Climate Transition Plan Icebug 2023

CLIMATE TRANSITION PLAN 2023

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Icebug is a Swedish outdoor footwear brand with the vision to be a changemaker for a society where people can thrive on a planet in balance, and a commitment to use the business not for maximizing profit but as a force for good.

Icebug makes shoes with leading traction technologies to empower people to get out all year round – living happier and healthier lives.

Summary of transition plan This transition plan implements the recommendations of the UN Secretary-General’s High-Level Expert Group’s report “Integrity Matters.” It follows the criteria set forth in the UN’s checklist for businesses and was prepared with the support of the Exponential Roadmap Initiative.

The current plan focuses on the areas in which Icebug currently sees the biggest potential for securing emission reductions and avoidance, primarily through using less resources and using less energy, and phasing out fossil sources from all resources and energy. In practice, that means being an accelerator in switching to renewable energy in our supply chain and increasing the amount of recycled and bio-based materials in our products.

A core driver of the transition is the internal carbon fee of $100/ton CO2e which provides a financial incentive to constantly look for low carbon options in all parts of the business. In addition, the carbon fee allocates resources for climate transition investment.

The funds are allocated where Icebug sees the biggest potential effect, whether inside or outside of the supply chain. Seeking maximum positive impact this way is in addition to the baseline of committing to our own emissions decrease in line with the 1.5°C pathway.

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× Established: 2001 × Type of org: Corporation × Ownership: Private × Size today: 50 employees and 35 MUSD last fiscal year × Expected growth/development next 10-20 years: Substantial – but who knows about the future? Financial growth is not a target per se for Icebug, but a means to grow the impact on sustainable transformation. × Supply chain countries: Primarily Vietnam and Taiwan. × Materials used, for soles: Natural rubber, synthetic rubber (oil based), EVA and other special foams and plastics (primarily oil based, also some bio-based materials). Small amounts of steel. × Materials used, for uppers: Leather, wool, polyester (recycled/new oil/bio-based), nylon (recycled/new)

1. General 1a. Introduction about how the transition plan is embedded in and aligned with the undertaking’s overall business strategy Icebug’s climate commitment is implicitly written into the company statutes, which state that “…The purpose of the business is not limited to maximizing profit. The business must refrain from exceeding planetary boundaries and exploiting people. …” The company’s climate transition plan is therefore integral to and underpinned by the company’s overall business strategy.

Responsibility for implementing Icebug’s climate transition plan sits at the very top of the company, with the board and the owners. This is further clarified through the owners’ directives.

1b. Governance of the plan and responsibilities

Icebug’s central Sustainability Team, consisting of CEO, CFO, Sustainability Manager and the Sustainability Communications Lead, is responsible for operationalizing the commitment to climate action. The team meets weekly. The sustainability plan, which includes the climate transition plan, is updated annually, based on regular assessment of progress. We publish an annual impact report which includes our total greenhouse gas emissions and progress towards our climate targets.

1c. Aligning capital expenditure plans, R&D plans and investments with all targets Icebug’s internal carbon pricing of $100/ton designates funds for climate investments – inside or outside of our supply chain, wherever the greatest effect will be achieved. But as a general rule, Icebug doesn’t work with a traditional financial planning. Instead, we have a financial planning model called “beyond budgeting” where we work with directions but no details about future financials (see for instance https://bbrt.org/).

On the most foundational level we set our business objectives so that when Icebug is doing well (when we meet our business objectives), the World is doing well. Using our products increases people’s health and well-being, with a very low footprint and resource use. We promote people finding their activities close by.

Within this framework, we do business cases and evaluate them continuously. For example, we prioritized investing in capacity-building to get solar installed at factories in Vietnam (where we produce and where others produce) over installing solar panels on the roof at our office in Sweden, based on a cost/benefit analysis (solar panels have higher efficiency in Vietnam and the grid electricity is already nearly fossil-free in Sweden).

But in the next phase, when solar in Vietnam is on track, we will turn back to evaluate the solar case in Sweden. This would not need to be budgeted at the start of the year, instead we assess the overall impact – look at if we have competing projects, if we have enough liquidity and the effect both financially and on the environment.

Our mechanism of internal carbon pricing also builds climate consideration into the core business model: when we set the prices for our products or when choosing which materials to use in a shoe, those that cause higher emissions are penalized with a higher price. Here we also weigh in the longevity of the material and product, as carbon footprint per use is actually a more valid metric than just carbon footprint for production.

We have a slim balance sheet and we don’t own any buildings, factories etc.

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1d. Handling GHG intensive and energy-intensive assets and products (ie legacy and potentially stranded assets)

From a greenhouse gas perspective, it’s challenging to benchmark our shoes with the rest of the industry since there is very little average data publicly available. The benchmark LCA commonly referred to is still a study done over 10 years ago at MIT on an Asics running shoe, giving a result of 14kg CO2e per pair. For last year our average production footprint per pair was around 11kg CO2e per shoe, based on a simplified LCA. None of the large footwear companies report CO2 emissions per product, and the smaller brands that report emissions per product, such as Allbirds and AKU, use their own non-standardised methodologies, At present the footwear industry lacks a coherent standard and there are large uncertainties in underlying datasets for materials.

