CLIMATE CHANGE

Climate-related risks and opportunities

FORCIT Group has conducted during DMA process an assessment of climate-related risks and opportunities, considering both acute hazards (e.g., droughts, floods, wildfires, storms, and heat waves) and chronic hazards (e.g., changing temperatures, precipitation patterns, and soil degradation). This analysis is crucial given the nature of our business, which requires stable conditions for the safe manufacturing, storage, and handling of explosive products.

Limitations in the availability of sustainable alternatives for currently used raw materials may postpone our transition to more sustainable material use. Shortcomings in energy efficiency of some of our facilities (older ones) may pose risks to the success of our climate change mitigation efforts. Furthermore, the company operates in rental sites which infrastructure cannot be affected directly. These sites are possible risk if they are not capable to renew energy supply from fossil to non-fossil. There are also prohibitions due to ADR regulations and feasibility considerations associated with the electrification and/or fuel switching of our transportation fleet. This may pose risks to the pace of our climate change mitigation efforts.

Our assessment follows a structured approach:

• Scenario Analysis:

We consider a high-emission scenario and a 1.5°C transition scenario.

• Exposure Evaluation:

Internal subject-matter experts analyze the potential exposure of business activities and assets to climate hazards.

• Financial Materiality:

Risks are evaluated based on their likelihood and financial impact.

A more detailed risk assessment, including financial quantification, will be completed after EU sustainability reporting regulations are finalized.

Carbon emissions management

Scope I:

Motor technology development toward low emissions and charging or refueling net in Nordics may proceed slower than expected in 2022. The economical profitability and service net of renewable diesel are currently considered non usable.

Scope II:

FORCIT operates in rental sites which infrastruc rectly. These sites are possible risk to carbon neutrality if they are not capable to renew energy supply from fossil to non-fossil.

Scope III:

The biggest unified CO2 source in the company’s emissions is one raw material which is cultivated from ammonia. Thus, the energy in ammonia production in Europe is question in long term emission minimization and its influences are connected to mineral and mining industry in Nordics. You can read more about green hydrogen production on page 10. The chemical composition and reaction of explosives result in GHG emissions under the Use of Sold Products category. Since these reactions occur in open spaces, gas monitoring or processing is not feasible.

Greenhouse gas (GHG) emissions

FORCIT Group monitors and reports GHG emissions across Scope 1, Scope 2, and almost every Scope 3 categories. Emission calculations are conducted within the Tofuture CSM system, with data collection accuracy improving annually. Explosive and Defence business units (manufacturing of explosives) are included in 2024. FORCIT has no own energy production and are not obliged to E-PRTR reporting. The information about the share and types of contractual instruments used for the sale and purchase of energy bundled is provided in numeric data.

The company currently lacks a documentation system for investment project data that would enable the classification of materials and services purchased, and does not have a system sufficiently reliable to ensure accurate emissions accounting for investment projects. For commuting, HR is developing the process how to follow commuting in the future. The company sees these categories minor and less material than other Scope III categories.

The company cannot provide percentage value for the data which is given by suppliers. The assumption is, that all significant factors are based on secondary data and only some minor or single factors are calculated based on EPDs. The used of sold products (output of own production) is based on primary data more comprehensively.

Currently, company presents total amounts of energy, waste and fuel and their relation to production volumes. Values are based on invoicing and double bookkeeping of waste amount (origin and handling or transportation stage) is considered to be reliable. Once a year, the GHG emissions of all scopes are analyzed and compared to previous years.

Key GHG management actions include:

• Monitoring energy consumption and waste-burning

• Implementing energy efficiency improvements in production facilities.

• Reducing reliance on fossil fuels and increasing investments in renewable energy.

• Developing lower-emission products through R&D initiatives.

Company set the long-term target related to preparing emission monitoring and reporting capability and given recommendations to proceed with carbon neutrality road map and promote energy efficiency in operations and supporting disengage from fossil fuels. We estimate that carbon free products will get big interest among customers who participate in green transition (e.g. mining business).

At present, FORCIT has company-wide CO₂ emission reduction targets in place, but not comprehensive targets covering all GHG emissions. However, an official emission monitoring framework is under development, and detailed reduction targets will be established after EU sustainability reporting regulations are finalized.

