations and discussions.

At its meeting convened to adopt the accounts on March 22, 2023, the Supervisory Board acknowledged the 2022 Annual Financial Statements, approved the 2022 Consolidated Financial Statements after in-depth consultation and also passed the proposal to the Annual General Meeting on profit appropriation for 2022, the Corporate Governance Report, the Supervisory Board Report, the non-financial statement and the Remuneration Report. Additionally, the Supervisory Board passed the proposal for selection of the auditors of the Financial Statements and the Consolidated Financial Statements for 2023 and approved the Managing Board's proposal for a virtual Annual General Meeting. Changes to the remuneration systems for the Managing Board and Supervisory Board were also the subject of deliberations and discussions. Finally, the Supervisory Board evaluated the achievement of objectives by the Managing Board members in 2022 and adopted the Managing Board's objectives for 2023.

At its meeting on May 23, 2023, the Supervisory Board discussed the content of the personnel-related plans and the company's strategies and efforts to improve sustainability.

The meeting on September 9, 2023, focused on implementation of the company's Strategy 2025 and transformation of the company organization to a more customer-centric, decentralized structure. In addition, the Supervisory Board was informed about the new approaches to solution offerings, product innovations and the company's product roadmap as well as the status of the review of project handling and about the financial developments of SMA Solar Technology AG's subsidiaries. Finally, the Supervisory Board adopted separate rules of procedure for the Audit Committee, which also provide for responsibility for monitoring and advising the Managing Board on sustainability issues relevant to the company and preparing the negotiations and resolutions of the Supervisory Board on the audit/audit review of the non-financial statement or the separate non-financial report (Section 289b of the German Commercial Code) by the Audit Committee.

At its meeting on December 6, 2023, the Supervisory Board dealt in depth with the budget for the 2024 fiscal year submitted by the Managing Board. It also discussed the Managing Board's plan to build up local production capacity in the U.S. and the company's growth areas presented by the Managing Board. The Supervisory Board received training on company-related, non-financial sustainability issues. In addition, the Managing Board and the Supervisory Board adopted a new Declaration of Conformity pursuant to Section 161 (1) sentence 1 of the German Stock Corporation Act (AktG) in order to comply with the recommendations of the German Corporate Governance Code.

Focus of committee meetings

To improve the efficiency of the work carried out by the Supervisory Board, the Supervisory Board maintains four permanent committees: the Presidial Committee, Audit Committee, Nomination Committee and Mediation Committee. You will find the names of the persons appointed to these committees on our corporate website as well as in the Corporate Governance Statement 2023.

The committees prepare the topics and resolutions to be reviewed by the entire Supervisory Board, and, within the framework of the competencies assigned to them, they resolve those matters they have been assigned instead of the Supervisory Board. The content of the committee meetings is reported on by the committee chairperson at the subsequent plenary session of the Supervisory Board. All members of the Supervisory Board receive the content and resolutions of the committees in writing.

The Presidial Committee met three times – two of which were in person – in 2023. The committee's work focused in particular on dealing with matters relating to the Managing Board and setting the financial and non-financial objectives for the Managing Board, as well as preparing the efficiency check on the Supervisory Board. Kim Fausing participated in one meeting, Yvonne Siebert participated in two meetings. The other members participated in all meetings of the committee.

The Audit Committee met ten times – four of which were in person – in 2023. The meetings focused on discussing the company's business performance and cost efficiency, the Quarterly Statements and Half-Yearly Financial Report. In addition, the committee familiarized itself with the main points and overall findings of the auditor for the 2022 Annual Financial Statements and, upon review, confirmed the auditor's independence. The Audit Committee also dealt with tax issues. Another key area of the committee's work was reviewing the internal monitoring system (internal control system, internal risk management system, internal audit and compliance), with the committee members gathering comprehensive information about these systems' methods and effectiveness. Furthermore, the committee handled the Half-Yearly Financial Report prepared by the Internal Audit department and the Compliance Report, neither of which showed any significant irregularities in SMA business processes. Other topics of the committee meetings were the contents of the combined non-financial statement of the company pursuant to Section 289c of the German Commercial Code (HGB) and the extended Auditors' Report. The Audit Committee also reviewed the recommendation made for the entire board regarding profit appropriation, selecting the auditor for 2023 and granting the audit mandate for the financial and non-financial reporting. Finally, deliberations and discussions addressed the implementation of new statutory requirements relating to the company's non-financial topics, as well as risk management, accounting, financial reporting and audits. Oliver Dietzel attended seven meetings, while the remaining members of the committee attended all meetings.

The Nomination Committee and Mediation Committee did not convene in 2023.

Corporate Governance

In the reporting year, the Supervisory Board dealt with the contents of the German Corporate Governance Code that had been adopted in June 2022. For the reporting year, the Supervisory Board and the Managing Board issued a Declaration of Compliance pursuant to Section 161 of the German Stock Corporation Act (AktG) in compliance with the recommendations of the German Corporate Governance Code. The joint report issued by the Supervisory Board and the Managing Board on compliance with the rules of the German Corporate Governance Code pursuant to clause 23 of the German Corporate Governance Code (Corporate Governance Report) has been made permanently available on our corporate website. Moreover, the Corporate Governance Report is presented in the "Corporate Governance" section of the Combined Management Report. This is also where you will find statements on conflicts of interest and how they are handled.

Annual Financial Statements and Consolidated Financial Statements

The Annual Financial Statements prepared by the Managing Board as of December 31, 2023, the Combined Management Report of SMA AG for the 2023 fiscal year, the Consolidated Financial Statements as of December 31, 2023, and the Combined Management Report of the SMA Group for the 2023 fiscal year were audited by the accounting firm BDO AG Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, Germany. The Supervisory Board granted the audit assignment in accordance with the resolution adopted by the General Meeting on May 24, 2023. The Supervisory Board also monitored the independence of the auditor.

The Consolidated Financial Statements of the company were prepared in line with Section 315a of the German Commercial Code (HGB) on the basis of the International Financial Reporting Standards (IFRS) as applicable in the EU. The auditor granted an unqualified audit opinion for the Annual Financial Statements and the Combined Management Report of SMA AG as well as for the Consolidated Financial Statements and the Combined Management Report of the SMA Group.

The reporting documents, including the combined non-financial statement of the company, and the Managing Board's proposal on the appropriation of profits as well as the audit reports were made available to the Supervisory Board in good time. These were first discussed by the Audit Committee at its meetings on February 7 and March 19, 2024, together with the auditors and then by the Supervisory Board at its meeting on March 20, 2024, on each occasion in the presence of the auditor's representatives.

The auditor's representatives reported on the audit findings and provided detailed explanations of the net assets, financial position and results of operations of the company and the group. The questions posed by the Supervisory Board were answered and the reporting documents were reviewed in detail with the auditor's representatives and discussed and examined by the Supervisory Board. The Supervisory Board raised no objections after concluding its examination. Thereafter, the findings of the audit were approved. Accordingly, the Supervisory Board approved the Financial Statements prepared by the Managing Board and the related Combined Management Report for the 2023 fiscal year at its meeting convened to adopt the accounts on March 20, 2024. Hence, the company's Annual Financial Statements have been approved as set out in Section 172 of the German Stock Corporation Act (AktG).

Finally, at its meeting held on March 20, 2024, the Supervisory Board approved the Managing Board's proposal on the appropriation of the balance sheet profit. In this respect, the Supervisory Board discussed the company's liquidity position, the financing of planned investments and estimated business development. In doing so, the Supervisory Board came to the conclusion that the proposal was in the interests of the company and the shareholders.

Changes to the Managing Board and Supervisory Board

The Supervisory Board has reappointed Dr. Reinert to the Managing Board for a term until June 30, 2028. There were no other personnel changes on the Managing Board or Supervisory Board in the reporting period.

In 2023, the SMA Group succeeded in increasing its profitability by responding flexibly to rapidly changing market conditions, through clever strategic planning and by systematically taking the necessary action. We must continue to pursue this path consistently over the next few years to be a part of the promising future of renewable energies.

The Supervisory Board would like to thank the Managing Board and all employees for their dedicated work and their strong commitment in continuing to lead the SMA Group and the cause of renewable energies to a successful future.

Niestetal, March 20, 2024

The Supervisory Board

Uwe Kleinkauf Chairman

ROLAND BENT Shareholder Representative

MARTIN BREUL Employee Representative

OLIVER DIETZEL Employee Representative

KIM FAUSING Shareholder Representative (Deputy Chairman)

JOHANNES HÄDE Employee Representative

ALEXA HERGENRÖTHER Shareholder Representative

UWE KLEINKAUF Shareholder Representative (Chairman)

ROMY SIEGERT Employee Representative

ILONKA NUSSBAUMER Shareholder Representative

JAN-HENRIK SUPADY Shareholder Representative

YVONNE SIEBERT Employee Representative

DR. MATTHIAS VICTOR Employee Representative

COMBINED MANAGEMENT REPORT ¹

BASIC INFORMATION ABOUT THE GROUP

Business activity and organization
Products and services
Important sales markets and competitive situation
Strategy
Enterprise management
Research and development

COMBINED NON-FINANCIAL STATEMENT

Basic information on the combined non-financial statement
Sustainability management
Area of action: governance & ethical business
Area of action: environment & energy
Area of action: product stewardship
Area of action: employees
Sustainability key figures of the SMA Group
Key Performance Indicators EU Taxonomy
GRI Index
SDG Index

FISCAL YEAR 2023

General economic conditions and economic conditions in the sector
Results of operations
Financial position
Net assets
SMA Solar Technology AG (notes based on the German Commercial Code HGB)
Managing Board statement on the business trends in 2023

1 The present Combined Management Report has been drawn up for both the SMA Group and SMA AG. It was prepared in accordance with Sections 289, 289a, 315 and 315a of the German Commercial Code (HGB) and German Accounting Standards (GAS) numbers 17 and 20.

RISKS AND OPPORTUNITIES

Principles of the internal control system¹
Description of the internal control system
Key features of the internal control system in relation to the (group) accounting process
Principles of the risk and opportunity management
Description of the main features of the early risk detection system
Description of the climate-related risk and opportunity management
Description of the other risk and opportunity management
Overall statement on the internal control and risk management system
Risks and opportunities report
Individual analysis of climate-related risks and opportunities
Overall statement on the Group's risk and opportunity situation

FORECAST REPORT

Preamble
The general economic situation
Future general economic conditions in the photovoltaics sector
Overall statement from the Managing Board of SMA Solar Technology AG on expected development of the SMA Group

CORPORATE GOVERNANCE

Corporate Governance Report
Information concerning takeovers required by HGB sections 289a and 315a

BASIC INFORMATION ABOUT THE GROUP

Business activity and organization

SMA Solar Technology AG and its subsidiaries (SMA Group) develop, produce and sell systems and solutions for the efficient and sustainable generation, storage and use of solar energy. These include PV and battery inverters, monitoring systems for PV systems, charging solutions for electric vehicles as well as intelligent energy management systems and digital services for the future energy supply. Extensive services up to and including operation and maintenance services for photovoltaic power plants (O&M business) as well as medium-voltage technology and power supplies for hydrogen production round off the product range. With its products and services, the SMA Group actively contributes to making a sustainable, secure and cost-effective energy supply a reality worldwide.

Organizational structure

LEGAL STRUCTURE OF THE GROUP

As the parent company of the SMA Group, SMA Solar Technology AG, headquartered in Niestetal near Kassel, Germany, takes over all of the functions required for its operative business. The parent company holds, either directly or indirectly, 100% of the shares of all the operating companies that belong to the SMA Group. The Combined Management Report includes information regarding the parent company and all 28 group companies (2022: 29), including 6 domestic companies and 22 companies based abroad. In addition, SMA Solar Technology AG holds a 42% interest in elexon GmbH. The joint venture in the field of charging infrastructure facilities was established in 2019 and is included in the Consolidated Financial Statements using the equity method. The SMA Group sold its interest in elexon GmbH to VARO Energy Management AG in January 2024 (closing).

ORGANIZATIONAL AND REPORTING STRUCTURE

The SMA Group operates under a functional matrix organization. In this organization, the Home Solutions, Commercial & Industrial (C&I) Solutions and Large Scale & Project Solutions segments manage development, operational service and sales as well as production and procurement/logistics.

REPORTING STRUCTURE

MANAGEMENT AND CONTROL

SMA Gruppe Segment Home Solutions Segment Commercial & Industrial Solutions Segment Large Scale & Project Solutions In accordance with the German Stock Corporation Act, the executive bodies consist of the Annual General Meeting, the Managing Board and the Supervisory Board. The Managing Board manages the company. The Supervisory Board appoints, supervises and advises the Managing Board. The Annual General Meeting elects shareholder representatives to the Supervisory Board and grants or refuses discharge to the Managing Board and the Supervisory Board.

COMPOSITION OF THE MANAGING BOARD

Since December 1, 2022, the Managing Board of SMA Solar Technology AG has comprised the following members: Dr.-Ing. Jürgen Reinert (Chairman of the Managing Board and Board Member for Strategy, Research & Development, Operations and for the Business Units (segments) Home Solutions, Commercial & Industrial Solutions and Large Scale & Project Solutions, Sales & Service, Communications & Sustainability and Human Resources) and Barbara Gregor (Board Member for Finance, Investor Relations as well as Real Estate Management, Digitalization/IT, Legal, Governance, Compliance, Risk Management and Internal Audit).

COMPOSITION OF THE SUPERVISORY BOARD

The Supervisory Board of SMA Solar Technology AG, which represents shareholders and employees in equal measure, consists of Roland Bent, Kim Fausing (Deputy Chairman), Alexa Hergenröther, Uwe Kleinkauf (Chairman), Ilonka Nußbaumer and Jan-Henrik Supady as shareholder representatives. The employees are represented on the Supervisory Board by Martin Breul, Oliver Dietzel, Johannes Häde, Yvonne Siebert, Romy Siegert and Dr. Matthias Victor.

Products and services1

As a specialist in system technology, the SMA Group develops and globally sells systems and solutions consisting of hardware, software and services that allow energy to be efficiently generated and intelligently monitored, managed and used. The portfolio of the SMA Group contains a wide range of PV inverters, holistic system solutions for PV systems of all power classes, battery storage solutions, intelligent energy management systems, charging solutions for private and commercial electric vehicles, digital energy services for private and business customers, and complete solutions for PV diesel hybrid applications. The SMA Group also operates successfully as a system integrator for complex power plant solutions in the areas of large battery storage systems, hydrogen production and hybrid systems. In addition, the SMA Group offers extensive services up to and including operation and maintenance services for photovoltaic power plants and large battery storage systems (O&M business) and power supplies for hydrogen production. The inverters of the SMA Group already come integrated with all the functions required to generate maximum yields, without any additional cost to customers. These functions include effective shade management with SMA ShadeFix and inverter monitoring with SMA Smart Connected within the string inverters. The satisfaction of our customers and the sustainability of our products and solutions is always our top priority at SMA.

Further innovations and solutions were unveiled in the 2023 fiscal year under the new "I love the sun" slogan. In addition to the single-phase Sunny Boy Smart Energy inverter and the modular SMA Home Storage battery, the Home Solutions segment is delivering the next generation of the Wallbox Home EV Charger with the eCharger. The Sunny Boy Smart Energy is a hybrid twoin-one PV and battery inverter that is compatible with the new SMA Home Storage battery and other HV batteries from leading brands. The SMA Home Storage battery is designed for use in and adaptation to various applications. If required, its capacity can be expanded anytime.

The Sunny Home Manager 2.0, the SMA energy manager for homeowners, has recorded considerable growth since its launch with over 300,000 units (more than half of those in 2023) sold. This success underlines the growing importance of intelligent energy management, which also enables the integration of heat pump connections.

SMA serves key photovoltaic markets worldwide (excluding China) and, in addition to hardware, offers communication products, accessories, warranties, spare parts and modernization services (repowering) to increase system performance and service life. Digital energy services round off the extensive offering.

In the Commercial & Industrial Solutions segment, the focus is on global markets for commercial PV systems with and without energy management, battery storage and electric vehicle charging solutions. The SMA Commercial Energy Solution, featuring ideally matched hardware, software, tools and services, gives commercial enterprises and the real estate industry the option of producing, storing and selling solar power themselves, organizing their companies' energy flows in a transparent and cost-efficient way as well as charging and managing electric vehicle fleets efficiently and sustainably. The solutions comprise the three-phase string inverters of the Sunny Tripower product family with outputs of 12 kW and up to 110 kW, storage solutions for the commercial sector and island applications in the Sunny Tripower Storage and Sunny Island product families as well as holistic energy management solutions for commercial integrated energy. Solutions for charging management and billing of electric vehicle fleets on the basis of the ennexOS platform were implemented by the Commercial & Industrial Solutions segment together with the subsidiary company coneva. As an SaaS provider for intelligent energy management, coneva connects all energy-related sectors, optimizing energy flows and making them transparent.

¹ The following section is not a mandatory component of the Combined Management Report as defined in Sections 289, 315 HGB in conjunction with GAS 20, and therefore not a subject of the financial audit.

The product offering in this segment is rounded off by integrated services and digital services along the product life cycle, starting with the planning of a custom energy solution and including the commissioning of the systems and operational system management right through to system repowering and expansion.

The offering is complemented by services such as repowering, engineering services, operation and maintenance as well as customized solutions for individual customer requirements.

Grid stability and grid reliability are becoming increasingly important as the energy mix is transitioned from conventional to renewable energies. The Large Scale & Project Solutions segment is addressing these challenges with grid-forming solutions in combination with large-scale storage systems. These systems enable numerous additional services, such as energy arbitrage, black starts, frequency control, inertia, stability services and system restoration.

Ensuring sustainable grid stability is a basic prerequisite for the successful expansion of renewable energies. In October 2023, the SMA Group opened a Competence Center in Bangalore, India, for the targeted promotion of and further research into grid stability. With what is now its second office in India, SMA is strategically realigning itself and creating a central competence center to promote the development of expertise and knowledge sharing on an international scale. From here, SMA experts will process global inquiries and use their services to make an important contribution to the further expansion of renewable energies. From Bangalore, customers all over the world are assisted and supported in grid stability matters. This service is an important part of SMA's comprehensive portfolio.

Customers of the Large Scale & Project Solutions segment include independent power producers; developers and institutional investors; engineering, procurement and construction companies; system integrators; public utility companies and grid operators as well as energy-intensive industries, particularly for hydrogen applications.

Important sales markets and competitive situation1

With its extensive portfolio of systems and solutions, the SMA Group is well positioned to benefit in all segments from the growth of global solar and battery-storage markets and from the increasing demand for holistic solutions for energy management and electric vehicle charging for private and commercial applications. Key differentiator of the SMA Group is its broadly diversified range of products and solutions in three segments. Its own presence with experienced specialists in 20 countries on six continents enables the SMA Group to serve all markets worldwide. Our main customer groups include companies from the sectors of investment, project development, engineering, procurement and construction (EPC), system integration, energy supply, operation and maintenance services, real estate industry, wholesale and installation companies as well as commercial enterprises.

Our production site in Niestetal (Germany) has an overall annual capacity of 21 GW. The competence center for coils (electromagnetic components) is based in Modlniczka, near Krakow (Poland). With its international positioning and product and service portfolio for all types of applications within the three segments and different regional requirements, the SMA Group can respond quickly to shifts in demand on international markets anytime.

SMA estimates that approximately 368 GW to 374 GW of new PV power was installed worldwide in 2023. This is again a significant increase compared to last year's level (2022: 212 GW; figures exclude inverter retrofitting and battery inverter technology). SMA estimates that global PV inverter technology sales, including inverter retrofitting and battery inverter technology, increased to around €15.7 billion to €16.9 billion in the reporting period (2022: €10.9 billion).

According to SMA estimates, the share of the photovoltaic markets in Europe, the Middle East and Africa (EMEA) in global sales decreased to 31% in 2023 (2022: 35%). With approximately 24%, American photovoltaic markets declined (2022: 29%). The Chinese market accounted for 34% of global sales in 2023 (2022: 22%) due to further strong growth. The Asia-Pacific photovoltaic markets (excluding China) accounted for 11% of sales and thus less than in the previous year (2022: 14%).

¹ The estimated values (as of February 5, 2024) in the following section are not a mandatory component of the Combined Management Report as defined in Sections 289, 315 HGB in conjunction with GAS 20, and are therefore not a subject of the financial audit.

CONSOLIDATED SALES WELL ABOVE PREVIOUS YEAR DUE TO IMPROVED SUPPLY SITUATION

The SMA Group closed the 2023 fiscal year with an extremely positive result. The existing high order backlog was successfully managed thanks to the improved supply situation and the higher production volume this entailed. Sales increased to €1,904.1 million (2022: €1,065.9 million). The cumulative inverter output the SMA Group sold amounted to 20,454 MW (2022: 12,225 MW).

In the reporting year, the SMA Group consistently pressed ahead with its ongoing strategic development to become an innovative and sustainable systems and solutions provider and systematically expanded its product portfolio. During the year, efforts were focused on storage solutions, which are becoming increasingly important given the efficient use of renewable energies as well as the greater flexibility and assured grid stability they provide.

Strategy

Climate change is currently one of the major challenges society is facing. The negative consequences of the climate crisis are repeatedly being felt around the world. The expansion of renewable energies therefore remains the top priority. Added to this were rising energy prices for fossil fuels in recent years, which are set to further accelerate the transition to renewable energies. In its "Renewables 2022" report, the International Energy Agency (IEA) outlines its expectation that global power generation capacity from renewable energies will increase by 2,400 gigawatts (GW) by 2027. This means that renewable power generation capacity will almost double accompanied by the substitution of coal as the biggest source of power generation. Alongside photovoltaics, the experts also attest to the enormous growth potential of green hydrogen (power-to-gas) in the coming years. Other growth drivers include the electric vehicle sector and battery storage systems, the use of which plays an indispensable role in the success of the energy transition and is increasing worldwide.

The rapid global expansion of power generation capacity in photovoltaics as the most cost-effective energy source is being driven by electric utility companies largely through the construction of large-scale PV power plants. In addition, more and more households, cities and companies are becoming less dependent on energy fuel imports and rising energy costs by having their own PV systems. This will also lead to a rise in demand for energy storage solutions. Plus, energy will be increasingly distributed via smart grids to manage electricity demand, avoid consumption peaks and take the strain off utility grids. In addition, the growing number of electric vehicles is contributing to higher levels of selfconsumption among renewable energies. Using artificial intelligence, the decentralized energy consumption and storage can be adapted to the fluctuating production of electricity from renewable energies, thus enabling the overall system to be optimized.

In this context, innovative system technologies that generate and temporarily store solar power and provide energy management to private households and commercial enterprises, or are used on a power plant scale for grid stabilization, offer worthwhile business opportunities for the SMA Group. Rising prices for conventional domestic and commercial power and many private households and companies wanting to drive forward the energy transition by making their contribution to a sustainable and decentralized energy supply promote new business models. Plus, electric utility companies are increasingly using battery storage systems to avoid expensive grid expansions, stabilize grid frequency and balance fluctuations in the power feed-in from renewable energy sources. In addition to storage technology, digital energy services aimed at optimizing household and commercial enterprises' energy costs and their connection to the energy market are thus becoming increasingly significant.

The SMA Group has aligned itself with a clear focus on these growth markets as well as the global change in energy supply and has set a course for sustainable growth, long-term business success and successful positioning as part of its Strategy 2025. The SMA Group is already an innovative and sustainable "energy transition company". To be able to offer and systematically further develop suitable solutions for all key areas of future energy supply, the SMA Group offers a broadly diversified portfolio of products and solutions in the three segments Home Solutions, Commercial & Industrial Solutions, and Large Scale & Project Solutions. We are leveraging our systems expertise to develop complete, futureproof solutions of significant customer benefit in close collaboration with our strong partners and to tap into new business areas.

