SUSTAINABILITY REPORT

2 O

2 2

03

sustainable development provides us with a direction and an opportunity for innovation and new operating methods.

s. 36 s.

Governance

s.4

Our sustainability goals	4
Introduction	5
Environmental responsibility	10
Social responsibility	36
Governance	66
Goals and measures	84
Taxonomy	88
GRI index	92
Sustainability reporting
at Ponsse	94

S sustainability and responsibility represent continuity at Ponsse. We are a company whose management and owner ship is based in our values, and we have a clear course for the future. We believe our continuously developing technology and new business models will enable sustainability principles to be realised in forestry.

Our R&D activities seek climate- and nature-friendly solutions, and we aim to become carbon-neutral in our operations. Productive harvesting that respects the environ ment supports the regeneration of commercial forests and enables the use of valuable raw materials in long-lasting and high-quality wood-based products.

In 2022, we launched new technology with the introduc tion of our PONSSE EV1 forwarder concept. Its fully electric platform is an important step on our path towards zeroemission harvesting.

We could not take a single step on this path without our people. The sense of community that is part of our corporate culture has carried Ponsse throughout its history. The will to do things together is our greatest strength that allows us to bravely face the changes and opportunities ahead of us. The inclusion of responsibility as part of our daily work and decision-making has been surprisingly fast. That proves how genuinely important it is to our people, which reflects the company's values of a customer-oriented approach, honesty, innovativeness and the Ponsse spirit.

We want to stay humble as we continue developing as well as fulfil the company's founder Einari Vidgrén's wish that our people would be happy working at Ponsse, both now and in the future.

j u h o n u m m e l a , President and CEO k a t j a p a a n a n e n , Chief Responsibility Officer

PEOPLE –

We improve the wellbeing of our people

Ponsse is a good and safe place to work for us. We work productively following the excellent Ponsse spirit, appreciate one another and take care of each other, our customers and our whole network.

SOLUTIONS

– We innovate sustainable solutions that respect nature

Our product and service solutions play an important role in enabling the implementation of the principles of sustainable forestry. We bear responsibility for the machine lifecycle and extend it through good maintenance services. Sustainable and responsible development offers us a direction and opportunities.

ACTIVITIES

– We do not burden nature through our

operations

We understand the impact of our operations on the environment and human rights. In our operations, we seek carbon neutrality and material efficiency.

COMMUNITY –

We are a reliable partner who values community

Acting honestly and ethically as a community is at the core of Ponsse. Good corporate governance and our Code of Conduct define how we treat people equally, conduct sustainable business and engage in confidential cooperation with our partners.

Our strategic sustainability goals

6 7

Ponsse Group's business

Ponsse Plc develops and produces sustainable and innovative harvesting solutions based on customer needs. With the experience gained from manufacturing more than 19,000 forest machines, the company is one of the world's leading manufacturers of forest machines based on the cut-to-length harvesting method.

Ponsse on Ponsse has always been a family-owned company, and its management has emphasised values and long-term business. The Ponsse company was established by the forest machine entrepreneur Einari Vidgrén in 1970. The company's roots are deep in the Finnish countryside and Finnish work, but it also feels quite at home on the international market. Today, PONSSE machines are used at logging sites in more than 40 countries. All the machines are manufactured at the company's birthplace in Vieremä, Finland, where the company is also domiciled. The public limited company's shares are quoted on the NASDAQ OMX Nordic List. Ireland Ltd. in Ireland, Ponsse China Ltd. in China, Ponsse North America Inc. in the United States, Ponsse Latin America Ltda in Brazil, Ponsse Uruguay S.A. in Uruguay, Ponsse Chile SpA in Chile and Epec Oy in Finland. Ponsse Group's subsidiaries are responsible for the international sales and after sales services of PONSSE forest machines together with 30 PONSSE dealers. The Finnish technology company Epec Oy is a system supplier specializing in advanced electrics and electronics for non-road mobile machines and commercial vehicles. All PONSSE forest machines are manufactured from key

Ponsse Group consists of the parent company Ponsse Plc and its directly owned subsidiaries Ponsse AB in Sweden, Ponsse AS in Norway, Ponssé S.A.S. in France, Ponsse Czech s.r.o. in the Czech Republic, Ponsse UK Ltd. in the United Kingdom, Ponsse Machines components to assembly at our Vieremä factory in Finland where the company's head office is also located. Exports account for 79 per cent of our net sales, and our international service business network consists of 235 service centres.

Exports account for 79 per cent of our net sales.

8 9

F I R S T T I M E

We trained 200 Ponsse Training Path students by the end of 2022.

The share of carbon neutral (Scope 2) energy in our electricity and heating.

Launch of the PONSSE EV1 electric platform forwarder concept.

Launch of the Lidar concept. Lidar measures and verifies thinning intensity, the remaining stem number and harvesting impacts, such as the width and interval of forest machine trails.

Our factory's carbon footprint was reduced by 90 per cent.

In 2022, we set our first climate goals in accordance with our roadmap.

Management quality on a scale from 1 to 4.

of our subcontracted purchases are made within a 25-kilometre radius of our factory in Northern Savonia.

In the Reputation&Trust survey, private investors evaluated Ponsse as the most reputable company in Finland in terms of responsibility.

A total of 150,000 kg of spare parts were refurbished or reused.

The highlights from our sustainability journey in 2022 The highlights from our sustainability journey in 2022

2 0

89.3 % 3.28 38% LAUNCHES

0 62%

90%

Compared to 2019, we reduced our carbon footprint in the Nordics by 62 per cent.

Our carbon footprint was 38 per cent lower than in the first calculation in 2019.

150,000 kg

We do not burden nature through our operations

Our product and service solutions enable sustainable forestry

OUR PRINCIPLE

We bear responsibility for the machine lifecycle and extend it through excellent maintenance services. We develop solutions that promote the circular economy and reduce the environmental impact of machines.

We know the environmental impact of our operations and work systematically to improve it. We seek carbon neutrality and material efficiency in our products and operations.

We innovate sustainable solutions that respect nature

01 A carbon neutral factory by 2025 (Scope 1 & 2)

Towards carbon neutrality

During 2022, we investigated opportunities and measures to reduce emissions, based on which we prepared our carbon neutrality roadmap. Our emissions reduction goals cover Scope 1 and 2 emissions (our operations and purchased energy).

energy, we mean energy generated using renewable energy sources and nuclear power.

In 2022, the coverage of carbon neutral (Scope 2) energy from electricity and heat increased to 89.3%, up by 1.8% from the previous year. Compared to 2019, we have increased the share of carbon neutral (Scope 2) energy from our total consumption of energy by more than 13%.

By carbon neutral factory, we mean our production operations. We do not include test drive operations and the use of our vehicles in our production operations. In addition to the manufacturing of forest machines, Ponsse has production operations at Epec Oy in Seinäjoki, Finland. Epec is a system supplier specializing in advanced electrics and electronics for non-road mobile machines and commercial vehicles.

In 2022, the carbon footprint of Ponsse Group's factories was 259 t CO2-eq, representing a decrease of 4% compared to the previous year. We have reduced the

Carbon neutral (Scope 2) energy, %

Factory's carbon footprint, t CO2-eq.

carbon footprint of our factories by 90% compared to 2019 by purchasing electricity produced with guarantee-of-origin renewable energy, using district heating mainly produced with renewable energy sources and by transitioning to the use of renewable diesel (HVO).

Environmental responsibility

E N V I R O N M E N TA L R E S P O N S I B I L I T Y I N P R A C T I C E

03 Carbon neutrality in the Nordic countries by 2035 (Scope 1 & 2)

In addition to production operations, this goal covers main tenance services in the Nordic countries. Besides Finland, Ponsse operates in the Nordic countries through its subsidiaries in Sweden and Norway.

In 2022, our carbon footprint in the Nordic countries decreased by 7% to 1,931 t CO2-eq. Compared to 2019, we have reduced our carbon footprint in the Nordic countries by 62% by shifting to the use of energy generated using renew able and carbon neutral (Scope 2) energy sources.

The carbon footprint will be compared to emission levels in 2022. In practise, this translates to emissions reductions of roughly

5% per year.

In 2022, Ponsse's carbon footprint in the Nordic countries decreased by 1% to 4,310 t CO2-eq. Compared to our initial carbon footprint calculated in 2019, our carbon foot print is now 38% smaller.

5% Our annual emissions

reduction goal

Ponsse's carbon footprint, t CO ²-eq.

We have used 2019 as the baseline for our emissions calculations, as the company started to calculate the Ponsse Group's emissions during that year. In 2022, we recalculated our emissions in 2019 to correspond to our continuing opera tions, as the company's operations were suspend ed at the beginning of March 2022 due to Russia's invasion of Ukraine. Other changes in 2022 that affect the calculation of our emissions included the establishment of subsidiaries in the Czech Republic and Chile.

As a result of the recalculation, Ponsse's carbon footprint in 2019, the baseline for the calculation of emissions, was 6,951 t CO2-eq., of which Scope 1 emissions accounted for 3,277 t CO2-eq. (47%) and Scope 2 emissions for 3,674 t CO2-eq. (53%). Emission intensity was 12,4 t CO2-eq. per EUR million. In addition to the carbon footprint, the biogenic emissions of our operations and purchased energy were 3,185 t CO2-eq.

In 2022, our Scope 1 and 2 (our operations and purchased energy) carbon footprint was 4,310 t CO2-eq. Compared to the previous year, our carbon footprint decreased by one percent (55 t CO2-eq.) mainly in Scope 2 emissions, in which the consumption of district heating decreased significantly and a larger share of district heating was generated using renewable fuels. In addition, Scope 1 emissions decreased after the reduced fuel consumption in our operations in South America. However, the total impact was low, as emissions increased in our other operations and the calculation included two new subsidiaries: Ponsse Chile and Ponsse Czech. Our carbon foot print in 2022 was 38% smaller than in 2019.

Scope 1 emissions accounted for 85% (3,681 t CO2-eq.) and Scope 2 emissions for 15% (629 t CO2-eq.) of our carbon footprint. Emission in tensity, i.e. the carbon footprint relative to net sa les, was 5.7 t CO2-eq. per EUR million. Regardless of the increase in business operations, we were able to reduce our carbon footprint relative to our net sales, and our emission intensity decrea sed by 20%. Biogenic emissions, i.e. the volume of carbon dioxide emissions from the combus tion of organic material, were 2,468 t CO2-eq.

E N V I R O N M E N TA L R E S P O N S I B I L I T Y I N P R A C T I C E

The calculation of our emissions is based on the Corporate Standard of the international Greenhouse Gas (GHG) Protocol. key figures are based on the information presented in the most recent confirmed financial statements. The Our calculation is based on the operational control method, and Scope 2 emissions have only been calculated using the market -based method. The calculation of our emissions covers six greenhouse gases: CO 2 , CH 4 , N 2 O, HFC, PFC, and SF 6 . In our calculation, we use the 100 -year global warming potential values (GWPs) set for greenhouse gases in the Fourth Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Other significant climate emissions generated in our operations include volatile organic compounds (VOC) that are released from our paint shop. The VOC volumes contained by chemicals originate from chemical suppliers.

Scope 1

Scope 2 (marked-based)

Total carbon footprint

Carbon footprint relative to net sales

Total biogenic emissions

Volatile organic compounds (VOC)

Carbon footprint, t CO ²-eq.

