SMI 2020 Sustainability Report

Sustainability Report

|

2020

Report Contents

03 MESSAGE FROM THE CEO

04 ABOUT SMI

06 PURPOSE, MISSION, AND VALUES

08 ABOUT THIS REPORT

09 SUSTAINABILITY GOVERNANCE

10 DIVERSITY, EQUALITY, AND INCLUSION

12 U.N. SUSTAINABLE DEVELOPMENT GOALS

14 MATERIALITY

16 PEOPLE

21 PARTNERS

27 PLANET

32 APPENDIX

SUSTAINABILITY REPORT

THE AT

A

YEAR

GLANCE

PEOPLE

1.37

11%

PARTNERS

reduced turnover

TRIR

26 hours of Environmental, Health, and Safety training per employee

100% of workers covered by H&S management system

$28K+

99.9%

charitable contributions

Quality Acceptance Rate

0 confirmed incidents of corruption

2023 GOALS

PLANET

2.4M+ tons of materials diverted from landfill

95% of suppliers to sign Code of Conduct agreement

388

5%

tons of hazardous waste recycled

reduction in energy and water consumption

STRATEGIC MATERIALS, INC.

PAGE 03

SUSTAINABILITY REPORT

A MESSAGE FROM THE PRESIDENT & CEO

Strategic Materials, Inc. (SMI) began life as an environmental pioneer in 1896, partnering with General Electric (GE) in Cleveland, Ohio, to recycle its lightbulb glass. Since then, our passion for glass has only grown. With operations in nearly 50 locations across three countries, we recycle a variety of glass totaling the beneficiation of nearly three million tons of glass each year.

Although in the past we have operated with the best intentions, intentions were not enough. We needed meaningful action, even during the challenges of a pandemic. It was time to bring our people, our partners, and our planet to the forefront of our success. We stepped up our efforts in 2020 by formalizing our commitment to all three focus areas.

"Today, we operate with one simple guiding principle: do the right thing."

We joined the United Nations Global Compact and engaged third-party experts in sustainability and compliance to solidify the promise to do better within our organization and beyond. It was time to “walk the walk” when it comes to our environmental, social, and corporate governance responsibilities. Quite frankly, it has been a long time coming for us. Today, we operate with one simple guiding principle: do the right thing.

As an environmental leader, we recognize the responsibility and opportunity we hold to leave our planet better than we found it for generations to come. We are on an accelerated path to do better and to do so in every aspect. I’m proud of our team. I’m thrilled to share the progress we’ve made in our first ever sustainability report, and I’m excited to share what’s to come. I’m confident our best days lie ahead.

CHRIS DODS PRESIDENT & CEO STRATEGIC MATERIALS, INC.

PAGE 04

SUSTAINABILITY REPORT

ABOUT SMI

With a 125-year history, Strategic Materials, Inc. (SMI) is North America’s largest and most comprehensive glass recycler, with nearly 50 locations in the United States, Canada, and Mexico. The company operates as the go-to solutions provider, creatively uniting the interests of people, partners and planet with economic and environmental products and services.

STRATEGIC MATERIALS, INC.

"Strategic Materials improves industrial performance by recycling earth’s resources."

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SUSTAINABILITY REPORT

A LEADER IN THE CIRCULAR ECONOMY

SMI is instrumental in helping companies and communities achieve their waste management and circularity goals.

Glass is the perfect partner to a circular economy: it can be recycled endlessly without any loss in quality, completely closing the loop.

The use of recycled glass in the production of new glass containers or fiberglass insulation reduces energy usage and greenhouse gas emissions. Savings are realized through displacing mined, virgin materials such as sand, and melting at a lower temperature in the production of new products. Recycled glass thereby extends furnace life for manufacturers, allowing the equipment to run at a lower temperature.

Products made with recycled glass save energy.

6 tons of recycled container glass

1 ton of carbon dioxide reduced

Figure 1: For every six tons of recycled container glass used, a ton of carbon dioxide is reduced. A relative 10% increase in cullet reduces particulates by 8%, nitrogen oxide by 4%, and sulfur oxides by 10%. Therefore, recycling 1M tons of glass a year saves 166,666 tons of CO2 emissions.

STRATEGIC MATERIALS, INC.

PAGE 06

SUSTAINABILITY REPORT

PURPOSE

MISSION

STRATEGIC MATERIALS, INC.

We recycle glass to unite the interests of our people, our partners, and our planet

Through passionate advocacy, operational excellence, and collaborative partnership, we recycle glass for the world

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SUSTAINABILITY REPORT

Our core values keep us aligned.