The entire Strategy 2025 is based on defined ambition levels from which the respective annual objectives are derived. Regular monitoring of strategy implementation and ongoing updates are ensured by a continuous management process that includes reviews at quarterly level and an annual strategy conference. The extent to which the objectives have been achieved and the progress made within the objectives and areas of action are thus made transparent to all key stakeholders and also regularly communicated to employees. Management derives appropriate courses of action from the results of the strategy reviews.

In 2024, a comprehensive analysis of external and internal factors will also lay the foundation for the ongoing development of Strategy 2025 beyond its validity period.

Purpose, vision and mission ¹

SMA's purpose reflects the strong entrenchment of sustainability within the company, which also represents a key element of the SMA Strategy 2025. It is: "Our energy inspires the world's most important customer. Our future". We think long-term, strive for an eco-friendly and resource-saving way of doing business and have a livable planet for future generations in mind.

The same is true of our vision, which sets out the SMA Group's vision for the future and the standard we are setting ourselves: "We pioneer access to clean energy". With our experience, our innovative strength and our knowledge of system technology, we make renewable energies accessible to people all over the world in an easy, straightforward and sustainable way.

Our mission statement describes how we intend to achieve this objective and meet the ambitions and needs of our customers and other stakeholders: "We leverage 40 years of expertise and passion in renewables to drive the world's energy transition with our partners". In our daily interactions, we embody our company values of trust, performance and team spirit, and allow our actions – within and outside the company at all levels – to be influenced by our brand values: We are sustainable and respect people and the planet, we are passionate in all that we do, we are connected and work together to achieve our objectives, we are visionary and dare to innovate, and we are a reliable partner.

Strategic corporate objectives

The strategic corporate objectives form the basis for the future viability and long-term corporate success of the SMA Group. They define the ongoing development of the company and key success factors across all segments. For each objective, priorities are set on an annual basis and their achievement is ensured through clearly defined and measurable interim targets and regular reviews.

OBJECTIVE 1: CLOSER TO THE CUSTOMER

We inspire our customers with a high level of user-friendliness and solution-oriented cooperation.

The future corporate success of the SMA Group will depend largely on us aligning our actions even more consistently with the requirements of our customers. Customer focus is therefore purposefully the first objective of our strategy.

The implementation of the company-wide SPIRIT program launched in 2022 was one of the main priorities of the strategic work in the 2023 reporting year as well. With SPIRIT, we have set ourselves the objective of systematically bringing our processes and structures in line with the various customer segments and designing them in such a way that we can develop and deliver even faster, more seamlessly and in a more demand-oriented manner. We are thus able to align our portfolio of systems and solutions even more precisely to the current and future requirements of the various customer segments. To this end, we elaborated on and rolled out the end-to-end processes along the main value chains of our three business segments Home Solutions, Commercial & Industrial Solutions and Large Scale & Project Solutions. Underpinned by continuous communication and training measures, SPIRIT ensures clear roles and responsibilities, faster decision-making and a much improved understanding of customer requirements throughout the organization.

The committee structure was also revised extensively in 2023 and the global functions were integrated into the business processes at international level.

One of our objectives for 2024 is to systematically, uniformly and regularly survey customer satisfaction across all customer groups in order to incorporate customer feedback in a targeted manner to improve our business processes and our range of services.

OBJECTIVE 2: PROFITABLE GROWTH

We are sustainably increasing our profitability through the further development of our core business and the targeted development of new business areas.

SMA's market environment experienced very positive development in the 2023 reporting year and the prospects for future growth are extremely good. Our own ambition to grow faster than the market led to the decision to replace the title of the "Stability through profitability" objective with "Profitable growth". Profitable growth will be the basis for entrepreneurial freedom, strategic

1 The following section is not a mandatory component of the Combined Management Report as defined in Sections 289, 315 HGB in conjunction with GAS 20, and is therefore not a subject of the financial audit.

investments and economic security. We have therefore defined increasing sales and profit as key objective categories and raised our own ambitions:

In 2023, we significantly increased our delivery capacity while limiting increases in material costs. Combined with the stabilization of our own prices, this led to the positive result for the year. These successes have also helped us to achieve solid net liquidity and an improved free cash flow.

For 2024, we will continue to focus on the market launch of new segment-specific platforms and corresponding products as part of our positioning as a systems and solutions provider. We will continue to drive forward the actions initiated in 2023 to improve strategic project portfolio management in order to make prioritization decisions more effectively. As part of ongoing process improvements, projects to reduce costs and increase efficiency are being implemented at process level in order to successfully tackle the challenges posed by a rapidly growing installed base of devices. The focus on a positive development of net liquidity will continue to be one of the SMA Group's key annual targets in 2024 given the high number of planned investments.

OBJECTIVE 3: HOLISTIC SUSTAINABILITY

We live sustainability in all areas of the company and take over a leading role in shaping a better future.

Holistic sustainability in all areas of the company is one of the key objectives at the heart of our strategy. The Managing Board is thereby not only underlining the considerable importance of the topic of sustainability within the SMA Group, but also taking account of the ever-increasing interest and expectations of major stakeholder groups. Our aspiration for the "holistic sustainability" objective is to integrate sustainability into all areas of the company and to take a leading role in creating a better future with the SMA Group. Sustainability risks and opportunities must therefore be assessed in all business processes and encompass the entire value chain, as every area of the company can make a contribution toward achieving the objectives. Our holistic sustainability strategy comprises four areas of action: environment & energy, employees, governance & ethical business and product stewardship.

In the "environment & energy" area of action, we strive to keep the environmental impact of our business activities as low as possible and protect the climate by handling resources responsibly along the value chain and using renewable energies. We thus help establish the conditions for a livable future for all people.

Committed, highly motivated and skilled employees are an essential factor in the success of the SMA Group. Our goals and measures in the "employees" area of action take this into account. Ensuring the health and safety of our employees is just as much a part of securing the future of the company as bringing diversity to life. We promote diversity and equal opportunities and recognize the excellent commitment of our employees through fair pay and company benefits.

In the governance & ethical business practices area of action, we are continuously working on improving our processes – such as bundling business decisions requiring approval by the Managing Board in an approval catalog – and structures to ensure good corporate governance as well as integrity and compliance. We select our business partners with care and are committed to protecting human rights and acting sustainably and responsibly throughout the supply chain.

In the product stewardship area of action, it is our aim to meet our customers' incredibly exacting quality requirements and provide them with products with a long lifetime. For us, product stewardship means taking responsibility for the impact of our products throughout the product life cycle, from their development to the end of their lifetime.

Detailed information on the sustainability strategy and management of the SMA Group and on development and progress within our four areas of action of sustainability in the reporting year can be found in the "Combined non-financial statement" section.

OBJECTIVE 4: SHAPING THE FUTURE WITH INNOVATIONS

We use our expertise, experience and innovative strength to position SMA for the future in existing and new business fields. Our business environment is characterized by ever-faster innovation cycles, high complexity and accelerated technological change. Our high capacity for innovation continues to be what fundamentally sets us apart from the competition. To expand our competitiveness further, we are systematically addressing future topics, continuing to promote digitalization and increasing our ability to deal with complexity.

Core actions in 2023 included formulating a vision for 2030, including a trend radar, which will be actively used in the ongoing development of our corporate strategy. The successful expansion of systematic trend management will also enable us to prioritize our innovation activities and investments both in terms of customer added value and in line with the trends most relevant to SMA. We also continued to focus on the megatrend of digitalization for SMA in 2023. Two further releases were successfully rolled out in the "Digital Core" program, which help flexibly map new business models within an end-to-end digital system landscape. A "digital objective" has also been formulated, which serves to look beyond current trends at future topics in digitalization from all relevant perspectives and to position SMA for success at an early stage. The "digital objective" has also created clarity around a data strategy designed to monetize new business models based on our extensive data.

In 2024, our primary focus will also be to further expand the digitalization of our production and production-related processes via the "Digital Factory" program in order to operate our current and future production facilities based on the latest state of the art.

OBJECTIVE 5: POWERFUL PARTNERSHIPS

We develop a powerful partner network and take advantage of the opportunities it creates.

Our systems and solutions business thrives on powerful partnerships. They are the key to comprehensive solutions with high customer value and a broad range of applications. To be successful in this area, our management processes are geared to the targeted integration of partners with whom we are shaping the energy supply of the future. In this respect, the SMA Group will be able to benefit from new business opportunities and broader room for maneuver. By improving our efficiency, productivity and competitiveness we are also increasing our internal and external impact.

In 2023, we developed and implemented a governance model for the systematic integration of partners. The relevant committees and decision-making processes were established and communicated within the SMA organization as part of this governance model. Regarding the leveraging of new business opportunities with partners, we have implemented a partner funnel and a set of evaluation criteria in order to select the most promising partners in a targeted manner.

In 2024, we will coordinate a systematic analysis of our own skills and capabilities (capability map) within the company. This is intended to ensure a targeted selection of partnerships with high potential for SMA. We will also operationalize partner management processes globally and systematically measure the success of our partnerships in order to identify potential for improvement.

Strategic areas of action

The strategic areas of action of the SMA Strategy define the company's focus and have therefore been formulated across all segments. Derived from the overarching megatrends in our market environment and the growth potential in SMA's core markets described above, the strategic areas of action create the basis for clarity and prioritization in an increasingly complex market environment.

This includes focusing on the core photovoltaic business as well as the further development of the SMA Group in the relevant growth fields of battery storage systems, e-mobility, energy management solutions and energy market integration. We have also invested in the expansion of the high-potential powerto-gas business at an early stage and are systematically expanding our investment.

The segments are responsible for defining and implementing the relevant business initiatives within the areas of action. In the context of clearly defined financial targets, they therefore have the necessary scope to successfully shape their business.

SMA is thus optimally positioned for future business success and sustainable growth. With its portfolio of products, systems and solutions for all PV segments and applications, its level of system expertise and its global presence, the SMA Group thus makes a significant contribution to the rapid and sustainable transformation of the world's energy supply structures and exploits the opportunities arising from the megatrends of decentralization, decarbonization and digitalization.

Enterprise management

Overview

The SMA Group's corporate management is based on the leading indicators and financial management parameters outlined below. Corporate management also incorporates non-financial performance indicators. More information on this can be found in the "Combined non-financial statement" section.

Leading indicators

To be able to respond to market changes in a timely manner, it is exceedingly important for the SMA Group to recognize opportunities and risks early on. To achieve this, we will have ongoing discussions about what are commonly referred to as operative leading indicators at both the Managing Board and segment level and the general managers of SMA subsidiaries. Indicators relevant to the SMA Group include changes in PV system incentive programs and their effect on regional market potential, growth and competitiveness of the SMA Group in regional markets, customer acceptance of new products as well as market-related information stemming from discussions with customers, suppliers and associations. The myriad of influencing factors and the complex way they interact make it difficult to produce a detailed forecast that holds up long term.

As part of annual and medium-term planning, the Managing Board specifically discusses opportunities and risks with regard to markets and sales volumes with the sales and segment heads and records the final assumptions for planning. In the reporting period, the Managing Board and segment heads were informed on a monthly basis of the financial development of the entire SMA Group and the individual segments. They were continuously compared with planning assumptions. In the event of deviations or unforeseen events, short-term countermeasures could therefore be taken on the basis of intra-year forecasts.

Financial management parameters

In 2023, the SMA Group used the following key financial management parameters for its operative business as explained below. Compared with the previous year, there were no changes in the calculation of key figures or in the management system.

SALES

Sales include all the sales generated over the reporting period. Because the market for inverters was shaped partly by plummeting prices, we measure inverter output sold along with sales. We calculate sales at both the group and segment level. In addition, sales and the contribution margin are calculated at the product group level on a monthly basis.

OPERATING PROFIT (EBIT)/OPERATIVE EARNINGS MARGIN

In addition to sales and the cost of sales, the operating profit includes functional costs and other operating expenses and income. We use this key figure to measure the profitability of the individual segments and the group. To determine the operative earnings margin, we calculate operating profit in relation to total sales. We measure the operating profit and operative earnings margin at both the group and segment level.

EARNINGS BEFORE DEPRECIATION AND AMORTIZATION (EBITDA/EBITDA MARGIN)

We calculate operating earnings before interest, income taxes, depreciation and amortization (EBITDA) based on operating earnings (EBIT), plus depreciation and amortization of fixed and intangible assets. To determine the EBITDA margin, we calculate the operating earnings before interest, income taxes, depreciation and amortization in relation to total sales. We use these key figures to measure profitability at the group level, excluding imputed depreciation of investments made.

NET WORKING CAPITAL/NET WORKING CAPITAL RATIO

In addition to inventories, net working capital comprises trade receivables, trade payables, prepayments received from customers and prepayments made to suppliers. We measure our customers' and suppliers' accounts receivables as well as product manufacturing inventories regularly in relation to sales over the last 12 months. We measure and manage net working capital at the corporate group level.

CAPITAL EXPENDITURE

Capital expenditure is another key driver of liquidity planning. To manage capital expenditure, we formulate budgets as part of our annual planning, which the Managing Board approves over the course of the fiscal year. This applies particularly to largescale capital expenditure projects, which are additionally evaluated with a profitability calculation. We manage capital expenditure at the corporate group level.

NET CASH

With net cash, we review our own financing possibilities for the ongoing business like net working capital and capital expenditure. It includes liquid funds and securities contained within working capital and cash on hand pledged as collateral less interestbearing financial liabilities to banks. We manage net cash at the corporate group level.

Intragroup reporting and management

INTRAGROUP REPORTING

The monthly reporting includes, among other information, detailed status reports on orders placed and order volumes, the amount of inverter output sold, sales figures, results of operation, cash flow statements, research and development activities, investments and net working capital. The aim is to compare changes in decisive items on the income statement and balance sheet both with the budget and figures of the previous month and to take any corrective measures necessary. Reporting is mapped using SAP Analytics Cloud (SAC), and SAP Business Warehouse, an electronic management information system, serves as the home for the information.

INTRAGROUP MANAGEMENT SYSTEM

In the reporting period, the basic elements of the intragroup management system were the regular Managing Board and Supervisory Board meetings as well as the monthly discussions on results with the segment heads. Strategy implementation was also discussed during quarterly business reviews with the segments as was an assessment on the progress of objectives. In addition, the intragroup management system encompasses the regular Risks and Opportunities Report and the report prepared by the Internal Audit department.

Research and development

The SMA Group uses its systems expertise to develop holistic solutions comprising hardware, software and (digital) services for different applications in the fields of photovoltaics, battery storage systems and electric vehicle charging, as well as for comprehensive energy management across all segments and sectors (power generators, household appliances, storage systems, heating, ventilation and air-conditioning, e-mobility). To offer our customers technically mature and economic system solutions in all market segments and regions, we selectively collaborate with strong partners. With our continuous research and our market- and customerfocused development, we can further reduce the consumer cost of PV electricity, optimize the use of energy and decrease the complexity in the new, decentralized and digital energy world.

Forward-looking development approach

With the growing importance of photovoltaics for the global power generation and the increasing integration of PV systems into complete systems, system technology demands on system integration, connectivity and the provision of grid services for a reliable energy supply are taking center stage. In this context, the SMA Group's development focus is on highly integrated and digitalized solutions that cover as many functions as possible (allin-one solution). Future focus areas of our research and development activities also include energy storage systems, e-mobility, energy market integration and hydrogen.

At the end of 2018, the decision was made to discontinue development in China and to concentrate development on segmentspecific platforms (instead of individual products) at the Kassel site. We have created the basis for this in recent years. The first products on these platforms will be available on the market starting 2024. By standardizing the architecture of the core components and integrating key system functions, we are increasing the proportion of identical components and software modules across the entire portfolio while also reducing the number of components in the system in order to offer our customers highly efficient solutions. Customization in line with different markets and customer needs is implemented partly through the connection area and software as well as through different power classes based on the platform. ¹

¹ This paragraph is not a mandatory component of the Combined Management Report as defined in Sections 289, 315 HGB in conjunction with GAS 20, and therefore not a subject of the financial audit.

The implementation of the platform strategy in the Large Scale & Project Solutions segment will be made possible thanks to the new GIGAWATT FACTORY at the Niestetal site near Kassel, Germany. The new factory, which is scheduled to go into operation at the beginning of 2025, will enable us to double our production capacity from its current level of 21 GW to nearly 40 GW. In doing so, we want to safeguard supply chains and become more independent of fluctuating trading conditions. Increased customer proximity will also be an important driver, especially in the large-scale plant business. This will allow us to strengthen our excellent brand reputation, especially in the core markets of Europe and the U.S. We also want to drive innovations from Germany for the global market and increase added value at our main location in Germany.

SMA Solar Technology AG was granted or had registered 1,628 patents and utility models worldwide by the end of the reporting period. Additionally, 564 other patent and utility model applications were still pending as of December 31, 2023. Furthermore, SMA Solar Technology AG holds the rights to 1,529 trademarks.

In addition to the (further) development of solutions for the efficient generation, storage and use of solar energy, for electric vehicle charging and charging management and for intelligent energy management across various sectors, the focus of development in the reporting period was on optimizing hydrogen production. The SMA Group was already involved in the implementation of related projects on several continents (see "Project business" section).

Research and development expenses of the SMA Group

in € million	2023	2022	2021	2020	2019
Research and deve lopment expenses	119.8	86.8	77.7	71.2	63.1
of which capitalized development projects	41.2	35.2	27.4	15.2	10.9
Depreciation on capi talized development projects (scheduled)	9.7	6.9	8.8	9.1	9.0
Research and deve lopment ratio in % in relation to sales	6.3	8.1	7.9	6.9	6.9

Holistic solutions for the energy supply of the future ¹

PRIVATE APPLICATIONS: HYBRID INVERTERS AT THE HEART OF RENEWABLE ENERGY MANAGEMENT

In the Home Solutions segment, the single-phase Sunny Boy Smart Energy hybrid inverter for markets and applications with specific requirements for single-phase systems was successfully unveiled at Intersolar 2023. As a hybrid inverter that combines both PV and battery inverter functions in one product, it ensures seamless integration of solar power generation and battery storage systems. With its secure electricity supply and optional battery backup, the Sunny Boy Smart Energy provides a stable energy supply, even during grid failures. It is also compatible with the new SMA Home Storage battery and all other HV batteries from leading manufacturers. The Sunny Boy Smart Energy will be available in the U.S. starting the first quarter of 2024. Depending on country-specific certification, launches in Germany, Austria, Benelux, Spain, Italy and Switzerland will follow from the end of the first quarter of 2024. The market launch in Australia and other European countries is planned at some point over the course of 2024.

The modular SMA Home Storage battery was developed as an addition to the hybrid inverters of the Sunny Boy Smart Energy and Sunny Tripower Smart Energy families. It offers homeowners maximum flexibility, including when expanding existing PV systems, and reliably enables the optimal use of sustainable energy supply. The SMA Home Storage battery is already being sold in Germany, Austria, Switzerland, Belgium, Luxembourg and the Netherlands. Other European countries will follow in the first quarter of 2024. A market-specific solution for the U.S. market is also in the pipeline.

At Intersolar 2023, SMA also unveiled the new eCharger, the successor to the current EV Charger. Its charging mode, which is based on an AI algorithm, is characterized by a near-production charging function. Safety and reliability are paramount concerns for the SMA eCharger. It offers improved user protection and integrated overload protection, which not only ensures safe charging but also protects against possible power outages in the home. A billing function is also planned for the new SMA eCharger,

which will allow company employees to charge their company vehicles easily and bill their employer directly. The processes and installation are controlled via the SMA eMobility Portal. The market launch in Benelux, France and Germany is scheduled for the beginning of the second quarter of 2024. Other European countries will follow in the same quarter.

Energy management is one of the most important topics of the future. This was also demonstrated in the reporting year by the continued high demand for our SMA Sunny Home Manager 2.0. The Sunny Home Manager has been one of the most successful products since its market launch, with more than 300,000 devices sold. The Sunny Home Manager 2.0 is an innovative interface that interconnects PV systems, wall boxes, batteries and household appliances. Its adaptive algorithms learn individual habits and minimize power consumption through intelligent management of energy flows. The Home Manager also plays an important role in the integration of heat pumps. Energy management is indispensable for the optimal use of sustainable energy sources and for easing the strain on utility grids worldwide. By continuously improving the intelligence of the Sunny Home Manager and through our cooperation with strong partners, such as Samsung, SMA will continue to strengthen its position in the field of energy management.

COMMERCIAL & INDUSTRIAL: INTEGRATED SOLUTIONS FOR COMMERCIAL APPLICATIONS

In the Commercial & Industrial (C&I) Solutions segment, the SMA Group presented the new integrated SMA Commercial Storage Solution for grid-connected commercial storage applications for the first time in the reporting period. The solution enables business owners and industrial companies to optimize their self-consumption and avoid expensive load peaks. The modular design also allows for flexible expansion of the overall system, for example, with PV inverters or EV chargers, as well as simplified planning for professional partners and optimization of current and future energy costs for commercial customers. The storage solution was successfully launched into the EU market in the second half of 2023. The company is currently preparing to launch the product into other markets.

In addition to the on-grid storage solution, the SMA Group offers a comprehensive, scalable storage solution for stand-alone grids and backup applications ranging from 4.4 kW up to 288 kW. The SMA Group has over 20 years of experience in rural electrification and offers one of the most robust battery inverters in the world: the Sunny Island. The new Sunny Island X battery inverter ensures the integration of storage into both grid-connected and off-grid power supply systems. The market launch will take place at the end of the fourth quarter of 2024 and will extend the performance spectrum of the SMA Commercial Storage Solution into the megawatt range.

In the U.S. market, a number of pilot projects were supplied with the STP-X inverter at the end of the second quarter of 2023. The transition to series production and delivery took place in the third quarter of the reporting year. The successor to the Sunny Tripower CORE 2 was presented at Intersolar Europe 2023. The new inverter has a rated power of 125 kW and will be launched into the market in mid-2024.

Also at Intersolar Europe 2023, the SMA Group presented the expanded SMA Commercial eMobility Solution, with which business owners can act as charging infrastructure operators themselves. With the newly available version of the EV Charger Business charging station in compliance with calibration laws, kilowatthours can now be billed precisely in Germany too. A roaming function in the SMA eMobility Portal also allows for billing to third parties.

In addition, the SMA Group expanded its Sunny Design software for planning renewable energy systems in the first half of 2023. Besides product improvements to increase efficiency and provide optimal support for the current product portfolio, expanded planning options were established, particularly in the field of e-mobility. Sunny Portal, one of the world's largest PV portals, is increasingly being converted to the Sunny Portal powered by ennexOS version. In Australia and the U.S., the migration of existing systems from the Classic Portal is already complete.

In the past fiscal year, the Commercial & Industrial Solutions segment implemented a number of additional fee-based services. The SMA Planning Service creates customized energy concepts consisting of PV, commercial storage systems and charging infrastructure for commercial projects. The result is extensive customer documentation that covers all energy-related and economic key figures as well as a full list of components. The Planning Service was initially rolled out in Germany, Austria, Switzerland and France. Additional countries are currently being instructed for a market launch.

In addition, a modular SMA Certification Service was introduced, which handles the certification process from application to telecontrol for type A and B system certificates. The Certification Service can currently only be booked in Germany, but the company is planning to expand it to other European countries. The new services enable 360-degree support for PV experts.

Coneva GmbH will continue to expand its range in the Commercial & Industrial solutions segment in particular. At the start of the new 2024 fiscal year, a dynamic electricity tariff for commercial and industrial electricity consumers with a minimum purchase volume of 100 megawatt hours per year will be added to its range of services. The company procures the required amount of electricity directly on the spot exchange and passes on the variable prices to customers. Over the past 1.5 years, coneva has continued to optimize the Hilden charging park and established an integrated energy management system. The charging park has more than 100 charging stations (mainly fast-charging stations) and a 400 kWp PV system. With the introduction of the dynamic electricity tariff, coneva will also take over the supply of electricity to the Hilden charging park from January 1, 2024. A 2,000 kWh battery storage system provides the necessary flexibility to purchase the electricity required for the charging park from the grid at favorable times on the short-term EPEX Spot electricity markets and thus to supply the charging park with electricity at the coneva Flex tariff. The synergies from electricity procurement and local energy management enable cost savings of between 15% and 30%.