However, even if we apply a wide range of 5-25 kg CO2e/pair, footwear is not a particularly GHG intensive product. Certain parts of the supply chain are energy and GHG intensive, such as coal-fired boilers for heating. Icebug does not own such equipment or have any potentially stranded assets. We have phased out coal from our supply chain and offer support to our suppliers to switch away entirely from burning fuels to using electricity.

Our main legacy to take responsibility for is historical CO2 emissions caused. We have estimated those and made an attempt to compensate for them through buying the same amount of CERs through the CDM program via the UN Carbon Offset platform.

1e. Challenges and potential blockers for the implementation of the plan The primary objective is to use less fossil fuels, particularly oil, while not causing rebound effects by increasing land use in an unsustainable way – for example by causing deforestation.

Our transition plan addresses two main areas: energy efficiency and renewable energy in the value chain, and low impact materials. Phasing out fossil energy being the one where we can see the quickest and most sure effect. This is the most important part of Icebug’s transition plan and this could cover well over the first 50% emission reductions for Icebug’s footprint, but it would have a multiplying factor of at least 5-10 on overall emission reductions as we are normally a quite a small customer at our suppliers,

Renewable energy Our main production countries are Vietnam and Taiwan. At present, Vietnam doesn’t have a feed-in tariff for solar energy into the grid. It is all self-consumption at site. This means that new solar installations are not maximized for how much they could produce, instead peak electricity generation is matched with peak consumption. It’s also not possible to buy renewable electricity certificates or use virtual power purchase agreements to make investments in new renewable energy. This is a blocker to our objective of only using renewable energy in production. The program we have in place for installing solar at the Tier 1 factories will typically provide for around 50% of their electricity need (with a feed-in tariff that could be 70-80%). When we bring this program to Tier 2-4 suppliers this will typically be less, 20-25%. To reach 100% we would need to able to buy the balance off the national Vietnamese grid.

Taiwan has a green certificate market, but the market is only theoretical for Icebug currently as all electricity available from renewable projects is ear-marked for the tech industry. We contribute to lobbying for regulatory changes, and when the situation changes, we are ready to purchase Energy Attribute Certificates (Vietnam) or Renewable Energy Certificates (T-REC, Taiwan), through a reliable marketplace or virtual Power Purchase Agreements. If carried out through all tiers in parallel with electrification where needed the potential effect is an additional at least 40% to what will already be achieved with the solar roof top at tier 1 factories.

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Materials The main challenge with materials is that the quality of underlying datasets for comparing carbon effect of different materials currently varies a lot, and that there are often trade-offs: going for more recycled or bio-based content often means lower performance and durability, and for bio-based material there are also potential land use conflicts and risk for deforestation and bio-diversity loss. This is something that we are continuously assessing and we will keep looking for breakthroughs and participating in development of new materials.

1f. Contributions to economic development and how just transition elements - resilience, inequality, gender and energy access - are integrated We work hard on social issues and are firm on our mission to have all people in the supply chain earning a living wage. All our tier 1 factories are audited by Fair Wear Foundation and we support their work on inequality and gender (discrimination, harassment, violence as well as financial equality). See for instance: https://www.fairwear.org/programmes/gender.

At present we don’t have specific plans for mitigating risks from climate change at factories that we work with – apart from general working conditions being maintained safe and fair – nor in the communities where the factories are located.

1g. Plans for verification and validation of progress against the plan (in total and/or in parts) We report GHG emissions in all relevant scopes each year to Climate Neutral and they certify our numbers using their validation process. See https://www.climateneutral.org/how-it-works.

As a member of the Exponential Roadmap Initiative we now do a Climate Performance Review annually which assesses our performance on over 50 indicators of climate action. And we’ve also made our climate commitments public via the SME Climate Hub .

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2. GHG Emissions targets, pathway, and actions 2a. Base year greenhouse gas emissions Base year is 2015.

Total quantified emissions for base year: 4 528 tCO2e.

2b. GHG reduction targets × 2021-2050 (started 2021): Staying within our remaining carbon budget to align with the 1.5°C roadmap by gradual emission reduction to reach 50% reduction latest by 2030, 75% reduction latest by 2040 and over 90% reduction latest by 2050. Progress is expected to be non-linear OR faster as some changes have a bigger effect. For example, from 2024 onwards our factories will have significantly lower emissions from energy. × 2025: Provide the energy system with more renewable energy than the total non-renewable energy that Icebug uses or is used on Icebug’s behalf.

(The hierarchy for where to add renewable energy: (1) At the factory, (2) In grid that factory uses, (3) In the region and (4) anywhere in the World. The purpose of this would be to make Icebug “energy positive”) × 2030: At least 50% reduction in total emissions, scopes 1-3, compared to 2015 × 2030: At least 50% reduction in emissions per functional unit.

“Per functional unit” means per pair of shoes and it’s a weighted average of the carbon footprint for all our footwear produced, including indirect upstream emission and estimates for downstream emissions (including transport, use and end of life). × At least 75% reduction in both total emissions and in emissions per functional unit by 2040. This is to keep us aligned with the 1.5°C roadmap.

2c. Net zero target year Net zero target year is latest 2050.