VALUES

Our values keep us action-oriented. We pinpoint the exact ways in which our efforts support our long-term purpose and our day-to-day mission.

1

See Through the Customer's Eyes

2

Integrity Guides Every Decision

3

Create Positive Energy

4

Embrace and Drive Change

5

Be Passionate About the Progress We Make

Internal: Support each other to serve the customer External: Listen actively, act in the customer’s interest

Internal: Earn teammates’ trust External: Integrity and accountability lead to strong relationships

Internal: Find joy in our journey External: Be the partner with whom customers want to work

Internal: Commit to finding better ways External: Accept the challenge to think differently

Internal: Focus on our goals for each other, our customers and the planet External: Care deeply about outcomes

STRATEGIC MATERIALS, INC.

PAGE 08

SUSTAINABILITY REPORT

ABOUT THIS REPORT

Strategic Materials, Inc. (Strategic Materials, SMI, or the Company) is pleased to publish its first Sustainability Report, sharing sustainability activities, initiatives, and performance in 2020. While the year presented challenges, including a pandemic, the focus remained on these efforts.

For questions about this report, contact: info@smi.com

SMI has prepared this report in accordance with the Global Reporting Initiative (GRI) Standards: Core option.

The structure of this report outlines the company impacts based on the most critical parts of the business, which were identified through a stakeholder engagement survey; interviews with key decision-makers; and research in relevant industry standards, customer commitments, and competitor reports. The stakeholders include employees, customers, suppliers, investors, and other partners.

Findings from this stakeholder engagement and internal analyses were used to analyze the impacts SMI has on its people, partners and the planet; and to outline goals and initiatives to achieve industry best practices in each category.

STRATEGIC MATERIALS, INC.

PAGE 09

SUSTAINABILITY REPORT

SUSTAINABILITY GOVERNANCE

SMI manages material environmental aspects through a robust Environmental Management System (EMS) and policy. The policy is applicable to all operational sites, employees, contractors, sub-contractors, temporary hires, and any individuals performing on behalf of the company throughout North America. The company's Environmental Health and Safety (EH&S) team is responsible for continuous improvement of the policy and performs periodic environmental impact assessment audits. Each site is audited for compliance on a scale from 0 to 100 in the following areas: Zero non-storm water runoff Noise Air emissions Good relationship with neighbors Vector free Odor Trash/debris Toxics Best management practices

SMI management provides the necessary resources to establish, maintain, improve and enforce the policy. The resources include collaboration between each functional group, technology, and financial support. The policy is periodically evaluated by the environmental engineer or highest ranking EHS individual, and legal counsel for effectiveness.

The company and all facilities ensure internal communications are sufficient to support implementation of the policy and are

STRATEGIC MATERIALS, INC.

trained to respond to relevant external communications. All employees are encouraged to report environmental issues and are provided with a hotline to do so anonymously. The company encourages local plant management to engage with the local community. The EMS includes the following appendices: Storm Water Management Procedure Visual Emission Monitoring Procedure Environmental Incident Reporting Waste Identification Procedure Storm Water Benchmark Sampling Procedure Emission Inventory Reporting Procedure Solid Waste Handling Procedure Waste Handling, Storage, and Labeling Procedure Emission Management Procedure

SMI is in the process of creating a formal Sustainability Committee to coordinate sustainability efforts across the organization and centralize data management.

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SUSTAINABILITY REPORT

OUR COMMITMENT TO EQUALITY

Although the year 2020 was plagued with devastating injustices and ensuing unrest in our nation, I believe these events serve as reminders of our opportunity to do better. The company will continue to fight for inclusiveness and progress towards true equity and equality for all. We are committed to doing more for our employees, and ensuring we are allies at our company and in our communities. I stand - and as a company, we stand - united with everyone who is demanding true equality and lasting change in the fight for a more fair and just society. Change is coming. It is necessary, it is overdue, and we will be a part of it.

To that end, with the help of a third-party, we are evaluating all of our policies and procedures, increasing employee training, and developing goals specific to inclusion and diversity. In 2021, we will also allocate funds to donate to credible and knowledgeable organizations, who share our goals and who are in the forefront in this fight.

Our work environment does not tolerate racism or discrimination of any kind. Whether you are an employee or a visitor at one of our facilities, if you see racism or discrimination in our workplace – whether subtle or overt – say something. To be silent is complicit.

It is my hope our company commitments go beyond the workplace and the demand for fairness, equality and inclusiveness are carried at the same standard and with the same energy into your homes and local communities.