PROJECT BUSINESS: SYSTEMS AND SOLUTIONS FOR THE POWER PLANTS OF TOMORROW

R&D activities in the Large Scale & Project Solutions segment focus on developing a comprehensive portfolio of products, systems and solutions to meet the challenges of decarbonization and systematically drive forward the energy transition. One focus is on digitalization and how it can help increase the optimization and efficiency of systems along the entire value chain – from system design to system operation and integration into the energy market. Furthermore, systems and solutions are being developed that enable optimal and efficient integration of sector coupling at both the system and plant level.

Other key topics are sustainability and the ongoing development of sustainable products and solutions. In 2023, a comprehensive life cycle assessment was published for the Sunny Highpower PEAK3. Life cycle assessments enable us to determine the factors that influence the environmental performance of our products throughout their entire life cycles.

In the green hydrogen production business, the turnkey container solution developed by SMA, including medium-voltage technology, enables the construction of highly efficient systems without any additional filters or compensation units for the operation of the electrolyzer. The converter has a wide DC operating window for electrolyzer operation. This makes it possible to use almost all types of electrolyzers. The carefully selected low- and mediumvoltage components ensure highly efficient and reliable operation over the entire service life of the electrolyzer.

The service offering for PV power plants is being systematically expanded. This includes free remote service from experts for quick fault analysis and rectification and the provision of software updates via remote transmission according to the highest security standards and system availability. The SMA Virtual Support app enables the maintenance of central inverters on-site with support via remote service for both corrective and preventive maintenance, including the replacement of components.

R&D activities for large-scale PV power plants and project solutions are also focused on developing the next generation of platforms. Our goal is to change the way power plants are designed, built and operated. The new generation of platforms, which will be produced in the GIGAWATT FACTORY, also offers additional opportunities for expanding our range of products and solutions, including the integration of battery storage capacities into the core system while also supporting PV and hydrogen as well as the use of hybrid systems. We will also continue to expand our range in the area of grid integration to drive forward innovation across the entire energy market.

COMBINED NON-FINANCIAL STATEMENT

Basic information on the combined non-financial statement

In this combined non-financial statement, the SMA Group reports on the developments and progress in its areas of action for sustainability in the 2023 fiscal year in accordance with the statutory requirements under Section 289c-e and Section 315c of the German Commercial Code (HGB) and Article 8 of the Taxonomy Regulation. Some of the wording and requirements used in the Taxonomy Regulation and the complementary delegated acts are still subject to interpretation uncertainty at present. An interpretation thereof by SMA Solar Technology AG's legal representatives is given in this combined non-financial statement. The combined non-financial statement requires the approval of the Managing Board and Supervisory Board of SMA Solar Technology AG. The reported information has been prepared with reference to the Global Reporting Initiative (GRI) Standards. The GRI content index given at the end of the combined non-financial statement provides a detailed overview of where in the SMA Annual Report the information relevant for the GRI Standards can be found. General information on the SMA Group's business model, on products and services as well as on the sales markets can be found in the "Basic information about the Group" section.

NON-FINANCIAL RISKS

Non-financial risks in connection with the SMA Group's business activities, products and services, and business relationships are described in the "Risks and opportunities report" section if these risks also meet or exceed the criteria and financial thresholds for risk and opportunity management set out therein.

We have also identified a material non-financial risk in accordance with Section 289c (3) HGB that is relevant for 2023. We procure the components for our electronic devices from a global supplier base. Due to the purchase of components from risk countries and a lack of transparency in the wider value chain (tier 2-n), there is an increased risk in connection with working conditions. In order to contractually obligate our suppliers to comply with human rights and environmental due diligence obligations, we

have formulated additional human rights and environmental contractual clauses in addition to our Business Partner Code of Conduct, to which all business partners are subject, which we require suppliers who supply direct material to sign. As of December 31, 2023, nearly 50% of the suppliers addressed have recognized the supplementary contract clauses. Our strategic purchasing department is still working hard to bring the remaining suppliers to sign. In the "Sustainable supply chains" section, we report on further comprehensive measures to reduce risk.

REPORTING BOUNDARIES

Unless stated otherwise, all disclosures in the governance & ethical business and product stewardship areas of action relate to the entire SMA Group, including the parent company SMA Solar Technology AG. The companies included therefore correspond to the list of fully consolidated group companies published in the "Notes SMA Group". This also applies to the employees area of action, with the exception of the "occupational health & safety" aspect. Unless stated otherwise, all disclosures in the environment & energy area of action and in the "occupational health & safety" aspect cover all major locations. We have defined major locations as locations that occupy 400 square meters or more. In addition to the parent company SMA Solar Technology AG, these embrace locations of the group companies coneva GmbH, SMA Solar Technology America LLC, SMA Magnetics Sp. z o. o., SMA France S.A.S., SMA Italia S.r.l., SMA Australia Pty. Ltd., SMA Solar India Private Limited, SMA Japan Kabushiki Kaisha, SMA Benelux BV and SMA Ibérica Tecnología Solar, S.L. The information relates to the report period from January 1, 2023 to December 31, 2023. It is reported annually. The combined non-financial statement 2023 will be published on March 27, 2024, in the Combined Management Report 2023 of SMA Solar Technology AG.

COLLECTION OF KEY FIGURES

The key figures in all areas of action were gathered and verified by the responsible departments to ensure that the information was complete and correct. The data for the environment & energy area of action and for the "occupational health & safety" aspect were largely compiled using the software Cority. The key figures on energy at the headquarters in Niestetal/Kassel, Germany, were managed using the software InterWatt. The key financial and personnel figures were largely recorded using global SAP systems.

The risk assessment of suppliers was performed using Sphera. When determining the sustainability performance of our suppliers, we work with IntegrityNext. Key figures relating to the "integrity & compliance" aspect are managed using datasheets. An overview of sustainability key figures can be found at the end of the combined non-financial statement. We publish further information about sustainability in the SMA Group on our website.

EXTERNAL AUDIT

BDO AG Wirtschaftsprüfungsgesellschaft performed an audit of the combined non-financial statement in accordance with ISAE 3000 (Revised) with limited assurance. The "Independent auditor's limited assurance report" can be found starting on page 172 et seq.

UN SUSTAINABLE DEVELOPMENT GOALS

The UN Sustainable Development Goals (SDGs) in the areas of environment, economy and social welfare are at the heart of the 2030 Agenda for Sustainable Development adopted by all member states of the United Nations at the UN Sustainable Development Summit 2015. It is a joint roadmap for a future characterized by peace and prosperity for people and the planet. All participants in society are called upon to help achieve these goals. The Managing Board of SMA Solar Technology AG is committed to this responsibility. In 2021, the contribution of SMA's business activities to the SDGs was evaluated down to the level of the SDG subgoals. We reviewed the valuation in the reporting year. Within the main aspects, the SMA Group's activities contribute to nine of the 17 SDGs. Its business activities have the greatest influence on SDG 7 "Affordable and clean energy".

UN GLOBAL COMPACT

In the opinion of the SMA Managing Board, producing technologies for the decarbonization of the energy supply is not enough for a holistic understanding of sustainability. It is equally important for these solutions to be produced in accordance with high environmental, social and governance standards. Against this backdrop, the Managing Board is committed to the ten principles of the UN Global Compact. SMA Solar Technology AG joined this United Nations initiative in 2011. The UN Global Compact sets out ten principles relating to human rights, labor standards, environmental protection and the fight against corruption, which are based on the central conventions of the United Nations. We report on our progress with respect to the UN Global Compact within the scope of the Communication on Progress (CoP) format.

Sustainability management

With its solutions, the SMA Group has played a major part in the conversion to a climate-friendly electricity supply based on renewable energies worldwide for over 40 years. For us, sustainable business means making a significant contribution to the company's long-term success by way of responsible and respectful treatment of people, the environment and resources with increasing use of decentralized renewable energies along the entire value chain. As such, the SMA Group's business activities directly contribute to SDG 7 "Affordable and clean energy" and take an active part in combating the global climate crisis. Our aim is to assess sustainability-related risks and opportunities within SMA processes and to integrate sustainability requirements into the processes. The SMA Group's sustainability management is managed centrally and based within the Global Communication & Sustainability department. The head of this department reports directly to the Chairman of the Managing Board.

MATERIALITY ANALYSIS

The sustainability management of the SMA Group comprises four areas of action: governance & ethical business, environment & energy, product stewardship and employees.

The SMA Group identifies the materiality of the sustainability aspects within these four areas of action by means of a materiality analysis. The materiality analysis maps the outside-in and insideout perspectives of sustainability aspects. The outside-in perspective provides an understanding of how sustainability aspects were assessed by major stakeholders. For example, requirements of politicians and legislators are included, as are customer perspectives. The inside-out perspective presents the influence that the SMA Group can have on the aspects assessed. To this end, we have performed a detailed evaluation of the UN Sustainable Development Goals and our influence along the value chain.

SMA Group materiality matrix

= governance & ethical business area of action = environment & energy area of action = product stewardship area of action = employees area of action

We have examined the material aspects and SDGs to which we thus contribute along the entire SMA value chain and presented the points in the value chain where they are relevant.

Area of action	Material aspects	Procurement	Own production, administration	Delivery logistics	Product use	Product end of life	SDG sub-goal
Governance&ethical business	Sustainable supply chains	x	x				5.2, 8.7, 12.7, 16.2
	Integrity& compliance	x	x	x	x		16.5
Environment&energy	Sustainable energy use	x	x	x	x		7.1, 7.2
	Climate protection	x	x	x	x	x	7.3, 12.2, 13.2
	Responsible use of materials	x	x	x			8.4, 12.2
	Waste&recycling	x	x	x		x	12.4, 12.5
Product stewardship	Sustainable product development	x	x		x	x	7.b, 9.5
	Sustainable product life cycle		x		x	x	12.4, 12.5
Employees	Occupational health&safety	x	x	x			8.8
	Fair pay&benefits	x	x	x			8.5, 10.1
	Diversity&equal opportunities	x	x	x			4.3, 5.1, 5.5, 8.5, 10.2, 10.3

Delineation of material aspects and SDGs along the value chain

We reviewed the key aspects in the reporting year. The materiality of the aspects in the fields of action of environment & energy and product responsibility was confirmed. The materiality of the "integrity & compliance" aspect in the upstream value chain was identified as essential for the governance & ethical business area of action. Within the employees area of action, the materiality of the "diversity & equal opportunities" and "occupational health & safety" aspects was confirmed. The materiality of the "fair pay & benefits" aspect was not confirmed in the course of the review for our own business area. In the upstream value chain, however, the materiality of human rights issues was confirmed. We report on how we deal with these issues in the "Sustainable supply chains" section. In addition to materiality, we base our reporting on the requirements of key stakeholders. With this in mind, we have integrated corresponding information on the non-material "water" aspect in the reporting in the environment & energy area of action. We added information on the "further training" aspect, which is still not material and was previously reported in the employees area of action, to the "Stakeholder management" section in the information on "Employees". Information on the non-material aspect of "nature conservation and biodiversity" can be found in the "EU Taxonomy" section.

In the reporting year, we prioritized the preparation of the "Policy Statement on Human Rights and Environmental Due Diligence" issued by the Managing Board of SMA Solar Technology and the internal "Sustainability Management Guideline" over the originally planned update of the SMA Sustainability Guiding Principles. We also drew up a Sustainable Procurement Policy that provides an overview of all sustainability-related requirements that are relevant to procurement. In 2024, we will review the need to publish further guidelines and policies.

STAKEHOLDER MANAGEMENT

We place high value on ongoing, transparent dialogue with important stakeholder groups, which is a catalyst for the further development of our sustainability management. We define stakeholders as individuals or organizations that could influence our decisions and activities or that could be influenced by decisions and activities of the SMA Group. We report important events within the company in ad hoc messages, press releases, on our website and social media channels.

One important tool for assessing opportunities and risks relating to our stakeholders is our annual stakeholder analysis, which gives us an insight into the SMA Group's stakeholders and their expectations. We analyze the data and prioritize the expectations. If prioritized expectations are not met by the SMA Group, we define appropriate measures. The most important stakeholder groups for us are employees, customers, investors and analysts, politicians and legislators, suppliers, service partners and service providers as well as media and non-government organizations (NGOs). In the reporting year, the stakeholder analysis was expanded to include the topic of information security.

Employees

Open and trustful interaction with each other as well as the highest possible transparency and involvement of all employees and temporary employees in corporate decisions are highly important to us. That is why we not only provide them with regular and comprehensive information about developments and changes in the company but also develop important topics and content in a participatory way.

Following the end of the coronavirus pandemic, dialogue with employees and temporary employees took place both virtually and increasingly on-site again in the reporting year. The Managing Board provided information directly on-site, in video messages and via intranet articles on the company's current situation and outlook as well as other important topics and developments. In addition, a virtual and a physical works meeting were held in the reporting year with presentations by the Works Council, Managing Board and Industrial Union of Metalworkers. Employees and temporary employees were able to put questions to the Managing Board and Works Council both in advance and directly at the events. New employees were also welcomed using the virtual format New@SMA in the reporting year and had the opportunity to meet the Managing Board. At the headquarters in Niestetal/Kassel, Germany, all areas that provide services for employees also presented themselves at the quarterly SMArt Start event.

We normally use our annual employee appraisals for employees worldwide to coordinate their tasks and the associated qualification requirements, to measure performance and to provide feedback on collaboration in an exchange between manager and employee. This does not apply to trainees and learners.

For further qualification, employees of the SMA Group benefit, in addition to external training opportunities, from a diverse internal training program that they can make use of in line with their individual needs and learning objectives. Alongside methodological skills training, language courses and a variety of other topics, this program also includes the "Masterplan" learning platform. It contains video courses on various topics covering everything from digitalization and soft skills through to new technologies and sales expertise. Employees can organize and use the courses themselves to suit their requirements. In the reporting year, we began equipping employees for their new roles within the SMA organization, which has been realigned to focus on customer-oriented processes, by means of mandatory learning trips.

Global employee surveys are generally conducted every two years and help us identify important topics for employees. The last survey was held in 2020. One integral part of the survey is the topic area of "Engagement", which addressed topics relating to the work situation, management and team spirit in the 2020 survey. The evaluation results in a transparent Engagement-KPI across all areas of the SMA Group and thus allows for targeted improvements. Measures are derived by the business divisions in collaboration with the HR department. Due to the realignment of the SMA Group's organizational structure implemented in the past two years as part of the SPIRIT project, no employee survey was carried out in 2022. Once the realignment is complete, as part of the transformation process the survey will be carried out in 2024 to identify important issues and gather information on initial employee experiences of the new structure. Representative surveys of executives and employees to measure the success of the change process began in the third quarter of 2023.

In addition to the global survey, executives and responsible project managers can conduct short "pulse check" surveys in collaboration with the HR department, which can be used to measure the mood in change processes, for example.

Customers

The significant importance that our customers hold for the SMA Group's business success is reflected within the SMA Strategy 2025 in the objective "Closer to the customer". With this in mind, we oriented the SMA Group's entire organizational structure toward customer-oriented processes in the last two years. Further information on the SMA Strategy 2025 can be found in the Combined Management Report in the "Strategy" section.

The dialogue and close collaboration with our customers take place in addition to the personal support in daily collaboration by the SMA Sales department, in particular at customer events, as part of the SMA partner program, at SMA Solar Academy seminars and at international trade fairs. Besides 505 seminars and webinars at the SMA Solar Academy with a total of around 14,000 participants worldwide, more than 250 solar power professionals attended the Solar Power Professionals Day and C&I Solutions Day at the headquarters in Niestetal/Kassel, Germany, in the reporting year. The "Meet-Listen-Act" format introduced in 2022 was also continued in the reporting year. Within this framework, employees from different areas meet customers to discuss specific problems with them and to work on solutions or provide feedback within a defined period of time. The derived measures are regularly monitored for their effectiveness within the SMA Group. Under this format, employees from the management team of a major customer also attended the SMA Management Meeting to report on their experiences of working with the SMA Group.

To systematically monitor and further improve customer satisfaction, we also began introducing the net promoter score key figure (customer recommendation rate) in the reporting year. As part of the project, we have set up a rudimentary measurement based on customer feedback, which is currently still limited and shows a qualitative improvement for 2023 compared with 2022. The Customer Experience Manager position responsible for the process has been filled. The next steps involve the ongoing formulation of the definitions and the development of a sensor system, the monitoring and the tracking of derived measures.

Investors and analysts

We also aim to ensure transparency, up-to-date information and credibility in our capital market communication. This year's Capital Markets Day was held as a hybrid event, both in person at the headquarters in Niestetal/Kassel, Germany, and broadcast live on the Internet. SMA's Annual General Meeting 2023 was held virtually again. In addition, the Chief Financial Officer met investors and analysts at the Intersolar trade fair and took part in roadshows, conferences and virtual formats. The Chief Financial Officer conducted conference calls for institutional investors and analysts to coincide with the publication of the financial reports. Investors also visited the company's headquarters and took part in production tours. The Sustainability department was directly involved in discussions with investors on specific issues, such as the company's sustainability performance. To further increase transparency, we regularly participate in the ESG ratings and rankings that are most relevant to us and work continuously to further improve the ratings.

Our sustainability ratings at a glance

MSCI	AAA (rating scale AAA to CCC)
ISS ESG	Prime (B–) (rating scale A+ to D–)
Sustainalytics	17.0/rank 26 out of 281 companies
Ecovadis	Gold medal
CDP	Climate Change 2023: B Supplier Engagement 2022: A–

Politicians and legislators

As a globally operating company, the SMA Group is subject to a wide variety of political changes and decisions that affect its business activities. To safeguard the future of the SMA Group, it is important to communicate the company's interests in open dialogue with governments, industry associations and organizations. We also respond to our business partners' suggestions and interests with the same openness. Our principles on political dialogue and representation of interests form the basis for a set of responsible, reliable and honest practices aimed at reconciling commercial and social interests. In the reporting year, we did not make any financial donations to political parties.

We are organized in industry associations for the purpose of representing our interests. The main national and international advocacy groups of which we are a member include SolarPower Europe, the Solar Energy Industries Association, Bundesverband Solarwirtschaft (German Solar Industry Association), Bundesverband Erneuerbare Energie (German Renewable Energy Federation), Zentralverband Elektroindustrie (German Electrical and Digital Industry Association) and Verband der Elektrotechnik, Elektronik und Informationstechnik (Association for Electrical, Electronic and Information Technologies). As part of our membership of SolarPower Europe, in the reporting year, the Chairman of the Managing Board of SMA Solar Technology AG together with representatives of other companies in the industry continued to advocate ambitious growth targets for renewable energies and the expansion of the European solar industry in meetings with members of the European Parliament, as in the previous year, and once again put his name to an open letter with this objective to the President of the European Commission.

In the reporting year, the SMA Group supported a global initiative for the World Climate Conference (COP28) for the first time. During the event in Dubai, the Chairman of the Managing Board of SMA Solar Technology AG joined forces with representatives of other international organizations and companies to call for a tripling of global renewable energy generation capacity by 2030. This goal was adopted in the final declaration of COP28.

The SMA Group is also a member of the "Allianz für Transformation" (Alliance for Transformation), which was launched by the German federal government in June 2022. The central dialogue between the federal government and decision-makers from business, trade unions and the associations aims to underpin the transformation of society toward climate neutrality, digitalization and sustainability in the long term with concrete solutions.

At a local level, we are also involved in the "Klimaschutzrat Kassel" (Climate Protection Council) at our headquarters. This committee, which includes representatives from business, science, civil society, culture, education, youth organizations, religion and social welfare, advises the city council on climate protection. It reflects a broad range of opinions of different stakeholder groups. Taking account of the Climate Protection Council's recommendations, the city of Kassel has set itself the goal of reaching climate neutrality by 2030 and implementing a 100% decentralized supply of renewable energy.

The table below shows a summary of the main stakeholder groups for the SMA Group, their type of involvement and important topics and concerns expressed.

SMA stakeholder dialogue

Stakeholder	Type of involvement	Issues raised and expectations of SMA
Employees	Regular company-wide and division-specific "pulse check" surveys, works meetings held by the Works Council, intranet communication with comment functions, collaboration tools, leadership events, communication with "climate representatives", newsletters, division and department meetings, committees, working groups	Working conditions, working hours and location arrangements, mobile working, training, career opportunities, fair, transparent and performance-based remuneration, sustainable corporate strategy, safe jobs, business success, equal opportunities
Politicians/legislators	Organization of events, joint initiatives, proactive contact, participa tion in consultations, personal meetings, presentation of positions via industry associations, involvement in local initiatives	Securing jobs, location image and positive reputation, specialist support in the field of renewable energies and sustainability strategies, evaluation of solar-specific issues, economic performance, willingness to invest, preparation of positions
Press/NGOs	Press releases, annual press conference, ad hoc messages, social media channels, interviews, background discussions, responding to inquiries, media center on corporate website	Transparent communication, sense of responsibility in dealing with sustainability issues, compliance with global standards (e.g. UN Global Compact), business success, securing jobs, working conditions, location image and positive reputation, renewable energies, technological development and innovation
Customers/key accounts/ distributors/project partners/ installers	Personal and virtual meetings/sales visits, key account management, events, trade fair presentations, customer survey and customer audits, surveys to measure satisfaction and identify potential for improvement, SMA Solar Academy and partner programs for installers	Quality, reliability, value for money of systems and solutions, contract compliance and delivery reliability, compliance, fairness, sustainability performance of products, product certification, training for installers, innovative applications, lifetime, customer service, holistic collaboration
Investors/analysts/rating agencies	Financial and sustainability reporting, Annual General Meeting, Capital Markets Day, one-to-ones with investors and analysts, conferences and roadshows, participation in ESG ratings and rankings	Transparent and extensive communication on the company's development, economic profitability, high sustainability performance/ESG
Service partners/service providers	Bilateral exchange with SMA departments, review meetings, steering committee meetings	Open and constructive communication, reliable partnership, contract compliance, optimal product support
Suppliers	Bilateral dialogue via commodity managers, partnerships, annual or quarterly discussions, Supplier Day, supplier training, participa tion in supplier evaluations, supplier development with regard to quality, supplier audits	Reliable partnership, compliance with legal regulations, fair competition and ethical conduct, clear guidelines for quality, occupational safety requirements and environmental standards, reliable capacity and procurement planning

Area of action: governance & ethical business

The Managing Board and Supervisory Board of SMA Solar Technology AG firmly believe that effective and transparent corporate governance in accordance with internationally and nationally recognized standards is an essential factor for business success. Observing the principles of good corporate governance is extremely significant for us in order to uphold the trust of shareholders, business partners, employees, other company-affiliated groups and the public. Our corporate governance is based on the recommendations and stipulations of the German Corporate Governance Code. More information on corporate governance and on the company's corporate bodies and their functions can be found in the Combined Management Report in the "Corporate governance" section.

In recent years, we have also integrated sustainability governance into the company. To strategically integrate and promote sustainability within the company, the SMA Managing Board established a Sustainability Committee in 2021, which is chaired by the Chairman of the Managing Board. The committee makes decisions on sustainability issues and reviews the degree to which the sustainability objectives have been achieved on a quarterly basis.

Sustainability management is coordinated globally within the SMA Group. A Global Sustainability Meeting at which all major group companies of the SMA Group are represented has been initiated for this purpose in 2021. The goal is to communicate sustainability initiatives and coordinate standards and key figures.

