#1BAE Systems - ESG Presentation October 2021 “Sustainability is important to us and our stakeholders. We recognise that the way we do business is vital for the future strength of our business. The long term outlook for the company and the defence sector means we need to anticipate change and ensure we continue to improve on what we do today." CEO - Charles Woodburn, March 2021 baesystems.com All statements other than statements of historical fact included in this document, including, without limitation, those regarding the financial condition, results, operations and businesses of BAE Systems and its strategy, plans and objectives and the markets and economies in which it operates, are forward-looking statements. Such forward-looking statements, which reflect management's assumptions made on the basis of information available to it at this time, involve known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of BAE Systems or the markets and economies in which BAE Systems operates to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. BAE Systems plc and its directors accept no liability to third parties in respect of this report save as would arise under English law. © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS 1#2Agenda Part 1 • Welcome • Board Overview • ESG committee Overview Sir Roger Carr - Chairman Sir Roger Carr - Chairman Jane Griffiths - Chair of ESG committee Part 2 • • • Executive Overview Product Trading Environmental and Social Cyber Charles Woodburn - CEO Philip Bramwell - Chief Counsel Charles Woodburn and Tom Arseneault Julian Cracknell - MD Applied Intelligence Part 3 - Q&A © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS 2#3Sir Roger Carr Chairman Copyright© 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.#4Defence and Cyber - helping governments fulfil their primary responsibility Protecting the country and its citizens Threat environment is changing and multi-dimensional – protection offered by defence to wider society provides the basis for sustainability We at BAE Systems Unique global portfolio supporting NATO and "five eyes" nations and their allies Generate significant economic value Invest in education and skills to develop and maintain critical skills Valuable contributors to our communities © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Operate in tightly regulated industry – Governance and business ethics at our core - Working with governments and industry for a safer and prosperous society BAE SYSTEMS PROPRIETARY 4 BAE SYSTEMS#5Our Purpose At BAE Systems we serve, supply and protect those who serve and protect us, in a corporate culture that is performance driven and values led. We have an important role in society because we: Help our customers to provide security Contribute to the economic prosperity of the places where our people live and work Support high value jobs and employee rights Value our people and their diversity Identify opportunities for individuals from disadvantaged backgrounds Develop cutting-edge technologies Provide best-in-class products and services by forging strong relationships with our suppliers and partners Support local communities Inspire in the work we do Will reduce the environmental impact of our activities © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS 5#6Bringing our "Purpose" and the "Case for Defence" to life Environment/Net Zero Social • UN 'Race to Zero' commitment . • Scope 1&2 - our operations 2030/ Scope 3 - supply chain & product 2050 COP 26 involvement c.800 Apprentices being hired in 2021 - maintained even during COVID £93m invested in education and skills - providing pipeline of talent Key role in UK "levelling up" agenda - Over 20,000 employed in North West England Exporter from UK and US - e.g Type 26 - design adopted by Australia and Canada 2020 - UK GDP contribution - £10bn+ ~0.5% of domestic economy; c.£4bn in exports UK - we support 143,000 jobs directly and indirectly - 5,000 UK suppliers, 21,000 globally Defence demonstrates governments & industry working together - delivering critical skillsets & prosperity to the benefit of all Economic Prosperity © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS 6#7Board Information Diverse and Relevant Skills Multi-National company leaders Engineering & Operations Finance Artificial Intelligence • Strategy and HR 14 Board Members Chairman 10 Independent 3 Executive 9 UK 3 Nationalities 4 US 1 Australian © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Independent Non-Executive Directors - Board Diversity 50% 50% O- 64% All Directors -Board Diversity C ■Female ■Male Tenure - Non-Executive Directors High quality diverse Board - meeting code requirements BAE SYSTEMS PROPRIETARY 27% ■ Female Male 36% 64% 9% ■ Up to 3 years Over 3 and up to 6 Over 6 BAE SYSTEMS 7#8Succession Planning - key points Non-Executives Executives • • 4 new Non-Executives recruited in last 12 months 1 further appointment planned in next year CEO, CFO and CEO Inc new appointments in last 4 years Succession planning and developing executives a top priority for the Board: Focusing on an improved balance of age and gender • • Diversity target set for 50% of Executive Committee to be female by 2030 Mix of experience from internal and fresh thinking from external recruits In-depth review of the succession plans for all the Executive Committee level roles Improvement in quantity and quality of succession plans Identification of high performance groups Investing in additional education and training for an ever deepening talent pool Good progress being made on all aspects of succession planning - Board and Executive © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS 8#9Board Level - Corporate Governance Overview © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Stakeholders Board • Chairman Shareholder Contact CEO / Executive • Remco Informal Board Dinners* Government Contact • Regular dialogue with Senior ministers and Political Officials Committees RemCo Ian Tyler Customers/Military leaders in the UK, US, Australia, KSA and Qatar Regular dialogue with Senior Military leaders in all customer countries • Board dinners Audit Stephen Pearce Environmental, Social & Governance Dr Jane Griffiths Pension Employees Close working relationship with pension funds through CFO • Formal and informal communication networks NomCo Sir Roger Carr Inc. Board - USA Special Security Agreement Oversight on behalf of USA government - Innovation and Technology Dr Ewan Kirk Robust governance - total commitment to best practice – performance driven and values led BAE SYSTEMS PROPRIETARY 6 BAE SYSTEMS#10Dr Jane Griffiths Chair of ESG Committee Copyright© 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.