To us net zero means: × Reductions of 90% in total emissions (scopes 1-3) and in emissions per functional unit term compared to base year 2015 with × removal of more CO2 than CO2e emissions caused in 2050 and probably the period 2040-2050 (depending on the cost benefit analysis of whether removal or avoidance will have the most effect)

2d. Specific reduction target for methane if relevant At present, Icebug doesn’t have a specific methane reduction target. There are methane emissions from the leather supply chain and during 2024 we will investigate whether it’s relevant for us to have specific methane reduction targets, or whether methane is covered sufficiently in the leather LCA as CO2 equivalents.

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2e. Justification of the selected 1.5°C pathway Icebug’s selection of 1.5°C pathway has been informed through our participation in Exponential Roadmap Initiative, with the science-based “Carbon Law” https://www.stockholmresilience.org/publications/publications/2017-03-27-a-roadmap-for-rapid-decarbonization.html This pathway is consistent with both absolute contraction and physical intensity pathways as proposed by the SBTi sector decarbonisation approach for footwear and apparel.

2f. Planned actions to reduce emissions and to increase removals, and likely impacts of those actions Switching to renewable energy at production sites

This is key to being able to reach our emission reduction targets. Our main country of production is Vietnam, with Taiwan also playing a significant role for production of materials. We’re phasing out the remaining footwear and material production that we have in China, due to geo-political considerations and difficulties with transparency and ensuring human rights at production sites in China.

With the installation of solar rooftop at Tier 1 factories in Vietnam, which is in process and planned to be in place during Q4 2023 or Q1 2024, we will have done what is possible to do with renewable energy in Tier 1 within the current regulatory framework, without feed-in tariffs in place. The expected emission reduction from the installation is 5-8% per functional unit, with total emissions reductions at the three factories expected to be 5,000 tonnes CO2e annually (similar to Icebug’s current total annual emissions).

We are also planning to work on energy efficiency at the Tier 1 factories, to be carried out during 2024. This has potential for an additional 2-3% emission reductions per functional unit.

We’re expanding the solar rooftop program to Tier 2-4 in Vietnam.

Taiwan has a green certificate market (T-REC), but no certificates are currently available to us since all certificates from planned renewable projects are ear-marked for the IT industry.

We contribute to lobbying for regulatory changes. In Vietnam this is done through industry cooperation and teaming up with the local office of the Clean Energy Investment Accelerator, and in Taiwan through collaborating with other brands in the European Outdoor Group and making the ask through Taiwan Textile Research Institute. When the situation changes, we are ready to make investments to purchase Energy Attribute Certificates (Vietnam) or Renewable Energy Certificates (T-REC, Taiwan), through a reliable marketplace or a virtual Power Purchase Agreement.

If RECs and PPAs become available, and Icebug can secure renewable energy certificates for all tier 1 factories in Vietnam and Taiwan, the potential reported emission reduction effect, in parallel with electrification of key processes, would be well over 40% of Icebug’s total emissions (Scope 1-3), to add to what will already be achieved with the solar roof top at tier 1 factories.

On site solar rooftop will mainly be financed through the solar vendor as a PPA, as this is a really strong business case for all parties. The solar vendor finances the panels, handles construction, permits and maintenance, guaranteeing a certain output during the duration of the PPA (normally 15 or 20 years), while offering the factory a discount of the electricity from the solar rooftop, compared to buying it off the EVN grid.

We volunteer our time and effort on capacity-building with the factories in our supply chain and with brands in our industry. Icebug co-financed the pilot project to set up the business model for solar at apparel and footwear factories, covering the full cost for our factories, so that they have not had any expenses for the solar rooftop project (Icebug’s total contribution US$50,000). In the case of buying renewable energy certificates or establishing a virtual PPA, Icebug will cover the cost for this.

Inbound transport, land: Electric trucks from port to main warehouse in Sweden. Should save 1-2 tons CO2e per year, planned start during Q3 2023.

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Inbound transport, ocean: Continuous work with Adnavem to find the optimal routes for the upstream shipping of our products, from the port in Vietnam to our warehouses in Sweden and the US. The difference between routes and ships can be significant. Potential reduction of 50-75 tCO2e per year, this work has started during 2023. During the second half of 2023 we will also investigate impact and set targets for switching to non-fossil fuels for sea freight.

Outbound transport, air: Switching at least 80% of B2C orders in the US to be fulfilled from the US Warehouse, instead of from warehouse in Sweden will significantly reduce the remaining air freight – which is all outbound and already below 2% of total emissions – and reduce total emissions by 50-65 tCO2e per year, starting during fall 2023. During the second half of 2023 we will investigate impact and set targets for switching to non-fossil fuels for the air freight that can’t be avoided.

Better source and data for nubuck. Securing information about the origin of nubuck leather with traceability to farms in Denmark will reduce the reported nubuck leather related emissions by 30% - total amount will depend on quantity produced.

Icebug has a general aim to reduce the amount of leather used, as this is a material with a high initial carbon footprint, but, on the other hand, if cared for properly, leather is very durable and ages well.

On-going work to improve the product. This breaks down into two parts: 1. Reducing resource use and emissions caused in production by reducing waste and energy use, by looking at material changes and process efficiency, with an extra focus on phasing out fossil oil as a raw material.