The high importance of sustainability for the SMA Group and corporate management is also reflected in the remuneration system for the Managing Board. It provides for the integration of non-financial performance indicators in the remuneration-related targets of the Managing Board as part of both the one-year bonus and the long-term bonus. The targets are approved by the Supervisory Board and incorporated in corporate management. Since the 2022 fiscal year, the non-financial performance indicators "Proportion of women in the total workforce (excluding apprentices and trainees) with a target value of 26% in 2025" and "100% assessment of the sustainability performance of A and B suppliers by 2025" have been part of the Managing Board's remunerationrelevant targets. Both performance indicators were integrated into the targets set for the long-term bonus for the years 2022 to 2025 within the Managing Board remuneration system that applies for employment contracts concluded since 2021. The Managing Board's long-term bonus for 2023 to 2026 includes the nonfinancial performance indicators of "Introduction and application of the net promoter score (customer referral rate) by 2026" and "Proportion of women in the top two management levels below the Managing Board (within SMA Solar Technology AG) with an overall target of 20% in 2026". The "Assessment for suitable alternatives for 75% of all components containing substances of very high concern (SVHC substances according to the REACH regulation)" is part of the personal objectives of all members of the Managing Board for 2023. The remuneration of the Managing Board is detailed in the "Remuneration report" section. The degree of target achievement of all long-term targets mentioned in the reporting year and the forecast values for 2024 are also presented in the "Forecast report" section.

Sustainable business & governance

VALUES AND PRINCIPLES

In an international and European context, compliance with international principles and standards has become much more important in recent years. Legal regulations increasingly enshrine requirements for the recognition of international human rights and labor standards and demand that measures be taken to comply with them. By obligating their suppliers to comply with human rights due diligence obligations, these requirements are passed on along the supply chain.

By signing the UN Global Compact in 2011, the Managing Board of SMA Solar Technology AG has committed itself to the ten embedded principles covering human rights, labor standards, environmental protection and anti-corruption. The Managing Board is also committed to the OECD Guidelines for Multinational Enterprises, the United Nations Guiding Principles on Business and Human Rights, the United Nations International Bill of Human Rights and the core labor standards of the International Labour Organization (ILO). The SMA Group pledges to uphold these principles and standards, including freedom of association in accordance with ILO conventions 87 and 98, at all locations worldwide, as long as this does not conflict with specific federal state legislation to which the respective group company is subject. The SMA Group does not have a representative office with more than 100 employees in any country where freedom of association and the right to collective bargaining are restricted.

Our Employee Code of Conduct creates a group-wide uniform framework that helps all employees consistently make the right decisions in the interests of the SMA Group. It underscores the group's desire to fully comply with and implement all legal and regulatory requirements. It also commits all SMA Group employees to act ethically, with integrity and in accordance with key sustainability requirements at all times, to assume corporate responsibility and to treat others with respect. All SMA employees are bound by the Code of Conduct. Training campaigns are held annually on changing key topics. The Code of Conduct is publicly available on our website.

STRATEGIC OBJECTIVE OF HOLISTIC SUSTAINABILITY

The strategic objective of "holistic sustainability" within the SMA Strategy 2025 sets out the aspiration of integrating sustainability in the areas of the company and taking on a leading role in creating a better future with the SMA Group. As part of the strategy process, measures are defined annually to achieve the sustainability targets, which are monitored by those responsible for program management. Clear responsibilities are assigned for the sustainability targets and the defined measures. The management is briefed on the implementation status of the targets and measures to achieve them in quarterly strategy reviews.

Further information on the SMA Strategy 2025 can be found in the Combined Management Report in the "Strategy" section.

EU TAXONOMY

The European Green Deal aims to achieve sustainable growth in harmony with the well-being and health of society and protection of the environment and biodiversity. At the heart of the growth strategy is the European Union's target of climate neutrality by 2050.

With the Sustainable Finance package, the European Commission has adopted extensive measures to guide finance flows toward sustainable activities and thus close financing gaps for climate protection. The Taxonomy Regulation forms the basis for improving transparency with regard to sustainable economic activities.

The EU Taxonomy has defined a set of requirements for determining which economic activities are environmentally sustainable and contribute to the goals of the Green Deal. Economic activities that are described in the Taxonomy Regulation and in the complementary delegated acts are classified as taxonomy-eligible. Activities are considered to be taxonomy-aligned if they also fulfill defined minimum safeguards and other screening criteria. The screening criteria include that an economic activity must make a significant contribution to one of the six environmental objectives of the Taxonomy Regulation and "do no significant harm" (DNSH) to the other environmental objectives.

In 2022, following an in-depth analysis as part of a taxonomy project with the help of an external consultant, we have already reported the key figures on taxonomy eligibility and alignment for the economic activities performed by the SMA Group 3.1 "manufacture of renewable energy technologies" and 7.6 "installation, maintenance and repair of renewable energy technologies", which make a significant contribution to the environmental objective of climate protection.

In 2023, the European Commission published further delegated acts on the EU taxonomy. First, these relate to the inclusion of additional economic activities with regard to the environmental targets of climate change mitigation and climate change adaptation. Second, economic activities and technical evaluation criteria were defined for the four additional environmental objectives of sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. Companies that perform one or more of the added economic activities must report the key figures for taxonomy eligibility for the 2023 fiscal year. Reporting on taxonomy alignment will be mandatory from the 2024 fiscal year.

The review of taxonomy-eligible economic activities, the significant contribution to an environmental objective, the avoidance of significant harm on other environmental objectives (DNSH criteria) and compliance with the minimum safeguards was performed repeatedly in the reporting year. The Sustainable Finance Council was established to ensure the fulfillment of agreed measures and as a body for regular exchange. The Sustainability Committee receives regular reports on the status of implementation.

Determining taxonomy-eligible economic activities

In the reporting year, we again reviewed the economic activities of the SMA Group in a project involving all relevant group companies and departments. In addition to the taxonomy-eligible economic activities "manufacture of renewable energy technologies" and "installation, maintenance and repair of renewable energy technologies" already identified in 2021 and confirmed in 2022, we have, on the basis of the newly added delegated acts, added the economic activity 3.20 "manufacture, installation and servicing of high, medium and low voltage electrical equipment for electrical transmission and distribution that result in or enable a substantial contribution to climate change mitigation" (hereinafter: "manufacture of technical equipment") under the environmental objective of climate change mitigation and the economic activity 5.2 "sale of spare parts" under the environmental objective of transition to a circular economy. For 2023, we are disclosing the mandatory key figures for these new taxonomy-eligible economic activities. Reporting on taxonomy conformity will take place from 2024. The SMA Group does not carry out any activities relating to nuclear energy and fossil gas pursuant to Delegated Regulation 2022/1214.

Significant contribution to the environmental objective of climate change mitigation

The SMA Group's taxonomy-eligible economic activities already identified in 2021, "manufacture of renewable energy technologies", to which we assign the majority of our products, and "installation, maintenance and repair of renewable energy technologies", to which we assign our services, make a significant contribution to climate change mitigation in the area of enabling economic activities as defined in Article 10(1) (i) in conjunction with Article 16 of the Taxonomy Regulation. Enabling economic activities do not contribute significantly to climate change mitigation with their own performance, but rather play a key role in the decarbonization of the economy, as they make it possible to improve the climate footprint and environmental performance of other activities.

Avoiding significant harm to other environmental objectives

To further determine taxonomy alignment, we then conducted a review involving the relevant business areas to check whether these business activities did any significant harm to the five other environmental objectives. The review covered climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

Climate change adaptation

To avoid significant harm to the environmental objective of climate change adaptation, the EU taxonomy makes provisions for conducting climate risk and vulnerability assessments to identify significant physical climate risks and implementing adaptation measures where a risk has been identified. To this end, we worked with an external service provider in 2022 to conduct data-driven climate projections over the next 30 years based on the four IPCC scenarios RCP2.6, RCP4.5, RCP6.0, and RCP8.5. The results were assessed by SMA experts. For our production sites in Germany and Poland, the results show that, relative to the overall risk, there are no significant risks for the economic activity "manufacture of renewable energy technologies". Accordingly, no climate change adaptation solutions need to be implemented.

The economic activity "installation, maintenance and repair of renewable energy technologies" takes place directly on-site at customer premises worldwide. Given the various locations, it is not possible to conduct a climate risk and vulnerability assessment in detail for specific locations. We therefore adopted a risk-based approach to review the activity. Focusing on the key regions where systems are installed and either commissioned, maintained or repaired by the SMA Group, this approach aims to determine relevant climate risks and assess the resilience to climate change of the SMA products and activities provided. The risk-based approach covers the most important regions for the SMA Group, in which more than 50% of SMA's inverter output has been installed over the past 20 years. These include Germany, Australia and various regions within the U.S. Other countries and regions that individually account for no more than 3% of the total SMA inverter output installed were not included under the risk-based approach. In five of the regions assessed, several physical risks (e. g., flooding, heavy precipitation, heat and water stress) were identified that could have a negative impact on SMA products and economic activities. Due to the design of SMA inverters for operation under extreme environmental conditions, the transparent provision of information on fault-free operation and the possibility of temporary postponements of service activities, the SMA Group is not vulnerable to the identified risks. On this basis, no further adaptation solutions prescribed by the Climate Delegated Act are required. Further information on climate-related risk and vulnerability assessments can be found in the Combined Management Report in the "Risks and Opportunities Report" section.

Sustainable use and protection of water and marine resources

The DNSH criteria for the environmental objective of sustainable use and protection of water and marine resources refer to legal and regulatory requirements, compliance with which is ensured by the SMA Group. At the production sites in Germany and Poland, fulfillment of the requirements is ensured through implementation of legal registers. Processes undergo regular internal and external audits within the scope of our DIN ISO 14001 certified environmental management system at the headquarters in Niestetal/ Kassel, Germany. More information on this can be found in the "Legal compliance" section.

Transition to a circular economy

The DNSH criteria for the environmental objective of transition to a circular economy prescribe the implementation of measures that we were already working on before the Taxonomy Regulation came into force and which we have further intensified. In light of the major potential repercussions, we believe we have a particular duty as a manufacturer of electronic products to avoid significant harm to this environmental objective. Our materiality analysis confirms this. The measures we have addressed contribute to several DNSH criteria for the environmental objective of transition to a circular economy. To provide a better overview of where we report on the individual criteria, we have included the following table:

DNSH criterion within "transition to a circular economy"	Section in the combined non-financial statement
Use of secondary raw materials	Responsible use of materials/ secondary raw materials
Reuse of components	Sustainable product life cycle/ reparability and reuse
Design for long life	Sustainable product life cycle/product lifetime
Design for recyclability	Sustainable product life cycle/ reparability and reuse
Design for easy disassembly	Sustainable product development
Design for adaptability	Sustainable product development
Waste management	Waste&recycling
Waste management	Waste&recycling
Information on substances of concern and traceability	Responsible use of materials/ substances of concern

Pollution prevention and control

The general DNSH criteria for pollution prevention and control regarding the use and presence of chemicals mentioned in the Delegated Act on Climate state that an activity does not cause significant harm to the environment if it does not lead to the production, placing on the market or use of substances regulated in different European legal acts. This includes certain hazardous substances in electrical and electronic equipment under the RoHS Directive, certain substances that deplete the ozone layer, mercury and mercury compounds, certain persistent organic pollutants (POP), and substances covered by the Regulation on the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH). For substances of very high concern under REACH (SVHC substances) that are not subject to authorization restrictions, exemptions are provided under the DNSH criteria. The manufacture, placing on the market or use of these substances is permitted if no suitable alternative for their use is available. The use of the substances mentioned does not prevent taxonomy alignment only if no such alternative is available. For this purpose, the non-existence of a suitable alternative for a harmful substance must be assessed and documented. The SMA Group uses these substances of concern in compliance with all relevant legal provisions. Furthermore, in the course of the economic activity "manufacture of renewable energy technologies", we do not use any substances that deplete the ozone layer, nor do we use either mercury or mercury compounds or persistent organic pollutants under the Stockholm Convention.

To manufacture our string inverters, we use "restricted substances" that are classified as such in the RoHS Directive in compliance with all legal provisions. According to the Climate Delegated Act, this is not sufficient to be classified as taxonomy-aligned. Proof of taxonomy alignment excludes the manufacture, placing on the market and use of the hazardous substances regulated in the RoHS Directive without exception. We are therefore unable to demonstrate taxonomy alignment for our string inverters at this time.

Central inverters, however, are large-scale fixed installations that are excluded from the scope of the RoHS Directive. To achieve taxonomy alignment in accordance with the Climate Delegated Act, Appendix C, letter g, it must be demonstrated that there is no suitable alternative for the use of the SVHC substances in accordance with REACH. In this respect, the European Commission has not clearly defined what is meant by the concept of "suitable alternative" within the DNSH criterion for pollution prevention and control, Appendix C. Therefore, as is generally the case with new legal regulations, uncertainties remain. At present, we include the technological and economic feasibility of substituting SVHC substances in the concept of "suitable alternatives" and document our approach in a comprehensible manner. We therefore consider the criteria in Appendix C of the Climate Delegated Act to have been met for our central inverters. Further details about our pollution prevention and control activities are outlined in the "Substances of concern" section.

Protection and restoration of biodiversity and ecosystems

The DNSH criteria for the environmental objective of protection and restoration of biodiversity and ecosystems make provisions for conducting environmental impact assessments (EIAs). According to European regulation, an EIA is mandatory if certain activities are carried out that could have a potentially harmful impact on biodiversity and ecosystems. The SMA Group's activities are not covered by the scope of this. We also ensure that we fulfill all legal requirements at all times. Consequently, the SMA Group's activities do no significant harm to this environmental objective. Further information can be found in the "Legal compliance" section.

Minimum safeguards

In accordance with Article 3(c) of the Taxonomy Regulation, proof of the environmental sustainability of economic activities also requires that they are performed in compliance with minimum safeguards as defined in Article 18 of the Taxonomy Regulation. The minimum safeguards require a comprehensive due diligence approach to ensure compliance with the OECD Guidelines for Multinational Enterprises, the United Nations Guiding Principles on Business and Human Rights, the International Labour Organization's core labor standards and the International Bill of Human Rights. The due diligence measures implemented by the SMA Group to ensure compliance with the minimum safeguards have been integrated into existing risk management systems. With the due diligence measures for minimum safeguards, we cover the topics of human and labor rights, corruption and bribery as well as taxation and fair competition.

We have included disclosures on the implementation of the requirements in these areas in the relevant sections of the combined non-financial statement. We cover the topic of human and labor rights for our own business area in the section "Safeguarding employee rights and maintaining high labor standards". We describe the implementation of requirements in the areas of corruption and bribery, taxation and fair competition in the "Integrity & compliance" section. The implementation of the requirements for minimum safeguards in the supply chain are integrated into our human rights risk management system for the supply chain and are mapped in the "Sustainable supply chains" section.

Our review of compliance with human rights in our own business area has shown that legal regulations in the United Arab Emirates sometimes contravene the requirements of minimum safeguards. This relates in particular to principles of non-discrimination and the right to freedom of association. As the SMA Group has no control over these legal requirements, the sales of the relevant group company were deemed to be taxonomy-aligned and were included under the activity "installation, maintenance and repair of renewable energy technologies". In addition, we have not identified any restrictions on the implementation of minimum safeguards.

Data collection and calculation process

To determine the disclosures on taxonomy eligibility and taxonomy alignment, we first analyzed consolidated sales and differentiated them by product group for the 2022 fiscal year. The basic approach of the analysis was retained in 2023, although it was refined by switching from looking at product groups to looking at materials. Based on this differentiation, the sales could then be directly assigned to the identified taxonomy-eligible economic activities. Charging solutions for electric vehicles and their accessories, which were previously assigned to "manufacture of renewable energy technologies", are now reported separately under the newly introduced economic activity "manufacture of technical equipment". Sales generated by PV and battery inverters and accessories continue to be assigned to the economic activity "manufacture of renewable energy technologies"; sales generated by extended warranties, operation and maintenance services, and other services continue to be assigned to the economic activity "installation, maintenance and repair of renewable energy technologies". The spare parts sold reported under this activity in the 2022 fiscal year are now allocated to the economic activity "sale of spare parts" under the environmental objective of transition to a circular economy.

We looked at the capital expenditure (CapEx) of all group companies on a macro level. We deducted the capital expenditure in the activities that had previously been identified as non-taxonomyeligible. This was then assigned to the company areas and finally split by company area between the economic activities, taking into account the new economic activities.

To calculate taxonomy-eligible operating expenditure (OpEx), we identified all the relevant consolidated items and assigned them to the company areas. We then also deducted the expenditure in the activities that had previously been identified as non-taxonomyeligible. The expenditure was finally split by company area and assigned to the economic activities, taking into account the new economic activities.

The EU Taxonomy KPIs include all fully consolidated companies of the SMA Group. The company did not elect to include joint ventures.

Composition of the sales numerator

To calculate environmentally sustainable sales, net sales that make a contribution to climate protection were divided by the net sales of the SMA Group. Detailed information on the SMA Group's sales can be found in the Combined Management Report in the "Results of operations" section.

in €'000	2023	2022
Taxonomy-aligned sales in absolute terms	741,053	450,999

Composition of the capital expenditure numerator

Environmentally sustainable capital expenditure (CapEx) relates to assets that are connected with taxonomy-aligned economic activities. This includes additions under the following IFRS standards: additions to property, plant and equipment (IAS 16), additions to intangible assets (IAS 38), additions to rights of use (IFRS 16) and additions to investment property (IAS 40). Further notes on calculating the denominator can be found in the consolidated financial statements in the "Notes to the balance sheet SMA Group" section.

in €'000	2023	2022
Taxonomy-aligned additions property, plant and equipment	15,342	7,445
Taxonomy-aligned additions to intangible assets	15,400	11,411
Taxonomy-aligned additions to rights of use	4,047	1,830
Taxonomy-aligned additions to investment property	0	0
Taxonomy-aligned additions from business combinations	0	0
Total taxonomy-aligned	34,789	20,686

Composition of the operating expenditure numerator

Operating expenditure (OpEx) relates to direct, non-capitalized expenditure for research and development, building maintenance, servicing and repair costs, and current leases. The figure reflects the share of OpEx that relates to assets or processes that are connected with taxonomy-aligned economic activities.

in €'000	2023	2022
Taxonomy-aligned research and development expenses	19,849	10,006
Taxonomy-aligned short-term leasing	4,674	4,097
Taxonomy-aligned service, maintenance and repair	1,880	1,167
Total taxonomy-aligned	26,403	15,270

SMA disclosures on EU taxonomy

SMA Group in €'000	2023	2022
Sales	1,904,060	1,065,946
thereof taxonomy-aligned	741,053	450,999
thereof from activity 11	661,938	317,587
thereof from activity 21	79,116	133,412
Operating costs	67,520	43,457
thereof taxonomy-aligned	26,403	15,270
thereof from activity 11	24,703	12,891
thereof from activity 21	1,700	2,379
Investment expenditure	95,129	65,758
thereof taxonomy-aligned	34,789	20,686
thereof from activity 11	31,061	17,796
thereof from activity 21	3,728	2,890

SMA Group in %	2023	2022
Sales	100.0	100.0
thereof taxonomy-aligned	38.9	42.3
thereof from activity 11	34.8	29.8
thereof from activity 21	4.2	12.5
Operating costs	100.0	100.0
thereof taxonomy-aligned	39.1	35.1
thereof from activity 11	36.6	29.7
thereof from activity 21	2.5	5.5
Investment expenditure	100.0	100.0
thereof taxonomy-aligned	36.6	31.5
thereof from activity 11	32.7	27.1
thereof from activity 21	3.9	4.4

¹ Activity 1: Manufacture of renewable energy technologies; Activity 2: Installation, maintenance and repair of renewable

energy technologies

The tables of disclosures in accordance with Appendix II of the delegated act can be found at the end of the combined nonfinancial statement.

In the 2023 fiscal year, the SMA Group generated sales of €1,904.1 million (2022: €1,065.9 million). Of these sales, €1,460.9 million are taxonomy-eligible (76.7%; 2022: €902.5 million; 84.7%). Sales that are non-taxonomy-eligible total €443.1 million (23.3%; 2022: €163.4 million; 15.3%). The variance of 8.0% is due mainly to the higher share of merchandise in sales compared with the previous year. These are not covered by the scope of the Taxonomy Regulation, nor are non-essential activities that cumulatively account for less than 1% of consolidated sales.

In the 2023 fiscal year, €741.1 million or 38.9% of sales can be classified as environmentally sustainable (taxonomy-aligned) as defined in the EU Taxonomy (2022: €451.0 million, 42.3%). Of these, sales of €661.9 million are attributable to activity 1 "manufacture of renewable energy technologies" (34.8%; 2022: €317.6 million; 29.8%). This is the share of sales that was generated by central inverters and their accessories. More information on this can be found in the "Pollution prevention and control" section. €79.1 million of taxonomy-aligned sales are attributable to activity 2 "installation, maintenance and repair of renewable energy technologies" (4.2%; 2022: €133.4 million; 12.5%). In addition, sales of €719.9 million were attributable to the sale of renewable energy technologies that are taxonomy-eligible but for which taxonomy alignment has not been proven, or to the "manufacture of technical equipment" and the "sale of spare parts", for which taxonomy alignment is not yet mandatory (37.8%; 2022: €451.5 million; 42.4%).

The taxonomy-related capital expenditure of the SMA Group amounting to €95.1 million (2022: €65.8 million) is 36.6% environmentally sustainable. This equates to capital expenditure of €34.8 million (2022: 31.5%; €20.7 million). A share of €31.1 million (32.7%; 2022: 27.1%; €17.8 million) was attributable to the activity "manufacture of renewable energy technologies" and €3.7 million (3.9%; 2022: 4.4%; €2.9 million) to the activity "installation, maintenance and repair of renewable energy technologies". Taxonomy-eligible but non-taxonomy-aligned activities accounted for €56.0 million (58.9%; 2022: €41.8 million; 63.6%). The share of capital expenditure that is non-taxonomy-eligible was €4.3 million (4.5%; 2022: €3.2 million; 4.9%).

In 2023, the SMA Group's operating expenditure that falls under the scope of the EU Taxonomy amounted to €67.5 million (2022: €43.5 million). Of this, 39.1% can be classified as taxonomyaligned (€26.4 million; 2022: 35.1%; €15.3 million). A share of €24.7 million (36.6%; 2022: €12.9 million; 29.7%) was attributable to the economic activity "manufacture of renewable energy technologies" and €1.7 million (2.5%; 2022: €2.4 million; 5.5%) to the economic activity "installation, maintenance and repair of renewable energy technologies". €39.9 million (59.1%) of the taxonomy-related operating expenditure is taxonomy-eligible but does not meet all the criteria to be classified as taxonomy-aligned (2022: €26.7 million; 61.5%). €1.2 million of the operating expenditure is non-taxonomy-eligible (1.8%; 2022: €1.5 million; 3.4%).

Integrity & compliance

The "integrity & compliance" aspect, which means adhering to important principles and values as well as legal requirements and internal guidelines, is a crucial part of the way that the SMA Group does business. Our compliance management focuses on a value-based approach and promoting a culture of compliance. This is based on the conviction that a compliance culture established throughout the group offers the best protection against legal violations and reputational risks. A high level of acceptance of the rules among employees and an understanding of the goals and values behind these rules are thus the basis for effective compliance management.

All employees of the SMA Group are obligated according to its guidelines to act ethically in accordance with the laws and regulations of their country within the scope of their work for the company. All corporate compliance guidelines are available in several languages. Group Compliance reports regularly to the Group Executive Committee (GEC) several times per year. Reporting topics include current non-compliance issues and new or changed compliance risks. The management of the company is represented on the GEC by the entire Managing Board and the segment heads. This enables the top management to adequately evaluate the effectiveness of the Compliance Management System and to initiate further developments if necessary. In addition, Group Compliance reports annually to the Audit Committee of the Supervisory Board on key aspects of compliance work.

Compliance training courses are mandatory for the employees assigned and promote awareness of the importance of compliance among the employees and pass on the required knowledge. This is done both with web-based training formats for basic training and with online and on-site events for examining specific topics in depth. The frequency and scope of training depends on the participants' risk situation in their specific roles. After completing their initial compliance training, new employees actively commit to the relevant principles and rules, including the SMA Employee Code of Conduct.