Emissions results

In 2024, the total GHG emissions (market-based) of Forcit Group business were 1,1 % lower than in year 2023. The total GHG emissions were 1,1, % higher compared to the previous years when location-based emission factors were used to calculate Scope 2 emissions.

Scope 1 greenhouse gas (GHG) emissions increased by 22,5 % from 2023 to 2024. The reasons impacting in the emissions increase are linked to Forcit Group managed transportation of the products to the customers which represent 98,5 % of scope 1 emissions. The transportation data availability was improved compared to year 2023 and customer mix is impacting the transportation distance.

In 2024, 9,6 % of Forcit’s total purchased energy usage was covered by Guarantees of Origin and 16,02 % of total purchased electricity.

Market-based scope 2 GHG emissions decreased by 82,5 % from 2023 to 2024, primarily driven by increased usage of renewable electricity and the increased share of renewable energy sources in the district heat used at Hanko site. Location-based scope 2 GHG emissions were 6,0 % lower compared to year 2023.

Scope 3 GHG emissions increased by 0,5% from 2023 to 2024. This increase was primarily due to improved data availability, e.g. purchased services were included at Forcit Group level in scope 3.1. GHG inventory.

GHG emission intensity based on market-based calculation is 661.8 tCO2e/net revenue (MEUR). Respectively, GHG emission intensity based on location-based calculation is 662.7 tCO2e/ net revenue (MEUR).

According to the GHG Protocol, biogenic emissions shall be reported separately from scope 1 - 2 GHG emissions. Direct and indirect (scope 1 and 2) biogenic carbon emissions were 2 014,51 tCO2 in 2024.

Climate transition plan

During the DMA process, the identification of assets and business activities that are incompatible with or need significant efforts to be compatible with a transition to a climate-neutral economy was conducted on a more general level. While we do understand potentially locked-in GHG emissions and critical pain points where significant efforts are needed, we aim to work towards making our analysis even more detailed and robust.

Climate scenarios that were considered when identifying and assessing climate-related physical and transition risks included a high emission (also known as business as usual) scenario especially for the assessment of physical risks and a climate scenario in line with limiting global warming to 1.5°C with no or limited overshoot for the assessment of transition risks.

Various climate-related transition events were identified to assess transition risks and opportunities during the DMA process, for example related to the following matters:

Transition risks and opportunities

Policy and legal

• Enhanced emissions reporting obligations

• Mandates on and regulation of existing products, services, and production processes

Technology

• Substitution of existing products and services with lower emissions options

• Unsuccessful investment in new technologies

• Costs of transition to lower emissions

Market

• Changing customer behavior technology

• Uncertainty in market signals

• Increased cost of raw materials

Reputation

• Increased stakeholder concern

• Stigmatization of sector

Unofficial carbon neutrality roadmap, made in 2022, is naming the methods to minimize CO2-emissions and their effectiveness. The roadmap is based on mathematical evaluation of the first executed emission calculations and analysis of its material emission sources. The action plan which was created when the carbon neutrality roadmap was created are fuel consumption minimization, explosive waste minimization or their circularity into process, changing electricity contract to non-fossils, improving energy efficiency of district heating solution and finding a suitable greener raw material. Data is followed by the leadership team, business unit leadership team and site responsible. The current carbon neutrality roadmap has received approval from the explosives business unit, the leadership team, and the Board.

Forcit carbon neutrality roadmap 2022 instead of official transition plan:

Scope I

Preparing for the changes in fleets non fossil motor technology investments when the technology is usable in our conditions and has safety approvals by authorities. Minimizing the explosive wastes which must be open burn for safety reasons.

Scope 2

Purchasing only CO2 free energy and investment in energy efficiency improvements and fossil-based heaters removal.

Scope 3

Continuous work for finding CO2 free raw materials which are economically profitable, and improvements in productions explosive waste minimization.

The company’s plan is to do scenario analysis, including quantifiable milestones, and create transition plan, which is following the Paris agreement and limits the global warming to 1,5 degrees Celsius, based on actual data of 2025 and analyzed GHG emissions separately in three different scopes. The process to collect the data is under development and will result in representative values. Target is then evaluated if normalization of the base year is needed. The plan includes:

• Scenario Analysis: A comprehensive assessment of GHG emissions across all scopes.