Oil is used mainly in the outsole, the midsole and synthetic textile uppers. Substituting this could lower the product footprint by 15-25%. But today the emission reductions are only theoretical, as replacement materials have significantly lower performance and durability (meaning that the products would be used for a shorter time, resulting in a higher carbon footprint per use) and/or compete for land use and risk causing deforestation. But this remains work of high priority and we assess and test many new material candidates.

We have already eliminated the most energy-consuming and polluting processes – such as conventional dyeing of polyester – and have switched a number of materials to lower carbon options. We have targets to keep increasing the amount of recycled and bio-based material. The effect of further process and material changes is likely at the lower end of the 15-25% of total footprint (this is taken from an industry average). Scope 3.

2. Securing high quality – increase performance and durability – so that products can be and are used for a very long time, lowering the footprint per use for a relevant need. This has high potential to decrease the carbon footprint per use, which is what would eventually be the most important metric. If we could increase durability 100%, that would mean a decrease of footprint per use by 50% and that people would only need to buy one pair of shoes where they earlier bought two.

Challenges here are that we’re lacking a standard to measure durability and to collect data that shows actual use.

Lowering our own emissions is fully integrated in the business and financed in the same way as all our other activities ie included in sales prices and financed through revenue. We use an internal price of carbon of $100/ton, which is built into all our financial calculations including margins and pricing.

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2g. Specific actions to engage suppliers in reducing their emissions and increasing removals Icebug shoes are produced at three different factories in Vietnam, but Icebug doesn’t own any of these factories. Icebug’s share of the total production capacity at the sites where we produce ranges between 3% and 25%, which means we have very small to moderate influence on decisions. These factories account for over 99% of our tier 1 business.

Icebug’s hypothesis has long been that a switch to solar energy in Vietnam would be beneficial. This was confirmed by product footprint calculations and supply chain GHG mapping. But a problem to overcome was that both we and our factories had very limited knowledge about solar energy in general and about the Vietnamese energy market in particular. We understood that to get this onto the factories’ agenda, it wouldn’t be enough to just ask them to install solar, the process needed to be smooth so it could bed handle in parallel with the normal business.

The solution was a pilot project that Icebug co-financed, which pooled resources from different brands to hire local experts. The project financed pre-feasibility studies, identified the best solar vendor partners in the market. It solved technical, construction and legal permit problems for the factories, while also solving financing and lowering electricity costs. Turning the installation of solar into an easily understandable and strong business case is what was needed to get the factory commitment to go solar.

Installation of rooftop solar on our three Tier 1 factories in Vietnam will decrease the total footprint per functional unit, that is per average for an Icebug pair of shoes, by 5-8%. But the total emissions avoided will be much greater since the energy used for all production at these three factories, not just Icebug’s, will partly switch to solar. The total avoided emissions per year (estimated 5,000 tonnes CO2e/year) is likely to be higher than Icebug’s total scope 1-3 emissions.

Increasing climate action by our supply chain partners As a minimum we want our supply chain partners to align with the 1.5°C commitment, and we encourage them to go beyond this if they can. This request started with Tier 1 and key Tier 2-3 partners. At present, none of our suppliers has done a full GHG emissions quantification, nor set net zero goals. The dialogue around the 1.5°C commitment is initiated in person by Icebug’s top management, striving to have a counterpart as highly positioned in the organization as possible. The ask for a 1.5°C commitment is then followed up in writing. Since they also work for other brands, their action would multiply the effect on Icebug’s own footprint.

During Q3/Q4 2023, we will extend the ask to all our supply chain partners, though we recognize that for some of them we will be so small that they will likely not care. In these cases, we will look for collaboration with other customers. We also see our effort as part of a larger effort to drive the supply chain for our industry towards zero carbon. Accordingly, we try to promote the ask for supplier 1.5°C commitment through the European Outdoor Group.

We don’t onboard new suppliers that don’t have a 1.5°C commitment or are already low carbon.

For existing suppliers, expectations will gradually be increased. Up until now, having a climate commitment has been voluntary and we have settled for their expressed intention. Through energy use and source reporting, we have a pretty good picture of factories’ emissions, but for 2024 we will ask for full GHG emissions and a formal commitment to a Race to Zero-initiative and public reporting on progress.

In 2025 we will start decreasing or discontinuing business with those factories that don’t have a 1.5°C commitment with a credible transition plan and that have started taking action.

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3. Other climate-related targets, actions, and solutions 3a. Targets for transforming the company’s portfolio of products and services Icebug’s climate targets address the total emissions caused and the carbon footprint of every shoe we produce (see information on goals above).

Selling footwear is Icebug’s dominant revenue stream, but our business target has a wider aim: increasing the number of people using Icebug’s footwear to get out more, combined with increasing the life span of Icebug’s products, while simultaneously lowering the carbon footprint per pair produced. The compounded effect would give a very low carbon footprint per use and contribute towards people’s wellbeing and connection to nature.

This objective aligns the business model with striving for long term positive contribution – when Icebug is doing well, the World is doing well. It would also be beneficial for the total effect that Icebug takes market share from other companies.