In the case of suspected compliance violations, employees of the SMA Group and all external stakeholders have access to the Speak-Up Line. This misconduct reporting system is operated by an external provider and can be used in the respective native language of the reporting person. At the reporting person's request, their identity is kept anonymous. Reports of misconduct are treated as strictly confidential. The SMA Group assures all employees

freedom from sanctions for reports made in good faith. Further details, together with a complete description of the process for reporting misconduct, can be found on our website. In addition, the SMA Compliance Helpline is available for questions relating to compliance. Concerns or indications of possible misconduct can also be reported here.

CORRUPTION AND BRIBERY

The SMA Group does not operate in a particularly corruptionintensive industry. Nevertheless, business activities in countries with a high level of corruption and collaboration with external business intermediaries mean that corruption risks exist in principle and must be countered with preventive measures. The SMA Group does not tolerate corruption internally or by its business partners and is actively committed to Transparency International's Business Principles for Countering Bribery. To put this aspiration into practice, we have set up an extensive corruption prevention program throughout the group as a subarea of compliance management.

Corruption describes the abuse of entrusted power for private gain. Corrupt conduct could be committed by employees of the SMA Group as well as SMA's business partners. Corruption has serious negative consequences for society and compromises fair competition. Corrupt conduct also brings legal risks, which may significantly damage the SMA Group's reputation and unduly influence business agreements at the expense of the SMA Group or its business partners.

Regular compliance risk analyses, in which corruption risks are also recorded, provide the foundation for the conception and further development of all anti-corruption activities of the SMA Group. In addition to the responsibility of all employees and managers for compliance in their own area of work, the Managing Board of SMA Solar Technology AG has entrusted the Group Compliance function via the Compliance Charter with the cross-departmental creation of appropriate behavioral guidelines and standards as well as processes for the prevention of corruption. According to the SMA Employee Code of Conduct, it is clarified that employees must never abuse their professional position to gain personal benefits and must never offer anyone an improper personal benefit. The SMA Group's anti-corruption guideline is contained in Chapter 3 of the SMA Compliance Handbook, which is binding for all employees and contains clear rules of conduct and prohibitions. The aim is to avoid even the appearance of questionable conduct. For this reason, higher-value gifts, invitations and certain other benefits as well as benefits granted to public officials must be approved by Group Compliance. Payments to unlawfully expedite official processes are explicitly forbidden within the SMA Group.

Business partners that may influence third parties while performing their service must go through the Business Partner Due Diligence Process. The risk-based approach ensures a careful selection of such business partners who operate for the SMA Group. Only business partners who share the SMA Group's standards of ethical and legally impeccable conduct and who guarantee compliance with the SMA Business Partner Code of Conduct are to be commissioned. This sets out the legal and ethical standards that business partners such as suppliers and service providers must fully comply with when conducting business with the SMA Group and making decisions that affect the SMA Group.

Regular communication between Group Compliance and Corporate Audit ensures the necessary flow of information between these functions. As part of its regular audits, Corporate Audit also examines functions in which an increased risk of corruption exists. Significant corruption risks without specific misconduct are reported to Corporate Risk Management via the Risk Management System.

In the reporting year, the Group Compliance function reviewed the corruption risk for all existing companies of the SMA Group that currently have active business operations by way of a compliance risk analysis. No high corruption risks were identified. In 2023, 3,021 full-time, part-time and temporary employees, or 60.0% of all SMA Group employees, received a training with anti-corruption content (2022: 1,638 full-time, part-time and temporary employees, 39.8% of all employees; the previous year's figures have been adjusted as the scope has also been extended to temporary employees). As in the previous year, no confirmed cases of corruption were recorded in the reporting year.

FAIR COMPETITION

Measures taken to ensure compliance with the provisions of competition laws are a focal point of compliance management work. In addition to the responsibility of all employees and managers to ensure compliance in their own areas of work, the Managing Board has also entrusted Group Compliance with the creation of appropriate cross-departmental guidelines, standards of conduct and processes via the Compliance Charter. Antitrust risks are an integral part of regular compliance risk analyses. In accordance with the SMA Employee Code of Conduct, the SMA Group conducts its business in strict compliance with competition law. We also pass this requirement on through the SMA Business Partner Code of Conduct to our business partners (e. g., suppliers and service providers). The Group Compliance guideline, which is based on these principles and incorporated in the SMA Compliance Handbook, also contains clear rules of conduct for dealing with direct competitors and internal approval requirements for agreements with customers that are prone to risk from a competition law perspective. A separately published compliance checklist for cooperations with competitors provides additional guidance.

In the context of Compliance Network Meetings, the employees of Group Compliance have regular discussions with representatives of functions that are particularly prone to risk (e. g., Sales, the Business Segments and Procurement) about transactions and risks relating to competition law. Group Compliance also provides training with a focus on competition law for these areas. Business contacts that are particularly fraught with competition law risk are managed in close consultation with Legal Services. Regular communication between Group Compliance and Legal Services ensures the necessary flow of information between these functions. Significant competition law risks can be reported to Corporate Risk Management via the Risk Management System.

TAXATION

The primary objective of the SMA Group with regard to taxes is to comply with the existing legal requirements and to submit complete and correct tax returns and other tax-related reports on time. We consider transparent cooperation with the authorities to be an essential component of tax compliance. Aggressive tax structuring and tax planning with the primary aim of positively optimizing the tax quota, as well as transactions relevant under criminal tax law, are strictly prohibited. A tax risk management system (Tax CMS) is maintained and continuously tested for the parent company SMA Solar Technology AG to provide an overview and control of tax issues arising in the company. A confirmation of material tax compliance issues and key controls is provided for the subsidiaries. The main responsibilities for this are defined in the Group tax guidelines. The Chief Financial Officer has supreme authority when it comes to the overall control of all tax matters relating to the SMA Group. Operational implementation is performed by the Global Tax function. The tax risks identified and assessed as part of the Tax CMS are regularly updated and tested by those responsible in order to respond to exogenous and endogenous developments and to counter them appropriately. If, during the risk assessment or auditing, measures are identified that need to be adapted or supplemented, documentation is performed both within the existing Tax CMS and in the corresponding other systems. Relevant tax risks are also recorded in the Enterprise Risk Management System. In addition, the Internal Audit department examines selected tax-related matters randomly on the basis of the risk-oriented audit plan. Keeping a record of the Objectives and Key Results (OKRs) as part of the Finance Strategy initiative also helps the company develop business process measures that eliminate tax risks and contribute to the work of the SMA Group's Tax Compliance Management System. Since 2022, the topic of tax compliance has also been included in the SMA Employee Code of Conduct. There were no legally binding convictions against the company for tax offences in the reporting year.

Sustainable supply chains

→ Our goal: Sustainability performance assessment covering 100% of direct A and B suppliers ¹

The "sustainable supply chains" aspect includes all sustainability issues that are addressed as part of the risk management system for compliance with due diligence obligations in the supply chain. This includes in particular, but not exclusively, the issues of human rights and environmental protection within the supply chains. In this section, we also map the fulfillment of the minimum safeguard requirements relating to the supply chain in accordance with the Taxonomy Regulation.

The SMA Group sells its systems and solutions worldwide. The supply chains required for the SMA Group's business activities result in a global supplier base. These supply chains include 464 direct suppliers of SMA Solar Technology AG from 25 countries that supply direct material for production. In total, SMA Solar Technology AG purchased goods worth around €1.2 billion from these suppliers in the regions of Europe, North and South America and Asia-Pacific in 2023.

Our procurement planning is based on forecasts and therefore on planned sales figures. Orders are placed in cooperation with our suppliers, taking account of their production capacities. If the planned sales figures change, planning adjustments are made in cooperation with our suppliers to enhance planning reliability. For selected purchased components, we also analyze the cost structure using a cost breakdown tool so that we are able to negotiate appropriate and fair prices with the relevant suppliers.

SUPPLIER MANAGEMENT

Our supplier management aims to establish long-term relationships with all suppliers with whom we are in direct contact. With this in mind, we aim to conclude contracts of unlimited duration with a supplier base that is as consolidated as possible. In addition to leveraging economies of scale in procurement, this gives us better oversight over our suppliers in terms of relevant risks, including sustainability risks. The annual Supplier Day, to which we invite the direct A and B suppliers of direct material to SMA Solar Technology AG, provides an opportunity to communicate current issues and challenges. Sustainability issues are a permanent item on the agenda in order to make suppliers aware of the importance of sustainability in SMA Solar Technology AG's procurement processes. Supplier Day 2023 took place virtually and was recorded. The link to the video was sent to 138 suppliers. This corresponds to 7% of all direct suppliers of direct and indirect materials to SMA Solar Technology AG.

RISK MANAGEMENT IN THE SUPPLY CHAIN

Our process for ensuring compliance with due diligence obligations in the supply chain aims to prevent or minimize risks in the supply chain and to prevent, end or reduce the extent of breaches of duty. To achieve these goals, we have established a comprehensive risk management system for the supply chain. The Managing Board has appointed in writing a human rights officer charged with overseeing the due diligence obligations. By monitoring the effectiveness of our risk management system, we ensure the success of our measures and actions and the continuous improvement of our processes. As part of the Sustainability Committee, the Managing Board is kept regularly informed about the work of the Human Rights Officer and the implementation status of the Supply Chain Due Diligence Act (LkSG) in the SMA Group. As part of the Sustainability Congress 2023 organized by the Berlin Institute Supply Chain Management, we were awarded the finalist prize of the Sustainable Operations Championship Award in the Human Rights Due Diligence category for our process. The procedures are described in the Sustainable Supply Chains Policy, which we brought into effect in 2022.

The Policy Statement on Human Rights and Environmental Due Diligence issued by the Managing Board of SMA Solar Technology AG in the reporting year sets out our procedures and principles in detail. The policy statement is publicly available on the corporate website. The SMA Business Partner Code of Conduct and the Sustainable Procurement Policy prepared in the reporting year set out our standards and the expectations we have of suppliers and other business partners with respect to the recognition of international values and principles, health protection, occupational safety and product quality, respect for human rights and fair labor practices, fair competition, protection of confidentiality, information and property and environmental protection and responsible energy use. In the reporting year, we renewed the Code of Conduct and added further requirements as part of the implementation of the LkSG. The Code of Conduct is binding for all suppliers as part of the general terms and conditions. Our suppliers also undertake to pass on this requirement in their supply chains. The Code of Conduct and the Sustainable Procurement Policy are publicly available on our corporate website.

¹ The direct A suppliers for direct material make up 80% and the direct B suppliers for direct material 15% of the total purchasing volume for direct material of SMA Solar Technology AG.

Identification of risks in the supply chain

Our risk management system is based on a risk analysis with which we covered the direct suppliers of direct materials to SMA Solar Technology AG in the reporting year. If there is substantiated knowledge of possible violations of human rights or environmental obligations by indirect suppliers, we integrate them into the risk analysis. The risk analysis is updated annually and on an ad hoc basis. For example, we perform a risk analysis for a new direct supplier when we enter into a business relationship with them and subject an indirect supplier to a risk analysis as soon as we obtain substantiated knowledge of a possible breach of duty by them. Substantiated knowledge means we have actual evidence that an obligation has been violated. We use systembased processes, available risk information and knowledge gained in the course of our investigations to carry out the risk analysis. This procedure was explained to all commodity managers in a general sustainability training course in 2023. Process modeling, nationwide roll-out and training will take place in 2024.

Risks concerning direct suppliers are systematically identified with the help of external data sources. Country-specific risks and industry risks in connection with the economic activities of direct suppliers are identified first. Furthermore, information from the grievance mechanism described in the "integrity & compliance" aspect (speak-up line), which is available to all stakeholders for reporting breaches of duty in the supply chain, and from the monitoring of press releases is included in the identification of risks.

As part of risk assessment, the identified risks are evaluated and weighted taking into account the statutory appropriateness criteria for severity and probability of occurrence. The factors for the assessment include the severity or number of people affected and irreversibility. Detailed audit results, internal reports and completed questionnaires help substantiate the identified risks and enable assessment of these risks. This results in an actual risk disposition and a picture of the negative implications for people and the environment.

In the final step of the risk analysis, we prioritize the risks based on the criteria of our capacity for influence and contribution to causation. The results with regard to human rights and environmental risks and implications are incorporated into our corporate decision-making processes and actions. These include, for example, decisions on the selection of suppliers and business partners. The results also help us continually adapt our internal guidelines, actions and training measures to ensure compliance with our due diligence obligations. There were no incidents involving breaches of duty in the areas of human rights and labor practices or environment reported in 2023.

Since 2020, there have also been increased concerns due to indications of human rights violations against the ethnic group of Uighurs in the Xinjiang region in China. The SMA Group shares these concerns and has consequently conducted a supplier analysis. As a result, we can confirm that there are no business relationships with suppliers based in this region. In addition, we have implemented a process element in our global supplier selection to ensure that no products from the region are purchased in the future either. Following the start of Russia's war of aggression on Ukraine, we also extended this process element to suppliers from Russia in 2022. Accordingly, we also confirm that we do not procure any goods from direct suppliers from Russia.

Sustainability performance of our suppliers

In 2017, we also started to assess the sustainability performance of our direct A and B suppliers, who deliver direct material for production to SMA Solar Technology AG, using the sustainability software of an external partner. The assessment of sustainability performance covers environmental protection, energy management, CO2 footprint, labor and human rights, occupational health and safety, diversity and equal opportunities, living wages, corruption and bribery, quality and sustainable procurement. We are initially focusing on the suppliers that account for the largest shares in terms of the value of goods. Our target by 2025 is to include 100% of A and B suppliers that deliver direct material for production to SMA Solar Technology AG's production facilities in the assessment.

In 2023, we changed the system provider for assessing the sustainability performance of suppliers. The new system enables us to better analyze supplier risks. Suppliers' sustainability performance is assessed using a traffic light system. This renders it obsolete to continue pursuing the target that we set ourselves while using the previous system to assess the average percentage sustainability performance of our suppliers.

As of December 31, 2023, 81.8% of all A and B suppliers existing at the end of the fiscal year were covered by the sustainability performance assessment 1 in the new system (2022: 50.0% of all A and B suppliers existing at the end of 2022 in the old system). The suppliers that we had assessed at the end of 2023 represent a share of 81.8% of the direct material purchasing volumes of SMA Solar Technology AG. In addition to the switch to the new assessment system solution, the sharp increase in the number of assessed suppliers is also due to the fact that we continue to raise our suppliers' awareness of the importance of sustainability.

¹ The threshold value for the "assessed" classification is the criterion that a supplier is rated better than red in at least one of ten categories used for evaluation in the IntegrityNext evaluation system.

If relevant risks or suggestions for improvement are identified, we get in touch with the suppliers to address these issues, define measures where necessary and monitor the implementation of these measures. When changing the system provider for evaluating suppliers in the reporting year, we aimed at having as many suppliers as possible assessed using the new software. Possible measures for suggestions for improvement are now identified in the next step.

Since 2022, the sustainability performance of our suppliers has been included as part of our supplier selection process. Other criteria for supplier selection include cost, quality aspects, technical potential and supply chain management performance. Furthermore, our commodity managers have regular interactions with suppliers on sustainability issues.

Area of action: environment & energy

The technologies developed and produced by the SMA Group for the efficient and sustainable generation, use and storage of solar energy contribute worldwide to an affordable, secure and climate-friendly energy supply based on renewable energies. Furthermore, by handling resources responsibly and using renewable energies across the entire value chain, we aim to minimize the environmental impact of our business activities and to help establish the conditions for a livable future for all living beings.

We endeavor to continuously reduce the use of resources along the entire value chain or to substitute them with more environmentally friendly versions, thereby increasing the use of renewable energies, environmentally friendly materials and sustainable forms of mobility. The "climate protection" aspect and the subject area of circular economy are at the heart of the environment & energy area of action.

Under circular economy, we include all topics that contribute to closing material cycles and reducing material flows. Within the environment & energy area of action, these topics are presented in the "responsible use of materials" and "waste & recycling" aspects. Other circular economy topics are outlined in the product stewardship area of action. The topic of the circular economy is complex and is influenced by numerous areas of the company. So it is all the more important for us to incorporate the principles of the circular economy into our thinking and our business processes to ensure that impacts on the circular economy are always taken into account in corporate decisions.

Key figures on environment & energy that go beyond the disclosures in this section can be found in the overview of sustainability key figures at the end of the combined non-financial statement.

MANAGEMENT SYSTEMS

The SMA Group's production sites in Germany and Poland have a qualified, centrally controlled environmental management system. In addition, the environmental management system at our headquarters in Germany and thus the production site in Niestetal/ Kassel, Germany, is certified in accordance with ISO 14001. The system is subject to continuous monitoring, support and ongoing development by specialized environmental, waste and hazardous goods management officers. The energy management system at our headquarters in Germany and our subsidiaries Altenso GmbH and coneva GmbH is certified in accordance with ISO 50001 as well. Our management systems support us with our approach of minimizing the environmental impact at every stage of the value chain and acting in accordance with the current environmental and energy legislations. The processes of the environmental management system are comprehensively described and accessible to all employees of the SMA Group via the SMA Management Handbook.

LEGAL COMPLIANCE

At the headquarters in Germany, a legal provisions register and a permit register form the basis for ensuring that all applying laws and provisions and all binding obligations are complied with. The legal provisions register working group assesses the relevance of the provisions and defines responsibilities for complying with the legislation. The entrepreneurial and operator responsibilities for facilities and systems are transferred in writing to the executives responsible. Six-monthly reviews are conducted in cooperation with external consultants to ensure the legal provisions register remains up to date. Regular internal audits are conducted to ensure compliance with all legislation. In addition, quarterly reports are submitted to the Managing Board. No violations of environmental protection laws or regulations were identified in the reporting period and there were no legally binding convictions in this area.

Approval procedures are relevant for the SMA Group in the context of planning permissions for new buildings or building extensions. Buildings housing the company's operating activities are located at the headquarters in Germany and the second production site in Poland in industrial parks and designated business parks. The new building project to expand production at the headquarters (GIGAWATT FACTORY), which commenced in the reporting year, is also being implemented in a designated industrial park. The Sandershäuser Berg production site in Germany is located in a water protection area, which means that the water protection authorities are intimately involved in all building projects anytime. None of our locations is required to conduct a mandatory environmental impact assessment (EIA) on account of the activities undertaken there. We consider the negative impact of the SMA Group's activities on the surroundings to be low.

All binding obligations issued as part of planning permits for buildings and facilities at the main location in Germany are held in the permit register. In most cases, external service providers are appointed to implement these requirements during the construction phase and during operation. The Corporate Real Estate Management function is responsible for awarding these contracts and for maintaining and regularly updating the permit register.

Sustainable energy use

The SMA energy concept is based on three pillars with which we commit ourselves to continuously improving energy-related performance: avoiding energy consumption, using energy more efficiently and increasing the share of renewable energies. The SMA Group has already undertaken a number of flagship projects such as the SMA Solar Academy building in Niestetal, Germany, which functions independently from the utility grid, and two highly energy-efficient production buildings operated with renewable electricity. These projects are a testament to the high priority the SMA Group places on its sustainable energy management. The production buildings won the international Energy Efficiency Award and the Timber Construction Award for Hesse. Construction of the GIGAWATT FACTORY at the headquarters in Germany, which commenced in 2023, is also being carried out in accordance with the highest environmental standards. The building will be equipped with a PV system, constructed in accordance with the eco- and climate-friendly energy efficiency standard KfW 40 EE and is expected to be certified according to the DGNB's gold standard. In addition, the Corporate Real Estate Management function implemented the globally binding Sustainability in Real Estate guideline for all SMA Group companies in the reporting year. This defines requirements that all buildings built, acquired or rented by the SMA Group must fulfill.

In 2023, the SMA Group's total energy consumption was slightly below the previous year's level at 33.48 GWh (2022: 34.59 GWh). Of this total, 26.68 GWh was sourced from renewable sources and 6.81 GWh from non-renewable sources (2022: 20.93 GWh renewable, 13.66 GWh non-renewable). In 2023, the specific energy consumption per kW of inverter output produced significantly fell to 1.62 kWh/kW at the headquarters (2022: 3.14 kWh/kW) and to 2.08 kWh/kW globally (2022: 4.13 kWh/kW). In addition to the ongoing implementation of efficiency measures, the decline is due in particular to the higher production capacity utilization compared with the previous year. A detailed list of the energy carriers used in the SMA Group can be found in the key figures for the environment & energy area of action at the end of the combined non-financial statement.

RENEWABLE ENERGIES

→ Our objective: 100% electricity from renewable energies

With more than 4,000 employees in 20 countries, the SMA Group develops, produces and sells technologies that are fundamental to the transition to a sustainable energy supply. Our systems and solutions facilitate decentralized and efficient energy generation and use based on renewable energies. As such, the SMA Group's business activities directly contribute to SDG 7 "Affordable and clean energy." The transformation of global energy supply structures to generation based on decentralized renewable energies is an important factor in the fight against the global climate crisis. This fact is also being recognized in the international political arena, resulting in initiatives like the European Green Deal and U.S. Inflation Reduction Act. More information on this can be found in the "Future general economic conditions in the photovoltaics sector" section of the Forecast Report.

Renewable energies also play an important role in our own energy supply. Our power supply is based on the following hierarchy: Top priority is given to electricity from our own PV systems. The next level is formed by direct power purchase agreements (PPAs) with operators of renewable energy plants in the surrounding area. In third place are supply contracts with utilities that purchase renewable electricity directly from the generators. At the bottom of the hierarchy are supply contracts under which the utility buys renewable power on the exchange and additionally allocates it via certificates.

Since 2020, our headquarters in Germany has been supplied entirely with decentralized renewable power from the immediate surroundings. Our company-owned PV systems produced 6.92 GWh of electricity in 2023 (2022: 7.96 GWh). This corresponds to 36% of our total electricity consumption at our headquarters in Germany (2022: 42%). We used 2.23 GWh of the electricity generated ourselves (2022: 2.71 GWh). The rest was fed into the utility grid. To secure the targeted share of at least one third of self-generated solar power in the electricity supply at our headquarters in Germany in the long term, even with growth, we began modernizing our largest company-owned ground-based PV system by means of repowering in the reporting year. This will increase the nominal system power from 3.2 MWp to 5.4 MWp. We have also been purchasing electricity from a PV power plant in the surrounding area via a PPA since May 2023, which has enabled us to cover a further 19% of our electricity demand at the headquarters. As of next year, it is planned to account for one third of electricity demand. The PV power plant was designed to be environmentally friendly in collaboration with the lower nature conservation authority and is therefore also intended to help protect local biodiversity. In 2023, we also covered the remaining electricity demand at the headquarters through a power supply agreement with the local utility company and through power purchased from a local wind farm using certificates.

By the end of 2024, we have set ourselves the goal of increasing solar power generation through company-owned PV systems at the headquarters by around 43% compared with 2022. In addition to the aforementioned repowering of the ground-based PV system, a new PV system with an output of 1.15 MWp will also be installed on the roof of the GIGAWATT FACTORY, which is currently under construction and is scheduled to enter operation in summer 2024.

With the second production site in Poland, another major consumer within the SMA Group is fully supplied with electricity from renewable energies under a supply contract. This also applies to some of the international office locations, so that in the reporting year, only around 2.2% of group-wide power consumption has not been covered yet by green electricity due to contractual conditions. Internationally recognized green electricity certificates were acquired for these office locations in the reporting year. We have therefore already achieved the goal we set ourselves as part of the SMA Strategy 2025 of sourcing 100% of our electricity from renewable energies globally by 2025, including green electricity certificates. We have set ourselves the long-term goal of improving the quality of the renewable electricity supply at all locations in accordance with our electricity hierarchy and using certificates only where no other solution is possible. To this end, reporting and verification requirements were introduced in the reporting year for all international locations, regardless of function and size, and the requirement for a renewable energy supply for all new buildings rented, purchased or constructed by the SMA Group was integrated into the newly enacted global Sustainability in Real Estate guideline.