#1111 ESG Committee The focus for the ESG Committee during 2021 has been: . · • Assuring the Company maintains strong and robust standards of • • • • governance Oversight of: the Company's environment agenda and progression towards Net Zero the Company's ambition and programme of work to increase diversity how the Company discharges its societal and community responsibilities The Company's approach and outcomes of employee engagement Ensuring continued focus by the Company on safety & wellbeing Acting as the Board representative on Employee Voice Membership: Jane Griffiths (Chair) Nick Anderson Crystal Ashby (joined September 2021) Chris Grigg Nicole Piasecki Our MSCI ESG rating: AA CCC B BB BBB A AA AAA Laggard Average Leader 2021 Full Programme - Supporting Information © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS#12ESG & Board Employee Engagement ― activity to date 2021 ESG Committee has reviewed safety & wellbeing, D&I, environment (net zero), community investment. The Board has reviewed culture & engagement (including results of employee engagement and ethics surveys), ethics helpline and employee assistance data. 2021 to date - High Potential virtual call, site visits to Portsmouth, Warton and Glasgow, Senior women perspective. Opportunities for further engagement: Future leaders/emerging talent conference (8-9/11), graduate conference (24-26/11), CEO trade union forum (25/11). Hear from executives on employee matters such as safety, wellbeing, D&I and company decisions that could impact employees. Review employee sentiment and wellbeing surveys and other data sources evidencing employee views. Learn from operational management teams on the practical application and impact of workforce policies. Direct engagement with groups of employees. Senior Executives Operational Managers Direct engagement Data © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS 12#13Vision and Overview Charles Woodburn - CEO © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS BAE SYSTEMS PROPRIETARY 13#14Our Sustainability Vision Well-positioned portfolio Environment • Goal to reduce environmental impact of our operations Committed to TCFD recommendations • Target net zero greenhouse gas emissions across our operations by 2030 Long-term programme visibility Sustainability agenda • Governance Governance and business conduct Responsible supply chain Social • Our People and values - developing talent Positive social & economic impacts Technology investment . Safety and well-being • Human rights Further embedding sustainability into business through strategic objectives Accelerating our ambitions Strong consistent programme performance Top line growth Technology investment Efficiency and simplification in working Portfolio shaping for value creation Secure further opportunities and widen market base Accelerate our sustainability agenda Margin expansion Improved cash conversion Balanced and broad capital allocation Higher ROCE Benefit to all stakeholders Attractive shareholder returns © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 14 BAE SYSTEMS#1515 Sustainability integrated in to governance & operations • The sustainability standards are set at the Group and embedded in Group policies defined within our Operational Framework. The Sectors are responsible for aligning customer requirements with our environmental, social and governance principles and upholding our Code of Conduct with employees and partners and suppliers. • Regular performance reviews through Quarterly Business Reviews and CEO Business Reviews. • Cross functional/cross sector steering groups provide oversight and assurance. Operational Assurance Framework and Internal Audit confirm compliance status with policies and processes. Sector Management Boards Board of Directors ESG Committee Executive Committee Cross functional/cross sector ESG governance groups Sustainability Steering Group Net Zero Steering Group Diversity & Inclusion Steering Group Safety Council Ethics Review Committee & Ethics Oversight Committee Group Functions Group Functional Councils All executive grade employees have specific incentive targets related to: Safety, Environment, Diversity and Engagement Strong governance and ethical behaviour at core of the business © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS#16Sustainability (ESG) in the defence sector Environment How efficient are companies at managing natural resources and Carbon Scope 1&2 impacts Carbon Scope 3 Social How do we treat our employees, customers, supply chain, communities and other stakeholders? Safety Governance How are companies managing current & future ESG risk? Human Capital (incl Diversity) Corporate Governance Business Ethics Resource Use & Impacts Innovation & clean technology Community Relations Social & economic impact Product Data Privacy & Trading Land use & biodiversity Climate transition & impacts Health Employee & wellbeing Engagement Human Rights security Anti-bribery & succession © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Supply Chain BAE SYSTEMS PROPRIETARY BAE SYSTEMS 16#17Accelerating our ambitions 17 Environment/Net Zero UN 'Race to Zero' commitment • Scope 1&2 - our operations 2030 Scope 3 - supply chain & product 2050 • Technology development e.g. HybriGen Strategic partnerships e.g. Cranfield University Sustainability Apprenticeships . Social Gender diversity ambition 30% women by 2030 Key pledges: gender, ethnicity, LGBTQ+, mental health, disability, mobility & inclusion, veterans Ongoing focus on safety & wellbeing Review of community & social impact Continued investment in STEM & early careers MOVEMENT TO WORK The Serial Mehity Pledge The 500 Valuable change Governance Committed to cease handling white phosphorous Accredited Real Living Wage Employer AA (leadership rating) by MSCI SASB submission and TCFD disclosure Code of Conduct updated to increase focus on IT & data security, hybrid working and strengthened Human Rights statement Extended ESG review of Supply Chain Veoarthdayag for moreve Celebrating Earth Day 22 April, 2021 Energy services Phase Define net zero torget Prise Develop net zero 2 roadmap Phase 3. Develop net zero operating model Phase 4 Implement change © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Commited to the whe she Howment to Work Soc In 2020, we contributed an £10m Inclusion Week 2021 Head Office BAE SYSTEMS PROPRIETARY MITHIN ER اعش برام الله 20 السلام ياد Our approach to ethics and anti-corruption ESTSTER Oe MSCI ES BAE SYSTEMS#18Product Trading Policy Philip Bramwell – Legal Counsel - RH SMENING 18 © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS BAE SYSTEMS PROPRIETARY#19Product Trading Policy • To identify Responsible Trading Risks the Product Trading Policy requires an evaluation on all Products and Trading activities, in line with the Responsible Trading Principles. The process ensures that in addition to commercial assessment, consideration is given to wider ESG concerns. • It is a principles-based policy that provides a framework for Line Leaders to determine the most appropriate mechanism in their business to carry out the evaluation. BAE Systems Responsible Trading Principles are: • . • We understand and support our customers' national security and other requirements; We work to BAE Systems' values in all that we do; We assess carefully our products and services with the objective that neither BAE Systems nor our customers are exposed to significant reputational risk; and We are as open as practicable about the nature of our business. © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 19 BAE SYSTEMS#20Product Trading Policy Evaluation considerations Does the product fulfil its intended purpose and match the customer's stated requirement? 