Sustainability in Short 2022 - FORCIT Group - ENG

2022 SUSTAINABILITY IN SHORT

PREWORDS

NEW NORMAL

The Confederation of Finnish Industries (EK) is the leading business organisation in Finland. It predicted three different scenarios for the future in Finland based on the overall situation in Europe, varying from the state of continuing war to the rebuilding of Europe. Each of the scenarios highlighted the importance of green transition and sustainability. If the war situation continues, their importance will undoubtedly increase. Besides the scenario models, preparation for cyber threats has been seen as important.

Also, difficulties in raw materials and components supply chains in addition to labour shortages were identified.

These trends in public scenarios were recognised at FORCIT during 2022. Many threats, opportunities and fast changes in international economics also affected us, but we succeeded in keeping a high level of delivery reliability and in developing our business in these special circumstances.

NEW THINKING

The FORCIT Group Leadership team members started the year by training themselves in the field of sustainability. The essential focus factors were named as the basis for our roadmap work, which was also completed in 2022.

To better understand overall expectations from our customers, a materiality analysis was conducted. The identified focus factors, in conjunction with the materiality analysis, exposed several essential connection points which help our business sector to be more sustainable.

The first carbon footprint data for group-level operations showed the importance of sustainable supply chains. In 2022, economics, demands for metals in the field of energy production, changes in supply chains and the importance of carbon emissions were tied together in a new way.

NEW TARGET

The Intergovernmental Panel on Climate Change (IPCC) reported in April 2022 that the current trends in emissions will lead to a global warming of around three degrees by the end of the century, unless fast and effective emission reduction measures are undertaken over the next two decades.

Fossil energy has had a major role in causing climate change, but the ongoing energy transformation offers opportunities to find solutions to this issue. Many types of low-emission technologies have become cheaper and are being introduced faster. At FORCIT, we have continued investing in fossil-free energy and are waiting for the new technology to be approved by ADR regulations.

These elements, listed above, gave more potential for our sustainability work, and we finalised an ambitious roadmap to carbon neutrality. Energy sources, supply chains and regulations are changing fast, and we are ready to step onboard and contribute to the green transition in the mining and excavation businesses.

TABLE OF CONTENTS

GREETINGS FROM CEO

CELEBRATING OUR LEGACY

This year, we are celebrating our 130th anniversary – our company history goes back to the end of the 19th century and continues to this day.

From our beginnings in dynamite production in 1893, we have continued our operations throughout the 20th century to the present.

Today, we are the leading expert in explosives and blasting for Nordic conditions – and present on the global market for the digitalisation of mining. We are also a major player within environmental consulting services, as well as a responsible producer of state-of-the-art defence technologies for the global market.

We feel that a long history comes with a sense of duty for the future. This means taking responsibility and leading our industry forward. We are committed to continuously developing our products and services, utilising modern digital technologies to address the needs of a sustainable future.

FORCIT CONTINUES TO GROW THROUGH TURBULENT TIMES

Overall European economic development and the operating environment have been heavily influenced by the pandemic, the war in Ukraine, and the

aftermaths of these. Despite an overall challenging business environment, we continue to grow as a company and have solid finances. This enables us to invest in our future.

circular economy can contribute to supply to some extent, but not even close to meeting the future needs. This puts the European mining industry at the forefront of the green transition.

Resilience and security of supply are strongly connected to sustainable business. The importance of these issues has increased significantly during the past years and today constitute key challenges for us. During 2022, the macro-level discussion on European security of supply related to critical raw materials and energy has also intensified. Access to rare earth elements, as well as many base metals and minerals is essential to sustain Europe’s climate ambitions as well as our independence. A typical electric vehicle battery pack, for example, needs around 8 kilograms of lithium, 35 kilograms of nickel, 20 kilograms of manganese and 14 kilograms of cobalt, while charging stations require substantial amounts of copper. For green power, solar panels use large quantities of copper, silicon, silver, and zinc, while wind turbines require iron ore, copper, and aluminium.

Currently, European production of many critical raw materials is less than three per cent of the EU’s own needs, which makes the EU highly dependent on imports from for example China. Recycling and

Our customers operating in the mining and infrastructure construction field in the Nordic countries have a pivotal role to play in this development, and as a key supplier and partner to these industries, we are an important part of this value chain.