2022	Change, %	2021	2020
3681.0	+1%	3653.4	2688.9
628.9	–12%	711.3	881.7
4309.9	–1%	4364.8	3570.6

2022	Change, %	2021	2020
5.7	–21%	7.2	6.4

2022	Change, %	2021	2020
2468.5	-11%	2775.8	2389.1

2022	Change, %	2021	2020
9.9	–35%	15.3	13.0

Emission intensity, t CO ²-eq./M€

Biogenic emissions, t CO ²-eq.

Other emissions into the air, t

Emissions into the air

Epec Oy is already close to carbon neutrality regarding Scope 1 and 2 emissions.

We aim to include Scope 3 emissions in our cal culations at the beginning of 2024. During 2022, we identified the company's most significant Scope 3 emission categories and will define a data collection and reporting policy for the calculation in 2023.

Of Ponsse's carbon footprint (Scope 1 and 2), the use of the company's vehicles accounts for 60%, the test drive process for manufactured forest machines and the use of work machines for 14% and heating for 11%. Geographically, the most significant part of our carbon footprint comes from Northern Europe (45%) and North America (25%).

Climate acts by Ponsse's subsidiaries

Of Ponsse's subsidiaries, Epec Oy is already close to carbon neutrality regarding Scope 1 and 2 emissions. In 2022, the company only generated 51 t CO2-eq. of emissions, down by 84% from the baseline year of 2019. A refrigerant leak increased the carbon footprint from the previous year. The new factory to be completed in Seinäjoki, Finland in autumn 2023 will be completely carbon neutral.

Ponsse AB, our subsidiary in Sweden, defined a new car policy in 2022, according to which the company will only acquire electric or hybrid pas

senger cars in the future. The policy aims to pro mote carbon neutrality in the Nordic countries.

CDP climate reporting

In 2022, we participated in CDP climate reporting. Our score was C, which on the reporting scale stands for awareness of our climate impact and the impact of the climate on our operations. The score matches the industry average, while being lower than Europe's regional average (B). Even though our score was better than in the previous year (2021: D), we still have room for improvement in calculating the emissions of our value chain, among others.

Environmental responsibility

E N V I R O N M E N TA L R E S P O N S I B I L I T Y I N P R A C T I C E

Energy consumption

In 2022, our total energy consumption (includ ing fuel) was 39.0 GWh, of which 56.5% came from renewable energy sources. Compared to the previous year, our consumption increased by two percent. Also the share of renewable ener gy increased by two percent. We consumed 12.9 GWh of electricity (accounting for 33% of our total energy consumption), of which 95% came from renewable energy sources. The electricity consumed in our locations in Finland was 100% guarantee-of-origin hydropower. Our solar panels at our factory in Vieremä and at our subsidiary in Uruguay generated 141.4 MWh of electricity, the majority of which was consumed, while a total of 383.5 kWh was sold.

Of our energy consumption, district heating accounted for 18% (7.2 GWh), of which 89% was generated using renewable energy sources. In addition, 1.6 GWh of heat were generated using oil, natural gas and woodchips. Carbon neutral (Scope 2) energy, i.e. energy generated using

Fuel consumption

20 21 *The change rate has been calculated from unrounded figures.

Fuel consumption accounted for the majority of our energy consumption – 49%, meaning 18.9 GWh. Only 19% (3.5 GWh) of the fuel vol ume came from renewable sources, including the biofractions contained by fuel mixtures. Fuel was consumed by vehicles, the test drive of manufactured machines, surface treatment, and work machines, as well as the generation of heat as mentioned above. We consumed 1.6 GWh of wholly renewable fuels, of which hydrotreat ed vegetable oil (HVO) diesel was used in work machines, as the first tank of fuel in manufac tured forest machines, and in test drive opera tions. Our Brazilian subsidiary consumed ethanol in vehicles. Woodchips were used by the Czech subsidiary to heat its maintenance facility and renewable heating oil was used in Norway.

	fuels:		Energy consumption GWh	2022	Change, %	2021	2020
			Fossil fuels	17.3	+7%	16.2	12.4	Environmental responsibility
			Petrol	2.4	–6%	2.5	1.4
			Diesel	10.9	+15%	9.5	8.4
			Natural gas	1.0	+6% *	1.0	1.1
			Liquefied petroleum gas	1.0	–1% *	1.0	0.8
	Energy consumption	renewable energy sources or nuclear power,	Fuel oil	2.1	–3%	2.2	0.8
	In 2022, our total energy consumption (includ -	accounted for 89.3% of all electricity and heat	Renewable fuels	1.6	+13%	1.4	1.1
	ing fuel) was 39.0 GWh, of which 56.5% came	consumed by the group.	Ethanol	0.1	–51%	0.3	0.0
	from renewable energy sources. Compared to		Wood chips	0.4	new	–	–
	the previous year, our consumption increased by two percent. Also the share of renewable ener -	Fuel consumption Fuel consumption accounted for the majority	Renewable diesel (HVO)	1.0	–3%	1.1	1.0
01	gy increased by two percent. We consumed 12.9	of our energy consumption – 49%, meaning	Renewable fuel oil	0.1	–0%	0.1	0.1	01
	GWh of electricity (accounting for 33% of our	18.9 GWh. Only 19% (3.5 GWh) of the fuel vol -	Total energy from fuels	18.9	+8 %	17.5	13.5
	total energy consumption), of which 95% came	ume came from renewable sources, including
	from renewable energy sources. The electricity	the biofractions contained by fuel mixtures.	Purchased electricity	12.7	+5%	12.1	11.0
	consumed in our locations in Finland was 100%	Fuel was consumed by vehicles, the test drive	Self-generated electricity	0.1	–16%	0.2	0.2
	guarantee-of-origin hydropower. Our solar panels	of manufactured machines, surface treatment,	Purchased district heating	7.2	–14%	8.3	6.8
	at our factory in Vieremä and at our subsidiary in	and work machines, as well as the generation of	Total electricity and heat	20.1	–3%	20.6	18.0
	Uruguay generated 141.4 MWh of electricity, the	heat as mentioned above. We consumed 1.6 GWh	Total energy consumption	39.0	+2%	38.1	31.5

1.6 GWh Wholly renewable

fuels:

Energy information has been calculated based on reported consumption. For certain leased facilities, we have calculated energy consumption based on the surface area, as more detailed information has been unavailable. We have used Statistics Finland's conversion factors in the calculation of energy figures. We do not consume any district cooling or steam in our operations. We did not sell any energy other than electricity. The figures include only continuing operations.

Total energy consumption relative to net sales	51.6	–18%	62.8	56.2
Share of carbon neutral (Scope 2) energy, %
Carbon neutral (Scope 2) electricity and heat	89.3	+ 1,8%	87.5	83.1

Energy savings

Measures to save energy were carried out especially in our operations in Finland. Several locations switched to LEDs, and a timer was installed for outdoor lighting at the Vieremä factory. In addition, ventilation machines' adjustments were checked in all Ponsse lo cations in Finland. The measures carried out resulted in annual energy savings of 412 MWh, of which 243 MWh came from district heating and 169 MWh from electricity. An energy audit of savings potentials and emissions reductions was conducted for surface treatment in production. We also participated in Motiva's energy saving week, during which we aimed to increase our employees' energy awareness. We collected energy saving tips and observations of any waste of energy from our employees. In addition, we participated in the Down a Degree campaign, which aims to encourage Finnish people to take

	288 Mixed waste	92 Other	For energy-use For landfill sites		341.9 221.5	savings potentials and emissions reductions was conducted for surface treatment in production.	first time throughout Ponsse Group. Our opera - tions generated 3,907 tonnes of waste, of which
		(biowaste, plastic, glass)	Total waste volume		3,907.0	We also participated in Motiva's energy saving week, during which we aimed to increase	hazardous waste accounted for 44%, wood for 19%, and metal waste for 18%. Hazardous waste
01	704	1,699 Hazardous	Waste recycling and reuse, %		2022	our employees' energy awareness. We collected energy saving tips and observations of any waste	includes lubricants and coolants used in main - tenance operations, oil filters and lead batteries, of which 13% are disposed of and 87% are reused,	01
	Metal	waste	Waste recycling rate		54.8%	of energy from our employees. In addition, we participated in the Down a Degree campaign,	recycled or used as energy. Of the waste volume,
	751 Wood		incineration)	Waste utilization rate (recycling and	92.3%	which aims to encourage Finnish people to take concrete action to save energy.	8% was disposed of at landfill sites, 37% was burned into energy, and the remaining 55% was
				Waste information collected at a group level for the first time. Previously, the information was only collected regarding Finland.		Water consumption	recycled. A significant part of all waste, more than 80%,
						During the year, our total water consumption was 29,680 m³, down by seven % from the	came from our operations in Finland: 35% from our factory in Vieremä, 27% from maintenance
	Water					previous year. More than half of this volume	services in Finland, and 19% from our subsidiary
	Water consumption, 1,000 m³		2022 Change, %	2021	2020	was consumed in our production. Water is only consumed in production to wash components in	Epec.
	Water consumption	Water consumption information collected at a group level for the first time in 2021.	29.7 –7%	31.8	-

concrete action to save energy.

Water consumption

Waste

surface treatment and machines after test drive operations, which also prevents the spread of invasive non-native species through our export ed machines. In surface treatment, we minimise water consumption by reusing water several times. In 2022, water consumption in our produc tion increased by 6% from the previous year to 15,906 m³ (2021: 14,946 m³).

Waste recycling

Waste, t	2022
Non-hazardous waste	2,208.3
For recycling	1,005.1
For energy-use	1,125.3
For landfill sites	77.9
Hazardous waste	1,698.7
For recycling	1,135.3
For energy-use	341.9
For landfill sites	221.5
Total waste volume	3,907.0

Waste recycling and reuse, %	2022
Waste recycling rate	54.8%
Waste utilization rate (recycling and incineration)	92.3%

We collected information about waste for the first time throughout Ponsse Group. Our opera tions generated 3,907 tonnes of waste, of which hazardous waste accounted for 44%, wood for 19%, and metal waste for 18%. Hazardous waste includes lubricants and coolants used in main tenance operations, oil filters and lead batteries, of which 13% are disposed of and 87% are reused, recycled or used as energy. Of the waste volume, 8% was disposed of at landfill sites, 37% was burned into energy, and the remaining 55% was recycled.

Waste by fraction, t

Environmental responsibility

Environmental impact of procurement and logistics

Key goals of procurement include the efficient circulation of stocks and the optimal availability of materials. This helps us keep our stock levels and needs for facilities and resources moderate and avoid material waste. The most significant environmental impact of our procurement and logistics is associated with steel manufacturing for PONSSE forest machines and the transport of components. Steel and castings combined make up a significant part (82%) of the weight of forest machines. We calculate and dimension machine structures in our research and development operations by optimising the use of steel and castings based on 01 product loads. Forest machines have a recycling rate of 97%.

Risk management

We have kept our environmental impact and other procurement risks under management by centralising our procurement in Europe and especially in Finland. Of Ponsse's material suppliers and subcontractors, 74% are located in Finland (2021: 73%) and 23% in other EU states (2021: 22%). Ponsse exercises no significant direct sourcing from low-cost countries. In addition to Finland, the most technologically challenging and expensive components for PONSSE forest machines are sourced from Germany and Sweden.