SHERRY D. WILLIAMS

CHIEF LEGAL OFFICER SENIOR VICE PRESIDENT, HUMAN RESOURCES

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

DIVERSITY

&

SMI Senior Leadership Team

INCLUSION

DATA

SMI Senior Leadership Team

22% Women

33% Racially Diverse

Employee Generational Demographic

5% Gen Z

30% Millennial

40% Gen X

25% Boomers

Employee Gender Identification

130

655

Women

Men

The company will continue to fight for inclusiveness and progress towards true equity and equality for all.” — Sherry Williams | Chief Legal Officer Senior Vice President, Human Resources

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

UNITED NATIONS GLOBAL COMPACT

While SMI has been committed to human rights, labor, the environment and anticorruption throughout its history, at the start of 2021, SMI signed on to the U.N. Global Compact to demonstrate its formal commitment to corporate responsibility. The company is committed to making the U.N. Global Compact and its principles part of the strategy, culture and day-to-day operations, and to engaging in collaborative projects that advance the broader development goals of the United Nations, particularly the Sustainable Development Goals.

The company recognizes a key requirement for participation in the U.N. Global Compact is annual submission of a Communication on Progress (COP). SMI supports public accountability and transparency, and commits to report annually on company progress.

STRATEGIC MATERIALS, INC.

PAGE 13

SUSTAINABILITY REPORT

UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS

SMI fosters technical innovation towards a circular economy and promotes resilient infrastructure of recycled glass products by its customers. Through innovation, promotion and supply chain partnerships, SMI makes cities and human settlements more safe, resilient and sustainable.

The company takes urgent action to combat climate change as a leader in the circular economy of glass and through our specific environmental impact reduction goals.

With an in-depth focus on the total supply chain, SMI works with suppliers to ensure and promote sustainable consumption and production patterns.

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SUSTAINABILITY REPORT

Importance to Stakeholders

Higher

SMI MATERIALITY MATRIX

People Partners

Lower

Planet

Lower

Importance to Business (SMI)

MATERIALITY ANALYSIS

In order to identify the company's most material impacts, SMI commissioned surveys, conducted interviews, and benchmarked industry standards via an independent third party. Feedback from these engagements drove the SMI materiality matrix.

The topics in the top right quadrant indicate those identified as the most important to stakeholders and to the business, and thus served as a guide to develop the company's key focus areas and goals.

STRATEGIC MATERIALS, INC.

1.

2.

3.

4.

5.

6.

7.

8.

Higher

Employee health and safety Ethics; Integrity Safe and ethical labor practices Employee engagement Employee training Financial health Employee benefits Diversity and Inclusion and Equal Opportunity

9. Customer service 10. Turnaround time; Productivity in servicing customers 11. Product offering and scale 12. Quality 13. Visitor health and safety 14. Economic opportunity and growth 15.

16.

17.

18.

19.

20.

Regulatory/environmental compliance Recycling and resource recovery Waste generated; waste diverted Proper handling of hazardous waste Air pollution Greenhouse gas emissions

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SUSTAINABILITY REPORT

OUR FOCUS AREAS & GOALS

GOAL

PEOPLE

Engage and embrace employees who live the purpose, mission and values

KEY PERFORMANCE INDICATORS

Employee retention Employee satisfaction Safe operations

PARTNERS

Be reliable and trustworthy partners with customers, suppliers, and communities where the company operates

Customer satisfaction Employee ethics training and supplier code of conduct Strong community relations

PLANET

STRATEGIC MATERIALS, INC.

Reduce environmental impact by diverting glass from landfill, and facilitating a circular economy

Zero waste goals Environmental management

PAGE 16

PEOPLE We are glass warriors on the front lines as essential workers, recycling glass to create a better world.

SUSTAINABILITY REPORT

PEOPLE

Engage and embrace employees who live with purpose, mission and values.

IMPACT AREAS Employee Health and Safety; Ethics & Integrity; Safe and Ethical Labor Practices; Employee Engagement

MANAGEMENT APPROACH

1.2 Ethics & Integrity

1.1 Employee Health and Safety

To safeguard the highest ethical standards, SMI is developing an employee training program with a credible third party. The program will be centered on ethics and integrity and set to launch in the second quarter of 2022. The program will help limit overall company risk and create a culture of ethics, driving business value.

SMI's goal is to ensure all employees feel safe and respected. Facility assessments are a critical measure toward this goal and also help identify inefficiencies in the workplace, leading to process improvements.

Plant managers define the scope and approach of the facility assessments. Sites are prioritized based on current issues. Each site completes at least one facility assessment per year. Additionally, a job safety analysis audit (JSA) is conducted annually.