20 20 Policy Applicability When & how to evaluate Evaluation considerations Forming trading judgements Putting it into practise • Does the product conform to our product safety policy? • • • Is the product able to distinguish planned from unintended targets? Is it proportionate to the role and necessary for its intended purpose? Can it reasonably be anticipated that the product will be controlled or prohibited in the foreseeable future? Is the product an entirely new class of weapon or capability? Is there a significant, specific and foreseeable risk of the product being diverted or transferred to an unapproved user or utilised for an unauthorised purpose? Does the product create a significant lasting adverse environmental or health impact over and above that reasonably necessary in its manufacture, storage, deployment, use or disposal? Can the product's end use reasonably be expected to violate civil liberties or human rights? © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS#21Controversial Weapons Weapon/capability Cluster munitions 21 21 Current BAE Systems position We do not manufacture or sell cluster munitions banned under the terms of the Convention on Cluster Munitions (Oslo Convention) Anti-personnel mines Chemical & Biological weapons Depleted Uranium White phosphorus We do not manufacture or sell Anti-personnel mines banned under the terms of Anti-personnel mine ban convention (Ottawa Treaty) We do not manufacture or sell chemical or biological weapons We do not manufacture or sell depleted uranium (DU) BAE Systems does not manufacture white phosphorous. However, we do supply certain mortars for obscuration only to the UK Ministry of Defence that contain white phosphorous. Under 0.1% of sales 2021 Update - We have communicated our intention to cease the supply of the product containing White Phosphorus to our customers and are actively working with them on alternative solutions and exploring timelines for withdrawal. © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS#22Controversial Weapons Nuclear capability Current BAE Systems nuclear involvement We do not provide or manufacture nuclear weapons: We are building the Royal Navy's new Dreadnought submarines which will provide the UK's continuous sea deterrent for decades to come. We are not involved in manufacturing the Trident missile system nor nuclear warheads. In the US, we provide logistics and maintenance support for the facilities which store the US Trident and Minuteman missiles; we do not have the contract for the maintenance of the missiles. The French branch of MBDA is in charge of the development and production of the ASMPA air launched missiles (at the exclusion of the warhead) of the French nuclear deterrent. All ASMPA missiles currently held by the French forces were delivered between 2009-2011 – no further production of these missiles is expected. In 2016, MBDA received a contract for the mid-life update of these missiles. MBDA is not involved in the production of the nuclear warhead. – Sales associated with this are under 0.1% of Group sales. Why nuclear is important to BAE Systems and our customers Across the work streams detailed above this is over £1bn of revenues per annum for BAE Systems. The US, UK and French Nuclear deterrent is critical to their and the NATO defence and security shield. BAE Systems is proud to support this most critical of capabilities for our customers in support of the democratically elected mandates. It provides technology, skills and economic benefits in the 3 countries. © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 22 BAE SYSTEMS#23Controversial Weapons Autonomy Current BAE Systems position There are a clear range of benefits to unmanned systems. We are developing a range of autonomous systems and future concepts to enable naval, land and air forces to carry out a diverse range of roles including attack, electronic warfare and surveillance. Unmanned systems have been in existence for some time, such as remotely controlled drone aircraft and bomb disposal units that protect people from hazardous situations. There are opportunities for autonomous systems in both the military domain and for adjacent civil applications. We support our customers' view that there needs to be human input in the weapon command and control chain © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 23 BAE SYSTEMS#24Defence contracting in our primary markets 米 © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. • • US contracts either with US DoD or other government agencies FMS via the US DoD · With other US defence primes (Lockheed, Northrop, Boeing etc) • UK contracts generally direct with UK MoD or other offices of state Exports from the UK either Government to Government or with UKG approval Contracts primarily with the Australian DoD KSA operations under a UK Government to KSA Government contracting structure with BAE Systems the prime contractor Defence exports subject to stringent export licence regimes from exporting nations and on component parts Significant list of countries BAE Systems will not conduct business with in line with our policies BAE SYSTEMS PROPRIETARY 24 BAE SYSTEMS#25Environment and our Net Zero Journey 25 © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS BAE SYSTEMS PROPRIETARY#2626 Environment - Overview & Key Facts . We have set our Scope 1 and 2 targets to be Net Zero by 2030 We have signed up to Race to Zero, via the Business Ambition 1.5 Degrees to demonstrate this commitment We will submitting our milestones to the Science Based Targets initiative (SBTI) in 2022 We recognise that our value chain (Scope 3) emissions are many times that of our Scope 1 and 2 emissions, and will work with our supply chain and customers towards meeting our net zero target across our value chain by 2050. On track to meet TCFD reporting requirements in 2022 TCFD detail - Supporting Information Our Commitment We have set a target of achieving net zero GHG emissions across our operations by 2030 aiming to do this in line with the 1.5°C pathway and working towards a net zero value chain by 2050. We recognise we cannot do this alone. We intend to collaborate with our suppliers and customers, and partner with researchers and technologists to innovate for a net zero future. Greenhouse gas emission per employee (tonnes CO2e) 2020 Global* 5 2019 UK 4 Global 11 UK 5 *Removed two US sites from reporting boundary in 2020 as outside operational control © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS#27Net Zero Roadmap 27 Phase 1 (2020) feasibility study to define Net Zero ambition and commitment Phase 2 (H1 2021) developed strategic business case and roadmap ✓ for achieving phase 1's net zero ambition Phase 3 (H2 2021 - ) design of transformation programme and implement governance to deliver Net Zero Implement net zero change I 2022 (following two years) November December January 2022 + Net Zero Roadmap Phase 3 I Design transformation programme & governance and prepare for change 2021 September October Workstream 1: Net Zero transformation and change management Design of a Net Zero Transformation Programme Ito coordinate delivery of Roadmap across the Group Workstream 2: Net Zero governance and planning © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Change management activities to support Net Zero Transformation Programme, handover to Sectors / Businesses and launch of key roadmap initiatives Development of policy and governance to deliver Net Zero across the Group Development of planning and coordination capabilities BAE SYSTEMS PROPRIETARY BAE SYSTEMS#28Environment & Climate Transition Major workstreams & examples Energy sourcing & efficiency • 40 of our UK sites (including majority of our manufacturing entities) now using renewable energy Resource Management • Recycled 80% of waste and 19% of water in 2020 across our operations Zero waste to landfill across Air UK sites since August 2020 Design, Manufacturing and Facility Investment • Recent investment in US, UK, Australian facilities; factory of future Samlesbury, UK- 9,000 solar panels save 500 tonnes of carbon each year Energy services Vaicearthday ConingsBEE Celebrating Earth Day 22 April, 2021 BAE SYSTEMS 65% reduction in energy emissions at Portsmouth Naval base over last 15 years 28 · Technology & innovation More than 14,000 of our electric- hybrid systems in operation saving more than 30 million gallons of fuel & 335,000+ tonnes of CO2 Hyper realism in simulator training improving safety and reducing emissions Collaboration & engagement Graduate Sustainability Forum organised 2021 Virtual Sustainability week © 2021 BAE Systems. 