A new service that we’re offering since November 2022 is the Solar Rooftop Scaling (SOLROS) program, where we’re building on the success of the project for our factories to go solar, and together with the solar vendor extending this project and promoting it to other footwear and apparel brands with production in Vietnam.

3b. Targets for renewable energy capacity-building and procurement

Q4 2023-Q1 2024: Installation of on-site solar generation at all three tier 1 factories that Icebug works with in Vietnam. These factories account for over 99% of our tier 1 business. Installed capacity will be around 5MWp. 2024 and onwards: expansion of SOLROS, the on-site solar program for factories in Vietnam, to other tiers in Icebug’s supply chain (estimated another 5MWp during 2024) and outside of our supply chain (estimated 5-15 MWp during 2024).

This is early stages of the program and we’re targeting exponential development, with a stretch target of reaching over 5,000 MWp before 2030.

2025: Procurement of more renewable energy than the total non-renewable energy that Icebug uses or is used on Icebug’s behalf. Preferably in the grid each factory uses, but if that’s not possible, in the region of the factory, and if that’s not possible, anywhere in the world.

Icebug leases 10 cars. All new vehicles acquired since 2020 are either EV or biogas in accordance with our commitment to https://fossilfrittsverige.se/utmaningar/tjanstebilsutmaningen/ Until now, we have not focused much on energy in office operations, since such small part of our emissions are created here, and we have green energy from the grid in Sweden for Icebug’s HQ. However, during this fall, we will investigate whether we can be a solutions provider locally in mobility/renewable energy/ grid balancing. We will analyse the business case for installing solar energy at the office and combining that with making company cars a shared asset locally and using batteries in connected EVs for grid balancing.

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3c. Target dates for ending use of fossil fuels No exact target, but a general guideline to do it as fast as possible when alternatives are available.

3d. Planned actions to end use of fossil fuels

Road: Using electric trucks when available, in-setting for other parts of transportation.

Sea: Working with our logistics provider for ocean to use the routes with lowest emissions.

Air: We don’t fly shoes inbound at all. For outbound we are working hard on minimizing air freight – building inventory and IT-systems in the US (where products come by ocean). This should be finalized by September 2023. All other markets are served without the need for air transport (as the footprint is at least 20 times higher than sea freight).

For all types of transportation where fuel is used, we analyse the impact of non-fossil alternatives on an ongoing basis, staying ready to be an early mover when good solutions become available.

3e. Dates for ending exploration and development of new coal/oil/gas extraction, if relevant We don’t do any exploration or development extraction ourselves, nor do any of our supply chain partners.

There is however the aspect of our financial flows, about which we began a dialogue with our bank, Danske Bank, a few years ago, requesting them to stop financing exploration and development of fossil fuel extraction. Icebug has shared learnings from this work in contributing to the Exponential Roadmap Initiative action guide “Greening Cash”. Icebug has also signed the Fossil Fuel Non-Proliferation Treaty (fossilfueltreaty.org) as an early business supporter. This will be communicated during fall 2023.

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3f. Targets for reducing deforestation, peat extraction and other land use changes from natural ecosystems in value chain In practice, Icebug already has a zero target here, since we have a strict rule that our value chain and materials use must not cause deforestation, peat extraction or other negative land use changes.

Our materials of highest risk are natural rubber, leather and wool.

Natural rubber Since 2022 we only use FSC certified natural rubber. Icebug has been instrumental in establishing a new supply chain of FSC certified natural rubber from small-holder farmers in Thailand to the footwear production in Vietnam. Icebug was part of a project with FSC and inclusive business, also inviting other footwear brands to join. Icebug’s 2023 forecast for FSC certified natural rubber from this new supply chain is 18 tonnes and the total forecast is 15,000 tonnes.

Leather For leather it is more difficult to ensure non-deforestation since leather is a by-product of the meat and dairy industry, and deforestation is a particular risk in the meat industry. Icebug’s approach is to increase transparency and traceability and moving towards sourcing only from safe suppliers. The nubuck leather we use can now be traced back to the farm in Denmark (meat or dairy), where no-deforestation is guaranteed.

This work will be done for the suede we use during Q3/Q4 2023.

Icebug was the first brand to sign Textile Exchange’s “Deforestation-Free Call to Action for Leather”, which has the purpose of changing leather supply chains.

Wool Wool is a relatively small material for Icebug and the wool we use is primarily up-cycled waste from production of garments. Until now, we have mainly had animal welfare requests on the brands producing the garments. Latest during 2024 we will look further into wool supply chain land use effects.

Land use in general Icebug doesn’t currently have a specific target for land use and we have not quantified land use change emissions. During fall 2023 and going into 2024, we will investigate whether we can measure this in a credible way and set a target.

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4. Actions beyond value chain 4a. Planned lobbying and policy engagement activities (3.13, 3.19)

At Icebug we try to identify what we’re uniquely positioned to do, using our platform and resources to maximize our impact on the sustainable transformation of the world. Since we’re a business, a logical starting point is how business can be a force for good. Since we make products, these products consume resources and cause negative impact, it’s then imperative that what we do satisfies a fundamental human need and that we do that with the smallest footprint. Then we can be a solution provider, being compatible with 11 billion people living flourishing lives within what the planet can regenerate.