Interest in our defence technology has increased over the past years because of the geopolitical environment which culminated in the war in Ukraine. As many countries are raising their defence budgets, the demand for our technologies continues to grow at a rapid pace. We expect the growth within this segment to continue for many years to come as Europe rebuilds its defence capabilities.

Safety is always our key priority. In 2022, we took several steps to further strengthen consciousness and safety culture at FORCIT.

AMBITIOUS ROADMAP TO REACH CARBON NEUTRALITY BY 2035

We strive to be at the forefront of our industry when it comes to sustainability. Our strong commitment to be a part of the solution in the global fight against climate change is well reflected in our goal to be carbon neutral in our operations by 2035.

Our carbon neutrality roadmap, finalised in 2022, includes investments and development projects that will help us to reduce emissions, improve energy efficiency and further increase the share of green energy. We have also initiated a comprehensive R&D program to develop a green product line.

We are committed to continuing stretching ourselves every day to fulfil the expectations on us as a trustworthy supplier, also during turbulent times, and to taking further steps in sustainable product and services development. Always with safety first! Here’s to the next 130 years of charging ahead!

Joakim Westerlund CEO FORCIT Group

PROFITABILITY: THE FINANCIAL PERFORMANCE OF 2022

The company’s operations continued to develop positively in 2022. The overall European economic development and the operating environment have been heavily influenced by the pandemic, the war in Ukraine, and the aftermaths of these.

Despite an overall challenging business environment, all business units grew in comparison to the previous year in local currencies.

TURNOVER

FORCIT Group’s operations developed overall positively in 2022, the group turnover increasing by 52% to EUR 228.3 million (150.5).

In 2022 FORCIT Explosives and FORCIT Defence business unit’s turnover grew significantly, while FORCIT Consulting business unit’s turnover remained on last year’s level.

FORCIT Group’s turnover developed positively in all our main markets: Finland +38%, Sweden +52% and Norway +76%.

OPERATING PROFITS

FORCIT Group’s operating profit (EBIT) increased significantly compared to 2021, by more than 200%, while EBITDA also increased significantly compared to 2021, by more than 100%.

Profitability has increased with rising revenues and a more profitable business area mix.

The development of turnover in 2019‒2022

SUSTAINABLE PROFITABLE GROWTH

Financial sustainability is based upon long-term financial targets and perspective on financial decisions and actions. The targets address profitable growth and sustainable capital structure, resulting in stable economic value for our owners.

PEOPLE: GOOD FLOW AROUND SAFETY

FOCUS ON RISKS

Safety has been our focus for a long time. Our latest actions have concentrated on psychological aspects, pointing out the importance of human behaviour and recognising risks. At the beginning of 2022, we developed the concept of Day with Operator (DWO) rounds, where we followed one employee or a group of employees for a day. We discussed risks, made observations, and came up with new ideas together. At the end of the day, we summarised the observations and the employees evaluated and wrote down the risks related to their work. The learnings were shared in the company’s internal channels. A total of 25 DWO rounds were conducted.

TRAININGS IN FULL ACTION AFTER COVID-19

Safety development and deeper understanding needs different professionalities, backgrounds and experiences. Co-operation has led to sharing information of accidents or good practices between organisations, as well as to deeper co-operation through training. FORCIT supervisors were trained by the Competence Centre for Energetic Materials (KCEM) in Stockholm to understand how people react in accident situations, how accidents de-

velop and what the responsibilities of supervisors are when talking about explosives manufacturing. FORCIT employees participated in Fex, Allex and other courses, and in addition we organised a tour at our dynamite factory for the supervisors of other explosives companies.

ADAPTING TO THE CHANGING SITUATION

Physical and cyber security procedure was developed in our operations, as the overall situation in Europe was rapidly changing. The awareness of the overall threat level has been analysed in close co-operation with authorities. The preparedness to protect facilities, employees and overall safety is a top priority for us. We never place all of our trust on a single security procedure or technology, and the resources and level of techniques were increased based on a general risk analysis.

Charging work near the edge of a bench.

* LTIF, Lost time injuries, includes all on-the-job injuries that require a person to stay away from work more than 24 hours or which result in death or permanent disability. LTIF number shows how many of lost time injuries occur in a workplace per 1 million hours worked.