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HybriGen® Power system reduces the workload of diesel engines and runs nearly maintenance free - reducing operating costs, fuel use and emissions Employee and partner engagement raising awareness and providing opportunities for involvement BAE SYSTEMS BAE SYSTEMS PROPRIETARY#29Supply chain and our customers • • We recognise we cannot do this alone - Collaboration with supply chain and customers is crucial Supply chain - Our major suppliers are multi-nationals in the sector driving their own ESG strategies like Rolls Royce and Thales . • Uplifting our Supplier Principles in Q4 to reflect not only compliance with Environmental Law but also tackling climate change Undertaking projects relating to sustainable procurement to shift the dial (e.g. Green Energy, Electric Vehicles, FM) Engaged top suppliers on sustainability and other risk Our two major customers are setting bold targets and looking for a growing number of sustainable products 米 • US DoD pledged to help nation achieve Net-Zero emissions by 2050 US administration have committed to 50% reduction in national carbon emission by 2030 Federal R&D budget set to include considerable portion to sustainable technologies Defence and commercial opportunities will arise – Bradley already being trialled UK MOD pledged to help nation achieve net-zero emissions by 2050 RAF Net-Zero bases by 2040 Defence and commercial opportunities will arise from existing and developing technologies Bid Criteria to include ESG considerations © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 29 BAE SYSTEMS#30Electrification Global leader in electric drive systems for zero emission bus propulsion with more than 14,000 systems delivered Our systems are capable of saving more than 30 million gallons of fuel and more than 335,000 tons of CO² from entering Earth's atmosphere each year ➤ Advancing vehicle mobility, efficiency and capability in urban transit, marine and military markets Capability in action: Gen3 Electric Drive System Jaunt Air Mobility: electric energy management systems Power management for next-generation hybrid engine Bradley - contract to integrate a hybrid electric drive system What's next: Well positioned in the commercial air mobility market, pairing flight controls with our aircraft power management and energy systems Leading capabilities to address rapidly growing market ©2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Not Export Controlled per ES-NHQ-05621-0264 BAE SYSTEMS PROPRIETARY GET TO ZERO JAUNT ARKIELITE 30 BAE SYSTEMS#31Sustainability driven product innovation Current Current programmes Hybrid electric propulsion system bus mass transit • maritime use Full electric drives also available Hydrogen power in development • Synthetic training Future Example opportunities ⚫ Electric flight ⚫ Future defence platforms • • PHASA-35 solar aircraft All-electric 'heavy lift' UAS • Commercial partnering • Further maritime expansion • Waste heat energy recovery for maritime vessels BAE SYSTEMS Advancing technology and innovation Improving hand in hand sustainability with better performance © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS BAE SYSTEMS PROPRIETARY 31#32Social © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. James Rose Zayn Karim James Whitehead BAE SYSTEMS BAE SYSTEMS PROPRIETARY 32#33Social Section - Contents . • . Overview Our response to Covid • Safety and wellbeing Employee Engagement Diversity and inclusion • Skills and education · Communities, skills and education • 700 Mullhemah Supporting Wilman to Inspire Others Economic prosperity Our people are at the heart of our sustainability agenda © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY Have a great Armed Forces week. ROYAL BAE SYSTEMS BAE SYSTEMS 33#34Social Overview ARMED FORCES COVENANT MOVEMENT TO WORK The Social Mobility The Pledge Valuable 500 time to change discrimination Armed Forces Covenant Movement to Work Social Mobility Pledge The Valuable 500 time to change 34 · • • • Community involvement including Covid initiatives & local support • Diversity ambition set for 30% women by 2030. Year on year improvement in gender diversity through 2020/2021• Strong focus on safety Committed to inclusion with Employee Resource Groups in each region - 50% increase in members over 2020 Employee survey showed 6% improvement in employee engagement • • Investment in STEM & early careers training Around 3,000 young people in learning in the UK in 2020 with flagship apprentice programmes in UK, KSA and Australia External involvement & commitments: 21 pledges on Gender, Veterans, LGBTQ+, Mental Health, Disability, Social Mobility & Inclusion Strong focus on communication, inclusion and mental well being through pandemic Demonstrating clear support to 4 UN SDGs Detail in Supporting Information © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Our people are at the heart of our sustainability agenda BAE SYSTEMS PROPRIETARY BAE SYSTEMS#35Supporting our communities through the pandemic . • . • • • Engineers from our Submarines business, with Lancastle and the University Hospitals of Morecambe Bay NHS Foundation Trust, developed pioneering new PPE for staff on Covid-19 wards. Supported 45 foodbanks close to our UK sites. Donated hundreds of mobile handsets, data packages and laptops to help prevent digital poverty and respond to the issue of access to IT for children home schooling. Worked with charity partners to allow them to apply our funding where it was most vitally needed during an increasingly challenging period. Made financial donations to a wide range of organisations supporting the pandemic in our local communities across the UK, US and Australia. We donated approx. 150,000 faceshields to more than 250 hospitals, GP surgeries, care homes, hospices and ambulance services in the UK and US. In Saudi Arabia, we funded more than 1,000 care packages with essential items for families in need. More than 250 employees volunteered to mentor small-to-medium enterprises through our partnership with Be the Business in the UK. Employee volunteering has been encouraged including in support of the vaccination roll out. Proud members of the VentilatorChallenge UK consortium and developed our 'AirCare' ventilator in weeks. © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY THANK YOU BAE SYSTEMS 35 LO216 BAE SYSTEMS#36Safety Workplace Safety • • • · Recordable injuries - overall 3 year rolling average continues to decrease but increased during first part of 2021 Handling, lifting & carrying and Slips, trips & falls continue to be responsible for more than 50% of recordable injuries Australia and US seeing greatest increase Major (most severe) injuries down Sept 20- Sept 21 © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY Each Each 1250 3 Year Average Incidence Rate - Recorded 1000 750 500 250 0 2017 50 40 30 20 10 0 2018 BAE SYSTEMS PLC Applied Intelligence Air Sector INC Maritime & Land 2018 2019 Group Functions Major Injuries - BAE - Recorded 2019 BAE SYSTEMS PLC Maritime & Land Air Sector INC 2020 2020 2021 data year to date. 2021 Applied Intelligence BAE SYSTEMS 36#37Wellbeing • • • Strong focus on supporting employees through Covid Emphasis on personal communication Access to Employee Assistance Programme Improved communication tools and access, including Apps, online and virtual tools/events Manager and employee guidance on hybrid working Mental Health & Wellbeing Engagement New Mental Health Awareness training (launched July 2021) for all employees Introduced Unmind App (May 2021) to support employees in mental wellbeing Wellbeing Channel live in online training system Wellbeing Webinars continuing in H2 unmind Employee Assistance Data (2021) shows 45% of calls related to mental health & wellbeing 50% 45% 40% 35% Benchmarking 30% 25% 20% 15% 10% 5% 100% Mental Health Legal Service Enquiry Work Relationships Life Event Physical Health Trauma Parental Support Self Identity Financial © 2021 BAE Systems. 