Achievement of objective: 100% electricity from renewable energies

ENERGY EFFICIENCY

Alongside our efforts to continuously increase the share of renewable energies, energy saving and energy efficiency have long represented another pillar of the company's sustainable energy utilization strategy. We have set ourselves the goal of implementing measures at the main site in Niestetal/Kassel that will lead to energy savings of around 5,700 megawatt hours by the end of 2024, starting from the base year 2022.

The energy focus team set up in 2022 in response to the energy crisis was returned to regular operations at the end of the reporting year. All efficiency measures and the achievement of targets at the main site are recorded, evaluated and further developed as part of energy management. An energy management software makes it possible for us to monitor and analyze all types of consumption on an ongoing basis, among others. In 2024, we will gradually integrate the Poland site into our energy management system in order to gather insights for the integration of the other international sites. On this basis, energy efficiency measures and reduction potentials are to be identified worldwide and measures developed.

Project: "warming instead of heating"

In the 2022/23 heating period and as part of an internal pilot project, some of the employees at the logistics center at the headquarters in Germany were equipped with thermal clothing and battery-powered smart textiles that maintain a constant body temperature depending on ambient temperature and activity level. As a result, the room temperature in one section of the hall was gradually lowered from 21°C to 16°C without any loss of comfort for the employees. Although this measure affected only around 20% of the logistics center's area, the hall's heat consumption was reduced by a good 40%. Due to the positive results and the great energy-saving potential of this innovative approach, the trial was continued and expanded in the 2023/24 heating period.

Energy optimization in the production buildings at the headquarters

We also continued to optimize the energy efficiency of our production buildings in the reporting year. A more efficient hot water supply system, which will enter operation in 2024, was implemented in Solar Factory 3. A feasibility study was conducted for the logistics center to convert the lighting to LED lamps. As a result of this study, we will implement a new intelligent lighting concept based on motion-controlled LEDs in 2024. This measure is expected to more than halve our current lighting-related power consumption. In 2023, we also continued to pursue the measures to convert the heat supply to heat pumps, local and district heating in order to gradually reduce gas consumption. To further enhance awareness on saving energy among all SMA employees, we are also planning to expand our training concept for environmental and energy management.

Improving the energy efficiency of IT

As part of our "cloud first" strategic approach, we completed the relocation of a large proportion of the servers, files and applications used from our data center at our headquarters in Germany to the cloud in the reporting year and decommissioned the data center.

Climate protection

The Managing Board of SMA Solar Technology AG considers the global climate crisis to be one of the greatest challenges facing mankind. The Managing Board is convinced that the climate protection goals set out in the closing statement of the 2016 UN Climate Change Conference in Paris must be achieved to preserve a livable planet for future generations. But this will require us to step up our global climate protection activities significantly. States, public and private institutions and companies must all work together to limit global warming to 1.5 degrees Celsius. The SMA Managing Board believes that the outcome of the UN Climate Change Conference (COP28) that was held during the reporting year did not go far enough for us to reliably achieve this target.

The Managing Board has geared the SMA Group toward contributing to the target of limiting global warming to 1.5 degrees Celsius, both with its systems and solutions and in its operating activities. In 2022, the SMA Group also joined the European Climate Pact initiated by the European Commission as part of its European Green Deal. It provides a platform for people and organizations to share information, learn together and build networks in the fight against the climate crisis.

Participating in CDP has enabled us to increase transparency surrounding SMA's climate footprint for our stakeholders since 2021. CDP also helps us recognize opportunities in line with best practices and systematically integrate climate protection into our business processes. In the reporting year, as in the previous year, CDP gave us a B rating in the Climate Change category. We are thus meeting the European CDP average and are above the global average for the activity group "Renewable energy equipment", which is C. In addition, CDP has assessed our efforts undertaken with suppliers to reduce emissions in the supply chain with an A– in the CDP Supplier Engagement Rating 2022. The assessment for 2023 is not yet available.

CLIMATE FOOTPRINT

The SMA Group's direct greenhouse gas emissions (Scope 1) were at 2,733 tons of CO2e in 2023 (2022: 2,444 tons of CO2e). The reason for the increase is the refilling of refrigerants at the headquarters in Germany in the reporting year, which became necessary due to a maintenance backlog caused by a change of supplier. Indirect greenhouse gas emissions (Scope 2) fell to 192 tons of CO2e (2022: 368 tons of CO2e) due to the greening of the electricity supply at the international office locations described in the "Renewable energies" section, where a supply of renewable electricity is currently not possible. The intensity of greenhouse gas emissions fell to 1.28 tons of CO2e/€ million of sales due to the strong increase in sales (2022: 2.08 tons of CO2e/€ million of sales). The target that we originally set ourselves for 2025 of reducing specific CO2e emissions in kg per kW of inverter output produced at the headquarters in Niestetal/Kassel, Germany, by 50% to 0.084 kg/kW compared to the 2018 base year has been achieved since 2020. In 2023, specific CO2e emissions per kW of inverter output produced at the headquarters in Niestetal/Kassel, Germany, rose to 0.083 kg/kW (2022: 0.072 kg/kW) due to the refrigerant refill described above.

Since 2022, we have supplemented the recording of our Scope 1 and Scope 2 emissions with a Scope 3 balance. Balancing is conducted in accordance with the GHG Protocol. We worked with an external service provider to prepare our Scope 3 footprint and calculated Scope 3 emissions on the basis of international and scientifically sound emission factors (e. g., EcoInvent, Defra and

GaBI). Indirect emissions from the GHG categories of purchased goods and services, capital goods, fuel- and energy-related activities not included in Scope 1 or Scope 2, upstream transportation and distribution, waste generated in operations, business travel, employee commuting, downstream transportation and distribution, use of sold products and end-of-life treatment of sold products were taken into account. Other categories such as upstream and downstream leased assets, downstream transportation and distribution, processing of sold products and franchises were not taken into account because they either do not apply to the SMA Group's business model or are of low relevance and controllability. We chose to use the operational control approach to consolidate the data. To calculate emissions, we collected primary data for each of the categories we included and checked this data for plausibility. Wherever we were still unable to acquire any primary data, we used scientifically sound assumptions to generate a complete set of data for calculation purposes.

We calculated other indirect greenhouse gas emissions (Scope 3) of 1,088.0 thousand tons of CO2e for the SMA Group in 2023 (2022: 618.1 thousand tons of CO2e 1). At 870.4 thousand tons of CO2e (2022: 461.3 thousand tons of CO2e), "purchased goods and services" is by far the most relevant Scope 3 category for the SMA Group. This is followed by the categories "use of sold products" with 124.3 thousand tons of CO2e (2022: 95.4 thousand tons of CO2e), "capital goods" with 57.2 thousand tons of CO2e (2022: 31.1 thousand tons of CO2e), "upstream transport and distribution" with 19.4 thousand tons of CO2e (2022: 20.4 thousand tons of CO2e), "end-of-life treatment of sold products" with 8.3 thousand tons of CO2e (2022: 3.4 thousand tons of CO2e), "business travel" with 3.7 thousand tons of CO2e (2022: 2.0 thousand tons of CO2e), "employee commuting" with 3.0 thousand tons of CO2e (2022: 2.5 thousand tons of CO2e), "energy-related activities not included in Scope 1 or Scope 2" with 1.0 thousand tons of CO2e (2022: 1.1 thousand tons of CO2e), and "waste disposal" with 0.9 thousand tons of CO2e (2022: 0.9 thousand tons of CO2e). The significantly higher Scope 3 emissions compared to the previous year are due in particular to the strong increase in inverter output sold and sales generated in the year under review and the associated higher volumes of purchased goods and services. The very high Scope 3 emissions in relation to Scope 1 and Scope 2 emissions confirm the significance of Scope 3 emissions for the SMA Group. We took this into account when drawing up a climate roadmap with climate targets for 2030 in the reporting year, which is described in the following section.

DECARBONIZATION

→ Our objective: 100% climate neutrality

We have set ourselves the goal of supplying the SMA Group with 100% climate-neutral electricity and heating by 2025 as part of the corporate strategic objective of holistic sustainability. The electricity and heating supply at the headquarters in Niestetal/Kassel, Germany, has been climate-neutral since 2020. In doing so, we also use the instrument of CO2 offsetting. In the reporting year, 494.73 tons of CO2e from the gas and district heating supply were offset. Globally, we have achieved a climate neutrality ratio of 96.8% in 2023 (2022: 95.1%).

Achievement of objective: 100% climate neutrality

With our commitment to the Science Based Targets initiative (SBTi) in July 2023, we have once again significantly increased our ambitions and committed to setting short-term companywide emission reduction targets in line with science to achieve the 1.5-degree target. We have developed our targets as part of a comprehensive climate roadmap and submitted them to the SBTi for validation. Starting from the base year of 2022, they envisage a 60% reduction in all Scope 1 and Scope 2 emissions of the SMA Group by 2030 and a continuous 100% renewable electricity procurement without the use of offsets. According to our scenario analyses up to 2030, this will require, among other things, an expansion of the renewable energy supply and the complete electrification of the vehicle fleet. To reduce Scope 3 emissions, and due to the great importance of the upstream and downstream supply chain, we have set ourselves the goal of committing those SMA Group suppliers who are responsible for a total

¹ The previous year's figures for Scope 3 accounting were adjusted due to the increase in the level of detail of the analysis in the year under review.

of 81% of emissions in the purchased goods and services, capital goods and upstream transportation and distribution categories to also set science based CO2e emissions targets by 2028. To this end, we will develop a concept for climate-friendly procurement in 2024 and anchor climate-related requirements more firmly in purchasing processes.

The contribution that we make to climate protection through the electricity generated using PV inverters produced by us can also be measured, in both CO2e emissions avoided and monetary terms. To calculate avoided emissions, in 2023, we also elected to use the World Resource Institute's methodology "Estimating and Reporting the Comparative Emissions Impacts of Products" as listed in the GHG Protocol. In accordance with this methodology, we have compared the CO2e emissions per kWh of photovoltaic electricity with the CO2e emissions per kWh of the respective fuel mix in the countries where our PV inverters are installed. With an underlying average lifetime of our PV inverters of 20 years and an average value in relation to the amount of electricity generated, the total PV inverter output sold by the SMA Group since 2003 of around 132 GW helped avoid greenhouse gas emissions of more than 70 million tons of CO2e in the reporting year. This corresponds to avoided environmental damage of approximately €14 billion.

SUSTAINABLE MOBILITY

In addition to our business activities in the area of electric vehicle charging solutions, our commitment to more sustainable mobility also relates to our employees and our in-house vehicle fleet.

Our corporate mobility management aims to raise awareness of environmentally friendly forms of transportation among SMA employees in the interests of climate protection. To increase the proportion of cyclists among our employees, we introduced the option of bicycle leasing at our headquarters in 2016. In 2023, 523 employees made use of this possibility (2022: 470 employees). In the reporting year, an employee survey on commuting by bicycle was also conducted to identify further potential for improvement in the use of bicycles on the way to work as well as in the availability, security and weatherproofing of bicycle parking spaces. In 2024, we are aiming for certification as a bicyclefriendly employer for the headquarters in Niestetal/Kassel, Germany. The most relevant improvement measures from this evaluation and the employee survey are to be implemented in 2024 in order to make commuting by bike more attractive.

In addition, we once again significantly expanded the charging infrastructure for electric vehicles at the headquarters in Niestetal/Kassel, Germany, in the reporting year. We now provide our employees and visitors with a total of 103 electric vehicle charging stations at four locations with an entirely renewable electricity supply. In 2024, we will analyze the possibilities of using an electric truck in a tender process for operational shuttle transport between our production and logistics buildings.

We are also continuing to make progress on switching our inhouse car fleet over to alternative drive systems. We thereby further reduced our vehicle fleet's CO2 emissions to 60 g/km in 2023 (2022: 75 g/km). On the one hand, this can be attributed to an increase in the share of electric vehicles among our company cars. On the other hand, the proportion of electric vehicles in our fleet vehicles also increased significantly to 71% (2022: 47%) in the reporting year. Since our vehicle fleet is to reflect our corporate values, a new fleet regulation for Germany came into effect in 2023, according to which only fully electric vehicles will be permitted as new company cars. The development and implementation of a corresponding global mobility guideline are planned for 2024.

Responsible use of materials

For the SMA Group, responsible use of materials in our products means continuously increasing material efficiency, substituting materials with more environmentally friendly alternatives and complying with the material requirements for our products at all times. Improving our products' sustainability performance with these and other measures is something that we take into account in the product development process already. We describe this and the way that we handle our products at the end of their useful life in more detail in the product stewardship area of action. By contrast, the "responsible use of materials" aspect maps the start of the product life cycle. For all these aspects, we follow the circular economy approach and strive to close material cycles and steadily reduce the impact of our products on the environment.

SECONDARY RAW MATERIALS

To promote the circular economy and conserve natural resources, it is very important to avoid the use of primary raw materials by treating waste products and returning them to the production process as secondary raw materials. In view of the growing shortage of raw materials, this is also a tool for ensuring supply reliability.

With the Taxonomy Regulation, the increase in the secondary raw material quota has also entered the regulatory arena. To meet the DNSH criteria for "Transition to a circular economy", the Climate Delegated Act stipulates that companies must assess the availability of secondary raw materials and, where feasible, use these materials in products manufactured.

In 2023, we significantly optimized our process for determining the secondary raw material quota. To this end, two sub-processes were initiated to enhance data quality. First, a template was created for this year's supplier survey on the secondary raw material quota of the most relevant 80% of components in order to standardize the feedback. Based on experience from the previous year, internal stakeholders were also increasingly informed about the topic of secondary raw materials and made aware of their high relevance. In this way, we received evaluable feedback from more than half of the suppliers we contacted and were able to determine secondary raw material quotas for the majority of the materials considered. Second, and in parallel with the supplier survey, discussions were held with selected suppliers in order to determine what proportion of secondary raw materials could be achieved and to discuss implementation options. The response from suppliers to these talks was very positive, so follow-up dates are planned for 2024. Based on these two processes, we have set ourselves the goal of developing a standard for the SMA Group in order to further reduce the use of primary materials in our products in the future.

MATERIAL EFFICIENCY

By reducing the amount of material used for our products, we are conserving resources and benefiting the environment. In addition, resource efficiency results in economic benefits for the SMA Group. An optimization tool for inverter power electronics that we developed in-house is helping us to continuously improve power density and thus reduce the weight of the devices in kg per kW of inverter output produced. The target that we had originally set ourselves for 2025 of reducing the weight of our products by 30% to 1.49 kg per kW of inverter output produced compared to the 2019 base year had already been achieved since 2020. In 2023, we significantly lowered the average weight of our products to 1.24 kg/kW (2022: 1.46 kg/kW). This is due in particular to the reduction in the average weight of our string inverters to 1.80 kg/kW output (2022: 2.31 kg/kW). The great success of the Sunny Highpower Peak 3 and the launch of the Sunny Tripower X had a positive impact here. Both inverters have a particularly high power density. For our central inverters, the weight across all products was 0.97 kg/kW output (2022: 1.06 kg/kW). The high power density also reduces the number of inverters required within a PV power plant. The previous year's figures for the average weight were adjusted in each case, because the data collection and quality for the calculation were also increased for the previous year in the reporting year.

AVOIDING PRODUCTION REJECTS

There is further potential to increase material efficiency by way of reducing production rejects. Rejects are produced when components and component groups cannot be used in the production process due to damage or faults. By improving production processes and ensuring the quality of components in procurement, the use of materials and quality costs can be reduced. We are working closely together with our suppliers on this. In cooperation with one supplier, for example, we are ensuring that all aluminum production rejects are handed back and directly returned to the supplier's production process.

In 2022, we had already significantly exceeded our objective of reducing the ratio of production rejects to product output in our production facilities at the headquarters in Germany by 25% by 2025, starting from the base year 2020. In particular, a project successfully completed last year to expand and optimize the relevant processes contributed to this. The resulting improvement in data quality and faster and more efficient implementation of measures contribute to a lasting reduction in production waste. Against this backdrop, we have discontinued further target monitoring.

SUBSTANCES OF CONCERN

Materials that are harmful to people and the environment are often required for the production of (performance) electronic components. In our standard for compliance with material regulations, we require our suppliers to comply with the relevant applicable laws such as the Regulation on the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) and the Stockholm Convention on Persistent Organic Pollutants. SMA Solar Technology AG is committed to sustainable purchasing practices. We share this expectation with our stakeholders. Our "Responsible Minerals" program is based on the OECD Due Diligence Guidance for Responsible Business Conduct. Accordingly, our aim is to consistently identify and eliminate risks in the supply chain. SMA Solar Technology AG performs risk mitigation and due diligence appropriate to the nature of the risks associated with our suppliers, products or services. In accordance with steps 2 and 3 of the OECD Guidance, we continuously monitor our direct suppliers via the platform of a leading product compliance solution provider. The aim is to identify "smelters of interest" (e. g., smelters or refineries that show warning signs of risk according to the OECD Guidance) and to inform the supply chain about current risks and concerns, to promote informed purchasing behavior

along the entire supply chain and to encourage our suppliers to conduct similar due diligence checks themselves. On behalf of SMA Solar Technology AG and other companies subject to the same due diligence obligations, smelters are also contacted directly via the platform to communicate the importance of their undergoing independent audits to confirm that their procurement is conflict-free and/or from responsible sources.

As a company that supplies the European market with products that contain substances of very high concern (SVHCs) under the REACH Regulation in a concentration above 0.1% by weight, the SMA Group is required to report the specified information about its products to the ECHA (European Chemicals Agency). The agency manages the Substances of Concern in Products (SCIP) database and ensures that information on SVHCs is available to consumers and waste operators throughout the whole lifecycle of products. By taking these steps, we help meet the DNSH criteria for the environmental objective of transition to a circular economy and satisfy the requirement for provision of "information on and traceability of substances of concern throughout the lifecycle of the manufactured products".

We have undertaken to reduce the share of SVHCs under the REACH Regulation and the possible exceptions under the Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS Directive) in our products. To this end, we have subjected all components that contain SVHC substances in accordance with the REACH Regulation to a substitution test. We assessed potential substitutes from an environmental, technical and economic standpoint. The SVHC-free components are now being introduced successively.

We also put safeguards in place through our Global Trade Service to ensure that we meet all international trade rules, resulting in no direct procurement from countries that the German Federal Office for Economic Affairs and Export Control (BAFA) has classified as embargo countries without a prior assessment of legality.

Waste & recycling

→ Our objective: 25% reduction in waste per € million of sales

Dealing with waste, we use the waste hierarchy set out in the EU Directive on Waste as a guideline. Accordingly, the top priority is to avoid waste. If this is not possible, then measures for reuse are examined. The next step is recycling measures, energy recovery and only then disposal. This approach to dealing with waste is consistent with the requirement of "waste management that prioritizes recycling over disposal in the manufacturing process" as outlined in the Climate Delegated Act. This also helps us meet the DNSH criteria for the environmental objective of transition to a circular economy.

In 2023, the total waste volume of the SMA Group was 2,904 tons (2022: 2,416 tons). At 90%, the recycling rate was slightly lower than in the previous year (2022: 91%). The global share of hazardous waste materials decreased to 11.5% in 2023 (2022: 14.3%). In response to the increase in hazardous waste for disposal in the previous year, which primarily consisted of packaging materials for hazardous resins at the production site in Poland, two initiatives were launched in the reporting year. First, the weight of the packaging materials was reduced through the use of intermediate bulk containers instead of metal drums. Second, a new waste disposal contract was concluded, which enables us to recycle the packaging waste. As a result, we have both reduced the quantity of hazardous waste and improved the quality of disposal in accordance with the waste hierarchy.

The volume of waste generated plays a particularly important role in the operating divisions. We have therefore set ourselves a reduction target regarding the volumes of waste generated in these divisions. The target aims to reduce the waste generated by the operating divisions at the headquarters in Niestetal/ Kassel, Germany, by 25% to 1.63 tons of waste per € million of SMA Group sales by 2025 compared with the 2018 base year. This target also includes hazardous waste. Construction waste is the only type of waste that is not included because this waste is subject to major fluctuations, very difficult to control and not always generated in the operating divisions. In the reporting year, the specific amount of waste generated in the operating areas at the Niestetal/Kassel site fell to 1.15 tons of waste per € million of sales (2022: 1.94 tons of waste/€ million of sales) due to the significant increase in sales and the increased use of reusable packaging. This means that we significantly exceeded our target for 2025 in the reporting year.

Achievement of objective: 25% reduction in waste per € million of sales

To avoid packaging waste, we have been working since 2012 on reusable systems for the movement of goods internally and with suppliers. To transport goods between our production sites in Germany and Poland, we use durable reusable containers that are specially tailored to our products. We use these in particular for our new product groups. We include suppliers in these reusable systems as far as possible. In the reporting year, we also set up a pilot project with the aim of investigating ways to recycle and reprocess packaging waste from supplier components generated at the production site in Germany.

For the packaging of finished products that are shipped to our customers, we have introduced sustainability criteria that we use as a basis for assessing packaging materials. Since 2015, we have refused to use polystyrene and PVC in our packaging for new products and to put glossy print on our packaging. We use composite materials only where this is essential for the type of product. In the reporting year, we also established a regional best practice network and increased the transparency of our internal processes. Both also help us derive effective measures for waste prevention.

Water

Water consumption does not play a significant role at the SMA Group's sites, because no water is used in the production processes. Water is used only in our Global Repair Center at our headquarters in Niestetal/Kassel, Germany, to clean defective devices before repair. Water is obtained worldwide via the public water supply. In some office buildings at our headquarters in Niestetal/Kassel, Germany, well water is used for environmentally friendly building cooling and reintroduced close to the surface. Total water consumption in the reporting year amounted to 81,740.91 m3 (2022: 71,393.57 m3). The total wastewater volume also amounted to 81,740.91 m3 (2022: 71,393.57 m3). Our sales and service locations in Belgium, Spain and Australia are located in areas with high or very high water stress. The water consumption at these locations amounted to 602.45 m3 in the reporting year (2022: 953.70 m3) and thus corresponded to 0.74% of our total water consumption (2022: 1.33%). In contrast, our production sites in Germany and Poland as well as our other international sites are not located in areas with high or very high water stress.

Area of action: product stewardship

For us, product stewardship means taking responsibility for the impact of our products throughout the product life cycle, from their development to the end of their lifetime. Our aim is to meet our customers' highest quality requirements and provide them with products with a long lifetime. We therefore develop high-quality products that meet the changing demands of an increasingly digitalized world and the requirements for the circular economy and that also function reliably over the long term under environmental conditions that are becoming ever more challenging as the climate crisis advances.

Our production sites are certified in accordance with DIN EN ISO 9001, thus guaranteeing compliance with internationally recognized quality standards. The high standards that we set for the quality and safety of our products and systems is supported by our accredited in-house test center. The expansion of our test center in 2021 enables us to test even larger devices for electromagnetic compatibility using state-of-the-art techniques and to ensure that our future solutions for PV power plants also satisfy the requirements and regulations on the international markets.

To examine the impact of our products on customer health and safety and the environment, we conduct risk assessments and extreme tests for fault simulation during the product development process, such as the creation of a flammable gas mixture that is caused to explode in the device. If necessary, we use the results to derive measures for achieving the desired condition of our products. The products of the SMA Group meet all the safety standards required by each of our markets (e. g., UL, JET, VDE). There were no violations in the reporting year in connection with the effects of our products on our customers' safety and health.

Sustainable product life cycle

It is important to us to know what effects our products have on the environment so that we can derive measures on this basis and improve product sustainability. In the past, we therefore performed internal life cycle assessments (LCAs) for representative product categories at the headquarters in Germany. The life cycle assessments help us identify the factors that influence the sustainability performance of our products throughout the product life cycle. To also create greater transparency and objectivity in terms of the environmental performance of our products for our customers, in 2022, we appointed a renowned institution to independently prepare a life cycle assessment for one of our string inverters and had it certified by the external body DEKRA for the first time. The life cycle assessment is based on a standardized method and the impact categories recommended by the European Environmental Footprint 3.0 (EF3.0). It therefore comprises a total of sixteen environmental impact categories, which have been split into target and control categories based on relevance and stability. The outcomes give us crucial guidance on what measures to take regarding product design. Overall, they confirm the findings from our previous internal life cycle assessments. In addition to our focus on the responsible use of materials, this also relates in particular to the findings on the product carbon footprint (PCF) and the need to reduce CO2 emissions in the upstream stages of the value chain.