Environmental impact of transport

A total of 47% of our subcontracted purchases (EUR) and 21% of all our procurement (subcont racting and purchased components) take place within a 25-kilometre radius from our produc tion. Our subcontractors are mainly based in the partnership business park located in the immediate vicinity of our factory in Vieremä. This significantly reduces transport emissions and enables joint transport operations between our production and our subcontractors.

We seek to control the environmental impact of transport by improving the efficiency of transport operations and developing packaging solutions. As many as 90% of our transport partners report their carbon footprint to us, allowing us to prepare for expanding our emis sions reporting to Scope 3 emissions.

Recycling of packaging material

We recycle packaging material between our material suppliers in Finland and Ponsse. Packa ging design, recycled packaging and transporta tion stands designed for PONSSE components have reduced not only the use of packaging material, but also damage to parts. Furthermore, they have improved the transport efficiency rate. To enhance return logistics, recycled packaging for large products can be folded.

We mainly use standard reusable pallets in our deliveries and transfer disposable pallets for chipping and further for the generation of district heating in Vieremä. Otherwise, we see to our producer liability by delivering our production packaging to a recycling partner, which forwards the material for recycling or use as energy.

97%

Recycling rate of PONSSE

forest machines A total of 47% of our subcontracted purchases (EUR) and 21% of all our procurement take place within a 25-kilometre radius from our production.

Environmental impact of production

01 01 Energy consumption The majority of the energy consumed in our factory is renewable. The electricity we purchased during 2022 was renewable 100% guarantee-oforigin hydropower. In addition, we generated 123 MWh of electricity using solar panels. The factory is heated through district heating, of which 99.9% was renewable in 2022, mainly generated using wood fuels. The factory's production machinery is also operated using renewable energy, either elec tricity or renewable diesel. The only fossil source of energy used in production is the liquefied petroleum gas (LPG) used at the paint shop. A total of 93% of the energy consumed at our factory has been generated using renewable sources. We will modernise our building systems in conjunction with production technology and property investments to enable energy efficiency and a proactive approach to maintenance needs. In 2022, we achieved 27 MWh annual savings in electricity when our buildings in Vieremä switched to more energy-efficient LEDs, and a time-control system was installed for outdoor lighting. By checking the adjustments of ventila tion machines, we achieved annual savings of 166 MWh in district heating and 89 MWh in electric ity. Combined, we achieved energy savings of 282 MWh at the factory. We also conducted an energy audit of energy savings potentials and emissions reductions in surface treatment. The investiga tion focused on replacing the LPG used at the paint shop by a renewable fuel and improving the recovery of heat.

We manufacture all PONSSE forest machines in Vieremä. The environmental impact of our production comes from energy and raw material consumption, the use of chemicals, and solvent emissions from surface treatment. Our operations have an environmental permit and a licence granted by the Finnish Safety and Chemicals Agency (Tukes) for the storage and handling of chemicals.

Calculation of Scope 3 emissions

In 2022, we investigated the company's most significant Scope 3 emission categories. We are preparing to calculate our Scope 3 emissions in 2023 by defining a data collection and reporting policy for the calculation. We will calculate our Scope 3 emissions for the first time at the beginning of 2024 using information regarding 2023.

REACH and conflict minerals regulations

During 2022, we collected information about our supplier network in accordance with the obligations set out in the registration, evaluation, authorisation and restriction of chemicals (REACH) and conflict minerals regulations. At the same time, we disseminated information about legal obligations to our supplier network, including the reporting of substances of very high concern (SVHC) to the European Chemicals Agency's (ECHA) SCIP database. The responses received cover 70% of our suppliers.

Regulation (EU) 2017/821 of the European Parliament and of the Council laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflictaffected and high-risk areas (conflict minerals regulation) and the Finnish act on conflict minerals (Government Proposal 203/2020) based on the EU regulation promote the responsible procurement of minerals and metals. The aim is to prevent the funding of armed groups through trade in minerals originating from conflict areas and violations of human rights related to the minerals industry.

The REACH regulation guides the registration, evaluation, authorisation and restriction of chemicals hazardous to health or the environment. The aim is to replace SVHCs with safer options.

Waste recycling

We aim to minimise the generation of waste, mixed waste in particular. We sort all waste generated so that it can be optimally reused, recycled as material, or used as energy. Currently, we can recycle all cardboard, paper, plastic and metal waste generated in our production.

Fuel emissions

When a new forest machine is completed on the production line, we fill it with light fuel oil or diesel according to the requirements of the customer and the country of destination. In 2022, renewable diesel accounted for 24% of all fuel used as the first tank of fuel, up by 3% from the previous year. From the beginning of 2020, we have only used diesel made from renewable raw materials in our production which has reduced the fossil emissions of our production by 20%. The emissions generated by the first tank of fuel are included in Ponsse's own emissions (Scope 1), as 75% of fuel is consumed during machine testing and delivery. If renewable diesel is used in a machine throughout its lifecycle, the machine's fossil carbon footprint will decrease by more than 90% according to a life cycle assessment (LCA). In 2022, a bio-based hydraulic oil was selected as the first tank of oil in 18.3% (16%) of our new machine deliveries.

Emissions from test drive operations

Post-production machine testing produces emissions during transport and test drive operations through fuel consumption. We use our own transport equipment to transport PONSSE forest machines completed in produc tion for test drive operations, to our customers in Finland and to Iisalmi railway station for further exportation. A total of 79% of all machines pro duced is exported, and all export machines are transported to the port energy-efficiently and with low emissions by rail.

Part of the test drive process for completed machines takes place in groundwater areas. In 2022, we participated in the revision of the groundwater area protection plan of Ylä-Savon Vesi. At the same time, we reviewed our management of risks associated with the environmental impact of test drive operations.

We carry out test drive operations as assigned by each forest company and comply with their harvesting instructions and Forest Stewardship Council (FSC)'s certification criteria in harvest ing operations. The FSC criteria also require environmental impact and values, including biodiversity, to be addressed in the processing of commercial forests.

We do not store any fuels in groundwater areas and always carry comprehensive oil leak response equipment with us during test drive operations. Test drive operations are preceded by production testing to ensure the functio ning of the machine and the integrity of hose connections, among others. To reduce the carbon footprint, we replaced the diesel used in tested machines with renewable diesel, while fuel oil is still used as the first tank of fuel in certain machines based on customer requests.

Exported machines are delivered to the port with low emissions by rail.

We have identified the environmental im pact generated during the lifecycle of Ponsse's products and services using LCAs in accordance with the ISO 14040 standard. During the assess ments, we have investigated the environmental impact arising from the manufacturing and transport of machines, their use in different con ditions, and machine maintenance. The majority of lifecycle emissions contributing to global warming, roughly 95%, comes from the con sumption of fuel in machines and the production of fuel. The highest transport emissions are

Machine maintenance

During maintenance, the most significant environmental factors are the oils, tyres and spare parts used in machines. Ponsse's authorised maintenance service network takes care of the appropriate handling of waste. The focus in our maintenance services is on preventive maintenance to avoid any unexpect ed breakage and carry out maintenance safely for the environment and mechanics. Regular machine maintenance and inspection included in maintenance agreements ensure that machines operate optimally and as planned without any breakage. This also eliminates any unneces sary consumption of material and extends the machine lifecycle. In 2022, the coverage of maintenance agreements was 36% in our new machine sales.

01 Lifecycle emissions We are committed to developing sustainable and innovative harvesting solutions. According to our stakeholders' expectations, environmental aspects have become significant guiding factors in R&D. The sustainability of our customers' operations is also affected by our investments in minimising fuel consumption, fuel, and tree and soil damage, as well as in the continuous development of our maintenance service processes.

associated with machine deliveries from the Vieremä factory to customers and the transport of machines between stands.

R&D focuses continuously on reducing the consumption of fuel and oil during machine operations. Fuel efficiency, meaning the con sumption of fuel relative to the volume of wood harvested, is a key cost factor in harvesting, which is why our development is guided by both financial and environmental factors. Our R&D allows PONSSE forest machines to be compatible with renewable fuels and hydraulic oils.

Environmental impact of products and services

Ponsse's authorised maintenance service network takes care of the appropriate handling of waste.

Cut-to-length harvesting

01 01 PONSSE forest machines are based on cut-to-length (CTL) harvesting. Machines have been developed to utilise the highly valuable wood raw material and cause the least damage to the soil. Nordic expertise and methods related to the sustainable use of forests offer a solution to minimise global forest loss, while renewable wood is required as a raw material to replace plastic and concrete. Regeneration methods and obligations in commercial forests, harvesting technologies and forest management methods play an important role when forest resources are required for carbon sequestration and as raw materials, not forgetting biodiversity in forests.

The advanced computing capacity of CTL forest machines allows the best possible value to be extracted from forests. This means more than financial gain. By optimising the yield

Ponsse's machines have been developed to minimise machine trails at logging sites.

and processing value of the raw material, the maximum amount of sawn timber with a long-term carbon sequestration capacity can be produced.

CTL machines support all harvesting methods from first thinning to continuous cover forestry and regeneration felling. For all harvesting methods, we make sure that the forest can regenerate quickly and reliably – as only the healthy growth of the next tree generation enables the continuation of the forest cycle and the regeneration of the raw material. To enable different harvesting methods, our machines must be balanced and strong, allowing for the long crane reach required at thinning sites.

The aim of CTL harvesting is to minimise ma chine trails. Eight-wheeled PONSSE forest ma chines have a balanced weight distribution, and correctly selected tracks can have a significant impact on machine trails. Forwarders have the greatest impact on trails because they drive over the same path multiple times. CTL harvesters typically leave branches and crowns on the trail to protect the soil from forwarders. Large load spaces also mitigate machine trails because capacious machines need to make fewer runs.

Y O U R P

N E R I N S U S T A I N A

R E S T R Y

Environmental responsibility

E N V I R O N M E N TA L R E S P O N S I B I L I T Y I N P R A C T I C E

network with refurbished and reused spare parts. They support Ponsse's goals of developing material efficiency and becoming carbon neutral.

Recycled parts are an environmentally friendly option for forest machine maintenance, as we can effectively allocate resources tied to damaged spare parts to remanufacturing and reuse. In previous LCAs, the carbon footprint of a single remanufactured part was found to be a quarter smaller than that of a new part. Ponsse's circular economy model has been developed based on the company's needs to promote the conversion of material flows into usable format and reduce the consumption of raw materials.

Pioneering the circular economy: Reman & Parts Recirculation

Ponsse's circular economy competence is particularly strong in the spare parts and used machine business. We sell and refurbish used machines in all our market areas and also spare parts in an increasing number of market areas. Used ma chines refurbished by professional mechanics can be updated using various per formance packages to meet modern standards.

During 2022, a total of 150,000 kg of spare parts were refurbished or delivered for reuse.

01 01 In addition to new parts, Ponsse provides its In 2022, Ponsse expanded its refurbishing operations to local subsidiaries. As a result, services are provided closer to customers, with out needing to transport damaged parts over long distances for remanufacturing. Greenhouse gas emissions can also be reduced by minimising the amount of transported cargo. To support local refurbishing operations, Ponsse has developed refurbishing kits for various parts, consisting of the most typical components replaced during refurbishing.