Boundary: SMI contributes to this material impact through the company's health and safety management system, policies, and actions. Worker health and safety is part of the direct operations and supply chain.

2020 Health and Safety Metrics Near Misses

2

TRIR

1.37

STRATEGIC MATERIALS, INC.

Boundary: SMI contributes to ethics and integrity through training programs and culture.

Workplace ethics and integrity impacts direct operations and supply chain through relationships with suppliers and clients.

1.3 Safe and Ethical Labor Practices The company is in the process of implementing a mentor program, where a newly hired employee will be partnered with a tenured or senior mentor. This allows the new employee to learn best practices and develop a rapport with a peer, while the mentor can sharpen leadership skills for future management opportunities. It also fosters comradery among the team.

SMI's goal is to have 95% of technical, managerial and professional employees receiving performance reviews at least once per year. Safety and general sustainability practices are part of each person’s review.

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SUSTAINABILITY REPORT

Boundary: SMI contributes to this impact through training, policies, and programs. Safe and ethical labor practice are critical to our direct operations and our supply chain.

1.4 Employee Engagement Sharing the company story with employees strengthens a shared mission and creates a sense of belonging, which is why the company is rolling out training in multiple languages for a renewed purpose, mission, values and logo in 2021. The company will also implement an enhanced employee code of conduct in the first quarter of 2022.

Further, SMI is developing a structure for a formal employee recognition program, under the name "Glass Warriors". Glass Warriors represents those who come to work everyday and are on the front lines of recycling.

100% of workers covered by H&S management system

It's not an easy job to recycle, let alone to recycle glass. The teams are fighting weather elements like sun or snow; fighting operational inefficiencies due to contamination; and fighting to keep glass out of the landfill.

The Glass Warriors training and recognition program will elevate and reward those for the work they do every single day to recycle glass for people, partners and the planet. The program has plans to extend beyond the company and onto customers, cities & communities, individuals and other glass allies who go above and beyond to facilitate glass recycling and landfill diversion.

Boundary: SMI contributes to employee engagement through programs and culture. This impacts our direct operations.

TM

The company's Glass Warriors program recognizes employees fighting to keep glass out of the landfill.

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

11% reduced turnover in 2020

26 hrs Environmental, Health, and Safety training per operations employee

1K

Figure 2: Recycling 1,000 tons of glass creates slightly over 8 jobs. (Source: Container Recycling Institute). Recycling 1 million tons of glass each year, equates to supporting roughly 8,000 jobs

STRATEGIC MATERIALS, INC.

PAGE 20

SUSTAINABILITY REPORT

MASK DONATION

WE ARE IN THIS TOGETHER. As the world was learning of a new virus, many unknowns still existed, but one thing was for certain - wear your mask! The Centers for Disease Control (CDC) and other government health officials specified N-95 masks for enhanced protection. The problem? N-95 mask global supply chain became strained.

Well before the pandemic, many SMI glass recycling facilities required employees to wear N-95 masks as part of their personal protective equipment (PPE). Therefore, the company was prepared and well positioned to protect its own essential workers, but given the uncertainty, SMI also implemented robust reusable mask practices and teams leveraged existing relationships to minimize the supply chain challenges. The combination of these efforts allowed SMI to donate over 1,000 N-95 masks to several local medical centers in need.

While we were operating as an essential business, we truly felt we were in this together with our local communities.

Our mask donation was a small way of showing our thanks. We unofficially referred to it as our 'COVID Kindness' initiative. " John Crane Director, EHS

STRATEGIC MATERIALS, INC.

PAGE 21

PARTNERS We combine deep respect for the power of partnership with an ever-present commitment to relationship-building.

SUSTAINABILITY REPORT

PARTNERS

Be reliable and trustworthy partners with customers, suppliers, and communities where the company operates

IMPACT AREAS Customer Service; Turnaround Time, Productivity in Servicing Customers; Product Offering and Scale; Quality

MANAGEMENT APPROACH 2.1 Customer Service SMI will conduct customer satisfaction surveys with all customers on an annual basis. Topics relate to: Turnaround time (sales to operations) Value (price to quality measure) # of customers that would repeat business and/or refer to others Alignment/support of customer’s goals, including sustainability Boundary: The quality of customer service impacts the company's supply chain, clients, and partners.

We are linked to this impact through our direct operations.

2.2 Turnaround Time; Productivity in Servicing Customers Query response time is an indicator of high-quality service to customers. The turnaround time is efficient in primary markets. Moving forward, the company aims to meet the same targets in growth markets.