FORCIT GROUP: PEOPLE IN FIGURES 2022

** TRIF, Total recordable injuries, is a measure that encompasses all fatalities, lost time injury, cases of substitute work due to injury and medical treatment cases by medical professionals. TRIF does not include any first aid injuries. TRIF number shows how many injuries occur in a workplace per 1 million hours worked.

OPERATIONAL SAFETY DEVELOPMENT

The majority of safety development is done by our own employees, by completing reports on safety observations, deviations, near-misses or accidents. This ForSafe reporting system has been adopted well in each business unit and country, and employees have been very active in safety observation and increased their share of the total number of reports.

During 2022, three accidents occurred which led to short sick leaves. There were no fatal or serious incidents. All our accidents and many near misses were related to falling or sliding, and thus we decided to arrange a campaign where we asked employees to report work situations or places where there are obvious risks of falling, slipping, dropping or stumbling. The campaign was positive in two ways: firstly, it revealed several risks which were not recognised earlier, and secondly, it opened our eyes to make observations of our surroundings.

ROUTINES IN CONTROLLING SAFETY

Normal inspection routines were conducted in each operation. Technical failures or shortcomings were handled fast. Authorities started to do live inspections again following the COVID-19 lockdown, and thus 2022 was active in many fields of safety. The total sum of internal and external inspections in our company was more than 200.

The largest authority exercise was held in the Vihtavuori factory area, where several stakeholders were organised to participate in a scenario that involved a bulk truck fire. The training revealed both the high level of systematic approach and knowledge around explosives and hazardous situations, and some details to develop further.

LTIF per million hours has developed in the right direction. Training in Vihtavuori.

CASE EXAMPLE: RACKS FOR SAFE TRUCK ICE AND SNOW REMOVAL

Truck drivers are responsible for safety of the vehicles they are driving and for minimising risk for others in road traffic. Prior to transportation, drivers have to ensure there is not anything external to flow or drop down from the cabin, e.g., snow or ice. During wintertime, drivers must check the truck cabin and remove ice and snow before driving to minimise risks for other traffic.

The rack in the picture is used to clean the cabins of vans and trucks in the explosive transportation fleet. It was the first model in use, and similar solutions will be added to other stations.

CASE EXAMPLE: PREPARING FOR NORDIC WINTER

Forcit Norway’s operators and drivers must put snow chains on their vehicles before 1 November each year. This yearly and traditional practice reveals the suitability and condition of the chains. At the same time, it is wise to check the friction and spikes of winter shoes as well.

DID YOU KNOW?

FORCIT Consulting has arranged almost 40 courses on safe transporting of dangerous goods for licensing ADR drivers. In addition, many other tailored training sessions have been held for large-scale Finnish actors, such as the Police University College and companies in pulp and paper industry.

Racks are used to remove snow and ice from the truck cabin.

CASE EXAMPLE: FORCIT DRIVING ACADEMY

In 2022, Winter Driving Training was organised for employees who drive a significant distance to work in their own cars. In addition, we started a Proactive Driving Course series for drivers of the heavy vehicle fleet. In the training, MEMU charging vehicles and EX III trucks were driven both empty and loaded. These same vehicles are used to transport explosives or semi-manufactured explosives.

The Proactive Driving Course consists of theory and practical exercises on the track. In addition to safety, the theoretical part also discusses practical measures of economical and ecological driving, which ultimately lead to smoother traffic. Drivers who have been involved in accidents also receive additional assuring training. The Driving Academy program will continue in 2023.

These training sessions, which around 20 employees have completed so far, have been organised by FORCIT Consulting’s traffic experts.

PLANET: ANALYSING AND PLANNING

CARBON FOOTPRINT

In the beginning of 2022, we conducted the first fully comprehensive evaluation and carbon footprint calculation for FORCIT Group. The calculation presents all business units and all functions including explosives manufacturing, offices, and services. This study clearly shows the differences in emissions between business units and scopes, and the importance of overall co-operation with customers and supply chains. Developing the data collection process, finding new raw materials with different energy sources and overall understanding of the meaningful actions in decreasing emissions are therefore key focus areas for the coming years. CO2 emissions totalled in 130,000 t CO2-eq.

