Caesarstone : ESG Progress Report 2023

About this update from Caesarstone Ltd.

Caesarstone ESG Report 2023 Caesarstone ESG Report 2023 F R O M T H E C E O A B O U T U S Contents 02 From our CEO 04 About Us Who we are 5 Mission and strategy 8 Our global business community 10 ESG Highlights for 2023 12 ESG Management in Caesarstone 14 Sustainability goals and their current status 16 About this report and material topics 20 22 Product Innovation & Sustainability Inspiring sustainable industry through 25 product innovation EPD and LCA analysis 28 Sustainable Supply Chain 35 P R O D U C T I N N O V AT I O N & S U S TA I N A B I L I T Y E N V I R O N M E N T S O C I A L G O V E R N A N C E A N N E X 38 Environment Managing our environmental impact 40 Energy & greenhouse gas emissions 42 Other air emissions 45 Water 46 Waste 48 50 Social Employees 52 Health & safety management 64 Inspiring towards a safer industry: 70 Master of Stone Program Giving back to the community 72 74 Governance Corporate governance 76 Business ethics, compliance and privacy 80 Customer satisfaction 82 84 Annex SASB Reporting Index 84 Forward-Looking Statements 85 F R O M T H E C E O A B O U T U S P R O D U C T I N N O VAT I O N & S U S TA I N A B I L I T Y E N V I R O N M E N T S O C I A L G O V E R N A N C E A N N E X From our CEO 2 As we reect on another year of transformation and progress at Caesarstone, I am lled with appreciation for the work carried out by our teams as well as optimism about our ability to further drive ESG goals in our future. The past year has been marked by signicant milestones, not only in our operational strategies but also in our commitment to sustainability and corporate responsibility. In 2023, we embarked on a strategic reorganization that fundamentally reshaped our production footprint, aligning our operations more closely with our long-term vision. This transition included partnering with strategic production business partners, a pivotal step in our journey. It allows us to focus more intensively on innovation, operational excellence, and sustainability, ensuring that we continue to deliver premium, high-quality surfaces requiring us, in the long run, to reinvent our ESG goals. Our commitment to sustainability remains unwavering, and our achievements over the past year reect this dedication. We made substantial progress in meeting our ESG goals, including a 40% decrease in Lost Time Injury Rates (LTIR) compared to 2020, transitioning our Bar Lev facility to natural gas, and reaching an impressive 99% wastewater recovery and reuse across all production sites. Additionally, we proudly introduced our groundbreaking Caesarstone Mineral™ low-crystalline silica surfaces, a signicant step towards safer and more sustainable products. Our commitment to sustainability remains unwavering, and our achievements over the past year reect this dedication. These accomplishments are not just about meeting today's standards but about setting new benchmarks for tomorrow. As we move forward, our focus will be on deepening our ESG responsibility throughout the supply chain, fostering a culture of innovation, and upholding the highest standards of environmental and social governance. Together with our dedicated employees and partners, we are condent in our ability to drive meaningful change and continue leading our industry towards a more sustainable future. I am proud of the strides we have made and remain committed to our ongoing mission of creating surfaces that not only inspire but also contribute to a healthier planet. Thank you for your continued trust and support as we build a sustainable future, together. Yos Shiran CEO 3 F R O M T H E C E O A B O U T U S P R O D U C T I N N O V AT I O N & S U S TA I N A B I L I T Y E N V I R O N M E N T S O C I A L G O V E R N A N C E A N N E X About Us 4 Who we are With a leadership legacy of over 35 years, we proudly stand as pioneers in our industry. For the past three decades, we have crafted countertops for millions of homes worldwide, and we consider it a privilege to be part of the daily lives of families in over 50 countries. We are committed to ever-evolve towards a sustainable world. Since our establishment in 1987, much has changed. Kitchens have transformed, and there is a heightened awareness and concern for the natural environment, material resources, and climate change. As a trusted authority in the industry, we continue to lead by embracing these changes through our customer-centric approach. Our ongoing commitment to our customers and business partners sustainability and safety motivated signicant strides in research and development. We are evolving our engineered stone to