In addition to conformity with the requirements of ISO 14040 and ISO 14044, DEKRA confirms that the overall approach of the life cycle assessment is professional in accordance with the current state of the art. The underlying data, the life cycle model as well as the assumptions and calculations are also classed as appropriate and valid and, in the reviewer's opinion, they result in plausible outcomes as well as relevant conclusions and recommendations. A summary of the study with a focus on the carbon footprint of the inverter is published on our corporate website.

To increase transparency in our product portfolio, we have launched another life cycle assessment for our current generation of central inverters with the same scope in 2023. We expect the final results after completion of the analysis and critical review by the certifier in the first half of 2024.

Among other things, we use the results of the life cycle assessments in a project to develop internal design tools that will provide our developers with even better support in making decisions in terms of sustainability during the design phase. An initial interim report has given us valuable information on where potential for improvement exists in our specific product development process and how this can be leveraged. The spectrum of approaches ranges from quick-to-prepare factsheets and checklists to specific material mixers for comparing different concepts. We are in discussions with providers to expand our system landscape so that we can perform these comparisons automatically in the future.

PRODUCT LIFETIME

Within our Design for Reliability process, we separately qualify components that are critical to the product's service lifetime before their use in SMA devices. As part of our extensive functional and endurance tests, within a test period of six months we can map out a service lifetime for components of 20 to 25 years, identify potential causes of failure and failure rates as well as derive countermeasures. We are working closely together with our suppliers and research facilities on this. We are continuously developing our knowledge of relevant aging models, the underlying aging effects and critical influencing factors, particularly as part of the publicly funded joint research projects "Reliability Design" and "Long Life". The results of our investigations are collected in a database and taken into consideration for every potential new use of the components in question. In addition, before series production begins, we validate our inverters through a series of tests conducted both in our accredited test center and in the field under real-life conditions. In the laboratory tests, we simulate a range

of environmental and grid connection conditions, artificially age the devices and test their electromagnetic compatibility. We thus ensure that our products and systems not only are of a high quality but also meet all international standards and can be adjusted to suit various requirements and conditions. We once again significantly increased the already high lifetime of our products for the Sunny HighPower Peak3. Provided it is installed and operated correctly, we can give proof of a lifetime of 25 years on the basis of extensive age simulations.

The design of our inverters with a focus on high reliability, the continuous reduction of wearing parts and efficient maintenance routines all make a contribution to meeting the DNSH criteria for the environmental objective of transition to a circular economy. The Climate Delegated Act calls for a design for high durability of products manufactured.

REDUCTION OF FAILURES IN THE FIELD

→ Our objective: 1.0% field failure rate

One important key figure for the quality of our products is their field failure rate. This key quality figure refers to the number of failures in the field after the products are approved. It includes failures for any devices that were shipped in the past two years (monthly rolling key figure; ratio of field failures over the past two years to the number of units shipped over the past two years). For each SMA product, ambitious and specific product lifetime and field failure rate targets are defined and assessed each year. Field behavior is evaluated continuously. Identified deviations are prioritized in terms of their impact from the customer's perspective and are remedied as part of a problem-solving process. Customer feedback is incorporated on an ongoing basis in the development of new products. Based on the failure rates and the installation figures for the products, we derive an overall failure rate target for overarching product groups and for the SMA Group. In order to adhere to our commitment to quality, we have set ourselves the target of reducing the field failure rate of our products to 1.0% by 2025. We derived this target in the 2018 base year by reference to the current and forecast products and the product mix in the field. In the reporting year, the field failure rate significantly fell to an average of 1.0% (2022: 1.5%). We therefore achieved our target for 2025 in the reporting year. Decisive factors included sustainable quality improvements in all segments, high sales of products with a high level of quality and the problem-free start-up of the new Sunny Tripower X inverter in the Commercial & Industrial Solutions segment.

REPARABILITY AND REUSE

To further minimize the environmental impact of our inverters, we aim to reuse the greatest possible proportion of materials once the inverters reach the end of their useful lives. We thereby become less dependent on raw material extraction, which involves working and environmental conditions that are difficult to control, and simultaneously enhance our supply security.

In our Global Repair Program, we have developed this approach in order to recycle used devices and components as comprehensively as possible and return equipment parts that are no longer usable to the material cycle. Reuse of components in manufactured products is also a requirement within the DNSH criteria for the environmental objective of transition to a circular economy. Our approach is as follows: If the source of the fault for devices in the field is known, the devices that require servicing are repaired by replacing defective components at the system operator's location. Only if this is not possible, the devices will be sent to our Global Repair Center in Niestetal, Germany, and replaced with reconditioned devices. We repair defective devices wherever possible and transfer them to our replacement device pool. Overall, the success rate of repairs carried out at the Repair Center is 97.4%, meaning that only a low single-digit percentage of devices have to be scrapped.

Components and assemblies that we can reuse are removed from decommissioned devices and reused for repair purposes. After defining system and process requirements, a pilot project was successfully completed last year and extended to another product group in 2023. When analyzing reuse, we factor in aspects such as technical feasibility, the availability of materials on the market and quality.

As part of the "Refurbished Inverter" subproject, we have also developed a process within the Global Repair Program that allows us in exceptional cases to offer refurbished products for which no use has been found in service for sale as used goods.

To decentralize inverter repair activities and also provide the required service closer to where the inverters are deployed as well as to increase reuse of components and extend product service life, we further intensified our partnership with a repair service provider in the U.S. in the reporting year. The selected partner has successfully carried out the first repairs of SMA products. The quality of the repairs was confirmed by the Global Repair Center in Niestetal, Germany. The aim for 2024 is to also decentralize quality controls using test equipment developed by the service provider in the U.S. After the project in the U.S. is completed, we will expand the analysis to other global locations.

Another component of the Global Repair Program was the "Disassembly of Inverters" subproject, where we assessed to what extent we can improve recyclability through inverter disassembly. In 2022 already, both our in-house team and an external service provider had dismantled an inverter into its constituent parts and assigned them to recycling categories. In the reporting year, the entire process of disposing of our inverters was also assessed as part of waste disposal audits: From collection, transportation and dismantling through to the separation and sorting of the various components so that they can be returned to production processes. As a result, we determined that because of the high recycling standards and legal requirements for waste disposal companies in Germany, single-origin scrap offers no significant added value over manual disassembly when it comes to sustainability.

The results of the certified life cycle assessment also attest to the high recyclability of our inverter components. We therefore satisfy the DNSH criterion stipulated for the environmental objective of transition to a circular economy of assessing the availability of and, where feasible, adopting techniques that support design for recyclability and easy disassembly.

During manual disassembly, we also found that some components could be separated only partially. This is because our development philosophy is focused on the longevity and reliability of our products. This can lead to conflicts between disassembly requirements on the one hand and serviceability requirements on the other. To identify the best possible solution here, the Development, Service and Repair functions are in constant dialogue with each other during the product development process to achieve the best outcome for SMA products in due consideration of all the relevant aspects.

PRODUCT END OF LIFE

Responsibility for our products throughout their life cycle does not end when they are sold, but also includes proper disposal. Extended producer responsibility (ERP) is a key principle of the European WEEE Directive. It regulates the handling and proper disposal of end-of-life electrical and electronic equipment. The purpose of the directive is to prevent or reduce the harmful effects of end-of-life electrical and electronic equipment, conserve resources and improve resource efficiency. In Germany, the directive was implemented through the Electrical and Electronic Equipment Act (ElektroG), which also applies to the electrical and electronic equipment placed on the market by the SMA Group in Germany and with which we comply at all times.

In line with this, we report the quantities of products placed on the German market to the Stiftung elektro-altgeräte register (ear) every month. Stiftung ear calculates the share of each manufacturer in the total quantity of appliances placed on the market on the basis of all appliances reported monthly and commissions them to dispose of the equivalent share of appliances currently awaiting disposal. This is usually performed by the manufacturers commissioning qualified waste management companies to dispose of the waste. The disposal costs for old electrical and electronic appliances are therefore already covered when they are placed on the market, and all appliances can be disposed of at the end of their life at zero cost to consumers. The Stiftung elektro-altgeräte register also coordinates the provision of containers for handover facilities at public waste disposal authorities. This is how we meet our responsibilities for proper disposal/recycling of end-of-life equipment. We satisfy requirements regarding the proper marking of electrical and electronic equipment with type labels. The marking tells consumers that our devices should not be disposed of with household waste, but must be collected separately.

Sustainable product development

Our top priority when developing our products and solutions is to consider the overall system across the sectors of electricity, HVAC and e-mobility. By standardizing the architecture of the core components (platform strategy) and integrating key system functions, we are increasing the proportion of identical components and software modules across the entire portfolio while also reducing the number of components in the system. The focus here is on highly integrated and digitalized solutions that cover as many functions as possible and thus meet the demands for sustainability, material efficiency and ease of use.

Product development at the headquarters in Niestetal/Kassel, Germany, follows a defined product development process (PEP). This covers the definition of product requirements through to the series production stage and ensures process and product quality. Our guideline for sustainable product design sets out key design criteria that have a positive impact on the sustainability performance of our products. From this, concrete specifications for sustainable product development are developed.

The product development process also takes account of the issue of design for easy disassembly and serviceability, which is addressed under the DNSH criteria for the environmental objective of transition to a circular economy. The relevant SMA guidance covers various criteria, including duty to repair, replacement of defective components in the field and availability of spare parts throughout the entire useful lives of the products (usually 20 years). The optimization tool that we developed for inverter power electronics factors in the quality criteria concerning the use of materials (weight), volume, cost and performance (efficiency) to calculate the optimal design using cutting-edge technologies. Optimal sizing of power electronics has increased the power density of string inverters in the higher power classes fivefold over the past ten years (more power in kVA per kilogram of material used).

Since 2021, we have also been working with a renowned research institute on a concept for the product- and componentspecific evaluation of product sustainability. Based on the results, we will further develop our design criteria for sustainability. The life cycle assessment that was prepared by a highly respected institution in 2022 has already enabled us to identify the component groups with the largest CO2 footprint. Currently, the relevant departments are deriving measures to reduce the CO2 footprint from this.

We also ensure resource-efficient phase-out management, which is based on a defined phase-out process (POP). One task here is to manage the use of materials in a way that avoids rejects and ensures further use of materials in subsequent generations. This task is made more difficult particularly when there is a broad product portfolio and subsequent generations widely differ from previous products.

When developing our products and solutions, we also anticipate future requirements in areas such as digital communication and cybersecurity, thereby meeting the requirement for adaptability of products manufactured as part of the DNSH criteria for the environmental objective of transition to a circular economy. The SMA system architecture guideline sets out rules for software development, which ensure that all components and applications are established on a consistent basis, interact seamlessly within an efficient overall system and can be adapted to new requirements through remote updates. We will also provide our customers with this level of adaptability for older devices in the future. They will not be required to replace fully functioning, existing devices in order to meet new requirements, but instead will be able to continue using these devices by integrating an additional component.

Research and development expenses increased to €119.8 million in the reporting year (2022: €86.8 million). The research and development cost ratio in relation to sales came to 6.3 percent (2022: 8.1 percent). The SMA Group offers solutions in the field of renewable energy and efficient energy use, meaning that its entire product portfolio can be allocated to low-CO2 technologies. For this reason, we attribute all expenses for our product development and R&D to the development of low-CO2 technologies.

Further information on our development approach can be found in the Combined Management Report in the "Research and development" section.

Area of action: employees

The high level of commitment and willingness of our employees to always learn are essential factors in the success of the SMA Group. Diversity, equal opportunities, safeguarding employee rights and maintaining high labor standards (including freedom of association) are just as much a matter of course for us as complying with all working hours legislation. Within the SMA Group, working hours and break times are determined by the company on the basis of applicable legal requirements in the respective countries. In no country does the contractual target working time exceed 48 hours per week. As far as the company's requirements allow, working hours are organized flexibly according to the needs of the employees.

In the competition for talent, it is important to us to be perceived as an attractive employer. That is why we are continuously developing our corporate and leadership culture, which is characterized by fairness and respect, putting our values of trust, performance and team spirit into practice in our day-to-day work and creating scope for responsible, entrepreneurial action and opportunities for shaping international collaboration. We have mapped this in our leadership fundamentals, which aim to create an environment in which all employees of the SMA Group can unleash their individual talents and potential. The focus here is on a high level of selforganization in cross-functional and international teams, entrepreneurial thinking and action, a strong customer focus and valuing diversity and life-long learning. We have transferred the leadership criteria to our instruments and tools and see them as the basis for our leadership activities.

DEVELOPMENT OF THE NUMBER OF EMPLOYEES

As of December 31, 2023, the SMA Group had 4,377 employees worldwide (December 31, 2022: 3,635 employees) 1. Employee figures increased in Germany to 3,039 (December 31, 2022: 2,610) and to 1,338 abroad (December 31, 2022: 1,025). Employee turnover decreased to 4.8% in the reporting year (2022: 5.8%), corresponding to 184 employees (2022: 197). We define employee turnover as departures by employees (resignations) as a percentage of the average headcount. It is a global policy for employees who have resigned to be invited to take part in an exit interview in the form of a standardized, digital questionnaire. The responses are systematically gathered by Human Resources so that countermeasures can be taken for any negative structural anomalies if necessary.

The SMA Group also employs temporary employees to absorb order fluctuations and to ensure a flexible response at all times. Temporary employees are mostly deployed in the areas of production and logistics. The solid order situation meant that, as of the reporting date, the number of temporary employees increased significantly by 179 to 658 worldwide (December 31, 2022: 479). Wherever possible, we endeavor to take on temporary employees in direct employment. In the reporting year, 331 temporary employees were taken on by the SMA Group.

Employees

Reporting date	2023/ 12/31	2022/ 12/31	2021/ 12/31	2020/ 12/31	2019/ 12/31
Employees1	4,377	3,635	3,510	3,264	3,124
of which domestic	3,039	2,610	2,506	2,293	2,210
of which abroad	1,338	1,025	1,004	971	914
Temporary employees	658	479	226	388	442
Total employees1	5,035	4,114	3,736	3,652	3,566

Full-time equivalents

Reporting date	2023/ 12/31	2022/ 12/31	2021/ 12/31	2020/ 12/31	2019/ 12/31
Full-time equivalents (excl. trainees, lear ners and temporary employees)	3,981	3,308	3,203	3,089	2,950
of which domestic	2,672	2,306	2,222	2,138	2,051
of which abroad	1,310	1,002	982	951	898

The figures for previous years have been adjusted, as auxiliary staff are now also included in FTE calculation.

Training and qualification have a high priority within the SMA Group. We currently offer training at the Niestetal/Kassel location in nine different training occupations in the industrial/ technical and commercial sectors. We also offer the dual study program B.Sc. Business Informatics and B.Sc. Computer Science and provide comprehensive professional orientation as part of the one-year technical college internship. As of December 31, 2023, 79 young people were in vocational training (December 31, 2022: 66). Following the cooperative vocational training, there is the possibility for further employment. The trainees benefit from the international nature of the organization and, apart from the opportunity to complete language training courses, they have the chance to complete an internship on project work at an international location for a defined period of time.

In addition, we are committed to topics relating to young MINT (mathematics, information technology, natural sciences and technology) talent. This commitment includes participation in the MäteB program, which enables girls from Kassel schools to gain insights into technical professions; organization of the regional "Jugend forscht" (Youth Researchers) competition in northern Hesse; and the ProInnovation partnership with a regional school to promote innovation and exceptionally talented learners. In addition, we gave 42 learners (2022: 33 learners 2) the opportunity to gain some initial insights into potential career areas, complete the mandatory internship as part of the curriculum or write a thesis in a corporate context in the reporting year. In the area of academic support, 100 students gained practical experience at the SMA Group in the reporting year.

Additional key figures on employees, in particular on the gender balance at the management level, can be found in the overview of sustainability key figures at the end of the combined non-financial statement.

¹ Unless otherwise indicated, all employee figures include trainees, learners and auxiliary staff; the previous year's figures have been adjusted accordingly because 2022 was presented without trainees, learners and auxiliary staff.

² Learners = interns and employees working on a thesis; the previous year's figure has been adjusted accordingly because auxiliary staff were also included last year.

SAFEGUARDING EMPLOYEE RIGHTS AND MAINTAINING HIGH LABOR STANDARDS

→ Our objective: 100% coverage of SMA Group companies under a risk and monitoring system for labor standards

To ensure that the rights of employees are upheld and a high standard of labor practices is maintained throughout the whole SMA Group, we set up a group-wide due diligence process in 2022. With this, we not only meet the minimum safeguards of the Taxonomy Regulation but also exceed them. Our objective is to include 100% of SMA Group companies with active business operations under the specified risk and monitoring system for labor standards by 2025. The risk-based approach covers the areas of freedom of association and assembly, general working conditions, forced labor and human trafficking, child labor, discrimination, wages and remuneration, sustainable procurement practices as well as occupational health and safety. Since risks relating to working conditions can vary between countries and economic sectors, we have determined in principle both factors for our identification of risk with the help of the CSR Risk Check Tool from the German Agency for Business & Economic Development. In the next step, the degree of general risk potential was quantified using suitable international indicators and classified according to severity. We then projected the risks specifically to our companies, their business volume and number of employees. Our process for further analysis and prioritization provides for the inclusion of findings from audits conducted, information received by the SMA speakup line and data from our risk software. In 2022, we audited all locations in countries with at least a medium risk for the risk categories identified. This means that we have already covered eight group companies with active business operations under the risk and monitoring system. Another four companies were added in 2023. Thus, in total, 54.5% of all 22 group companies with active business activities were covered at the end of the reporting year. The audit team has defined improvement measures based on the results, the implementation of which is monitored by the group companies using a system-based approach. The results of the audits and any necessary escalations are reported to the Sustainability Committee. The audit team normally comprises an auditor from the Management Systems department, a representative from HR and the Human Rights Officer of the SMA Group. The auditors were qualified for this activity in accordance with international standards. The risk evaluation is updated annually. Locations are monitored based on the level of risk; this process is set out in an audit plan. In 2023, there were no violations of labor laws identified at any locations of the SMA Group, nor were there any convictions under labor law.

Occupational health & safety

The safety and health of all SMA Group employees is a high priority for us. The processes for occupational health and safety at our headquarters in Niestetal/Kassel, Germany, have been certified in accordance with DIN ISO 45001 since 2018. As of December 31, 2023, 3,337 employees and temporary employees of SMA Solar Technology AG at the Niestetal, Kassel, Fuldabrück and Ulm locations have been covered by a certified management system for occupational health and safety. This corresponds to 66% of all employees and temporary employees in the SMA Group. Various subject-specific and department-specific meetings take place regularly to ensure that the topic of occupational health and safety management is firmly established at the production sites. These include the quarterly meetings held by the Occupational Safety Committee, which are chaired by the Labor Director at the headquarters in Germany with the participation of safety experts, the Works Council, the safety officers and the occupational health physicians. In the reporting year, the Health & Safety department implemented safety standards that apply to all SMA Group companies worldwide. The safety standards are summarized in the Health & Safety Directive and must be implemented globally by 2025 at the latest, in accordance with the SMA Strategy 2025.

Before implemented or used for the first time, new activities, work processes, workplaces and hazardous substances are assessed in terms of potential risks and hazards at our production sites. This process is performed at the headquarters following the STOP procedure. The substitution test (S) ensures that the activity/use of the hazardous material is absolutely necessary and that no alternative is available. If this is the case, technical measures (T) to reduce the risks are defined. If such measures are not possible or not sufficient, organizational measures (O) are taken. In the final step or in addition to the other measures, personal protective measures/equipment (P) have to be used.

At the headquarters in Niestetal/Kassel, Germany, hazardous materials are used only to a very limited extent on the basis of substitution testing and, wherever possible, in closed systems. Operating instructions and training are provided to ensure that all employees who handle hazardous substances are well-informed about the hazardous substances, their potential risks, emergency procedures and potential impacts to health. This training must be performed and documented before these activities begin. Employees at the headquarters who are regularly exposed to hazardous substances are also offered medical check-ups.

The obligation to perform hazard assessments is transferred to the executives in writing. While performing a hazard assessment, they may bring in the experts of the Occupational Health & Safety division for support. A defined process, subject-specific templates and support from the division ensure consistently high quality and monitoring of hazard assessments. The Occupational Health & Safety division also regularly checks that the hazard assessments are up-to-date and reports the results as part of the management assessment to the management.

In general safety instructions, we inform all employees in Germany and at the production site in Poland about the importance of occupational safety, obligations of employers and employees, safety organization, behavior in case of an emergency, and provide general information on safe and healthy behavior. In addition, there are workplace-related instructions in the divisions. Extensive information on occupational health and safety management as well as the current development of accident rates, templates, processes, organizational charts and contact details of the responsible contact persons are also available on the intranet for all employees.

The deployment of external companies on the SMA company premises in Niestetal/Kassel, Germany, and at the production site in Poland is specified via processes and corresponding guidelines. The guideline contains standardized requirements for the protection of people, property and the environment, and describes interfaces, tasks and responsibilities between the external company and the SMA Group. All external companies are provided with the guideline before starting work. They confirm that they acknowledge and comply with the requirements. Contractual partners with service, framework or work contracts confirm receipt and compliance for the duration of the contractual relationship when they sign the contract.

WORKPLACE SAFETY

→ Our objective: Global lost time incident rate of a maximum of 0.8

The focus of occupational health and safety management at the SMA Group is on avoiding work-related accidents and illnesses. As an employer, we have an obligation to eliminate possible risks and hazards. Despite all the measures mentioned, however, workrelated accidents cannot always be avoided and we are working continuously to improve our processes. For 2025, we have set ourselves the goal of achieving a global Lost Time Incident Rate (LTIR; accidents with at least one day of absence multiplied by 200,000 in relation to total hours worked) of no more than 0.8 across all major SMA Group sites. Globally, the LTIR increased to 1.67 in the reporting year (2022: 0.96). The reason for the increase is the ramp-up of production at the headquarters in Niestetal/Kassel, Germany, and the associated recruitment of new employees, primarily through temporary work. The accident

situation was analyzed and the results presented to the Managing Board at a meeting of the Working Committee. As an initial measure, it was decided to review the induction process for potential improvements. There were no serious work-related accidents in the reporting year. These are classified as accidents at work resulting in injuries that the injured employees are not able to fully recover from within six months, or where the employees are not expected to regain the state of health they had prior to the accident. In the reporting year, there were 19 work-related accidents within the SMA Group that had high potential for a serious outcome but ultimately did not entail any serious consequences. Two of these accidents were electrical accidents. There have not been any fatal work-related accidents at the SMA Group since the company was founded. The key figure includes work-related accidents involving employees of the SMA Group and temporary employees.

Work-related accidents at the production sites are documented and investigated. The procedure for investigating accidents is based on the severity of the work-related accident. Possible causes and countermeasures for more minor accidents in production are discussed directly on-site at the daily meetings before the start of the shift. For more serious accidents, a detailed accident investigation report is prepared and measures are defined.

The nature of our business field involving the commissioning, servicing and maintenance of systems within our service business and the operation of electrical test areas entails a particular risk for the SMA Group in connection with electrical current. This includes arcing, fire hazard and electrocution that may have serious or lethal consequences. We have taken extensive measures to minimize the risks in these areas. These include compliance with mandatory specifications for setting up and operating test areas. In addition, test areas may be entered only by electrically qualified persons who receive regular training and instructions. Access is managed using electronic access control.