Ponsse has remanufactured spare parts for forest machines at the Reconditioning and assembly centre in Iisalmi since 2010. The focus is on the refurbishing of mechanical transmis sion parts, but the Reman range also includes hydraulic parts and forest machine information systems. The Spare parts reuse centre, established in 2020, is located in the immediate vicinity of the Reconditioning and assembly centre. It receives damaged parts from customers, the factory and the sales network, and assesses their reuse poten tial following the principles of the circular econ omy. Both units work in close cooperation with

Ponsse's used machine services, in which used forest machines are maintained and updated to extend their lifecycle under the ownership of 2–4 new owners. When a machine finally reaches the end of its service life, it can be dismantled. Usable parts will be refurbished to make low-cost spare parts, while any unusable parts will be recycled as material. More than 90% of a forest machine's weight constitutes recyclable material, mainly steel and cast iron.

In 2022, Ponsse expanded its refurbishing operations to local subsidiaries.

02 Social responsibility 02

We improve the wellbeing of our people

Ponsse is an equal and non-discriminating working community, in which everyone can work safely.

We appreciate one another and take good care of each other, and our customers and network. Our machines are safe and ergonomic for their users.

We improve the wellbeing of our people

92.4%

Of our emplyees completed the Code of Conduct training in 2020.

Social responsibility OUR PRINCIPLE

In our Code of Conduct, we are committed to res pecting internationally recognised human rights, including international conventions on human rights and the ILO Declaration on Fundamental Principles and Rights at Work.

We are also committed to complying with the UN Guiding Principles on Business and Human Rights. We do not accept child labour or other forms of forced labour in any circumstances. If we discover any shortcomings related to human rights, we are committed to intervening in them and engaging in cooperation to develop the activities in question.

Training regarding the Code of Conduct approved by the company's Board of Directors in June 2020 was completed by 92.4% of our employees and 65% of contact people in our retail network in 2020. The Code of Conduct and related training will be updated in 2023. According to our induction programme, each new employee must complete Code of Conduct training. The Code of Conduct is available on our website. 02 02

Commitments and human rights

Each new employee must complete Code of Conduct training.

At Ponsse, social responsibility means responsibility for the impact of our business activities on people, and continuously aiming to have a positive impact on our people and community. Ponsse has a strong value base that steers us to respect people and cooperation, and to develop our operations as part of our community.

Social responsibility

The number of our personnel increased by 2.8% (55 people) from 2021 being at the end of the year 1,988 employees. The most significant changes in personnel resulted from the establishment of the new subsidiaries Ponsse Czech s.r.o and Ponsse Chile S.p.A, and the suspended operations of OOO Ponsse, our subsidiary in Russia.

Impact of the situation in Russia

We report personnel figures excluding our Russian subsidiary regarding 2022 and comparative years. Ponsse's export and service operations in Russia and Belarus were suspended on 2 March

Equal and skilled personnel who feel well

At Ponsse, we comply with the ISO 45001 standard for occupational safety and health management. We want to offer our employees a safe and healthy working environment and be an equal and reliable employer. Our goal is to be a developing workplace and have responsible, healthy and competent employees who are treated with equal respect.

At the end of June, Ponsse announced the divestment of OOO Ponsse, its subsidiary in Russia, but the Russian authorities have not yet confirmed the transaction.

Due to the situation in Russia, we were forced to invite Ponsse Plc's personnel in Finland to cooperation negotiations in June 2022. The needs for adaptations were related to the Russian invasion of Ukraine and the resulting stoppage in exports to Russia, the increase in manufacturing costs, and the decrease in profitability and cash flows. As a result of the cooperation negotiations, the employment relationship of 23 people ended.

1,140 (1,154)

employees in Finland (including the subsidiary Epec Oy)

848 (779)

employees in Sweden, Norway, Ireland, the UK, France, the Czech Republic, China, the USA, Brazil, Uruguay and Chile

1,988 employees (2021: 1,933)

in the group's continuing operations

100%

of our personnel within the scope of performance reward schemes

Personnel at the end of 2022

Social responsibility

SOCIAL RESPONSIBILITY IN PRACTICE

Equality and non-discrimination

We do not accept any discrimination against our employees or job applicants based on any personal reasons.
We promote an equal, non discriminating and diverse work culture.
We do not accept any form of harassment or bullying.
Employees can freely decide whether they want to belong to a trade union and/or participate in codetermination in their workplace.
All employees have equal opportunities to apply for various positions and to advance in their careers in accordance with their education and competence.
As a rule, everyone can apply for vacancies.
Ponsse facilitates coordination between work and leisure through working hours arrangements, remote work opportunities and by adopting a positive approach to the use of family leave.

We comply with our equality and nondiscrimination plan, which was updated in 2021. Its goal is that all Ponsse employees feel treated equally without any discrimination.

The company's personnel group revises the equality and non-discrimination plan every year.

A pay survey was conducted in 2021 for the personnel in Finland regarding the job classifica tion, remuneration and pay differences between men and women. No significant differences were identified between the pay of men and women. Ponsse conducts the pay survey every three years and the company's personnel group revises the equality and non-discrimination plan every year. In 2022, the ratio between men and women among Ponsse Group's employees was 88/12 (89/11). Among supervisors, the percentage of women increased to 14% (12%). Our aim has been to find new ways to improve the attractiveness of the forest and technology industries, but have not so far been able to achieve any major change in the gender distribution of job applicants. Considering the company's growth and develop ment, it is important for Ponsse to recruit the best professionals in the field, regardless of the gender or other personal background. responsibility SOCIAL RESPONSIBILITY IN PRACTICE

In 2022, we participated in the "Dismantling segregation" project of the Finnish Institute for Health and Welfare (THL).

Social

Ensuring skilled employees

We want to ensure that we have skilled and professional employees through regular training and job rotation opportunities. We identify training needs during performance appraisals. In addition, we support the personnel's voluntary training, including degree programmes. We prepare for the development of future technologies by identifying competence needs.

To advance our personnel's competence and recruitment, we are engaged in cooperation with universities, universities of applied sciences and vocational schools. We also provide vocational training in our facilities through the "Ponsse Polku" (Ponsse Training Path) programme of Ylä-Savo Vocational College. Mechanics and welders have already been trained through the programme for more than ten years now. The training programme has been a significant recruitment channel for us, with nearly 200 students having participated in it.

In 2022 , we also started student programmes with the University of Tampere and Savonia University of Applied Sciences. The "Student

Deal" programme of the University of Tampere is intended for students completing a master's degree in automation technology, while the target group of the "Digital Professional" programme of Savonia University of Applied Sciences consists of students of software devel opment. The goal is to provide students with an opportunity to be engaged in working life during their studies and complete part of their studies during on-the-job training periods.

The availability of skilled employees has also presented a challenge to Ponsse in recent years. We are monitoring job applicants' experiences in Finland through the NPS feedback survey conducted during recruitment. We have also

expanded our operations in locations in which education in technology is provided. In Finland, Ponsse has units in Kajaani, Kuopio and Tampere in addition to the Vieremä factory and the main tenance service network, and also in Turku with our technology company Epec starting from 2022. Epec Oy's production is located in Seinäjoki.

The reputation prizes given to our company in 2022 supported our employer image. In the Reputation&Trust survey, Finnish people ranked Ponsse as the second most reputable company and, according to private investors, Ponsse had the best reputation in Finland in terms of corpo -

rate responsibility.

investors, Ponsse had the best reputation in Finland

According to private in terms of corporate responsibility.

-

Our activities are guided by the One Ponsse principles:

Customer focus
Teamwork and responsibility
Open and proactive communication
Agile execution and
transparency Common practices

Strategic goals and the Ponsse culture

Each year, we communicate and implement the company's strategic goals relative to our functions and further to each employee's personal goals. The goals are monitored through daily management and performance appraisals. Our goal for 2023 is to also develop performance appraisals into a regular process in our subsidiaries.

In accordance with One Ponsse, we bear responsibility for what we do and for our com mon goals, without any organisational bound aries. This is visible to our customers as first-rate services and rapid responses to customer needs.

The One Ponsse principles are implemented in the daily activities of Ponsse's employees through training and communication for all employees. All of the Group's supervisors partici pate in the One Ponsse Leadership Programme, which provides guidance towards systematic and high-quality supervisory work.

All of the Group's supervisors participate in the One Ponsse Leadership Programme. Social responsibility

SOCIAL RESPONSIBILITY IN PRACTICE

the results, the strengths of supervisory work in clude activities in accordance with the company's values, related guidance, customer orientation, and encouragement to take responsibility. Accord ing to the feedback, we need to develop in commu nication and in motivating employees.

The voluntary employee turnover increased to 11.3% (7.2%). Differences between companies were relatively high. This change follows the general international trend, in which employee mobili ty on the job market has increased, driven by the increased popularity of remote and hybrid working. Our goal is to lower the Group's employee turnover under 5%. The average duration of our employees' careers increased slightly from the

02

Our goal for 2023 is to raise the eNPS score above the level of 40.

In 2022, the Group's total eNPS score of 22 was at a good level. The score fell from 40 in the previous year, which is also defined as the limit of an excel lent score. We have sought reasons and solutions for the decrease with our personnel. Discussions and open-ended feedback emphasised the amount of work and workloads, the level of pay relative to increasing living expenses, and challenges in the smooth flow of work. At the same time, Ponsse was considered a good employer, and Ponsse's corpo rate culture was also hoped to remain at a high level in the future. Our goal for 2023 is to raise the eNPS score above the level of 40.

In 2022, the annual survey to measure the quality of leadership had 1,244 respondents. The Group's average score was 3.28 (3.25) on a scale from 1 to 4, which was in line with our target of >3. Based on

Motivated employees who feel well have a significant impact on work results and customer experiences. We monitor the employee experience and wellbeing of Ponsse's personnel by the following means:

Performance appraisals twice a year
eNPS index to measure the employee experience and a
wellbeing survey twice a year An annual survey to measure the quality of leadership
Extensive personnel surveys every few years (previously in 2020, next in 2023)

Measuring employee experiences and wellbeing at work

The quality of leadership was in line with our target of >3

Quality of leadership

Social responsibility

SOCIAL RESPONSIBILITY IN PRACTICE

(31 December 2021)

Personnel by personnel group on 31 December 2022, % (qty)

Key personnel figures 1)

		2022	Change, %	2021	2020
	Group personnel on 31 December	1,988	3%	1,933	1,727	3)	Personnel by function on 31 December 2022 (31 December 2021)		179 (165)	responsibility
	Personnel in Finland, % 2)	58	-5%	61	64	4)	Support functions	580	112 (108)
	Personnel in other countries, %	42	8%	39	36	4)	(including the development of digital services) Sales and marketing	(615)
	Permanent personnel, %	97	0%	97	94	5)	Maintenance and spare parts
	Full-time personnel, %	97	-1%	98	97	5)	R&D
	Average duration of employment, years	8.0	10%	7.3	7.7	6)	Supply chain		1,988 (1,933)
	Voluntary employee turnover, %	11.3	57%	7.2	4.0	7)
	Average age of personnel, years	39	3%	38	40	8)
	The personnel's age distribution					9)		199 (166)	918
	Under 30 years	22	-8%	24	22				(879)
	30–49 years	59	5%	56	58
	Over 50 years	19	-5%	20	20		Personnel by personnel group	40
02	Women (Board of Directors/Management Team/supervisors), %	13/13/14	-7%/0 %/17%	14/13/12	14/11/10	5)	on 31 December 2022, % (qty) Blue-collar employees	(795) (2021: 38%)		02
	Percentage of women from total personnel, %	12	9%	11	11	5)	White-collar employees
	Salaries and wages, EUR million	107.9	23%	87.7	78.2
	Personnel within the scope of performance reward schemes, %	100	0%	100	100