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BAE SYSTEMS PROPRIETARY 37 BAE SYSTEMS#3838 Employee Engagement • • Increasingly personal, open and 'human' tone from leadership, acknowledged and welcomed by employees Engagement across the full breadth and depth of the organisation, including regular discussion with CEO and senior leadership (listening forums, top 100, HiPoTs and graduates) Two-way employee feedback encouraged through surveys, Apps, focus groups, town halls, learning webinars, apps and helplines • Employee survey 2021 . response rate was 64% compared to 58% for the 2018 global 'How We Work' survey Engagement scores 6% higher than 2018 survey with positive comments on company response & support during Covid. llbom BAE Systems in Saudi Arabia noh BAE Systems in Saudi Arabia launched The Mullhemah Committee hemo Believing in the importance of including women in decision-making, BAE Systems in Saudi Arabia launched the "Mullhemah" committee, dedicated to developing women into roles of leadership in line with the Kingdom's Vision 2030. 23 reactions Our conversation podcast 3 comments Chairman's Av rds Your app now does more Did you know? It's now easier to get involved with competitions, polls and more Get more from the opp ond gel support, here THE SYSTEMS Christopher McLarnon. 2nd Senior Programme Manager (Master) | Non Executive Director | Agile and Waterfall experience | Servant Leader... 1d-O was delighted to receive my Business Leader Chairman's ward in the post today! This is in recognition of my PM role st year with the BAE Systems AirCare Ventilator (our rence Project). I'm now in the Future Combat Aircraft Gystem business unit, but a big hello and thank you to all the team who made last March/April a truly remarkable experience. We proved that nothing is impossible with bition, agility, dedication and a great team. 3079 Cateraners: Tang's Speaking: Karen Mullan s #agilelearning Ontari 9 comments Angela McCent 9 Colin Galbraith Charles Woodbur Gary Wilkie Hannah Grier Kes Johnston Karen Mullan Stephanos Perkleous Layout © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS#39Employee engagement Sustainability Week • More than 5,000 employee registrations for • . • . events and workshops organised by graduates Involved a wide range of internal and external speakers 20,000 employee interactions with Sustainability Week themed content Responsibly printed collateral distributed to non- IT connected employees. All events captured and available 'on demand' Examples of employee sentiment: 'I have signed up for all the sessions' - 'A fantastic programme of events' - 'We are going in the right direction'. Join us for Sustainability Week 7-11 June 2021 Exclusive webinar with one of the world's leading experts on carbon foot-printing, Professor Mike Berners-Lee. Plus: • Introduction to Sustainability Week • Charging a Sustainable Future Building Better Batteries .Defence and Sustainability . Radical Reincarnation-Closing the Loop on Coffee Shop Waste .UK Meeting Net Zero How to do Something Extraordinary - Industry 4.0 Registration is now open-find out more and secure your place today >> CET TO ZERO Upcoming sessions Title Day Time Link Access & How to do Something Extraordinary 10 June 10-11am Register Industry 4.0 10 June 2-3pm See below Session descriptions and recordings Introduction to Sustainability Week (Recording now available) House Keeping GET TO ZERO Charles: Building a sustainable future together He explains how work to improve our safety, wellness and diversity, together with our 'race to zero, drives an ambitious sustainability agenda. Our Chial Execut's which they get facing and up appeach the end of Stainability deverything from shop water-L'D Picture of Everything. of Give us your feedback Everyone has the right to a healthy mind. Proactive support for all areas of life. Got a story to At the heart of our sustainability ageridas our people. વો unmind Denial o © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 39 BAE SYSTEMS#40© 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Diversity & Inclusion - Overview . • • Board Diversity - 36% women; breadth of sector experience and nationalities 50% gender ambition for Executive Committee by 2030 Diversity ambition for employees set for 30% women by 2030. Year on year improvement in gender diversity through 2018-2021 Committed to inclusion with Employee Resource Groups in each region -50% increase in members over 2020 External involvement & commitments: 21 pledges on Gender, Veterans, LGBTQ+, Mental Health, Disability, Social Mobility & Inclusion "Courageous Conversations" programme in US-based businesses Q1 2018 Q2 2018 Female apprentices Ethnic Minority Apprentices BAE SYSTEMS PROPRIETARY Gender Diversity Trend 2018 Q2 2021 22.0% 21.7% 21.7% 21.8% 21.5% 21.6% 21.8% 21.4% 21.7% 21.7% 21.6% 21.4% 21.2% 21.4% 21.2% 21.3% 20.9% 21.1% 21.0% 20.8% 20.5% 20.6% 20.4% 20.2% 20.0% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 2030 target - 30% Q3 2020 Q4 2020 Diversity & Inclusion 2021% 2016 2017 2018 2019 2020 Target % % % % % 30 26 27 26 24 25.5 Local 3.5 4.7 3.7 5.3 5.1 demographic 15 15 15 17 20.4 Inclusive Learning (Apprentice) Female Graduates 30 26 33 28 24 18.4 Ethnic Minority Graduates 15 (5yr 16 22 23 29 24.4 target set in 2016) BAE SYSTEMS Q1 2021 Q2 2021 40 40#41Advancing our DEI initiatives • 2020 launch of Courageous Conversations and · • CARE: Colleagues Advancing Racial Equity initiatives Established DEI Council to sustain focus on CARE initiatives Published first DEI Impact Report: A Decade of Progress in September • Spotlights our long-term DEI journey and goals • Increases transparency around our progress • Continue to invest in our communities to support employees and historically underserved groups BAE Systems, Inc. Impact report A decade of progress in Diversity. Equity, and Inclusion © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. 