Realistically, we can have the biggest influence where we have the biggest market share and have the strongest relations, this implies a proximity being an amplifier of effect, either geographically or being in direct contact. For our community of customers and within our industry (outdoor/sport/footwear/apparel) we can engage worldwide. For the wider business community and government, we can engage regionally and locally where we are active – particularly in Sweden where we have our headquarters. This doesn’t mean that we don’t try to stretch further, but then teaming up with others and collaborating becomes more important.

For policy, we have engaged primarily towards the EU and the Swedish national government, but also towards Vietnam and the US regulators. We will start targeting local/regional government in West Sweden and Goteborg region, as well as Taiwan on a national level.

Our top policy points, which we promote in our own channels and other places whenever it’s relevant and we get the chance: × A proper fee on carbon. At least $100/ton CO2e (for as large an area as possible, with a carbon border adjustment mechanism, we don’t have an opinion if this should be a tax or a fee and dividend, but it would mean an immediate stop to any fossil subsidies) × Put an end to fashion waste. An Extended Producer Responsibility or preferably a Target Producer Responsibility for apparel and footwear (ending the business model of making products that very quickly becomes thrash). This means a more considered approach to resource use. × Stop new fossil investments. × Protect and restore nature. Enough nature needs to be protected, restored and managed in a proper way so that we end bio-diversity loss and the planetary systems can be kept in balance.

In addition we lobby for specific policy changes which make it easier to switch to renewables with efficient resource use (grid balancing etc), legislation which asks for a stronger accountability for business, such as the human rights due diligence, and ecocide law (Icebug is a signatory to the Ecocide Law Alliance). We also identify policy and legislative proposals that support a sustainable transformation and support them to show that this is something that we as a business – and part of the business community – want to have in place.

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These are the policy directions that we want to try to influence the world to move towards. We don’t make firm and detailed plans long into the future regarding how to move this, but rather take an opportunistic approach and jump on opportunities/collaborations when the timing is right, or we can amplify through collaboration. The key is that we want to punch about our weight and to have an outsized impact.

We participate with and in a number of different organizations, sometimes quite actively in drafting and executing campaigns, sometimes merely by stating that we support the cause. For example: B corps (EU level legislation), Protect Our Winters (EU level legislation/climate ambition and US climate and environmental legislation), We don’t have time/ERI (Sweden government climate targets and plans), Clean Energy Investment Accelerator (Vietnam regulatory changes to simplify renewable investments and make more renewable energy available), European Outdoor Group (Increase Taiwan energy market renewables).

We have targeted three specific areas where we will lead or contribute very actively to influencing campaigns during this fall: × Minnesota – This is our strongest customer base in the US. It’s also one of the areas with the highest carbon footprint, due to the energy mix which still has a lot of coal. This seems to have relatively low public awareness. We will promote switching to renewables directly to our customers through newsletters and social media, framing this as a shared challenge and looking for a way to incentivize it by offsetting the cost of switching. We will invite other brands and retailers to join this initiative. × EU: Fit for 55 and the circular textile strategy (see below, 4c) × Norway: Stop to exploration and development of new fossil fuel extraction (see below, 4c)

4b. Planned action to ensure your company is only supporting trade and business associations that lobby in line with 1.5°C (2.14, 3.16)

Icebug is committed to only participating in trade associations, or indeed any organization, that are 1.5°C aligned.

Some of the business organizations that we’re part of have climate action as a clear purpose of the organization: 1% For the Planet, B Corp, Exponential Roadmap Initiative, SME Climate Hub. Then there are the Scandinavian Outdoor Group and the European Outdoor Group, where Icebug takes an active role in board representation to increase the already high climate action ambitions.

For more general trade and business associations, we’re a member of the international business network Trade Partners Sweden and the West Sweden Chamber of Commerce. We have been in dialogue with both of these during 2023 and at this point we’re happy with what they have submitted in terms of reports on lobbying carried out and plans going forward. We will monitor this closely going forward.

One organization where we have become members where we have not yet addressed this issue in the Forest Steward Council. We will work actively during the coming year to influence the criteria on sustainable forestry and also closely monitor any lobbying done to make sure that it’s in line with the 1.5°C ambition.

If we would flag a problem and it’s not remediated within one year – or there is not a clear plan to remediate the problem – we will leave the organization.

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4c. Planned action within public affairs to stop support for fossil fuels (1.8) (continued from 4a)

EU - Fit for 55 and EU’s circular textile strategy.

There is a short window to pass a significant package of legislation and directives that would be very important ahead of the new elections to the EU parliament in 2024. We will work to support this on the EU level and also put pressure on the national government in Sweden, as it will also need to be passed by the Council of Ministers. Planned action is to write an open letter to be sent to EU MEPs together with Protect Our Winters where we identify relevant proposals from the commission that shouldn’t be diluted in the further process, rallying wider support from outdoor and sports companies to show that our industry supports maximum climate ambition and action. We will follow up on this with op-eds in Sweden targeted towards the Swedish government, and communication in our own channels to raise awareness.

Norway – Launch of our support for the Fossil Non-Proliferation Treaty.

Kicking the dependency of oil is a challenge shared by the footwear industry and Norway. Planned action is to establish a close cooperation with the Fossil Fuel Non-Proliferation Treaty Initiative to look at how we can contribute with most effect in gathering strong business support, and targeting fossil prospecting countries where we are active in an attempt to sway public opinion to let fossils stay in the ground.