Despite all the precautions, emergencies involving risks to people, property or the environment cannot be ruled out in principle at the company. SMA Emergency Management regulates how to handle emergencies in the form of a binding guideline for the headquarters in Germany. For many types of emergency, such as fires or work-related accidents, there are also emergency plans specifying in a compact form what needs to be done and who needs to be informed when such incidents occur.

The goal of the Business Continuity Framework (BCF), which was newly regulated for SMA Solar Technology AG and its German subsidiaries in 2021, is to make it easier for the departments to identify potential major disruptions and to manage these effectively and efficiently in case they occur. We define major disruptions as disruptions that cannot be managed by the organizational structure and process organization of emergency management and that may be associated with significant monetary or reputational damage. In connection with the new regulation of the BCF, the relevant departments identified potential operational risks so

as to be able to respond to these faster if they occur. This gives the departments a framework for ensuring the proper functioning of the business operations until normal operations have been fully restored. A task force is being set up under the BCF that is to be specifically assembled depending on the type of major disruption and is commissioned by the Managing Board.

HEALTH

→ Our objective: 70% age-stable workplaces

SMA's health management at the headquarters in Niestetal/ Kassel, Germany, is aimed at avoiding chronic unfavorable stress and thus minimizing the risk of illness and maintaining employees' ability to work and be employed in the long term. As employees age, comprehensive health promotion and measures in the field of ergonomics are becoming increasingly important. Our health measures are developed and implemented to meet the requirements of particular target groups. One area of focus is ergonomic agestable workplace design in production and logistics.

In this context, the creation of age-stable workplaces plays an important role in SMA's health management. With age-stable workplaces, we create working conditions that allow all generations to perform to their full potential without suffering chronic unfavorable stress or long-term or delayed effects. We have set ourselves the target of assessing 100% of the workplaces in the operating areas at the headquarters in Niestetal/Kassel, Germany, for age-stability and increasing the proportion of age-stable workplaces in these areas to 70% by 2025. In the reporting year, the focus was placed on evaluation at workplace level and new software was introduced. This change enables an optimized evaluation procedure. By the end of the year, 62.9% of workplaces had been evaluated (2022: 72.8%). The proportion of workplaces evaluated has fallen compared with the previous year because the number of workplaces to be evaluated was adjusted upward in some areas. Of the workplaces assessed, 76.3% are currently age-stable (2022: 73.9%).

Another focus of health management at the headquarters is mental stress. Various measures were introduced in this area in 2023. We have started to assess the risk of mental stress in the workplace and offered employees relaxation initiatives and a series of target-group-specific stress workshops. In addition, training courses for mental health first-aiders (MHFA) were launched and psychological consultation hours were expanded. The sickness rate – including long-term sickness – at our headquarters in Germany fell in 2023 to 6.4% (2022: 7.0%). In Poland, it rose to 4.3% (2022: 3.4%).

External occupational health physicians support us with occupational health and safety management and with ergonomic workplace design at the production sites. Their tasks include taking part in company inspections, participating in hazard assessments, particularly in the case of hazardous substances, and attending meetings of the Occupational Safety Committee in Germany. In addition, they carry out the mandatory and optional examinations as determined in the hazard assessment, as well as in-house medical consultations. The occupational health physicians are assigned to the Occupational Health & Safety department. This department coordinates appointments for examinations, which take place on the company premises so that they are close by for the employees. Information on the occupational health physicians, their tasks and contact options is provided to employees in the annual safety training and on the intranet.

Fair pay & benefits ¹

The attractive overall package that the SMA Group offers its employees includes market- and performance-oriented pay and extensive benefits. SMA Solar Technology AG and its subsidiaries are not subject to any collective bargaining agreements. Our goal is to use individual company regulations to create attractive employment conditions that are geared toward the needs of both the employees and the company. In Germany, this is done on the basis of employer/works council agreements, for example, which are always concluded in cooperative collaboration with the employee representatives.

In key operational change processes that affect the employees directly or indirectly, the employee representatives are involved in the context of co-determination and beyond. Changes are announced to and discussed with the employees before they are implemented.

FAIR PAY

It is important to us to acknowledge our employees' commitment and performance through appropriate remuneration in line with the market at a level that has been calculated for all group companies and is maintained. The standard market structure of our salary bands and remuneration development is ensured using data from renowned benchmark service providers such as Willis Towers Watson (WTW), Mercer or, for Germany, Lurse AG. Furthermore, the job level model that was introduced in Germany

¹ Unless otherwise stated, all information in the following section relates to employees excluding trainees, learners and auxiliary staff.

in 2016 and has since been rolled out at almost all SMA Group locations, along with the associated remuneration system, help create transparency and enable comparison of pay across all areas of the company. The job level is based on the requirements of each position. The classification of an employee in a job level can change accordingly if their tasks change. The remuneration system is organized and set up in a way that gives equal importance to the different career paths, such as professionals, project managers and executives. In addition to the basic remuneration, the system is supplemented with variable target-based remuneration components in the higher job levels.

Under the remuneration system, employees' individual remuneration is determined within defined regional salary ranges according to the same criteria. The remuneration ranges are regularly reviewed globally every two to three years and are adjusted if necessary. Remuneration is based on the middle of the market. The review is based on recognized benchmarks from specialist consultants. Accordingly, we ensure the payment of locally specified minimum wages at all times. Where no statutory minimum wage applies, we pay at least a living wage or fair remuneration based on benchmarks. Temporary employees at the SMA Group receive the same hourly wage as SMA Group employees performing similar duties. The salary bands within our job level model are applied accordingly.

The ratio of the annual total compensation of the highest-paid individual to the median annual total compensation of all employees of SMA Solar Technology AG (excluding the highest-paid individual) amounted to 1:28.5 in the reporting year; in relation to the median of all employees of the SMA Group (excluding the highest-paid individual), the ratio was 1:30.9.

SMA Group employees in management, project management or professional career paths, which are assigned to higher levels of the structure under the job level model, receive a variable remuneration component that is linked to short-term targets. In each case, half of this component is based on the SMA Group's EBIT and cash flow and the other half on individual targets. In Sales in particular, remuneration is also supplemented with variable targetbased components right from the middle levels of the structure.

The remuneration of all SMA Group employees, with the exception of senior executives and employees of the German subsidiary coneva GmbH, also includes a variable component based on the company's annual profit (EBIT margin). The EBIT margin to be achieved corresponds to the target value set for the Managing Board in the respective fiscal year. The general conditions for profit sharing are the same across all countries.

All temporary employees working at the company worldwide are also entitled to a share of the profit. Employees of the parent company SMA Solar Technology AG also receive a non-performancerelated annual Christmas bonus, which roughly corresponds to a monthly gross fixed salary. To promote the lower salary groups, a general employer/works council agreement was also concluded in 2023 stipulating that the gross Christmas bonus must be at least €3,500 if the individual monthly gross fixed salary is lower.

The maximum possible inflation adjustment bonus of €3,000 was also paid to all employees of the parent company SMA Solar Technology AG in February 2023. Part-time employees and employees on parental leave also received the full amount, as did temporary employees.

For us, it goes without saying that there are no systematic differences in remuneration for comparable roles, particularly between female and male employees. In previous years, we comprehensively analyzed structural salary differences between men and women (gender pay gap) in Germany. With regard to the headquarters in Niestetal/Kassel, Germany, the results show a structural disadvantage for female employees, which is due to the fact that women tend to be employed in lower job categories. In addition, an adjusted gender pay gap was identified in some group companies in the reporting year. Further information is provided in the "Diversity & equal opportunities" section.

BENEFITS

In addition to fixed and performance-related remuneration components, our remuneration system includes various additional monetary and non-monetary benefits. When it comes to company benefits, we do not in principle differentiate between full-time and part-time employees or between employees with fixed-term and with permanent contracts. However, specific conditions and requirements may mean that certain groups of employees are excluded for factual reasons or that special financial benefits are reduced depending on working hours. Because they are not directly employed by the SMA Group, temporary employees can only profit from company benefits that do not require a direct employment relationship. The benefits offered may differ worldwide and be based on the needs of the individual national companies and on local norms.

In Germany, the benefits are regulated in employer/works council agreements. They include additional benefits such as special leave, lifelong working-time accounts, public transport subsidies (Deutschlandticket; Germany ticket), sick pay allowance, company pensions, death benefits and anniversary bonuses. We offer medical care components and company pension models globally based on the market standards and statutory requirements. For employees in Germany who have been working at the company for at least six months, the company pays a contribution of €50 a month to the company pension plan. Employees also have the option under a defined contribution pension scheme of transferring part of their salary to a direct insurance policy or a provident fund. We pay a financial contribution to the amount paid into a direct insurance policy. For every euro of deferred remuneration paid into the pension plan, employees receive a subsidy of 15%. Through framework agreements with insurance companies, employees at the German location also receive discounted offers for occupational disability cover and supplementary medical insurance. For periods of long-term sickness, employees in Germany receive an allowance to make up the difference between statutory sickness benefit and their net basic salary, for a period of 26 weeks starting from six months of company service and for a period of 52 weeks starting from ten years of company service. In 2022, we introduced an employer-subsidized phased retirement program to make the transition to retirement easier for employees working in lower job levels at the production site in Germany whose work involves intense physical activity. This was extended to a larger group of people in the reporting year and was made permanent.

To support the organization of everyday life between family and work, we offer employees of SMA Solar Technology AG various other company benefits that go beyond the statutory minimum. These include family-oriented services as part of our family service; fast and unbureaucratic emergency childcare, childcare during school vacations; first aid courses specifically for parents; a digital tutoring platform for employees' children; and additional child sick days granted above and beyond the statutory minimum standard. The options offered for flexible work organization, such as flexitime, flexible or mobile working, depend on the operational circumstances and can be individually tailored to the workplace and its content in consultation with the responsible executives.

In a global benefits analysis, we recorded our employees' satisfaction with the respective national company benefits from 2018 to 2020. Based on the analysis, we were able to uncover shortterm needs for action and adjusted offered benefits accordingly. In addition, we derived long-term cornerstones for a global benefits strategy from the results. The benefits strategy is a tool for categorizing and prioritizing actual and potential company benefits. It is based on the employees' individual needs and life phases and embedded in the SMA Group's corporate and brand values. At the heart of the strategy are the needs of each individual employee. Based on this starting point, the benefits portfolio can be broken down into financial benefits, offers for promoting physical and mental health, support for a balanced lifestyle and possibilities of individual development paths. Existing benefits shall be adapted to the strategy and potential new benefits are evaluated and selected in line with the strategy. In this way, we want to ensure that employee needs permanently determine the focus of the company benefits. The benefits strategy was not rolled out further internationally in the reporting year due to the company-wide realignment of organizational structures. This is to be addressed again in 2024 in order to establish the described approach even more strongly within the SMA Group.

We do not currently offer participation in the company's capital (employee share ownership program). We have already started to consider concepts for a future global share ownership program. In the reporting year, the Managing Board decided not to pursue this any further for the time being.

Diversity & equal opportunities

→ Our objective: 26% women in the workforce as a whole

The SMA Group is committed to diversity and equal opportunities. We see the diversity of our employees as an asset to our company. In joining the "Diversity Charter" in 2011, we also undertook to create a work environment in which all employees have the same opportunities for development, regardless of gender, nationality, ethnic or social origin, creed or belief, disability, age, sexual orientation or identity.

We strive to integrate different cultures and strengthen collaboration between employees of different nationalities. The SMA Group employs people of 75 different nationalities in 20 countries. In addition to promoting international collaboration, the possibility of deployment to our international locations and intercultural training, in 2017, we started implementing a concept to integrate refugees into our vocational training program.

We truly believe that diversity enriches collaboration and plays an important role in the financial success of a company. As such, increasing the proportion of female employees within the workforce is a key element of our diversity strategy with a focus on gender diversity, which also includes all the company's executives. Among other things, the strategy aims to increase the proportion of female employees, excluding trainees and learners, within the SMA Group to 26% by 2025. We have set ourselves the target of further increasing the proportion of female employees to 30% by 2030. On December 31, 2023, 71.3% of employees of the SMA Group were male (December 31, 2022: 73.6%) and the proportion of women increased to 28.7% (December 31, 2022: 26.4%). This means that we again exceeded the target proportion of women set for 2025 in the reporting year. By setting and publishing our targets for the proportion of women in the workforce as a whole, we have been raising awareness on gender equality for recent years. In addition to the information campaign, keynote speeches and targeted and individual consultations also helped to raise awareness of the need for more (gender) diversity. The planned extension of our production site at the headquarters in Germany will result in a greater number of new recruitments in the production area. In this context too, we must continue to increase the proportion of women and always have our targets in mind.

To counteract structural differences between men and women, we have also set ourselves targets for the proportion of women in professional and executive positions. The aim is for women to account for 25% of professional roles and 19% of executive positions within the SMA Group by 2025, and 30% and 22% respectively by 2030. By focusing on the appointment of women to executive positions, we increased the proportion of women in these positions to 20.7% in the reporting year, meaning that the target for 2025 has already been achieved (2022: 18.0%).

We have postponed the finalization of a global Diversity & Inclusion strategy originally planned for the reporting year until next year. This allows us to incorporate the results of the materiality analysis performed in 2023 into our strategy development. The kick-off for the strategy development took place in the reporting year. Our next step is to derive areas of action based on the results of the materiality analysis, a detailed analysis of our corporate structures and previous diversity and inclusion measures, a benchmarking exercise and qualified interviews with a representative global group of participants. These form the basis for the Diversity & Inclusion objectives and the implementation and realization of measures effective over the long term.

In 2023, we continued to monitor and analyze possible salary differences between men and women within the SMA Group using the Diversity Reporter. We found a gender pay gap adjusted to job level at some levels. We have decided on various measures to avoid this in the future. This includes monitoring compliance with uniform and clear criteria for performance evaluation and awarding individual pay increases; raising awareness among

executives of possible biases; the targeted individual review of employees' salaries in the job levels where a pay gap has been identified for appropriateness and equal opportunities; as well as documenting the review and monitoring, supporting and validating the results of the pay adjustment process in the respective units by the Human Resources department. We have set ourselves the goal of verifying, validating and, where necessary, eliminating the adjusted gender pay gap by 2025.

In the reporting year, we achieved initial successes in eliminating the structural salary differences identified in 2022 (unadjusted gender pay gap) within SMA Solar Technology AG. The unadjusted gender pay gap was reduced to 9.3% in 2023 (2022: 12.1%). To continue this positive trend, we are striving to further increase the proportion of women, particularly at the higher structural levels, as described above.

We completed the global information campaign on gender diversity launched in the previous year in 2023 and informed all divisions about their individual status quo. Other measures in the reporting year include a women's empowerment learning trip; the ongoing advertising all job vacancies in the SMA Group as full-time and part-time positions and the further establishment and promotion of networks and dialogue formats to increase problem awareness and gender competence. In addition to the women's network Woman@SMA, this includes a self-organized queer network within the company that looks at issues pertaining to a queer-friendly work environment. As part of Pride Week, awareness-raising and information campaigns were held at the headquarters in Niestetal/Kassel, Germany, in collaboration with other regional companies. This included displaying flags on the parking garage and an open information event on the establishment of queer networks. The Diversity Tuesdays format was successfully continued. In this virtual event series, internal and external experts shared knowledge and ideas on aspects such as part-time management, people with disabilities in the world of work, neurodivergence and right-wing extremism. This format will be continued in 2024. Another focus topic was the prevention of discrimination. In this context, a training module on discrimination and sexual harassment was included into the mandatory Code of Conduct training for employees in the reporting year. To further strengthen the Diversity & Inclusion role and expand the initiatives, a supplement in the form of job sharing will be set up in 2024. This is to be launched as a pilot project and, if successful, will be further established in the organization to promote flexible working models.

Sustainability key figures of the SMA Group1

TARGET-RELATED KEY FIGURES

Target	Unit	2022	2023	Target value	Target year	Comments
Environment & energy
100% electricity from renewable energies1						The target value for 2025 was reached in 2023 with the inclusion
	%	97.5	100.0	100	2025	of green electricity certificates.
100% climate neutrality2	%	95.1	96.8	100	2025
50% less CO2e emissions in kg/kW of inverter output produced3	kg/kW	0.072	0.083	0.084	2025	The target value for 2025 has been achieved since 2020.
30% less product weight in kg/kW of inverter output produced	kg/kW	1.46	1.24	1.49	2025	The target value for 2025 has been achieved since 2020.
25% less waste per € million of sales4	t/€ million	1.94	1.15	1.63	2025	The target value for 2025 was reached in 2023.
Product stewardship
1.0% field failure rate	%	1.5	1.0	1.0	2025	The target value for 2025 was reached in 2023
Employees
100% coverage of SMA Group companies by a risk and monitoring system for labor standards	%	38.0	54.5	100	2025
Global lost time incident rate of ≤0.85	LTIR	0.96	1.67	≤0,8	2025
Review of 100% of workplaces in the operating areas at the headquarters for age-stability6	%	72.8	62.9	100	2025
70% age-stable workplaces in operating areas at the headquarters7	%	73.9	76.3	70	2025
26% women in the workforce as a whole	%	26.4	28.7	26	2025	The target value for 2025 was achieved in 2023.
25% women in professional positions	%	24.2	26.3	25	2025	The target value for 2025 was reached in 2023.
19% women in executive positions	%	18.0	20.7	19	2025	The target value for 2025 was reached in 2023.
Governance & ethical business
Sustainability performance assessment covering 100% of suppliers8	%	50.0	81.8	100	2025

¹ Applies to SMA locations covering 400m2 or more

² Market-based approach, after offsets; includes electricity and heating at locations covering 400m2 or more

³ Applies to CO2e emissions (Scope 1 and Scope 2) at the main site Niestetal/Kassel, Germany

⁴ Applies to operating divisions in Niestetal/Kassel, Germany

⁵ Applies to SMA locations covering 400m2 or more; average across all locations

⁶ The percentage in each case relates to the jobs that have to be assessed at the end of the respective fiscal year.

⁷ The percentage in each case relates to the jobs already assessed at the end of the respective fiscal year.

⁸ The percentage in each case relates to all A and B suppliers in place at the end of the respective fiscal year.

¹ For the scope of the sustainability key figures in the individual areas of action and aspects, please see the section "Reporting boundaries" at the beginning of the combined non-financial statement.

AREA OF ACTION: GOVERNANCE & ETHICAL BUSINESS

		2023	2022
Companies assessed for risks of corruption1	Number	22	20
Companies assessed for risks of corruption	%	100	95
Anti-corruption training	Employees2	3,021	1,638
Anti-corruption training	%	60.0	39.8
Confirmed cases of corruption		0	0

¹ Companies of the SMA Group with active business operations

2 Full-time and part-time employees including trainees and learners as well as temporary workers; the previous year's figures have been adjusted as the scope has also been extended to temporary employees.

AREA OF ACTION: PRODUCT STEWARDSHIP

		2023	2022
Research and development expenses	€ million	119.8	86.8
Research and development ratio in relation to sales	%	6.3	8.1

AREA OF ACTION: ENVIRONMENT & ENERGY1

		2023	2022
General key figures
Sales	€ million	1,904	1,066
Inverter output produced	MW	16,066	8,380
Total weight of inverters produced	t	19,863	11,706
Energy
Electric power	GWh	21.90	20.78
District heating1	GWh	3.57	3.64
Natural gas	GWh	3.04	4.13
Diesel fuel	GWh	2.59	3.11
Gasoline	GWh	2.36	2.89
Other fuels	GWh	0.02	0.03
Total energy consumption	GWh	33.48	34.59
of which energy from renewable sources	GWh	26.68	20.93
of which energy from non-renewable sources	GWh	6.81	13.66
Energy intensity (Niestetal/Kassel location)	kWh/kW	1.62	3.14
Energy intensity SMA Group	kWh/kW	2.08	4.13
Climate protection2 (greenhouse gas emissions in CO2e)
Scope 1	t	2,733.41	2,444.75
Scope 2	t	191.71	368.11
Scope 1 + Scope 2	t	2,925.12	2,812.86
Compensation	t	494.73	596.23
Greenhouse gas emissions Scope 1 + Scope 2 after
compensation	t	2,430.39	2,216.62
Specific greenhouse gas emissions Scope 1 + Scope 2	t/€ million	1.28	2.08
Greenhouse gas emissions Scope 33	t	1,087,972.67	618,070.35
Waste & recycling
Hazardous waste	t	333.06	344.93
of which recycled	t	311.97	323.23
of which not recycled	t	21.09	21.69
Non-hazardous waste	t	2,571.28	2,070.75
of which recycled	t	2,292.55	1,876.86
of which not recycled	t	278.72	193.89
Total waste	t	2,904.34	2,415.67

1 Includes 0.66 GWh of local heating generated from biogas in 2022 and 0.23 GWh in 2023

2 CO2e emissions according to market-based approach. Scope 2 emissions in accordance with the location-based approach amounted to 9,847.19 metric tons of CO2e (2022: 9,667.94 metric tons of CO2e).

³ The previous year's figure has been adjusted due to the increase in the level of detail of the analysis in the reporting year.

AREA OF ACTION:

EMPLOYEES

	2023	2022
Employees SMA Group1	4,377	3,635
female	1,256	979
male	3,121	2,656
Employees EMEA	3,897	3,218
Employees Americas	309	266
Employees APAC	171	151
Full-time employees	3,900	3,246
female	962	737
male	2,938	2,509
Part-time employees	477	389
female	294	243
male	183	146
Employees with permanent contracts	3,723	3,218
female	1,015	838
male	2,708	2,380
Employees with
fixed-term contracts	654	417
female	241	141
male	413	276
Trainees	79	66
Learners2	42	33
Temporary employees	658	479
Employee categories
SMA Group executives
female %	20.7	18.0
male %	79.3	82.0
General Managers/ Vice Presidents
female %	15.3	14.8
male %	84.7	85.2
Directors
female %	17.2	14.3
male %	82.8	85.7
Managing Board and Supervisory Board
Managing Board
female %	50	50
male %	50	50
Supervisory Board
female %	33.3	33.3
male %	66.7	66.7

	2023	2022
Occupational safety	2023	2022
Work-related accidents resulting in at least one day of absence	54	26
Work-related accidents with high potential for a serious outcome	19	11
Serious work-related accidents	0	0
Fatal work-related accidents	0	0

¹ Including trainees, learners and auxiliary staff; the previous year's figures have been adjusted as 2022 was presented without trainees, learners and auxiliary staff.

2 Learners = interns and employees working on a thesis; the previous year's figures have been adjusted as auxiliary staff were also included last year.

Key Performance Indicators EU Taxonomy

Sales

				Substantial contribution criteria					"Do no significant harm" (DNSH) criteria for further EU environmental objectives
SMA activity	Code1	Absolute sales	Propor tion of sales	Climate change mitigation	Transition to a circular economy	Climate change mitigation	Climate change adaptation	Sustainable use and protec tion of water and marine resources	Transition to a circular economy	Pollution prevention and control	Protection and restoration of biodiversity and ecosystems	Minimum safeguards	Taxonomy aligned proportion of sales 2022	Category enabling activity	Category transitional activity
		in €'000	in %	yes/no	yes/no		yes/no	yes/no	yes/no	yes/no	yes/no	yes/no	in %	E/-	T/-
A. Taxonomy-eligible activities
A.1 Environmentally sustainable activities (taxonomy-aligned)
3.1 Manufacture of renewable energy technologies	CCM 3.1	661,938	34.8%	yes	no		yes	yes	yes	yes	yes	yes	29.8%	E	-
7.6 Installation, mainte nance and repair of renewable energy technologies	CCM 7.6	79,116	4.2%	yes	no		yes	yes	yes	yes	yes	yes	12.5%	E	-
Turnover of environmen tally sustainable activi ties (taxonomy-compli ant) (A.1)		741,053	38.9%	38.9%	0.0%		yes	yes	yes	yes	yes	yes	42.3%
of which enabling		741,053	100.0%	100.0%	0.0%		yes	yes	yes	yes	yes	yes	100.0%	E	-
A.2 Taxonomy-eligible but not environ mentally sustaina ble activities (not taxonomy-aligned activities)