41 BAE SYSTEMS BAE SYSTEMS PROPRIETARY#42ARMED FORCES COVENANT MOVEMENT TO WORK" Community, Skills & Education Armed Forces Covenant The Social Mobility Pledge The Valuable 500 time to change hand anat dition Movement to Work Social Mobility Pledge The Valuable 500 time to change 42 • • • Investment in STEM & early careers training Around 3,000 young people in learning in the UK in 2020 with flagship apprentice programmes in UK, KSA and Australia Rolled out Coding Success with RAF and RN - over 1,000 applicants for 600 school places Supporting Kickstart programme with more than half of first cohort drawn from Movement to Work population Community involvement focused on Education and skills - inspiring young people to consider STEM subjects and careers Local community - working to support the communities in which we operate Armed forces-supporting active service personnel, veterans and their families £10m* contributed globally in 2020 £2.8m £2.8m supporting Armed Forces charities £700k maintaining the heritage of the Company and the Armed Forces invested in education initiatives focused on science, technology, engineering and maths 10,224 hours volunteered by our employees - that's almost 1,400 working days 1400 days Certain awards won at UK/Corporate Level 'An additional £1.5m donated in support of the US Employee Relief Fund £1.7m to local community projects Princess Royal Training Award 2016, 2017, 2019, 2021 National Apprenticeship Macro Employer of the Year 2010,2016,2018 & 2020; © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS#43• . - Our role in communities Case study BAE Systems Submarines, Barrow-in-Furness Town of 67,000 people c.29% of working population is employed at the shipyard Barrow-in-Furness has three of the country's most disadvantaged wards BAE Systems Submarines is the home of UK submarine design and build The health and prosperity of the local area is a unique strategic imperative for long term business success We collaborate with a wide range of stakeholders and organisations to create a strategic and pro-active approach to help overcome the myriad of local challenges We have played a key role in driving improvements needed to improve the health and prosperity of the local area and its inhabitants including • • employment education & skills community investment regional development activities Community Investment Social Impact Education & Skills Stakeholder Management & Representation Our collaboration is vital to attract, develop and retain a world class workforce to deliver the deterrent programme. CLEP NORTH WEST BUSINESS LEADERSHIP TEAM hello future. UniConnect BOROUGH OF BARROW IN FURNESS Cumbria Coup County Council CUMBRIA COMMUNITY FOUNDATION © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS 43 33#44Our contribution to the UK economy In 2020 our operations in the UK supported: . • . • £10.1bn contribution to UK GDP, equivalent to 0.5% of the domestic economy 143,000 jobs, for every 100 jobs at BAE Systems, 410 jobs were supported in the UK economy £3.9bn worth of exports, equivalent to 0.7% of all UK exports a total tax contribution of £2.7bn We directly employed 14,700 workers in the most deprived local authorities, 40% of our total employment in the UK We spent c.£700m on supply chain purchases in the most deprived local authorities © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Source - Oxford Economics BAE SYSTEMS Welcome Aisdem for Skills & Knowledge 44 BAE SYSTEMS BAE SYSTEMS PROPRIETARY#45Governance of the "E" and "S" 45 © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS BAE SYSTEMS PROPRIETARY#46Governance for “E” & “S” - summary Making sure we all remember the rules around using and accessing Personal Information is important to the individuals whose data we hold, and important to the Company's reputation. Quick poll: What was the biggest Data Protection fine issued in the UK? BAE SYSTEM personal data protection £1m £10m £20m .ck here to get the answerة قواعد السلوك • Triennial refresh of Code of Conduct - updated to improve access, reflect hybrid working and increased focus on IT & data security Ethics Programme - Supporting Information Business integrity training - annual all employee scenario training • SASB submission and commitment to TCFD disclosure • • • Retained AA (leadership) rating with MSCI and 'B' rating with. Transparency International. Strengthened Human Rights Statement: https://www.baesystems.com/en- media/uploadFile/20210426124829/1434594517048.pdf Extended ESG review of Supply Chain SAE SYSTEMS ise SMSC Employee Survey March 2021 I feel able to speak up & raise Supplier Principles Gonce for Respons concerns Our approach to ethics Manual Professional Exec and anti-corruption Committed to responsible and ethical business conduct 78% 85% 87% High performing norm - 63% Manufacturing norm - 64% Strong governance and ethical behaviour at core of the business © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 46 46 BAE SYSTEMS BAE SYSTEMS#47BAE Systems Cyber Security “Security for a digital society" 47 © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS BAE SYSTEMS PROPRIETARY#48Cyber The critical capabilities we provide Defending Critical Organisations BAE Systems Cyber Security Building National Capability © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Tackling Active Threats 48 48 Pursuing a Safer Society Working with governments and industry for a safer society in a digital world BAE SYSTEMS PROPRIETARY BAE SYSTEMS#49Cyber - The critical capabilities we provide – Case Studies Global payments いま SWIFT & BAE joint report: an overview Orals m n Espionage via service providers PlugX OR RedLeaves MSP Customers Modern ransomware Simplified stages of a modem ransomware attack and five reasons why they're so successful Network intrusion options Exp Puding ROP Fay Ronsomware operators ore using many different occess routes APT10 Amackersist brote Managed Service Providers (NSP) and dockyar for an ac Data in trected and otracted from the UP back to the ades MSP Cuitcas rad v and work Data composed and staged for removal Stolen Data GOV.UK Chosen Victim Actions token on victim network Ed Brats Propagate Double extortion herom Twaa Treas Encypt Detr Criminal groups one more silled with pen test tools being used extensively (4) Ronsom poyments are fuelling the cycle 5 Criminal collaboration and service model is growing ✓ Topics Departments Governm Publish sample data on biog Theaton further leaks fude/auction fonsom po Dolo theft and extortion tochics are working and are being copied by more groups Enduring Cyber Threats and Emerging Challenges to the Financial Sector ADRIAN NISH, SAHER NAUMAAN, JAMES MUIR NOSTMITE IN 20 TATTE Cybersecurity unique challenge for the fondial sector. To prevent mas tasks and other facialututions aboulderstand → Coronavirus (COVID-19) Guidance and support Home International Foreign affairs Press release UK and allies reveal global scale of Chinese cyber campaign The UK government and its allies are holding responsible elements of the Chinese government for an extensive cyber campaign. English|中文 Victim blog trocking-the scale of the problem We have gothered blog publications indicating o total of over 800 ronsomware victims by operators of 5 different roroomware compaigns 260% Increase in number of victims identified on ransomware blogs between April and September 2020 -10% Cf victims removed from ransomware blogs indicaling potential ransom payment Average number of new victims per day Working with governments and industry for a safer society in a digital world © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 49 49 BAE SYSTEMS#50ESG Priorities - Looking ahead • • Deliver on our commitments, drive our future ambitions and consolidate our approach to increase our visibility and impact Confirm material issues but anticipate change Use external benchmarks to set targets and metrics to drive improvements, measurement and reporting Engage our employees & other key stakeholders Encourage innovative mind set and approach Embracing hybrid working guide For individuals, teams and mana BAE Systems 569,035 followers 3d #unitedforinclusion Dr. Charles Woodburn ⚫ 1st Group Chief Executive Officer, BAE Systems 3d. Edited. At BAE Systems we are always seeking the most talented people and that means being as open and inclusive as we can possibly be. It also means creating environments where everyone feels respected and able to give their b...see more BAE Syst As today market day of BlackHistory Month. www National InclusionWeek21 means to Philp Hal pert ence with people femalewt beckgounds and to understanding and