1) Continuing operations

2) The figure includes the personnel of Epec Oy (176 employees), Ponsse Group's subsidiary in Finland

3) On 31 December 2022

4) Annual average

5) The share of the personnel on 31 December

6) Group personnel / duration of employment

7) Total number of leavers / annual average

8) Average age by company, from which the group average

9) Personnel by age distribution / ratio

Personnel by subsidiary	Voluntary employee turnover by company

Voluntary employee turnover in Finland and other countries

Ponsse Oyj
Ponsse AB
Ponsse AS
Ponssé S.A.S
Ponsse UK Ltd.
Ponsse Machines Ireland Ltd.
Ponsse North America, Inc.
Ponsse Latin America Ltda.
Ponsse Uruguay S.A.
Ponsse China Ltd.
Ponsse Chile S.p.A.
Ponsse Czech s.r.o
Epec Oy
Ponsse Group

Ponsse Oyj	964	1,004	919
Epec Oy	176	150	126
Ponsse AB	72	71	64
Ponsse AS	12	12	12
Ponsse Chile S.p.A. 1)	25	0	0
Ponsse China Ltd.	35	33	31
Ponsse Czech s.r.o. 2)	16	0	0
Ponsse Latin America, Ltda.	418	390	328
Ponsse Machines Ireland Ltd.	8	7	8
Ponsse North America, Inc.	88	86	80
Ponsse UK Ltd.	28	29	24
Ponsse Uruguay S.A.	112	109	97
Ponssé S.A.S	34	42	38
Total group personnel on 31 December 2022	1,988	1,933	1,727

2022	2021	2020		2022	Qty	Average	2021	2020
964	1,004	919	Ponsse Oyj	7.8%	78	1,002	5.2%	2.5%
176	150	126	Ponsse AB	7.1%	5	70	2.9%	6.7%
72	71	64	Ponsse AS	15.4%	2	13	8.3%	7.7%
12	12	12	Ponssé S.A.S	21.1%	8	38	5.0%	20.5%
25	0	0	Ponsse UK Ltd.	17.2%	5	29	11.1%	25.0%
35	33	31	Ponsse Machines Ireland Ltd.	0.0%	0	7	25.0%	25.0%
16	0	0	Ponsse North America, Inc.	4.6%	4	87	6.1%	3.7%
418	390	328	Ponsse Latin America Ltda.	24.9%	107	430	15.1%	3.2%
8	7	8	Ponsse Uruguay S.A.	8.3%	9	108	11.1%	5.1%
88	86	80	Ponsse China Ltd.	0.0%	0	34	6.1%	10.3%
28	29	24	Ponsse Chile S.p.A.	0.0%	0	23
112	109	97	Ponsse Czech s.r.o	0.0%	0	17
34	42	38	Epec Oy	6.0%	10	168	4.2%	1.6%
1,988	1,933	1,727	Ponsse Group	11.3%	228	2,016	7.2%	4.0%

1) Ponsse announced the transfer of PONSSE services to Ponsse Chile S.p.A on 17 March 2022.

2) Ponsse announced the transfer of PONSSE services to Ponsse Czech s.r.o on 1 April 2022.

Finland (Plc and Epec)

Other coutries

2022	Qty	Average	2021	2020
7.5%	88	1,170	5.0%	2.5%
16.5%	140	847	10.6%	6.6%

Development of the number of personnel

Social responsibility

Occupational safety and health

We comply with the ISO 45001 standard for occupational safety and health management in our operations. Our goal set for occupational safety and health is to develop the safety culture and mindset, and prevent accidents by investing in preventive safety activities. We want to be an accident-free company in the future.

At Ponsse, developing the smooth flow and high quality of work is an integral part of safety activities. We are committed to improving occupational safety and health to meet the expec tations of our personnel and stakeholders, and we comply with the legislation and the Group's guidelines to ensure a safe working environment in all our operating areas.

Measuring occupational safety and health

02 02 Ponsse measures occupational safety using the Lost Time Injury Frequency (LTIF), which repre sents the number of accidents leading to absences per one million working hours. In 2022, changes and uncertainties in daily work processes were still reflected in safety. The Group's LTIF was 11.8 in 2022 (2021: 17.7). There were a total of 47 accidents leading to sick leave (2021: 63), of which 20 (27) caused fewer than three days of sick leave and 27 (36) more than three days of sick leave. There were no fatal accidents in the Group (2021: 0). To improve occupational safety and health, we will focus on building a method of continual improvement in safety and carrying out preven tive safety activities in 2023. For 2023, we have set goals for preventive safety activities for all our companies, and we will provide more safety training for our personnel.

In 2022, we harmonised safety practices in our new subsidiaries Ponsse Czech s.r.o and Ponsse Chile S.p.A to conform with the Group's practices. We will also engage in closer cooperation with the Group's international occupational safety and health network to implement a shared safety culture and best safety practices.

Measuring occupational safety and health

Ponsse measures occupational safety using the Lost Time Injury Frequency (LTIF), which represents the number of accidents leading to absences per one million working hours. L T I F The number of

accidents leading to absences decreased by 25 per cent in 2022

Group (%) LTIF

Social responsibility

Data management and data security

As business operations have become increasingly digital and networked, data management has become an integral part of Ponsse's business. Ponsse's data security management model complies with the ISO/IEC 27000 standards where applicable , and the operations of our subsidiary Epec Oy have been certified in accordance with the ISO 27001:2013 standard. Our management model consists of the data security policy and guidelines, for which all Ponsse employees are provided with training.

In 2022, we continued to develop data security by improving our technical data security solutions and cooperation between functions . We also regu larly monitored the maturity level of data security. In 2022, we submitted two notifications of identity thefts to the authorities, but avoided any severe data security incidents.

Honesty and cooperation

Honesty, ethics and communality in operations are vital factors for us. Good corporate governance and our Code of Conduct define how we treat people equally, conduct sustainable business and engage in close

cooperation with our partners.

Our mutual trust with different stakeholders is based on open long-term cooperation. Our key stakeholders include our customers and members of the entire Ponsse network. We want to know our customers personally and also address their families and stakeholders in our activities. The Ponsse network consists of our own companies, as well as our retailers who we always aim to treat as equivalent to our own companies.

We monitor customer satisfaction in all our sales and service activities. At the end of 2022, the Ponsse network's NPS was excellent at 54 (62) based on 1,097 responses. The NPS of Ponsse's subsidiaries increased to 43 (31) and that of our retailers was once again excellent at 76 (76). The NPS is measured on a scale from -100 to +100, with products, maintenance and spare parts.

Customers and other forest sector operators
Personnel
Ponsse network's retailers and contractual service partners
Subcontractors and suppliers
Shareholders

Local communities and associations
Legislators and authorities
Schools and educational institutions
Funding providers, investors and analysts
Media

Our key stakeholders

NPS

2021: 62

54 2021: 41 31 2021: 76 76 Ponsse network Ponsse's subsidiaries Ponsse retailers

The NPS of Ponsse network was once again excellent.

Investments in the local dimension

We find it important to be a responsible company in the communities in which we operate. When selecting our partners, we address the local dimension and aim to create regional wel fare through profitable and environmentally sustainable operations.

Ponsse's production and head office are still located in the company's birthplace in Vieremä, and we have a high impact on regional employ ment in Northern Savonia. At the end of 2022, Ponsse directly employed 658 people at our factory and 119 people at our Iisalmi logistics centre and in our maintenance services. In addition, nearly 400 employees worked in companies that are based in the partnership business park located in the im mediate vicinity of our factory and mainly provide Ponsse with subcontracting or components.

In addition, our sports sponsorships highlight the local dimension, a shared set of values and

long-term partnerships, ranging from children and young people to professional sports

Stakeholder survey

Our stakeholders' expectations have an impact on our responsibility goals, and we try to under stand the expectations set for us through active cooperation.

We identified our stakeholders' expectations of responsibility in our different market areas through the stakeholder survey conducted in 2021 –2022. In addition to our personnel, respondents to the survey included specialists representing the company's Board of Directors, the supplier, customer and service networks, forest companies, educational institutions, environmental associa tions, and funding and investment companies. We have used the stakeholder survey in the priori tisation of the focus areas in our responsibility activities and in the preparation of a roadmap.

We know our partners

We are committed to carrying out business sustainably and responsibly. We expect that parties outside Ponsse also follow the principles of our Code of Conduct, where applicable, when they do business with Ponsse or on behalf of Ponsse. External parties include Ponsse's business partners, suppliers and customers, as well as the Ponsse service network. We require all our suppliers to commit to the Supplier Code of Conduct. A total of 90% of our suppliers have signed the commitment.

Our business is always based on confiden tial cooperation with our partners, and it is vital to us to personally know our customers and other key stakeholders. At the same time, we develop our risk management associat ed with money laundering, corruption and human rights. At the beginning of 2022, we deployed a service that allows us to check the backgrounds of our partners based on risks as part of our business processes in accordance with the "Know your business

partner" principle.

Code of Conduct and whistleblowing channel

Ponsse is committed to conducting responsible business. Our Code of Conduct, which governs our operations, is strongly supported by our values: honesty, innovation, Ponsse spirit, and customer orientation. The Code of Conduct applies to all Ponsse employees and external parties, companies and communities closely connected to Ponsse.

When Ponsse employees or our stakeholders have concerns regarding the violation of our Code of Conduct, such concerns should be reported to the company. We encourage employees to report any concerns or violations to their immediate supervisor, HR management or the company's management as the first instance. Reports can also be submitted anonymously through Pons se's whistleblowing channel, which an external service provider maintains in nine different languages on our website .

The whistleblowing team appointed by Ponsse's Board of Directors processes reports submitted through the channel and forwards them to the Management Team or the Board of Directors, if required. The whistleblowing team consists of the company's internal auditor, CFO and CHRO. The team supervises that reports are processed and consequences are imposed identically in similar cases and that corrective measures are carried out.

In 2022, 14 reports were submitted to the whistle blowing channel. The anonymous reports were divided into the following topics: discrimination and harassment (1), misuse (1), corruption (2), HR procedures and guidelines (2), as well as privacy protection and the protection of personal data, and security in network and information systems (1), other (6), irrelevant (1). None of the investigat ed cases resulted in reporting to the authorities, as they were handled internally.

Our whistleblowing service: https://report.whistleb.com/en/ponsse

Social responsibility

SOCIAL RESPONSIBILITY IN PRACTICE

Product liability and safety

In the development of PONSSE forest machines, priority will always be given to customers and machine end users, especially to operators and maintenance employees, while the safe manufacturing of machines is also a requirement.

02 02 We assess risks associated with machine users throughout the product lifecycle as early as possi ble. Primarily, we aim to eliminate any hazards by means of design and secondarily through technical protective measures that improve safety. Warnings and instructions related to any residual risks remain the final means. According to our customer-driven research and development principles, our goal is to annually receive at least five feedback reports related to product safety from our customers and their personnel.