Boundary: Our production turnaround time and customer service responsiveness is linked to direct operations, supply chain and impacts clients and partners.

2.3 Product Offering and Scale SMI offers products in the following industries:

STRATEGIC MATERIALS, INC.

glass container, fiberglass insulation, highway bead, surface preparation, filtration, terrazzo flooring, fillers, flexible packaging, plastic films, agricultural pipe and integrated concrete foundation markets.

Expanding scale of production helps meet company and partner circularity goals.

Boundary: Our product offering and scale of production is linked to our direct operations and supply chain and impacts our clients and partners.

2.4 Quality Providing customers with high-quality products is a vital component to the longevity and overall success of to our company and theirs. Quality is assured with statistical process control.

Supplier guidelines clearly define and communicate the organization’s expectations for sustainability.

Clearly communicating requirements to suppliers grants the company a strategic advantage over competitors by reducing risk in the value chain.

There were zero confirmed incidents of corruption in 2020, and by 2023, SMI plans to have at least 95% of contracted suppliers sign the company's Code of Conduct agreement.

Boundary: The quality of our products is linked directly to our operations and is impacted by our supply chain and impacts our clients and partners.

99.9%*

Quality Acceptance Rate

*Percentage of recycled glass accepted by our customers in our primary markets

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SUSTAINABILITY REPORT

ON TIME, EVERY TIME

DATA VISIBILITY WITH ENACT® At SMI, quality is a primary measure of success. Yet when it came to sharing quality data between plants, the company faced a challenge with cross-site comparisons. Brad Bell, Director of Quality & Continuous Improvement at SMI, wanted a quality system that would quickly and easily unite data from all plants—and he selected InfinityQS® Enact®.

The system allows the company to closely monitor performance on a day-to-day basis, in real-time. With Enact® SMI can quickly identify areas that need attention, address red flags, and visualize those process improvements taking hold. Synthesizing plant data has provided a solid foundation and consistency across our organization; allowing us to bring our best to our partners.

Supply & Demand Chain Executive Magazine's Top 100 Supply Chain Projects List

ENACT IS NOW USED IN 31 PLANTS AND UNITES ALL DATA FOR STREAMLINED MANAGEMENT. STRATEGIC MATERIALS, INC.

I use Enact in my day-to-day quality operations. Enact allows me to check QC data in order to maintain customer specifications— which is essential for running the our Wilson, North Carolina quality department.” — Lamont Ferguson Quality Technician

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SUSTAINABILITY REPORT

CIRCULAR SOLUTIONS

Our business model helps our partners and communities meet their circularity goals.

CREATIVE COLLECTION SOLUTIONS IN RECOVERING GLASS When glass is removed from curbside programs, creative collection solutions come into play. Although the company always advocates for glass in curbside collection first - because it is convenient for residents and yields high volume - the company recognizes the need for other methods to recover glass. Each city, community, county and state is different, so there is not a "one-size fits all" solution, but through early partnership with SMI, a successful program can be achieved.

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SUSTAINABILITY REPORT

0 confirmed incidents of corruption

$28,179 charitable contributions

2023 GOAL

95%

of contracted suppliers to sign Code of Conduct agreement *50% of suppliers currently signed onto contracts

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

CREATIVE COLLECTIONS

TOWER BEER, WINE & SPIRITS PROGRAM

Tower Beer, Wine & Spirits developed an idea to offer a glass recycling option for the local community and launched a pilot program with The Center for Hard to Recycle Materials (ChaRM). As the program grew, they found partnership with local hauler, Derek Riker of Haulin’ Glass Recycling.

Since space is limited on premises – primarily parking for customers – Haulin’ Glass offered 96-gallon roll carts for glass only drop-off in front of both Tower stores. The program grew so quickly, the bin count tripled in less than a year.

The containers are emptied and the glass is taken to SMI by Haulin’ Glass Recycling.

IN 2020 ALONE, THE PROGRAM DIVERTED OVER 350,000 LBS OR 175 TONS OF GLASS FROM LANDFILL AND INTO THE CIRCULAR ECONOMY.

STRATEGIC MATERIALS, INC.

We are doing a great thing for our community because it’s keeping all the glass from going to landfill. We have a booming industry all around Atlanta and we need all the glass we can get." — Eugene Moreland SMI Plant Manager College Park, GA

PAGE 27

PLANET While the nature of our work is inherently environmentally friendly, we are deeply committed to the continual improvement of our operations and strive to expand the role that recycled glass plays in manufacturing at large.