EMISSIONS FROM OUR PRODUCTION

Scope 1 comprises direct emissions from operations at our own sites and services (fuel consumption in facilities and vehicles) as well as emissions when producing or destroying explosives on site. In our operations, it is obvious that logistics stands for the biggest part of our direct emissions.

Scope 2 summarises the CO2 emissions of purchased electricity and energy (heating and cooling) needed for sites, facilities and processes.

The results show the importance of shifting to green energy and focusing on energy-saving activities and technologies. In the coming years, we will investigate possibilities to shift to green energy at all locations.

EMISSIONS OF MATERIALS

FORCIT’s biggest carbon footprint emission sources (95%) originate from Scope 3 emissions, which is common in industrial business footprints. Ammonium nitrate ‒ the main raw material in explosives production ‒ has the biggest negative impact and accounts for approximately two-thirds of the total emissions of FORCIT Group. The results clearly show the great influence of Scope 3 emissions along the value chain, urging us to develop co-operation and partnerships to reduce these.

While production of raw materials causes the biggest footprint, the usage of our products at blasting sites is also clearly seen in our calculation results.

THE ENERGY EFFICIENCY OF FACTORIES IMPROVED BY 14% AND THE SHARE OF GREEN ENERGY INCREASED BY 8%

The amount of district heating used in Hanko factory has decreased. Also, the share of fossil sources decreased. The share of renewable energy increased and reached the level of 95%.

In Vihtavuori factory, the electricity was switched to 50% green electricity. The use of distric heating decreased over 60%. Improved figures are partly explained by better tracking and measuring.

These positive changes mostly concern our cartridge, pipe charge and detonating cord products, but also the bulk emulsion manufactured in Vihtavuori.

Increase in energy efficiency can also be seen in places where fossil oil is used for heating the facilities. The consumption decreased by almost 30%.

The overall electricity usage increased by 7%, but the share of green energy also increased, and thus the impact on CO2 emissions is neutral.

Business runs well and the total energy efficiency improved by 20% in relation to production volumes. The increased volume also means that the number of deliveries, driven distances and fuel consumption has increased, but not at the same pace as the volume. The idling statistics of trucks show improvement.

FORCIT GROUP: PLANET IN FIGURES

** Does not include personal cars.

The amount of waste decreased by 4%, and the share of recycled or energy waste increased, but there was a lot of internal variation.

The battery consumption has not developed into the right direction.

CARBON NEUTRALITY ROADMAP

According to principle of materiality, we defined the carbon neutrality roadmap to include only the Explosives business unit and the production operations of FORCIT Defence. Carbon footprint data was crucial in analysing materiality.

The roadmap to carbon neutrality starts with actions in Scopes 1 and 2, meaning replacing fossil oil heaters with fossil-free technology. We set targets for economical driving and material recycling. Both factors should be improved by at least 5%. FORCIT already offers customers the possibility to offset the CO2 emissions of downstream transportation. The plan is to renew the fleet of support functions to electrical vehicles. ADR regulations and the current state of available technology prevent the use of electric or hydrogen technology in our explosive transports.

INVESTMENTS IN ENERGY IMPROVEMENTS

In Karlskoga, Sweden, station facilities will be upgraded by insulation and solar panels. Other solar energy applications have been set in our long-time planning. Focus on energy efficiency projects and heating systems will be prioritised in coming investments. Increasing the share of fossil-free electricity is a crucial goal.

Reducing emissions in Scopes 1 & 2 is our primary target. The aim is to reduce emissions by 6-10% each year compared to the level of 2021. The plan is to achieve carbon neutrality in our own production at the latest by 2035. As a result of hazardous waste and possible ADR regulations, we will prepare to offset 100 t CO2 eq/year. The decision to convert the ADR fleet to hydrogen-based technology has already been made and will be implemented when technical solutions and regulations permit it. Our targets are partly even more ambitious than the general target level to stop global warming based on climate science and the Paris Agreement.

FUTURE PROJECTS

Besides developing our own production, we will continue our efforts aiming at reducing our Scope 3 emissions. Sustainable supply chain and logistics play a pivotal role in this work. Focus on relevant sustainability projects (such as nitrogen-free emulsion, emulsion recycling, package recycling and plastics minimisation) will continue. These projects directly correspond to the needs highlighted in the materiality analysis.

A large group of professionals with different backgrounds was involved in creation of the roadmap.