doul Sfears beliefs traffi and we Heat Ses the ace more THE TIMES 2021 TOP 100 GRADUATE EMPLOYERS © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. Continue to accelerate progress and adapt for the future BAE SYSTEMS PROPRIETARY Our approach to sustainability What does sustainability and ESG mean to us? SLOVEN'S AW BAE Systems acquires In Space Missions Sae 7am UKE STARTERS 50 50 UN CLIMATE CHANGE CONFERENCE UK 2021 IN PARTNERSHIP WITH ITALY BAE SYSTEMS#51Summary - key takeaways ESG important to me as Chairman, the Board and company as a whole - accelerating our ambitions This is not new to BAE Systems - long-term evolving commitment Commitment pan business - critical to recruitment & retention Management committed to putting BAE Systems at the forefront - incentivised to do so Sustainability integral to strategy - driving business performance and creating opportunity Operate ethically, openly with clear policies and procedures in place. Importance of our role in our communities & maintaining and developing critical skills BAE Systems helps governments fulfil their primary responsibility - protecting its country and citizens Working with governments and industry for a safer and prosperous society © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS 51#52Q&A © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. 52 BAE SYSTEMS BAE SYSTEMS PROPRIETARY#53Supporting Information A B C D Key compliance policies within the Operational Framework Advisors Policy Export control Policy External Reporting, Commitments & Disclosures E TCFD reporting FGH UN Sustainability Development Goals Ethics programme Н Ethics helpline reporting | ESG Committee Activity 2021 © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS BAE SYSTEMS PROPRIETARY 53#54Key compliance policies within the operational framework • • • • • • Advisers Policy Community Investment Policy Conflicts of Interest Policy Export Control Policy Facilitation Payments Policy Fraud Prevention Policy Gifts and Hospitality Policy · Lobbying and Political Donations Policy ⚫ Offset Policy • Procurement Policy • Product Trading Policy • Pursuit of Export Opportunities Policy • Risk Management Policy 54 54 Our policies are reviewed annually with changes approved at Board level. Our policies include processes for risk-based due diligence, internal and external approvals and on going monitoring. © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY BAE SYSTEMS#55Advisers Policy • Covers appointment and management of third parties engaged to influence, promote or assist our sales and marketing efforts or the strategic development of the Company. Appointment managed by central Business Conduct Compliance/International Compliance Team. • All Advisers assessed to ensure no apparent risk of corrupt or unethical behaviour, a clear business case and compelling justification for proposed remuneration. • Third party due diligence report and on-site interview by BCC team. All appointments reviewed and assessed by Business Development Adviser Compliance panel chaired by independent legal counsel. ● Ongoing monitoring, reporting and due diligence review. • Central oversight and approval of payments. . Re-appointment every two years. © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 55 BAE SYSTEMS#56Export control Policy • Mandates compliance with all applicable trade control regulations including the US International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR), the UK Export Control Act 2002 as well as trade and economic embargoes and sanctions Sanctions: Parties and Transactions Screening Procedure: Mandates screening against a wide range of categories (from visitors, to employment candidates, suppliers, customers, shipping companies) Uses recognised sanctions screening tool provider which searches against a broad range of sanctions lists, official and exclusion lists • Is not limited to a particular jurisdiction and includes US and UK databases/lists Conducts repeat searches on inputted names Requires proposed transactions to be reviewed to determine potential sanctioned country involvement Requires additional risk based assessments where necessary Mandates escalation to CCC&R for any positive sanctions screening hits © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS BAE SYSTEMS PROPRIETARY 56 99#57External Reporting, Commitments & Disclosures External reporting MSCI - AA rated last 3 years Sustainability Accounting Standards Board (SASB) - completed Taskforce on Climate Related Financial Disclosure - on track CDP Carbon Disclosure (B rating) Transparency International (B rating) CDP Water Disclosure - submitted September 2021 Dow Jones Sustainability Index (DJSI) - results November 2021 Gender Pay Gap Reporting © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. • • • Commitments & disclosures Race to Zero UK Real Living Wage Accredited Employer Public commitment to 21 charters in support of diversity (gender, ethnicity, disability & LGBTQ+), veterans mental health & social mobility (across UK, Aus & US) UK Modern Slavery Act • Australia Modern Slavery Act • California Transparency Act • Top 100 places where people want to work Committed to increased disclosure and engagement BAE SYSTEMS PROPRIETARY BAE SYSTEMS 57 49#58Back TCFD Reporting . · Committed to TCFD reporting from 2022 Conducted gap analysis against TCFD reporting requirements and produced roadmap for short, medium and long-term Swiss RE provided modelling of climate on our facilities using RCP development factors 2.6, 4.5 and 8.5 for 2030, 2050 and 2085 Modelling of impacts of Tier 1 suppliers underway PwC supporting workshops planned to understand the company's top climate-related risks and opportunities Next Steps Overlay outputs from workshops on climate modelling Progress to quantification of short, medium and long tem risk (and opportunity) evaluation. ©2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. On track for reporting in line with requirements in 2022 BAE SYSTEMS PROPRIETARY 0 + 133 Map Trends Total Value by Score Upload Custom Weights CLIMATE RISK TYPE DRY YEAR SCENARIO 2085 x▾ RCP 8.5 x SCORE 200 455 55 6 6 7 7 8 85 Min valu Max valu TIV 150 100 400000000 1200000000 Min valu Max vale No value 451 SCORE DIFFERENCE 500 300 3544555566577588 Min valu Max valu m Swiss Re Hazard details Flood PORTFOLIO BAE combined exposure RISK SCORES ° 8-10 A D(BAEL CRS Externals Output Stats 686 SCORE DIFFERENCE (REF 2000) COUNTRY AGGREGATIONS Negative 0-3 Average Score 96-8 o TIV 4-6 2-4 0-2 <3-6 8-10 Mapbox OpenStreetMap Improve this map Share Return Period [years] Locations TIV TIV 30 years 3,760,155,732 4.86% 50 years 2 1.761,786,078 2.28% ' 100 years 11 200 years 250 years 1 36,713,298 3.156.882.850 4.08% 10 4,613,551,223 5.96% - 0.05% 500 years 12 2,187,616,799 2.83% >500 years 81 12,421,628,574 16.06% Outside 136 49,419,056,634 63.88% Total 257 77,357,391,189 100% Storm Surge Share Return Period [years] Locations TIV TIV 50 years 7 3.667.001.026 4.74% " 100 years 1 64,986,299 0.08% 500 years 1 1,783,931,000 2.31% 1000 years 1 124,046,974 0.16% Outside 247 71,717,425,890 92.71% Total 257 77,357,391,189 100% 58 3 of 9 BAE SYSTEMS#59Back Our commitment to the UN Sustainable Development Goals We have selected 4 of the UN SDGs we can demonstrate strong support to : SDGs 4, 8, 9 and 12 QUALITY EDUCATION Quality education We work closely with schools, colleges and universities as well as engineering and business organisations in our principal markets to promote and inspire people to pursue careers in Science, Technology, Engineering and Maths. 