The supporting narrative will be that as business owners, we know how difficult it is to walk away before you have a return on investment. Since we also know that we’re living with a very limited carbon budget to stay on track for a 1.5°C future, not making any new fossil investments is the only rational thing to do.

Jointly we can then make a campaign and write op-eds, the specific objective would be for Norway to stop issuing licenses for new prospecting and show that the world is watching. If Norway can’t afford to let the oil stay in the ground, who can?

4d. The specific policies and regulation considered necessary to facilitate achievement of the company’s transition plan (3.12, 3.18)

For Icebug to reach our specific goals, it would be sufficient with regulation changes allowing investment or procurement of renewable energy where most of our emissions are caused, i.e. our main production countries Vietnam and Taiwan. For Vietnam, this would be behind-the-meter regulation, a feed-in tariff and the possibility to do virtual power purchase agreements (which in turn requires zone and load planning and a grid that supports the renewable energy).

However, this scope is too narrow. It makes it possible for companies to take responsibility, but it doesn’t create the real momentum needed for the speed and scale of switching away from burning fossil fuels for energy. This would require a proper fee on carbon. At least in the industry where we’re active, we can see that 100 US dollar per ton would create a pressure for change across the entire supply chain and create a financial sense of urgency to make energy changes which are actually already profitable and where financing is available – only, the cost of continuing the unsustainable business as usual is too low.

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4e. Planned collaboration with peers to accelerate climate action (2.15)

The most concrete collaboration around emission reductions is the Solar Rooftop Scaling Program (SOLROS) in Vietnam, where Icebug is sharing our key learnings, setting up a program where participation is free of charge, for apparel and footwear brands and the factories that they work with in Vietnam. The program offers an easy package solution and attractive business case for at site rooftop solar and switching a large part of the factories’ electricity from fossil to renewable source, leading to immediate emissions avoidance.

Five brands are already actively working with SOLROS with their suppliers, with more than 10 additional brands showing interest to join during fall 2023.

One of the most exciting projects that we’re working on is with the RISE team working with the Net Zero Compatible Innovation Initiative, looking at how we can change the thinking and move from the existing system and how to make that less bad, to looking at what human needs we really have and how we can fulfil those – adding flourishing life years – with resource use and emissions footprints that are within what the planet can regenerate.

Icebug – and the outdoor industry at large – was presented as a solution provider for great and future fit lives with high potential for emission avoidance at a side event to the MI-8 ministerial in Goa, India 19th21st July.

Icebug is currently working on a few other tracks where we see high potential. One is around smaller and smarter wardrobes, where quality, versatility and caring for the product is very important. Another is on making close and regular activities in nature attractive – if, through our communication, we can make discovering the trails around the town where you live more desirable than flying to a large city to go shopping, the avoided emissions would be huge. We need to shift focus from buying to using and to show that a low resource and carbon lifestyle is not dull and deprived but rich in experience. At the European Outdoor Summit in Berlin in September 2023, we will invite other brands from the outdoor industry to join us, working together to highlight the huge benefits of outdoor activities and present the wider outdoor industry as a solution provider at COP 28.

Icebug has been a driving force in making it mandatory for all Scandinavian Outdoor Group (SOG) members to join a Race to Zero-qualified initiative, and it’s a board proposal to make RtZ-affiliation mandatory for all European Outdoor Group (EOG) members as well. As a forerunner in climate action and a member of the Exponential Roadmap Initiative and SME-Climate Hub, Icebug has been engaged in capacity-building through webinars and advising SOG member companies on which route to take and how to work actively.

This work will be continued and repeated and intensified in EOG during the fall. We will also try to leverage the SOG and EOG supply chain decarbonization work through introducing the work with supplier 1.5°C commitment and making that ask jointly with other brands.

Through work in the EOG we will also reach out to the Taiwan Textile Research Institute to highlight the importance of making RECs available for the textile industry.

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4f. Planned engagement actions towards investors, suppliers, consumers and employees (2.15)

Investors: Icebug is owned by the people who run the company. We don’t have any external investors. We do however see a value in promoting our values and the way we do things to the bigger business community, to inspire others to take on a bigger responsibility than just maximizing profit. This is regularly communicated in our channels (website, newsletter, social media) high-lighting projects that we do and membership in B Corp and 1% for the Planet.

During fall 2023 we will do a specific communication push around our change of company statutes, which gives the legal directives of how the company should be governed. Our new statutes state that our primary stakeholders are society and nature and, when in conflict, their best interests have priority over the owner’s best interests.

This is an attempt to move from shareholder to stakeholder capacity, where we look at how the value we create is distributed in a fair way. In Sweden, we will raise awareness around the fact that there is no legal entity which is specific for companies with an extended stakeholder perspective or another purpose than maximizing profit. We believe that would be beneficial to change as a validation for companies making claims about purpose.

Suppliers: As a minimum we want our suppliers to align with the 1.5°C commitment, and we encourage them to go beyond if they can. This request started with tier 1 and key tier 2-3 partners. At present, none of our suppliers has done a full GHG emissions quantification, nor set net zero goals. The dialogue around the 1.5°C commitment is initiated in person by Icebug’s top management, striving to have a counterpart as highly positioned in the organization as possible. The ask for a 1,.°C commitment is then followed up in writing.