Standards and safety requirements

Our products meet the international standards applicable to them and the relevant safety require ments set out in directives, including the safety cabin's FOPS, OPS and ROPS structures and related test standards. As an indication of this, all machines carry the CE marking, and a declaration of confor mity, including references to relevant directives,

is delivered with each machine. As an example of recent development, we adopted a window material that meets the ISO 21876:2020 standard in our har vesters as protection against chain shots. We partic ipate in the development of industry standards in the international standardisation committee to also enable development in the future.

Help for forest machine operators

-

The professional skills of forest machine opera tors are highly significant considering the safe use of machines. High-quality operator training and instructions, combined with professional mainte nance services, significantly improve not only the productivity and smooth flow of work, but also safety. Operator training also ensures that working methods and the forest machine and its equip ment are suitable for each logging site in the best possible manner and that the harvesting results support sustainable forestry.

Ergonomics is a significant part of the forest machine operator's well-being. We invest in er gonomics by offering the best possible visibility over the work area from the cabin , by developing cabin and workstation ergonomics, such as the seat and controls, and by stabilising and levelling the operator's work environment, if required. User interfaces and automation systems, such as the Active Crane boom control system, are part of development, and they are now also available for harvesters. The PONSSE Opti 5G information sys tem is easy to use and provides harvester operators with the information required at the correct time to reduce the cognitive loads directed at the operator.

Association for Finnish Work
Bioenergy Association of Finland
Excellence Finland
Finnish Business Council Shanghai*
Finnish Business & Society FIBS
Finnish Family Firms Association
Finnish Forest Association
Koli Forum Kuopio Region Chamber of Commerce
Mechanical Engineering and Metals Industry Standardization in Finland
South Ostrobothnia Chamber of Commerce*
Stiftelsen Skogsbrukets Forskningsinstitut
Suomen Maatalousauto maatio ry*
Suomen Yrittäjät Technology Industries of Finland
Technology Industry Employers of Finland

Key association memberships

Social responsibility

03 Governance We are a reliable partner who values community

We are a reliable partner who values community

We operate honestly, ethically and communally in all communities in which we are present.

Good corporate governance and our Code of Conduct steer us to treat people equally, conduct sustainable business and engage in confidential cooperation.

OUR PRINCIPLE

39.3M€

Paid taxes and duties in 2022

Responsibility management

Ponsse's Board of Directors and management are committed to advancing corporate responsibility. Ponsse's Board of Directors receives regular updates on the company's responsibility work and risks and opportunities related to corporate responsibility and approves the key policies and guidelines.

We have identified the following

strategic objectives: We improve the wellbeing of our people.
We innovate sustainable solutions that respect nature.
We do not burden nature through our operations.
We are a reliable partner who values community.

The President and CEO and the Management Team are responsible for the achievement of the goals and business plans set by the Board of Directors, as well as the inclusion of corporate responsibility in the company's strategy and risk management work. The Group's Management Team is in charge of function-specific responsibil ity goals, their monitoring and achievement, and the identification of operational risks and opportu nities associated with responsibility issues. A chief responsibility officer was appointed in the Group's Management Team at the beginning of 2023.

Ponsse's responsibility steering group con venes four times a year to review measures related to the promotion, execution and monitoring of responsibility goals. The steering group's members are the President and CEO, CFO, CHRO and Chief Responsibility Officer, who reports the advance ment of responsibility goals to the steering group.

Shareholders

16.8 (16.8)

Dividents

Value distribution in 2022 (MEUR)

We have defined the most important strategic responsibility objectives that we seek to achieve through annual function-specific targets and actions as part of the company's annual strategy process.

GOVERNANCE IN PRACTICE

We innovate sustainable solutions that respect nature

Harmonised responsibility practices are ensured based on the company's Code of Conduct and values. We require Ponsse's employees and partners to comply with the principles of our Code of Conduct and respect our values whenever they work with or represent Ponsse. The Code of Conduct training is part of the induction programme for our new employ ees, and the training completion is monitored in annual performance appraisals. Our ethical business is also supported by our whistleblowing channel, which allows any suspected misuse re -

	2022			2021
(EUR 1,000)	Finland*	Other countries*	Total**	Finland*	Other countries*	Total**
Net sales	667,228	376,994	755,123	616,777	297,520	608,271
Result before taxes	31,953	4,559	43,219	41,180	25,576	48,107
Personnel (persons)	1,140	848	1,988	1,154	779	1,933
Corporate income tax	6,172	4,773	10,945	12,301	5,007	17,308
Property tax	643	138	781	428	136	564
Employer´s charges	13,116	7,578	20,695	13,072	5,611	18,683
Custom duties	136	6,716	6,852	84	6,227	6,311
Other taxes	3	64	67	3	216	219
Paid taxes total (EUR 1,000)	20,070	19,269	39,339	25,888	17,197	43,085

Net sales Result before taxes Personnel (persons) Corporate income tax Property tax Employer´s charges Custom duties Other taxes Paid taxes total (EUR 1,000) loss from trade receivables in total EUR 19.0 million. This posting influenced the effective tax rate of both the parent company and the group in 2022. Net sales (MEUR) Operating profit (MEUR) Equity ratio, %

Tax footprint (continuing operations)

*Unconsolidated

In 2022 the parent company measured the net investment to subsidiary Ponsse Latin America Ltda at fair value by recognising credit

**Consolidated

Governance

Our management systems steer the imple mentation of Ponsse's sustainable development principles and responsible leadership. Alongside the management systems, the company's mis sion, vision and values strongly guide the compa ny's operations, in which responsibility has been given a strategically important position.

Ponsse Plc uses the following standards: ISO 9001 for quality management systems, ISO 14001 for environmental management systems, and ISO 45001 for occupational health and safety man agement systems. The purpose of management systems is to standardise our group's operations and ensure our company's continuous develop ment. In 2022, LRQA re-certified the company's management systems. The Group conducted

Strategy and management systems

Sustainable development provides us with a direction and an opportunity for innovation and new operating methods, while securing our social and financial success. The development of our innovations and solutions is always initiated and guided by our customers' needs and the opportunities enabled by technology. We find that Ponsse's technology and operations need to be part of the solution that will secure a good future for the generations that will follow us.

internal audits and audits of the supplier and distribution network included in Ponsse's op erating processes according to the regular audit programme.

Ponsse Uruguay S.A., part of Ponsse Group, has been ISO 9001 certified for quality management and ISO 45001 certified for occupational health and safety management since 2020. Ponsse Latin America Ltda, our Brazilian subsidiary, was ISO 9001 certified for quality management in 2021. Epec Oy, Ponsse's Finnish subsidiary specializing in advanced electrics and electronics for non-road mobile machines and commercial vehicles, is certified according to ISO 27001 for information security management, ISO 9001 for quality man agement, ISO 14001 for environmental manage -

Ponsse's key politics and guidelines:

• Ponsse's Code of Conduct • Supplier Code of Conduct • Equality and non-discrimination policy • Information security policy • Operating policy • Risk management policy

-

Communication policy
Tax policy

ment and ISO 45001 for occupational health and

safety management.

Epec factory is certified by TÜV SÜD according to functional safety certificates EN ISO 13849, IEC 61508 and EN IEC 62061. Safety components certified according to functional safety can be used to manufacture safety functions to meet the requirements of the standards for safety products designed and manufactured by Epec.

Policies and guidelines All key policies and guidelines governing Ponsse's operations are processed by the Group's Manage ment Team and approved by the Board of Directors. Every employee is responsible for their part for observing the guidelines and reporting any defects.

Ponsse's shares are listed on Nasdaq Helsinki, and we comply with the rules and regulations of the Helsinki stock exchange and the Finnish Financial Supervisory Authority. Consolidated financial statements and interim reports are prepared in accordance with the International Financial Reporting Standards (IFRS).

According to good corporate governance, Ponsse protects the rights of its shareholders, conducts diligent and correctly timed finan cial reporting, and provides the organisation's

Good corporate governance

managers with guidance. Auditing, internal control, risk management, compliance with legislation and regulations, and management and administrative practices have been arranged appropriately, and the most significant business activities and conflicts of interest are evaluated on the basis of risks.

Ponsse complies with good corporate governance in accordance with legislation applicable to listed Finnish companies, Ponsse's Articles of Association and the Corporate Governance Code 2020 for listed companies, while promoting openness and transparency. The purpose of the corporate governance principles is to ensure ethical business and a high level of professionalism. Ponsse's highest decision-making body is the General Meeting. The General Meeting appoints the company's Board of Directors, which is responsible for the company's administration and the appropriate organisation of operations. There are no separate committees within Ponsse's Board of Directors. The President and CEO, appointed by the Board, is responsible for the operational management of Ponsse Group, assisted by the Group's Management Team. 03 03

In economical sustainability, we focus on a bal ance between profitability, cash flow from busi ness operations and growth to ensure our compa ny's financial performance in the long term.

Tax policy

We want to promote an open tax policy, and we comply with valid tax laws and regulations in all countries where Ponsse operates. The company has no separate taxation-based corpo rate structures. We are committed to paying the respective statutory taxes and fees without delay wherever we operate and produce results. We comply with the OECD transfer pricing guidelines and ensure regularly that intra-group pricing is based on market terms.

We report and publish our tax information in accordance with legislation and the transparen cy goals set in our tax policy. The goal of our tax management is predictable and effective taxation with high morals. We are engaged in close cooper ation with the Large Taxpayers' Office in Finland.

In 2022, Ponsse paid taxes and duties for a total of EUR 39.9 million (2021: 43).

In 2022, Ponsse Plc and Epec Oy received support from Business Finland, and Ponssé S.A.S. received employment subsidy from the French Government for a total of EUR 1,015,102.

Paid taxes and duties

Of which Finland's share was EUR 20 million (25.9). The figures include only continuing operations.

Governance

Corruption and competition

We are committed to combating corruption in all its forms, including extortion and bribery. We do not use bribes or other unlawful payments, nor do we authorise these payments to gain or main tain business. The company neither offers nor ac cepts any favours, gifts or benefits which could be reasonably assumed to influence decision making inappropriately or even give such an impression.

We do not accept or facilitate money launder ing, and we comply with legislation related to the prevention of money laundering everywhere in the world. We conduct business only with reputable parties involved in legitimate business activities, with funds derived from legitimate

Diversity and independence of the Board

of Directors

The Board of Directors is expected to possess sufficiently varied expertise and abilities to manage its tasks effectively, paying attention to the company's objectives. Diversity in the Board of Directors promotes an open culture of discussion and the ability to adopt an open approach to innovative ideas. Diversity in the Board of Directors is supported by the age and gender distribution, educational backgrounds, as well as work experience and international experience, among other things.

During the 2022 financial period, Ponsse's Board of Directors consisted of members with expertise in finances, legal affairs, technology, international operations, strategies, and sales and marketing. One of the eight members was female. Four members were independent, which is a deviation from the Corporate Governance Code's recommendation. The company justifies this deviation with the fact that throughout its histo ry, Ponsse has been a person- and family-owned company that has been led successfully. The deviation from the recommendation has not led and will not lead to any conflict with the interests of the company and all its shareholders.