SUSTAINABILITY REPORT

PLANET

Reduce environmental impact by diverting glass from landfill, and facilitating a circular economy

IMPACT AREAS Recycling and Resource Recovery; Waste Generated & Diverted

MANAGEMENT APPROACH 3.1 Recycling and Resource Recovery Recycling and resource recovery is at the core of our business value. Not only does recycled glass melt at a lower temperature, saving energy and CO2 emissions, but also, over a ton of natural resources are conserved for every ton of glass recycled, including 1,300 pounds of sand, 410 pounds of soda ash, 380 pounds of limestone, and 160 pounds of feldspar.

In 2020, our California operations recycled 388 tons of batteries through our third party specialized recycler.

Boundary: We contribute to this impact through our mission, industry, and daily operations. We also help contribute to this impact through our supply chain and for our clients.

3.2 Waste Generated/Diverted In order to work towards zero waste, SMI regularly samples inbound materials to reduce contamination of non-recyclable materials. With contamination level identified, SMI develops strategies in partnership with its suppliers and industry organizations to reduce waste first and foremost, and secondarily, exhaust all recycling and beneficial use options before landfill.

Boundary: We contribute to this impact through our mission, industry, and daily operations. We also help contribute to this impact through our supply chain and for our clients.

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SUSTAINABILITY REPORT

TOGETHER, WE ARE SHAPING A MORE SUSTAINABLE FUTURE.

Materials that would have gone to landfill

Materials diverted from landfill 2.4M TONS

2.9M TONS

Residual Waste 500,000 tons* *Primarily due to contamination and non-recyclable materials

Figure 3: A visualization of Strategic Materials' waste diversion in 2020.

6 tons of recycled container glass

1 ton of carbon dioxide reduced

Figure 4: For every six tons of recycled container glass used, a ton of carbon dioxide is reduced. A relative 10% increase in cullet reduces particulates by 8%, nitrogen oxide by 4%, and sulfur oxides by 10%. Therefore, recycling 1M tons of glass a year saves 166,666 tons of CO2 emissions.

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

2,865,213 ENERGY

total energy consumed (GJ)

72,792 WATER

HAZARDOUS WASTE

total water consumed (M3)

388 tons of hazardous waste recycled*

*In 2020, we recorded 388 tons of batteries that were recycled through our third party specialized recycler. Batteries are collected from local SMI locations and sent to our recycling partner's facility for proper disposal. SMI is committed to improving tracking and reporting on all hazardous materials in future reporting years.

2023 GOAL

5%

reduction in energy and water consumption STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

STATE OF ART INVESTMENT

WISCONSIN UPGRADES One of the company's largest glass recycling facilities resides in Delavan, Wisconsin, processing well over 100,000 tons of glass each year.

As part of SMI's continuous improvement efforts, SMI hired a third party engineering expert, RoboVent, in early 2020 to evaluate the facility's air quality. The study yielded several areas of improvement for air flow efficiencies and odor management. As part of the air flow ventilation plan, the facility also invested in a new dryer to enhance moisture control measures, while doubling processing capacity. The project began in February 2020 with a total investment of $2M. In addition, the SMI team improved upon the existing storm water pollution prevention plan, updated the management & site maintenance plan, and incorporated a full compliance and maintenance management system. The local team continued the momentum by enhancing truck loading procedures, regular street sweeping, 5S housekeeping audits, and professional plant cleaning. The SMI Delavan facility has become a best practice for new and existing company facilities.

We are proud of our partnership with RoboVent and the progress we made for our people and our local environment. We are grateful to the City of Delavan and the Wisconsin Department of Natural Resources for their glass recycling support." — Eric Tapper, VP Operations

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

APPENDIX

GRI INDEX GRI #

Disclosure

Page/Response

102-1

Name of organization

Pg. 1; Strategic Materials Inc.

102-2

Activities, brands, products, and services

Pg. 5; Strategic Materials processes recycled glass and plastic for use in a wide array of products, creating efficiencies for our customers while conserving earth's natural resources.