Since they also work for other brands, their action would multiply the effect seen on Icebug’s own footprint.

During Q3/Q4 2023, we will extend the ask to all our supply chain partners. Even though we know that for some of them, we will be so small that they will likely not care. In these cases, we will look for collaboration with other customers at the same supplier. We also see our effort as part of a larger effort to drive the supply chain for our industry towards zero carbon. Accordingly, we try to promote the ask for supplier 1.5°C commitment through the European Outdoor Group to have more brands ask the same.

We don’t onboard new suppliers that don’t have a 1.5°C commitment or are already low carbon.

For existing suppliers, expectations will gradually increase. Up until now, having a climate commitment has been voluntary and we have settled for their expressed intention. Through reporting of energy use and source, we have a pretty good picture of factories’ emissions, but for 2024 we will ask for full GHG emissions and a formal commitment to a Race to Zero-initiative and public reporting on progress.

From 2025 we will start decreasing or discontinuing business with those factories that don’t have a 1.5°C commitment with a credible transition plan and that have started taking action.

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“Consumers”: We don’t talk about our customers as consumers, but as users, that we want to turn into co-creators of a sustainable future.

During fall 2023 we will launch “the world’s worst customer club” where participants won’t get any sweet deals or discounts, but rather we will ask to them to contribute their time to being part of a community of changemakers, promoting low footprint high experience lifestyles and showing that a sustainable future is not dull and deprived.

Also in our other brand communication and campaigns we will high-light that we can live future fit and great lives, that’s around us already. That’s what’s desirable – not consuming. We will communicate specifically around smarter and smaller wardrobes, not buying things you don’t need, opting for care and repair over buying new and doing adventures and outdoor activities close by.

We will introduce a new purchase receipt that shows not only the negative footprint of the products, but also the co-investment in the future that you’re making in positive impact projects when you buy an Icebug product.

We will also start collecting data on the use phase, to be able to measure how much our products are really used.

Employees: Employee engagement in our vision to be a changemaker has always been something that we see as crucial. With the mindset of not only looking at how to minimize our negative effect, but also how we can measure our positive effect, it means that everybody in the organization can get deeper involved – not only those that work in the areas where we have negative impact. This has released a lot of energy and activity in the organization that we will build on and extend to external collaborations during fall, accelerating innovation for change.

Similar to our profit-sharing program, we will launch an impact sharing called “my legacy now” where we share the estimate of the positive impact across the employees. We believe this can increase motivation even more.

4g. Plans for use of carbon removals outside value chain We convert emissions to money through the carbon fee ($100/ton CO2e) and then use that money where we determine that they create the most value. The baseline remains mitigating at least Icebug’s own emissions, but the carbon fee generates a significant surplus to that. At this point we’re opting for financing emissions reductions projects rather than carbon removals, since the cost is so much lower and the effect on the climate is the same.

When looking for removals projects we will likely turn first towards nature-based solutions and look at the carbon law for nature. We see a clear overlap here with protection and restoration of ecosystems, where some things we do like protecting old-growth forest has a positive effect on carbon storage and capture.

Before setting a clear plan on how to move from reduction projects to removals projects, we will need to educate ourselves better. We expect that as our emissions decrease, we will ramp up investments in removals outside our value chain, and well before the time when we reach net-zero for our products (having reduced emissions at least 90%) we will have transitioned completely from reduction to removals to mitigate our remaining GHG emissions.

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4h. Planned voluntary purchases of carbon credits for beyond value chain mitigation In 2019 Icebug purchased carbon credits to cover all the estimated emissions of the company since the start in 2001.

Since 2019 Icebug has purchased annually twice as many carbon credits as the total emissions of the company (200% carbon credits relating to the total emissions in all scopes). The double carbon credit principle has been put in place to somewhat mitigate the problem of the uncertain additionality of CERs. The carbon credits have been purchased voluntarily. We’ve purchased carbon credits matching 100% of our total carbon footprint through the UN’s Carbon Offset Platform, from which we’ve chosen projects with the double certification of CDM and Gold Standard. And we’ve purchased carbon credits matching another 100% of our total company footprint via climateneutral.org. They have a comprehensive set of criteria, found here https://www.climateneutral.org/standards We are well aware that buying carbon credits is no substitute for own emission reductions, but we intend to keep compensating for more than we emit, to contribute to the maturity of voluntary carbon market.

4i. Plans for other investments in the protection and restoration of ecosystems beyond emissions reductions We donate to Naturarvet in Sweden (see more: https://naturarvet.se/) which preserves old growth forest, with all the benefits of biodiversity and carbon sequestration. Last fiscal year we donated 1,5 MSEK to them, which will allow protection of up to 48 hectares of old growth forest.

We will continue to support Naturarvet with yearly donations, in addition we will specifically look at projects around wetland restoration and plastic pollution clean-up in Vietnam. The Mekong river is one of the ten rivers in the world that together contribute 80% of the plastic waste in the ocean, so it makes sense to stop it at the source.

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CLIMATE TRANSITION PLAN 2023