8 DECENT WORK AND ECONOMIC GROWTH INNOVATION We create employment opportunities across our organisation via our apprentice, graduate, career development and recruitment programmes, to help increase youth and adult employment. • We will continue to support and encourage our employees to develop their skills to engage in lifelong learning via our training and development programmes. Decent work and economic growth • We contribute to economic productivity by investing In people, skills and innovation throughout our value chain. This investment is strengthened by our commitment to continue to create a diverse and inclusive work environment, underpinned by safe work practices promoting employee wellbeing, maintaining robust governance systems and efficiently using natural resources. 9 AND INFRASTRUCTURE Industry, innovation and infrastructure 12 RESPONSIBLE CONSUMPTION AND PRODUCTION Q • We structure our R&D activities around our business and product strategy, ensuring a clear focus for our R&D spend. We also continuously scan the horizon for new technologies and developments in defence technology around the world. • As well as partnering with our customers, we work with other companies and academia to invest in technologies and assets that compliment our existing capabilities and our future product development. Responsible consumption and production We are committed to reducing the environmental impact of our operations and value chain by actively managing the energy and resources that we use. Our products are built to be in active service for decades and we work with our customers and suppliers to develop innovative technology that is designed to reduce the environmental impacts of such products. • 0 Approximately 750 apprentices recruited as part of our 2020 intake in the UK. 170 graduates recruited in the UK in 2020 as well as 60 undergraduates (12 month industrial placement). 811 hours of training per employee² in 2020. £1,700¹ invested in training per employee in 2020. 40% of global hires recruited into STEM roles. • £236m invested in r and d in 2020. • Patents and patent applications covering approximately 2,500 inventions internationally £11bn spent with 21,000 directly contracted suppliers Target set to achieve net zero greenhouse gas emissions across our operations by 2030. Working towards a net zero value chain by 2050. Alignment of our business with the goals of the Paris Agreement © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. BAE SYSTEMS PROPRIETARY 59 BAE SYSTEMS#60Back Ethics Programme Our responsible decision-making model Our decision-making model gives you some helpful quidance when making complex decisions relating to business conduct Gather the facts BAE SYSTEMS 2 Understand the rules Gother 2 Understand the facts 3 Consider the situation B BAE SYSTEMS PROPRIETARY BAE SYSTEMS Ethics Officer Directory (UK and International) 2020/21 Edition Global Code of Conduct - externally benchmarked, reviewed and updated every 3 years Independent ethics helpline providing 24/7, local language access for employees, suppliers and others working on our sites. Network of 189 Ethics Officers in UK, US, KSA, Australia providing local support & advice A young 4 Seek advice from others 3 Consider the situation ? 6 Seek advice from others .. Remember that you are responsible for raising concerns while respecting the confidentiality of of Ethics Officers Gy BAE Systems has identified Local Ethics Officers, who serve as the local face c provide ethics advice, support annual training, help to publicize and communi finding investigations. They are appointed by the Chief Ethics Officer. To find your Local Ethics Officer click on the appropriate business name below business integrity training Name Site Business Phone > Business: Electronic Systems (29) › Business : INC - HQ/ESS (4) Business: Intelligence & Security (20) ▷ Business: Platforms & Services (23) Integrated Business Integrity Training - including annual all-employee scenario training and specific compliance training modules Governance & oversight provided by Ethics Review Committee and Inc Ethics Oversight Committee Data and metrics to monitor trends, provide insights and facilitate benchmarking On induction all employees receive a suite of training: Code of conduct; anti-bribery; corruption and trade controls awareness Business Integrity Training Scenarios for team discussions 20 60 60 Making sure we all remember the rules around using and accessing Personal Information is important to the individuals whose data we hold, and important to the Company's reputation. Quick poll: What was the biggest Data Protection fine issued in the UK? personal data protection Elm £10m £20m Click here to net the answer 29 17% 82% BAE SYSTEMS#61Ethics Helpline Reporting (figures shown for mid-year 2021) Contacts / 313/ per 1000 annualised 14.9 % Cases reported to Local Ethics Officer 44% % Guidance 52% % Anonymous © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. 38% Independent ethics helpline providing 24/7, local language access for employees, suppliers and others working on our sites. Numbers dipped during lockdown periods but returning to previous levels Network of 189 Ethics Officers to support employees with guidance & advice. Making sure we all remember the rules around using and accessing Personal Information is important to the individuals whose data we hold, and important to the Company's reputation. Quick poll: What was the biggest Data Protection fine issued in the UK? personal data protection £1m £10m £20m C BAE SYSTEMS Click here to get the answer. مدونة قواعد السلوك BAE SYSTEMS ise SMSCMC BSE SYSTEMS Supplier Principles Guidance for Responsible Business 52% of calls and contacts were employees seeking guidance on how to proceed – eg how to register a conflict of interest Employee Survey March 2021 I feel able to speak up & raise concerns Low rate of anonymity compared with external benchmark of 59% indicating employees trust in the ethics process BAE SYSTEMS PROPRIETARY 2% 17% 82% Our approach to ethics and anti-corruption Committed to responsible and ethical business conduct 61 BAE SYSTEMS High performing norm - 63% Manufacturing norm - 64% Manual Professional Exec 78% 85% 87% BAE SYSTEMS#62Back 62 62 ESG Committee Activity 2021 February 2021 Environment Environment & Climate Transition - Net Zero Programme update July 2021 Environment & Climate Transition - Net Zero Programme update September 2021 Environment & Climate Transition. Net Zero Programme update (presented to Full Board) December 2021 Environment & Climate Transition - Net Zero Programme update TCFD Reporting Social Social & Community (Review of socio economic impacts and community activity Barrow, UK) Culture & Engagement overview (presented to full Board) Diversity & Inclusion Workplace safety & wellbeing Employee Engagement - Ethics Helpline & Business Conduct Review (presented to full Board) Diversity & Inclusion Responsible Procurement Governance Review of 2020 performance/ 2021 objectives External stakeholder feedback ESG Ratings Review Anti bribery & corruption - Lobbying (US) Joint meeting of ESG Committee & Audit Committee to review non financial risk register © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. - Regulatory overview ESG Assurance & Audit Review Responsible Trading & controversial weapons Standing agenda items: - Performance metric review: ethics, safety, environment, diversity & inclusion 2021 Performance Review & setting of 2022 objectives Responsible Procurement Anti bribery & corruption • • Appointment of Advisers Gifts and hospitality ESG Roadmap 2022 BAE SYSTEMS PROPRIETARY BAE SYSTEMS