CASE EXAMPLE: WIND TURBINE PROJECT

The need for wind power has increased substantially in recent years, and wind farms are being built all over the Nordics. FORCIT is involved in several of these projects and has, for example, delivered explosives and mobile emulsion solutions to wind power construction for one of Europe’s largest wind power projects in the Ånge-Ljusdal region in central Sweden. The wind farms will be an important part in contributing to reducing carbon dioxide emissions from Sweden’s power production and a step to society’s transition to renewable energy. By the end of 2025, it is estimated that wind power will reach an installed capacity of 52.7 TWh per year in Sweden. There are 765 wind turbines under construction, with an estimated normal annual production of 14.2 TWh.

Through good implementation and co-operation with contractors, FORCIT intends to continue to adapt and develop equipment and processes with great interest to contribute to sustainability, e.g., optimised logistics for explosives deliveries. FORCIT is proud to be able to support the Stens Bergborrning company in its role as one of the most important players in wind farm investments in the region.

DID YOU KNOW? EPD KEMIX

A wind turbine consists of about 85% steel and iron, which are recyclable materials. The blades consist of thermosetting plastic composites, the same as in e.g. boats, and for these, intensive development is underway to find sustainable solutions for disposal.

FORCIT has a new member in the environmental product declaration (EPD) family. The twelfth EPD is published for Kemix A pipecharges.

An EPD is a document which may be used in different countries to quantifiably demonstrate the environmental performance of a product. It can also be used internally for the improvement of product manufacture or process efficiency.

EPDs have some strict requirements and rules to conform to. They are generated based on data obtained through Life Cycle Assessment (LCA). An LCA is performed for each product separately in line with EN 15804 and other related international standards, using a peer reviewed Product Category Rule (PCR) document. A PCR is a set of guidelines that determine what data should be gathered and how it will be evaluated. This document for explosives and initiation systems is NPCR 024. The standards and rules harmonise the structure for EPDs in the construction sector, making the information transparent and comparable.

All our EPDs are ‘cradle-to-grave’ and verified by a third party. The EPDs are published on The Norwegian EPD Foundation’s website www.epd-norge.no.

REUSE OF EMULSION MATERIAL

FORCIT has developed a method by which an emulsion explosive side stream classified as 5.1 can be broken down back into an aqueous ammonium nitrate phase and a separate oil phase. In 2022, FORCIT received funding from Business Finland to further develop this method in co-operation with Technical Research Centre VTT. The goal of the project is to find the most optimal decomposition and separation method, as well as to find the means for the further processing of the separated ammonium nitrate phase, so that it meets the quality requirements set for ammonium nitrate before being recycled back to FORCIT’s own production. The goal is to test and transfer the laboratory-scale process to production scale by the end of 2025.

NITROGEN-FREE EMULSION DEVELOPMENT PROJECT

Development work toward nitrogen-free emulsion has taken steps toward industrial utilisations. Authority permissions and CE approvals permit us to conduct test blasts at the Outokumpu Chrome Kemi mine. Well-planned testing procedure is now in the charging phase with hydrogen peroxide water gel explosive (HP Kemiitti), packaged as pipe charges. Tests have been successful and larger blasts will be conducted soon. R&D work continues towards bulk HPE Kemiitti, which will be an emulsion-based nitrogen-free explosive.

DRIVING EMISSIONS

Business volumes have been at a high level and there have not been any critical changes in truck technology, thus the total kilometres and emissions have increased. Consciousness of economical driving, with both nature and profitability as main drivers, has positively influenced fuel consumption. Current tracing is not comprehensive enough, but still sufficiently wide to analyse the trend. Environ-

mental consciousness and training clearly affected idling and driving culture, but there is still work to do and practices to develop. The share of idling depends on, e.g., the truck type and average distances, but we can show a few percent difference of idling between trucks in similar usage, and bigger variances in driving economy. More precise tracking will be continued.

Chargers testing HP Kemiitti at a working mine.

MATERIALITY ANALYSIS REGARDING SUSTAINABILITY

A materiality analysis consisting of an international web survey, followed by a limited number interviews, was conducted during spring 2022. The goal was to confirm how partners and customers rate and value different sustainability areas within FORCIT Group. Knowledge gained from this project was used specifically in planning and prioritising the Group’s sustainability efforts for the future.