102-3

Location of headquarters

Houston, TX

102-4

Location of operations

Pg. 5; 42 locations in the United States, Canada, and Mexico

102-5

Ownership and legal forms

Privately held

102-6

Markets served

42 locations in the United States, Canada, and Mexico; Containers, fiberglass, highway bead, glass abrasives, fillers, specialty glass, plastics

102-7

Scale of the organization

Approximately 800 employees 42 locations across North America

102-8

Information on employees and other workers

Pg. 18-20; Approximately 800 employees

102-9

Supply Chain

Accepted supply includes 3 mix (single stream), color sorted container glass, mixed container glass, automotive glass, windshields, windows, borosilicate, heavily laminated glass

102-10

Significant changes to the organization and its supply chain

No significant changes to report

102-11

Precautionary principle or approach

Pg. 13-14

102-12

External initiatives

Pg. 13

102-13

Membership of associations*

*not a complete list

AROW (Associated Recyclers of Wisconsin) CalRecycles Carolina Recycling Association (CRA) Container Recycling Institute (CRI) Georgia Recycling Coalition Glass Recycling Coalition Glass Packaging Institute (GPI) Glass Recycling Foundation (501c3) Indiana Recycling Coalition (IRC) ISRI (Institute of Scrap Recycling Industries) NRC (National Recycling Coalition) NERC (Northeast Recycling Council) NWRA (National Waste & Recycling Association) Ontario Waste Managers Association SERDC (Southeast Recycling Development Council) SWANA (Solid Waste Association of North America) Tennessee Recycling Coalition TX STAR (State of Texas Alliance for Recycling) WSRA (Washington State Recycling Association)

102-14

Statement from senior decision-maker

Pg. 4; Message from the CEO

102-15

Key impacts, risks, and opportunities

Pg. 16

102-16

Values, principals, standards, and norms of behavior

Pg. 7-8

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GRI INDEX CONTINUED

GRI #

Disclosure

Page/Response

102-17

Mechanisms for advice and concerns about ethics

Policy and process is included in our Employee Handbook

102-18, 19, 20

Governance structure; delegating authority; executive-level responsibility for economic, environmental, and social topics

The current governance structure includes one CEO, four Directors of Operations, two separate roles for Quality and EHS, one Chief Compliance Officer, as well as regional managers for each region; all members of the Senior Leadership Team have been engaged on a sustainability program, which would include enhanced governance commitments

102-21

Consulting stakeholders on economic, environmental, and social topics

Pg. 15

102-22

Composition of the highest governance body and its committees

Pg. 10-12

102-23

Chair of the highest governance body

102-24

Nominating and selecting the highest governance body

SMI's senior leadership team is selected and hired into strategic positions based on their qualifications regarding education, prior experience, core competencies, and leadership ability

102-25

Conflicts of interest

Any conflict of interest is to be reported and tracked through our employee hotline system.

102-26

Role of highest governance body in setting purpose, values, and strategy

The senior executive team is responsible for the development, approval, and updating of Strategic Material's purpose, value statement, missions statement, strategies, policies, and goals related to economic, environmental, and social topics

102-27

Collective knowledge of highest governance body

N/A

102-28

Evaluating the highest governance body's performance

SMI conducts internal, self assessments of our senior leadership team

102-29

Identifying and managing economic, environmental, and social impacts

Pg. 10, 15, 18-19, 23, 29

102-30

Effectiveness of risk management processes

SMI is actively investigating the feasibility of implementing an Enterprise Risk Management function

102-31

Review of economic, environmental, and social topics

In our continuous effort to improve our sustainability program, SMI is implementing a Sustainability Committee that will review our economic, environmental, and social topics and their impacts, risks, and opportunities on a quarterly basis

102-32

Highest governance body's role in sustainability reporting

In our continuous effort to improve our sustainability program, SMI is implementing a Sustainability Committee that will oversee sustainability reporting on an annual basis

102-33

Communicating critical concerns

All incidents that are reported to our third-party employee hotline are reported to our Chief Compliance officer

102-34

Mechanisms for advice and concerns about ethics

Our process to address and resolve any incident of critical concern is to first investigate the incident and then, if deem appropriate, enforce disciplinary action or implement policy change

STRATEGIC MATERIALS, INC.

Chris Dods, President and CEO

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GRI INDEX CONTINUED

GRI #

Disclosure

Page/Response

102-35, 36, 37, 38, 39

Remuneration policies; Process for determining remuneration; Stakeholders' involvement in remuneration; Annual total compensation ration; Percentage increase in annual total compensation ratio

N/A

102-40

List of stakeholder groups

Pg. 15

102-41

Collective bargaining agreements

10%

102-42, 43, 44

Identifying and selecting stakeholders; Approach to stakeholder engagement; Key topics and concerns raised

Pg. 15

102-45

Entities included in the consolidated financial statements

SMI is comprised of 34 total entities, 24 of which are active and covered within this report unless otherwise stated