03 03 The goal of Ponsse's remuneration policy is to advance the company's long-term financial performance and the creation of sustainable shareholder value by recruiting, engaging and motivating the top management and person nel to carry out Ponsse's strategy. As a rule, remuneration needs to be competitive, engaging and fair. The annual performance bonus of the President and CEO and the Deputy CEO cannot exceed 50% of their salary in the previous year.

sources. During the offer and negotiations process, we carry out background checks to ensure that the supplier or its management and owners do not violate any laws or regulations and are not subject to economic sanctions.

We promote fair and honest competition. We comply with applicable competition law, regard less of the market area, and refrain from entering into or carrying out any illegal practices.

Our assets may not be used for unlawful or improper purposes. In accordance with the GDPR requirements, we respect and protect personal data, and employees processing it are expected to exercise special caution when processing data.

In 2022, the members of the Board of Direc tors were: Jarmo Vidgren (Chair), Mammu Kaario (Vice Chair), Matti Kylävainio, Ilpo Marjamaa (as of April 7, 2022), Juha Vanhainen, Janne Vidgren, Juha Vidgren and Jukka Vidgren. The President and CEO appointed by the Board of Directors is Juho Nummela.

Remuneration principles

Trends, risks and opportunities

One part of the company's management system is risk management, which is guided by the risk management policy approved by the Board of Directors. Ponsse's management actively monitors the development of the business environment, and responsibility risks and opportunities affecting our business are also considered in the annual risk assessment. Within them, aspects related to climate change, biodiversity and resource efficiency together with digitalisation and technological development are emphasised.

At the end of 2022, we prepared an internal assessment of climate risks. Based on its results, we will continue the development of climate risk assessment as part of our roadmap work for car bon neutrality. In our assessment, the most sig nificant opportunities were associated with new technology solutions that enable zero-emission harvesting, and the most significant risks to the technological transition phase and increasing needs for reporting.

Market and business environment

The discontinuation of the business in Russia, high inflation and uncertainties concerning the availability of parts and components had strong impacts on Ponsse in 2022. Challenges with the availability of components caused some problems with the machine delivery schedules, but the factory operated uninterrupted through the year. Overall, our adaptation to the difficult business environment succeeded well. However, the increasing material and component prices due to the accelerating inflation and challenges at our Brazilian subsidiary weakened the company's profitability and cash flows. Our customers' work situation was excellent throughout the year.

Our operations in more than forty coun tries balances risks associated with economic fluctuations. We seek flexibility and responsive ness in our operations, facilitating quick adapta tion as the operating environment changes. Our confidential stakeholder relations and advanced product and service selection constantly offer us new opportunities for growth and development.

Data and information systems

03 03 The geopolitical situation increased uncertainty in the financial market. In the challenging situation, the company's financial position has remained strong due to good liquidity and binding credit limit facilities agreed with financial institutions. In terms of financing, Ponsse has carried out all measures necessary to ensure business continuity, and the situation is regularly evaluated. The goal of financial risk management is to keep liquidity, in terest and currency risks under control. The impact of adverse changes in interest rates is minimised by using loans and interest swaps tied to different reference rates. The impact of currency rate fluctua tions is reduced partly through derivative contracts.

Growing digitalisation has increased our data security risk, which we take into consideration in the processing of business, customer and personal data. Having updated, reliable, available and secure information systems and data is essential for our operations. We use the national cybersecurity assessment framework to evaluate and develop our cybersecurity. In order to strengthen cybersecurity, Ponsse has clarified software update policies and user instructions. The company is still in the pro cess of renewing its ERP system.

Supplier network

The recovery of the global economy that is happen ing faster than expected and the rapid growth in demand have resulted in availability problems in certain component groups, and accelerating infla tion has increased material and component prices. We strive to ensure product quality and competitive prices through close and long-term collaboration with our supplier network and by using alternative procurement channels.

Products and technological solutions

We support sustainable forestry by innovative products and services that protect nature and the environment. We promote harvesting based on the sustainable and effective cut-to-length method and are constantly reducing the environmental impact of our products and services. We seek to mitigate

risks through close cooperation with customers and stakeholders to ensure technological development that advances in the right direction and will serve the needs of forestry in the future. We work actively with higher educational institutions, universities and research organisations. New technology solu tions also involve new competence requirements, which we surveyed during 2022.

Financing

We ensure investments and adaptation to bu siness fluctuations through sustainable financing solutions. In our financing solutions, we also use a loan linked to sustainability goals, in which we are evaluated with indicators related to the devel opment of our safety and our supply network's commitment to the Supplier Code of Conduct.

01 Social

Personnel

Goal: A developing and safe place to work. Responsible, healthy and competent employees.

• Human and employee rights • Occupational wellbeing and competence • Safety • Equality, non-discrimination and diversity

Products and services

Goal: Responsibility for the quality, ethical compliance and safety of products and services, as well as customers' health and safety.

• Quality • Safety • Ethics • Customer satisfaction

Operation and cooperation Goal: Honest, ethical and communal operations and communication.

• Ethical practices • Responsibility of partners • Open communication and cooperation

Sustainable forestry

Goal: Innovative products and services support ing sustainable silviculture and the preservation of nature.

Cut-to-length (CTL) method
Environmental impact
Biodiversity

Finances

Goal: Balanced and sustainable company finances ensure our ability to develop and invest.

• Growth • Profitability • Cash flow from business operations • Solvency

Lifecycle management

Goal: Services supporting the environmental ly sustainable use and lifecycle of our product solutions.

Maintenance network
Processes
Competence
Product and service range

Governance

Goal: Reliable, developing financial manage ment. Good corporate governance ensures that business principles and practices are ethical and of a high professional quality.

• Proactive financial management • Sustainable financing solutions • Investments and risk management

Natural recources

Goal: Harmonised and environmentally sus tainable operations by using state-of-the-art technology and saving natural resources.

Environmental management
Energy and material efficiency
Water consumption
Emissions
Waste

-

Stakeholders

Goal: Supporting stakeholders' continuity. Areas:

-

Customers • Personnel • Owners • Suppliers

• Society

Key stakeholders listed on the page 58.

results in 2022: LTIF 11,8 (2021: LTIF 17,7). measures in 2023: Developing the method of continual improve ment in safety and preventive safety activities. G o a l s i n 2 0 2 3 : LTIF < 5, 8500 safety observations and 5,000 safety walks

2 Ethical corporate culture

m e a s u r e s i n 2 0 2 3 :

Code of Conduct update and training. Developing responsibility activities from the perspectives of diversity, non-discrimination, engagement and human rights. goals in 2023:

100% of Ponsse's employees complete training for the updated Code of Conduct.

We improve the wellbeing of our people

⁸⁴ ⁸⁵ 1 Zero accidents 4 Skilled employees and managers results in 2022: Management quality 3.28 (2021: 3.25), on a scale from 1 to 4. m e a s u r e s i n 2 0 2 3 : a) We will maintain regular and current training for supervisors. b) Supervisors will ensure the development of their employees through performance appraisals. g o a l s i n 2 0 2 3 : a) Management quality >3 on a scale from 1 to 4 b) 100% of our personnel within the scope of

3 Excellent employee experience results in 2022: eNPS 22 (2021: eNPS 40), on a scale from -100 to 100. m e a s u r e s i n 2 0 2 3 : We will develop the processing of eNPS feedback and the systematic implementation of the resulting measure. g o a l s i n 2 0 2 3 : Developing the engaging eNPS feedback process, eNPS > 40

performance appraisals.

5 Voluntary employee turnover results in 2022: 11,3 % (2021: 7,2 %). measures in 2023: We will strengthen internal job rotation and the personnel's development opportunities through diverse tasks and training.

g o a l s i n 2 0 2 3 :

Voluntary employee turnover < 5%.

6 Safe and ergonomic PONSSE forest machine

results in 2022: PONSSE Active Seat tech nology for following the boom, PONSSE Active Cabin for dampening vibration and impacts affecting the cabin, and a Lidar concept for assist ing operators in achieving the correct thinning in tensity, reducing the cognitive load for operators. measures in 2023: Development of operator's work ergonomics and working conditions for the cabin and other factors. goals in 2023: At least five items of customer feedback to improve product safety.

1 Environmentally smart innovation

results in 2022: R&D 3.7% of net sales (2021: 3.9%, EUR 23.8 million), launch of PONSSE EV1 forwarder.

measures in 2023:

Development of energy efficiency, cooperation with research institutions regarding alternative energy solutions

g o a l s i n 2 0 2 3 :

TR&D's share of net sales > 3.5%.

We innovate sustainable solutions that respect nature

2 Minimising the environmental impact of wood harvesting

results in 2022: Lidar concept for measur ing and verifying thinning intensity, remaining stem number and harvesting impacts, such as the width and interval of vehicle trails. measures in 2023: Further development of Lidar testing with customers. goals in 2023: Development of mechanical forest regeneration.

S O L U T I O N S

2) by 2025 results in 2022: 259 t CO2-eq. (2021: 270 t CO2-eq.). measures in 2023: Further development of the Vieremä factory's

carbon neutrality roadmap work.

g o a l s i n 2 0 2 3 :

Report on our readiness to replace the paint shop's LPG to a renewable energy source.

⁸⁶ ⁸⁷ 1 Carbon neutral factory (Scope 1 & 2 Carbon neutral operations in the Nordics and reduction of the Group's carbon footprint by 55% (Scope 1 & 2) by 2035 compared to 2022 results in 2022: 1,931 t CO2-eq. in the Nordics (2021: 2,082 t CO2 eq.) 4,309.9 t CO2-eq. in all of Ponsse (2021: 4,379 t CO2-eq.) m e a s u r e s i n 2 0 2 3 :

Further development of the carbon neutrality roadmap work.

goals in 2023:

Carbon footprint reduction of 5%.

3 Share of carbon neutral (Scope 2) energy: 95% by 2030 results in 2022:

89.3% (2021: 87.5%).

m e a s u r e s i n 2 0 2 3 :

Increasing the number of solar panels at Ponsse locations.

goals in 2023: We will increase the share of carbon neutral (Scope 2) energy in our procure ment of electricity and heating to 90% through the use of renewable energy sources and nuclear energy.

4 Climate change mitigation in the supply chain

results in 2022: no Scope 3 calculation. m e a s u r e s i n 2 0 2 3 : Definition of data gathering and reporting policy for select Scope 3 categories. g o a l s i n 2 0 2 3 :

Readiness to start Scope 3 calculations in 2024 (based on data from 2023).

5 Minimizing produced waste and ensuring the utilisation of waste

r e s u l t s i n 2 0 2 2 :

3,907 tonnes, with a recycling rate of 55%,

first Group-level calculation.

measures in 2023:

Group's waste plan and goals.

g o a l s i n 2 0 2 3 :

Readiness to start systematic waste monitoring.

1 A transparent supply chain committed to responsible operating method

results in 2022: 90% of suppliers have signed the Code of Conduct measures in 2023: Integrating responsibili ty goals in the company's procurement policy. G o a l s i n 2 0 2 3 :

100% of suppliers have signed the Code of Conduct.

We are a reliable partner who values community

2 Confidential and developing customer cooperatio R e s u l t s i n 2 0 2 2 : NPS 54 (62) Measures in 2023: 20 customer seminars for product and service development needs. G o a l s i n 2 0 2 3 : NPS > 60

1
cor
me
RE :

Goals and measures 2023

We do not burden nature through our operations

The Regulation establishes six environmen tal objectives. The Regulation's climate change mitigation and climate change adaptation criteria were passed as a Delegated Regulation on 4 June 2021. A Delegated Regulation for the other four climate objectives and their screening criteria are expected to be passed in spring 2023.