Safety has been the main sustainability value for a long time, but the survey answers and following interviews clearly indicate that the importance of the other sustainability values as selection criteria is expected to increase in the future as demands from shareholders, customers and authorities constantly increase and companies set their own goals for environmental emissions. In the last few years, nitrogen emissions in water have been in focus.

Answers confirm that safe products and deliveries are the most important sustainability criteria. For example, efficient use of materials and carbon neutral products and deliveries were desired ways to reduce emissions. In addtion, co-operation with customers and innovation were also considered important.

Fair competition alongside clear and fair terms were considered the most important ethical criteria.

All three main categories of sustainability – People, Planet and Profitability – scored high in materiality. People, including safety, received the highest average score (5/6).

OUTCOME OF INTERVIEWS

Interviews confirmed what the survey already indicated, that the importance of sustainability criteria is indeed expected to increase in the future. The importance of environmental effects will increase in particular, though safety will always come first.

The development of carbon neutral products and services was seen necessary, for example, as their use would improve the image of the operating company and make it easier to get environmental permits. There will most likely be an increasing demand for carbon neutral products and services from the side of clients and investors in the future. The focus is expected to shift more on the whole supply chain once actions are in place for site-related matters. Current ethical criteria were confirmed to be on a desired level in general and there were no expectations for new measurable criteria for this area.

FORCIT offset 100 verified carbon units (VCU) in a return to response activity.

Safety and solutions that consider environmental impacts play a particularly important role in mine environments.

CONSULTING BUSINESS –INVOLVED IN PROJECTS THAT PROMOTE SUSTAINABILITY

MEASUREMENTS IN THE KEMI BIOPRODUCT MILL

FORCIT Consulting conducted vibration, dust, and noise measurements at the bioproduct mill construction project in Kemi, Northern Finland. The value of the bioproduct mill investment is over two billion euros, and it is the largest investment ever made by the forest industry in Finland. The mill will begin production in 2023.

In the concept, the renewable wood raw material and production side streams are used in full as different bioproducts, thus replacing fossil-based materials and fossil fuels. The new plant will also produce 2.0 TWh of renewable electricity per year.

This impressive measurement task also contained several side projects in the same region. Side projects were related to development of infrastructure, railways, and harbour to ensure efficient logistics to the mill.

VIBRATION, NOISE AND DUST

The environmental impacts were minimised and had been taken into consideration during the pre-engineering phase, both regarding the construction and production of the mill. Vibration, noise, and dust emissions are included in these impacts.

The special feature of this measurement task in practice was related to the scale of the construction site and simultaneous operations with the old and new mill. Vibration control ensured that construction work would not damage old or already assembled facilities and structures or houses nearby. Mills are located partly inside of each other and thus the vibration control of construction project was a necessity. In addition, the sensitivity of the power plant, servers and fiberglass water pipes had to be considered when planning of construction activities.

Noise measurements ensured that the limits set up in environmental permission were not exceeded. In the measurement technique, the challenge came from nature itself due to close location by the sea, with a significant tailwind effect to noise transmission. The number of measurement points had to be increased with our own wind-measuring weather station to get reliability values besides the wind and waves.

Dust emissions were also monitored during the construction project. Identifying the number of dust particle levels was a very practical way to measure instant level of dust emissions. The analyser controls the dust particles emitted from the construction site and identifies the daily averages of each class of particle sizes. Based on the measurements, a special action to limit the dust diffusion was made possible.

Measuring devices and activities.

CASE EXAMPLE: ENSURING SAFETY AND SECURING OF PROPERTY – DRONE MONITORING MAKES SENSE

Using drones in monitoring technical facilities has proven to be very practical and effective. It has maximised the level of preliminary documentation and the data of the current state. When it comes to higher or unique architecture, it has not been possible to check all layers prior to the work via traditional methods. In the picture, the drone monitoring gave reliable data of the currents state of the slate structure of the roof in the old church. Monitoring was used in work design, employee safety practices and damage monitoring.