• Emission Reduction Roadmap: Key milestones for energy efficiency improvements, fuel transition, and circular economy practices.

• Investment Strategy:

Allocation of capital to sustainability initiatives, particularly in energy transition and carbon-neutral product development.

The transition plan will be fully aligned with the company’s business strategy and financial planning. The new transition plan subsequently will be approved by business units, the leadership team, and the Board of Directors. Currently, business unit leadership teams are evaluating all investment and operational needs, ensuring that changes, particularly those supporting carbon neutrality, are implemented in a logical and structured manner. While adopting new technologies and solutions, safety remains the top priority.

CSO actively participates in leadership team discussions and investment planning to ensure the effective progression of the transition plan. Moving forward, this operational practice requires more precise documentation and integration into strategic planning and financial reporting.

The execution of the transition plan builds on significant progress already made under the carbon neutrality roadmap.

Referring to FORCITs current carbon neutrality roadmap, which is not calculated precisely according to the CSRD requirement and methods, and does not cover all emissions of Scope III, but clearly follows the targets defined in Paris Agreement. The carbon neutrality roadmap is based on the data of 2021 and CO2 emission factors calculated by GHG protocol. Later, the data comprehensives are improved, and the next transition plan will gather operations in more detailed. The current roadmap contains the main CO2 sources and mathematically calculated targets which are in line with the Paris Agreement. FORCIT must prioritize the reduction of emissions of the Scope II first, thus emissions of the Scope I necessitates technology which is not approved by safety regulations or profitable for customers (e.g hydrogen technology).

Opex or Capex required for implementation of the action plan have analyzed only by rough estimation. Investments to minimize emissions are evaluated together with all investments. The business units consider investments priorities, or they are analyzed during the group budgeting’s process, depending on whether the investments are directed to business units operations or general development in the group level. Investments planning follows the strategy period and are approved by COO, CEO or BoD following general approval processes. Investments economical profitability and influences on business are evaluated.

Taxonomy-aligned financial reporting will be prepared and used as basis for reporting financial information related to transition plan. The company has recognized potential locked-in GHG emissions in each Scope.

Energy consumption and efficiency

FORCIT has implemented substantial measures to enhance energy efficiency and transition towards renewable energy. Notably, electricity contract renewals originally planned for the 2023-2026 period have been executed ahead of schedule. In 2022, FORCIT introduced a new car-benefit policy, resulting in a 44% increase in electric vehicles within the company fleet, supported by charging facilities provided at workplaces. Additionally, the company prioritizes maintaining a modern, well-maintained truck fleet operated exclusively by trained drivers, reducing emissions and fuel consumption.

Test investments in solar panel technology at support function facilities have shown promising results; however, combining chemical handling operations and solar technology within the same buildings has been deemed unsafe based on comprehensive risk assessments. In northern climates, the company has notably reduced fossil fuel dependency through enhancements in insulation and heating technology, significantly decreasing oil consumption. Continued R&D and procurement efforts have successfully produced lower-emission products, which will be reflected in updated Environmental Product Declarations (EPDs), ultimately benefiting end users and circular economy generally.

Further investments to optimize energy consumption are planned, with formal tracking mechanisms.

“Electricity contract renewals originally planned for the 2023-2026 period have been executed ahead of schedule.”

Financial impact and taxonomy alignment

Currently, FORCIT has not conducted a detailed analysis of how climate mitigation actions depend on internal resources, R&D investments, or investment capability. Broadly, the company recognizes the greatest climate impact mitigation potential in its core manufacturing process, specifically through managing the main raw material ammonium nitrate, as well as advancing non-fossil motor and fuel technologies, such as fuel cells and hydrogen technology.

In preparation for alignment with future EU Taxonomy requirements, FORCIT has initiated tracking sustainability-related investments, enhancing methodologies for classifying green investments, and developing documentation systems for monitoring the procurement of materials and services. The company aims to finalize taxonomy-aligned reporting when EU regulations are in place, integrating comprehensive climate impact assessments into its financial disclosures.

While climate-related factors have not been included in remuneration policies for administrative, management, and supervisory bodies, personnel in R&D, production, and procurement departments do have incentives tied directly to achieving targets related to reducing product greenhouse gas (GHG) emissions.