EU taxonomy regulation reporting

The EU Taxonomy Regulation is a classification system for environmentally sustainable economic activities which requires Ponsse to carry out an assessment based on three of its financial key figures. The Regulation entered into force at the start of 2022. Companies who are required to report according to the Regulation and its climate objectives' technical criteria must publish the share of sustainable activities of their net sales, operational expenses, and investments. The evaluation of taxonomy-compliant business functions was carried out by our sustainability and financial administration in cooperation with an external expert. They evaluated the business of Ponsse and its subsidiaries to identify taxonomy-compliant activities. Regarding operational expenses, our estimate is that the technical criteria cannot be met reliably, and the activities are therefore eligible but not compliant with the taxonomy. Counting figures twice is not a risk due to the limited number of eligible activities.

The reporting for 2022 must include information on the share of taxonomy-eligible activities in the company's net sales, investments and operational expenses based on the screening criteria for climate change mitigation and climate change adaptation. Companies must also publish information on the taxonomy alignment of their economic activities for the first time. Taxonomyaligned activities are defined as taxonomyeligible activities that meet the detailed technical screening criteria, do no significant harm to the other environmental objectives and comply with

the minimum social safeguards defined in the Taxonomy Regulation.

We have assessed Ponsse's taxonomy

eligibility and taxonomy alignment based on the descriptions and NACE codes of the economic activities for the financial period that ended on 31 December 2022. Ponsse's subsidiaries are also included in the assessment. The most important class of activity for Ponsse is 3.6. Manufacture of other low carbon technologies, and at least the following NACE codes in accordance with the EU's classification of economic activities (EU

1893/2006): C22, C25, C27 and C28.

The Taxonomy Regulation is based on the Eu ropean Parliament and Council's Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable invest ment and amending Regulation (EU) 2019/2088 (Taxonomy Regulation).

Taxonomy-eligible net sales

The Taxonomy Regulation mainly applies to busi ness that has the greatest potential for climate change mitigation or adaptation. Ponsse's eco nomic activities are based on the design, mainte nance and manufacturing of forest machines. The emissions caused by the company's activities are not significant, but it is possible for us to affect the emissions caused by the use of the forest ma chines through innovative product development.

The economic activities of Ponsse's technol ogy company Epec Oy are mainly based on solutions enabling the electrification of utility vehicles and heavy-duty machines, and we have assessed the significant portions of the compa ny's economic activities to be taxonomy-eligible. The Epec Flow Power Distribution Unit (PDU) is used to connect electric motors, batteries, and different types of actuators. The Epec Flow Hybrid Control Unit (HCU) is used to operate electric powertrains to ensure optimal energy efficiency, productivity, and usability. However, it is currently not possible to provide a breakdown of the net sales for low-emission technologies in the financial reporting of Epec Oy.

We will seek to develop the company's reporting in 2023.

(personnel, material and other costs)
Renewable energy and nuclear energy purchasing costs
Rail transport using renewable energy

Total expenses EUR 3,525,993.88

Taxonomy-eligible operational expenses

A significant portion of our product develop ment investments will enable harvesting with lower emissions in the future.

In 2022, Ponsse launched the PONSSE EV1 forwarder, a machine concept with a fully electric powertrain. The concept will result in significant emission reductions through the reduction of fuel consumption in wood harvesting, repre senting a step towards zero-emission forest machines. Heavy-duty machines with electric powertrains can be classified as "Manufacture of other low carbon technologies" or "Manufacture of renewable energy technologies" if the forest machine meets the technical screening criteria of the Taxonomy Regulation. Our product develop ment costs include personnel costs related to the PONSSE EV1 forwarder project and other busi ness expenses tracked with project identifiers.

Our taxonomy-eligible operational expenses include the purchase of renewable energy and nuclear energy, as well as electric rail transport. These activities are certainly eligible, but their compliance is not documented by the service providers, and it therefore cannot be verified.

In our operational expenses, we have identified the following as taxonomy-eligible expenses:

We cannot currently confirm any portion of our net sales or investments to be taxonomyaligned with a sufficient level of accuracy. The PONSSE EV1 electric forwarder machine concept is in the product development phase, so its final emission reduction potential remains unknown. As part of our product development process, an LCA life-cycle assessment has been carried out for the machine, and the machine concept's fuel consumption has been studied through field testing.

⁹⁰ ⁹¹ • Ponsse EV1 forwarder development costs We have identified a need to improve our risk assessments in relation to human rights, both within the Ponsse network and our supply chain, to fully verify our compliance with the taxonomy. The company's Code of Conduct applies to all Ponsse employees and external people, companies, and communities closely connected to Ponsse. The Code of Conduct's obligations are also included in our Supplier Code of Conduct. We are committed to complying with good governance and the legislation and regulations of our country of operation. Ponsse Plc, the parent company of Ponsse Group, is listed on NASDAQ OMX Helsinki Ltd and follows the applicable corporate governance laws and regulations valid in Finland. The full taxonomy report is available in the company's Annual Report for 2022 / Board of Directors Report.

The current machine concept has reached a fuel consumption reduction of 25 per cent, resulting in reduced emissions. According to our preliminary assessment, the machine meets most of the taxonomy criteria, and our goal is to further specify our assessment in 2023.

The activities of Epec Oy are aligned with the EU's green transition in many areas. Meeting the taxonomy alignment criteria requires further action, which we aim to work on in 2023.

Social responsibility requirements

Taxonomy alignment requires companies to comply with the following social responsibil ity requirements that Ponsse Oyj has publicly committed to in its Code of Conduct.

• OECD Guidelines for Multinational Enterprises • UN Guiding Principles on Business and Human Rights • Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work

-

International Bill of Human Rights

Code	Indicator	Location
2-1	Organisational details	Ponsse Group's business, p. 7
2-2	Entities included in the organisation's sustainability reporting	Sustainability reporting at Ponsse, p. 94
2-3	Reporting period, frequency and contact point	Sustainability reporting at Ponsse, p. 94 Financial statements 2022
2-5	External assurance	Sustainability reporting at Ponsse, p. 94
2-13	Delegation of responsibility for managing impacts	Responsibility management, p. 69
2-22	Statement on sustainable development strategy	Our strategic responsibility goals, p. 5
2-28	Membership associations	Product liability and safety, p. 65
201-4	Financial assistance received from government	Good governance, p. 74 Share capital and shares: www.ponsse.com/en/company/inves - tors/share/share-capital-and-shares#/
204-1	Proportion of spending on local suppliers	Environmental impact of procurement and logistics, p. 24–25 Honesty and cooperation, p. 60
207-1	Approach to tax	Good corporate governance, p. 75
302-1	Energy consumption within the organisation	Towards carbon neutrality p. 21
305-1	Direct (Scope 1) GHG emissions	Towards carbon neutrality p. 16,19
305-4	GHG emissions intensity	Towards carbon neutrality p.19
305-5	Reduction of GHG emissions	Towards carbon neutrality p.16,19
306-1	Waste generation and significant waste-related impacts	Towards carbon neutrality, p. 23
306-3	Waste generated	Towards carbon neutrality, p. 22
406-1	Incidents of discrimination and corrective actions taken	Code of Conduct and whistleblowing channel, p. 63
418-1	Substantiated complaints concerning breaches of customer privacy and losses of customer data	Data management and data security, p. 56 Code of Conduct and whistleblowing channel, p. 63

* Total energy use from fossil fuels: 62,640 GJ Total energy use from renewable fuels: 5,760 GJ Total energy use: 140,400 GJ

The Group data presented on the sustainability report published on 15 March 2023 includes both the parent company and all the Group's sub sidiaries for the reporting period 1 January–31 December 2022. If the provided data does not include all the Group companies, this is indicated separately. Except for the financial figures, the sustainability report has not been certified by a third party.

In the 2022 sustainability report, all key annual comparison data is presented for continuing operations. In June 2022, Ponsse signed a deed of sale regarding sale of all shares in OOO Ponsse, a subsidiary that provided PONSSE services in Russia and Belarus.

Sustainability reporting at Ponsse

Ponsse Plc publishes annually a sustainability report and annual report in Finnish and English, including consolidated financial statements prepared according to the International Financial Reporting Standards (IFRS) and audited according to the Finnish auditing standards.

The sustainability reporting is based on the Global Reporting Initiative (GRI) standards where applicable. The responsibility information published by the company does not cover all GRI indicator requirements identified as material, but Ponsse is continuously developing its responsibil i ty information management.

Sustainability contact at Ponsse:

k a t j a p a a n a n e n , Chief Responsibility Officer p. +358 40 553 2921 [email protected] Ponsse Oyj, Ponssentie 22, FI-74200 Vieremä

Image Geran de Klerk / Unsplash

AI Terminal

Ponsse Oyj

3283_sr_2023-03-15_27187597-1bb6-4cdf-9806-cc2751a5a391.pdf

SUSTAINABILITY REPORT

03

PEOPLE –

SOLUTIONS

– We do not burden nature through our

COMMUNITY –

Our strategic sustainability goals

Ponsse Group's business

The highlights from our sustainability journey in 2022 The highlights from our sustainability journey in 2022

Our product and service solutions enable sustainable forestry

01 A carbon neutral factory by 2025 (Scope 1 & 2)

Towards carbon neutrality

Carbon neutral (Scope 2) energy, %

Factory's carbon footprint, t CO2-eq.

Environmental responsibility

E N V I R O N M E N TA L R E S P O N S I B I L I T Y I N P R A C T I C E

E N V I R O N M E N TA L R E S P O N S I B I L I T Y I N P R A C T I C E

Emissions into the air

Climate acts by Ponsse's subsidiaries

CDP climate reporting

E N V I R O N M E N TA L R E S P O N S I B I L I T Y I N P R A C T I C E

Energy consumption

Fuel consumption

1.6 GWh Wholly renewable

Energy savings

Water consumption

Waste

Waste recycling

Waste by fraction, t

Environmental impact of procurement and logistics

Risk management

Environmental impact of transport

Recycling of packaging material

97%

Environmental impact of production

Calculation of Scope 3 emissions

REACH and conflict minerals regulations

Waste recycling

Fuel emissions

Emissions from test drive operations

Machine maintenance

Environmental impact of products and services

Cut-to-length harvesting

Pioneering the circular economy: Reman & Parts Recirculation

02 Social responsibility 02

We improve the wellbeing of our people

Commitments and human rights

Impact of the situation in Russia

Equal and skilled personnel who feel well

1,140 (1,154)

848 (779)

1,988 employees (2021: 1,933)

100%

Personnel at the end of 2022

SOCIAL RESPONSIBILITY IN PRACTICE

Equality and non-discrimination

Ensuring skilled employees

-

-

-

Our activities are guided by the One Ponsse principles:

Strategic goals and the Ponsse culture

SOCIAL RESPONSIBILITY IN PRACTICE

02

Measuring employee experiences and wellbeing at work

Quality of leadership

SOCIAL RESPONSIBILITY IN PRACTICE

(31 December 2021)

Personnel by personnel group on 31 December 2022, % (qty)

Key personnel figures 1)

Voluntary employee turnover in Finland and other countries

Development of the number of personnel

Occupational safety and health

Measuring occupational safety and health

Data management and data security

Honesty and cooperation

Our key stakeholders