102-46

Defining report content and topic boundaries

People, Partners, Planet

102-47

List of material topics

Pg. 15

102-48

Restatement of information

N/A

102-49

Changes in reporting

GRI Core Compliant

102-50

Reporting period

2020

102-51

Date of most recent report

N/A

102-52

Reporting cycle

Annual

102-53, 54

Contact point for questions regarding the report; claims of reporting in accordance with the GRI Standards

Pg. 9

102-55

GRI content index

Pg. 33-36

102-56

External Assurance

SMI is investigating the feasibility of external assurance for the future

205-2

Communication and training about anticorruption policies and procedures

Anti-corruption training is assigned to key employees

205-3

Confirmed incidents of corruption and actions taken

Pg. 23, 26

301-2

Recycled input materials used

100%

301-3

Reclaimed products and their packaging

100%

STRATEGIC MATERIALS, INC.

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GRI INDEX CONTINUED

GRI #

Disclosure

Page/Response

306-2

Waste by type and disposal method

Pg. 30-31

305-1, 2

Direct (Scope 1) GHG emissions; Energy indirect (Scope 2) GHG emissions

SMI will baseline GHG emissions in 2021

306-4

Transport of hazardous waste

Pg. 29, 31; All hazardous waste is handled and transported by our third party specialized recycler

307-1

Non-compliance with environmental laws and regulations

1 OSHA citation; $21,964

401-1

New employee hires and employee turnover

Pg. 20

403-8

Workers covered by an occupational health and safety management system

Pg. 19

403-9

Work-related injuries

18 Recorded incidents

404-1

Average hours of training per year per employee

Pg. 20

404-3

Percentage of employees receiving regular performance and career development reviews

26%

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

GLOSSARY

Term

Definition

Carbon Footprint

the amount of carbon dioxide and other carbon compounds emitted due to the consumption of fossil fuels by a particular person, group, etc.

Circularity

measures taken to retain the value of products, materials, and resources and redirect them back to use for as long as possible with the lowest carbon and resource footprint possible, such that fewer raw materials and resources are extracted and waste generation is prevented

CDP

a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts

carbon dioxide (CO2) equivalent (CO2e)

measure used to compare the emissions from various types of greenhouse gas (GHG) based on their global warming potential (GWP) Note: The CO2 equivalent for a gas is determined by multiplying the metric tons of the gas by the associated GWP

Code of Conduct (COC)

a statement setting out guidelines regarding the ethical principles and standards of behavior expected of a professional person or company

Cullet

Recycled broken glass, furnace-ready for remelting

Energy Efficiency

the ratio of a heating or cooling system's output, per hour, in British thermal units to the input in watts, used to measure the system's efficiency

Greenhouse Gas (GHG)

a gas that contributes to the greenhouse effect by absorbing infrared radiation

GHG Inventory

a list of emission sources and the associated emissions quantified using standardized methods

Global Reporting Initiative (GRI)

an international organization that helps businesses and other organizations take responsibility for their impacts with widely used standards for sustainability reporting

Materiality

a topic that reflects a reporting organization’s significant economic, environmental and social impacts; or that substantively influences the assessments and decisions of stakeholders

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

Term

Definition

OSHA 10 hr

provides basic awareness training on the recognition, avoidance, abatement, and prevention of workplace hazards, including information regarding workers' rights, employer responsibilities, and filing a complaint in a general industry or construction setting

OSHA 30 hr

provides a greater depth and variety of training on an expanded list of topics associated with workplace hazards in each industry for supervisors or workers with some safety responsibility

Recycling

reprocessing of products or components of products that have become waste, to make new materials

Sustainability

development that meets the needs of the present without compromising the ability of future generations to meet their own needs - Brundtland report 'Our Common Future'

Sustainability Accounting Standards Board (SASB)

an independent nonprofit organization that sets standards to guide the disclosure of financially material sustainability information by companies to their investors

Total Recordable Incident Rate (TRIR)

an OSHA metric for measuring occupational safety and health; Total Number of Recordable Cases multiplied by 200,000 divided by total hours worked by all employees during the year covered

United Nations Global Compact

a voluntary initiative based on CEO commitments to implement universal sustainability principles and to undertake partnerships in support of UN goals

United Nations Sustainable Development Goals (UN SDGs)

17 Sustainable Development Goals, which are an urgent call for action by all countries - developed and developing - in a global partnership.

They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests

Waste Diversion

waste diverted from the landfill through reduction, reuse, and recycling

Glossary definitions pulled from GRI, CDP, Oxford Dictionary, and UCLA

STRATEGIC MATERIALS, INC.

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SUSTAINABILITY REPORT

STRATEGIC MATERIALS, INC.

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