CONSULTING OPERATIONS IN THE NORDICS

EXPLOSIVES OPERATIONS: NORWAY

2022

EXPLOSIVES OPERATIONS: SWEDEN

EXPLOSIVES OPERATIONS: FINLAND

2022 FINLAND IN FIGURES (2021 in parentheses)

SUSTAINABLE DEVELOPMENT AND DEFENCE TECHNOLOGY

Today, FORCIT is a global supplier operating as a prime contractor for our own systems and as a partner for other international system providers within defence technology. FORCIT Defence is one of the leading suppliers of Insensitive Munition Defence Systems and delivers key capabilities to Finland and can also export technology and capabilities to countries approved by the Finnish government.

The product portfolio ranges from Land and Naval Systems to Breaching and Demolition Solutions and Warheads Design and Development.

Interest in FORCIT Defence’s technologies has increased during recent years as a result of the general deterioration of the geopolitical environment. This development is expected to continue due to the current European security situation.

Our philosophy within Defence is focused on developing insensitive munitions technology, which is as safe as possible to use and activate, minimising the risk of accidents and third-party damage. All issues related to defence technology are subject to strict national regulations and the Finnish government decides upon the list of countries to which Finnish companies are allowed to export defence technology and products. In order to maintain our position as a trusted partner within the defence field, it is necessary to conduct our business in strict accordance with current export control laws, regulations and authorisations.

National legislation and decisions therefore form the basis for all our activities regarding export and defence technology. We will always, without exception, comply with export control laws and regulations applicable to our business. In addition to complying with all applicable laws and regulations of the countries or territories where we operate, our defence products are fully compliant with international regulations and treaties (e.g., Ottawa, Geneva).

The operations of the Defence business unit are managed from FORCIT’s head office in Hanko, Finland.

CODE OF CONDUCT

Our policy is to conduct all our business in an honest and ethical way, as well as to implement transparency and traceability in business operations and practices. The FORCIT Code of Conduct addresses market and business ethics issues and obligates employees, partners and suppliers to respect this policy. The Code of Conduct is important to follow in FORCIT generally, but especially important for the Defence business unit and all their business transactions and relationships.

In all our operations, we comply with current legislation. Applicable legislation includes use of labour and employment contracts, occupational safety, environmental protection, anti-corruption and bribery, competition, and product safety, as well as laws related to chemical and explosives safety.

In addition to the regulations of licensing authorities, FORCIT has implemented internal guidelines and assesses each potential export case thoroughly. FORCIT is committed to observing and respecting universal human rights as defined in the United Nations (UN) Universal Declaration of Human Rights and other international human rights agreements, and to promoting the realisation of universal human rights.

FORCIT CODE OF CONDUCT

• Non-discriminatory treatment of employees

• Occupational safety and health

• Respecting human rights

• Anti-corruption and bribery

• Trade restrictions

• Avoiding conflicts of interest

• Competition law

• Confidentiality

DID YOU KNOW?

NOTIFICATION CHANNEL

FORCIT has a notification channel where it is possible to report any suspicion of a crime, misconduct, or other activity contrary to our company values. The notification can be submitted anonymously and also discussed anonymously with the notification handler.

The channel can be found at https://forcitgroup.ilmoituskanava.fi/#/?lang=en.

There have not been any notifications since the system was started in 2021.

MARKET AND BUSINESS ETHICS

To follow the transparency regulations, FORCIT has started a project focusing on ethics and human rights in the supply chain and will conduct audits of suppliers’ operations in 2023. The report of due diligence and practices around transparency are underway. FORCIT will detail the progress on the company’s web pages. In materiality analysis, customers appreciated the current situation in business ethics in a good level.

REPORT OF DUE DILIGENCE AND TRANSPARENCY

• Quite comprehensive background information is available on long-term suppliers, and also new suppliers have been audited along with different R&D projects or quality matters.

• Suppliers have already been subjected to desktop audits, and in 2023, some suppliers’ production facilities will also be audited at site. The desktop audits have covered topics related to safety, environment, and quality.

• We have not detected any abuses in the audits.

• Notification Channel has been in use since 2021. Zero notifications have been submitted.

• A more detailed analysis of suppliers from the perspective of ethics and transparency has been started.

• Almost all raw material volumes are from European companies and/or produced in Europe. Purchases from Russia have been completely stopped.

• Our procurement activities and the contracts we make comply with FORCIT’s Code of Conduct.

• We will report on these matters annually in FORCIT Group’s sustainability report. For more information, please contact FORCIT Group’s sustainability department, https://forcitgroup.com/ en/contact-information/.