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Investor Presentaiton

BOARD OF DIRECTORS' REPORT HUMAN RIGHTS, ANTI-CORRUPTION AND BRIBERY KONE's Code of Conduct was renewed in 2021 as part of KONE's sustainability actions, to better reflect our new values and strategy. The Code of Conduct forms an integral part of KONE's company culture and is the foundation of our ethical business practices. The Code sets out the responsible and ethical conduct expected of KONE employees and companies and is available in 33 languages. With an even stronger emphasis on diversity and inclusion, expanded guidance on fraud, corruption and fair competition and new sections on human rights, trade compliance and cybersecurity, the Code of Conduct is well aligned with international practice as well as stakeholder expectations. Integrity, responsibility and accountability are highlighted as essential themes. The topics covered in the new Code are: conflicts of interest, corruption, competition compliance, trade compliance, workplace well-being, health and safety, environmental compliance, human rights, privacy, fraud and theft, cybersecurity, intellectual property and confidentiality, external communications and insider trading. Also emphasized is KONE's non-retaliation policy which states that we do not tolerate any form of retaliation against anyone having made good faith compliance reports. The human rights section highlights our commitment to respect and endorse internationally recognized labor and human rights standards and specifies that we take steps to remediate adverse impacts on human rights that we become aware of. Dedicated compliance officers help employees comply with KONE's Code of Conduct, and our global and regional compliance committees advise and take decisions on compliance matters, including investigations into allegations of employee misconduct as well as human rights and corruption violations. All KONE employees are expected to understand and abide by the Code and to report any violations using the channels available for this purpose. Our internal reporting channels include reporting to management, HR, Legal or Compliance. We also have a confidential externally hosted reporting channel, the Compliance Line, to which all employees, suppliers and distributors have phone and/or web access. Reports can be made in the employee's native language and can be anonymous where permitted under data protection laws. Reports can be submitted on a range of topics including fraud and theft, fraudulent reporting, corruption, competition law, harassment and discrimination, data protection and confidentiality, environment and safety, trade compliance and conflicts of interest. All reports are handled by a dedicated impartial KONE Compliance team. In 2021, we received a total of 152 reported compliance allegations, of which 41% were received through the Compliance Line. Of these reports, 35% were fraud/corruption related, 35% were HR related, 10% related to conflicts of interest, and the remaining 20% fell under various other categories. In total 40% of the 141 cases closed in 2021 were either substantiated or partially substantiated, and disciplinary actions in those cases ranged from coaching discussions to termination of employment, with 23 employees who were dismissed or resigned as a result of compliance investigations. In 2021, the Code of Conduct e-learning course was refreshed to reflect the changes in the new Code of Conduct and assigned to all KONE employees. The training covers topics such as conflicts of interest, fair competition, anti- bribery, privacy and confidentiality, work safety, harassment & discrimination, gifts & hospitality and trade compliance and has a strong focus on scenarios that reflect day to day situations employees might face. The course is available in 37 languages. Regular face-to-face compliance training is also provided to managers and other target groups. Of KONE employees, 96% have completed at least one compliance training in 2021, including the Code of Conduct e-learning. KONE's general Code of Conduct is complemented by our Supplier and Distributor Codes of Conduct. Our Supplier Code of Conduct is available in 30 languages and sets out the ethical business practice requirements that we expect from our suppliers. It covers areas such as legal compliance, ethical conduct, our zero tolerance for bribery and corruption, and the standards we require from our suppliers in terms of labor and human rights, health and safety, and environmental issues. KONE may terminate its contracts with suppliers for failure to adhere to the Code. KONE expects its suppliers to comply with the requirements of the Supplier Code of Conduct in all their dealings with KONE, as well as with their own employees and suppliers, and third parties including government officials. All our suppliers are expected to sign KONE's Supplier Code of Conduct. By the end of 2021, 80% of KONE's total spend was with suppliers and installation subcontractors who have signed KONE's Supplier Code of Conduct or equivalent. KONE's Distributor Code of Conduct was updated in 2021 and covers similar topics as the Supplier Code of Conduct. It is available in 6 languages. As business partners, our distributors are likewise expected to comply with the requirements of the Code in all their dealings with KONE, as well as in respect of their own employees, customers and suppliers, and third parties including government officials. Our target is to have the Code signed by all our distributors. By the end of 2021, 100% (100%) of our distributors in China, and 99% (88%) of our distributors in the rest of the world, had signed the Code. All the above Codes of Conduct are available on kone.com. During the year, we continued focusing on human rights in the supply chain by further developing a supplier human rights assessment process within KONE. The COVID-19 pandemic continued to impact the roll-out of planned on-site pilot assessments. However, an extensive online questionnaire was rolled-out to over 200 suppliers' production sites to assess their potential and actual human rights risks. Human rights training was also provided to our internal human rights assessors. The Global Compliance Committee is responsible for the oversight of the Human Rights program at KONE. Disclosure according to the EU Taxonomy Regulation KONE discloses information according to Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088 (the "Taxonomy Regulation"). The Taxonomy Regulation forms the basis for the EU Taxonomy, a classification system that establishes a list of environmentally sustainable economic activities for six environmental objectives. The implementation of the Taxonomy Regulation will progress in phases. The first delegated act setting out technical screening criteria for the first two environmental objectives, climate change mitigation and adaptation (the "Climate Delegated Act"), was adopted in 2021. Another delegated act for the remaining four environmental objectives (the "Environmental Delegated Act") will be published in 2022. In the report regarding fiscal year 2021, undertakings are required to disclose the proportion of Taxonomy-eligible economic activities in their turnover, capital expenditure and operational expenditure. Taxonomy-eligible activities currently include those in the scope of the Climate Delegated Act. Undertakings are not required to assess Taxonomy alignment 18 KONE ANNUAL REVIEW 2021
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