create the next generation of surfaces. This strategic shift has expanded our product portfolio to include a range of unique blends that support our long-term growth and sustainability strategy. We are committed to ever-evolve towards a sustainable world. In 2023, we initiated a global restructuring plan, followed by the closure of our Richmond Hill facility in December 2023. These actions, driven by the need for operational efciency, are part of our new global strategy and helped us to intensify our focus on our operational excellence. As a trusted leader in the industry, we are taking the next steps to create new methods and standards to achieve our business and sustainability vision. We are focused on product innovation, environmental performance, ensuring end-to-end safety throughout the entire product lifecycle, and fostering a culture of governance aimed at meeting the highest business standards. All of these goals are accomplished through our community of employees and partners who believe in the human capacity to create something new and extraordinary. 5 F R O M T H E C E O A B O U T U S P R O D U C T I N N O V AT I O N & S U S TA I N A B I L I T Y E N V I R O N M E N T S O C I A L G O V E R N A N C E A N N E X Our ur History history Caesarstone started in 1987 in Kibbutz Sdot Yam, located on the shores of the Mediterranean Sea near the city of Caesarea in Israel. Out of a terrazzo tile factory at the kibbutz, and following R&D, Caesarstone was established to be among the pioneers of quartz surfaces manufacturing. In 2005, our second facility was established in the Bar-Lev Industrial Park in Israel. We began establishing subsidiaries around the world to better serve our customers, in places such as Australia, Canada, US, Singapore, and the UK. Caesarstone is listed for trade on the Nasdaq since 2013. During 2015 we began operating our Richmond-Hill, GA facility to better serve the US market. This facility ceased to operate during 2023. 1987 | Sdot Yam, rst production line 2005 | Bar Lev 1987 1998 2005 2010 2012 2020 Establishment of Caesarstone Opening of second Caesarstone Caesarstone Lioli Ceramica and Caesarstone at available in North production facility Canada shares listed on Omicron Granite Sdot Yam America, Australia in Bar Lev, Israel established NASDAQ: CSTE and Tile acquired 1990 International distribution 2001 Second production line 2008 Caesarstone Australia established 2011 Caesarstone United States established 2017 Caesarstone United Kingdom established 6 7 F R O M T H E C E O A B O U T U S How our products are made P R O D U C T I N N O V AT I O N & S U S TA I N A B I L I T Y E N V I R O N M E N T S O C I A L G O V E R N A N C E A N N E X Business highlights Quartz and Mineral surfaces Minerals are transformed into breakthrough countertops using our unique engineering knowhow, craftsmanship and care. Our surfaces sustained the test of time and their demonstrated quality often comes with a lifetime warranty. We leverage the outstanding qualities of nature's raw materials, transforming them into what we believe is ideal surfaces for residential and commercial spaces, chosen by countless architects and designers worldwide. The manufacturing process of our surfaces products typically involves blending mineral blends with polyester and coloring pigments. This blend uses specic and unique machinery acquired primarily from Breton, the leading supplier of surfaces manufacturing equipment, together with our proprietary manufacturing enhancements, this mixture is compacted into slabs by a vacuum and vibration process. The slabs are then moved to a curing kiln where the cross-linking of the polyester is completed. Lastly, the slabs are gauged, calibrated, and polished to enhance shine. Porcelain surfaces Caesarstone Porcelain marks a leap in technoloy, functionality, and design, in the porcelain surfaces industry. Utilizing our leadership and deep understanding in the surfaces industry, we acquired Lioli factory in India, expanding our capabilities to Porcelain. Caesarstone porcelain premium worktops are designed with state-of-the-art technology to provide maximum durability, hardness, and stain resistance. The manufacturing process begins with grounding and mixing the natural raw materials we use (clay and other minerals). The mixture is compressed and dried, and then goes through innovative digital printing process, in which we implement our unique design pattern on the panel. The panel undergoes a controlled burning process at high temperature, ensuring its strength and durability. To complete the process, each slab is gauged, calibrated and then polished to a perfect nish in a wide range of colors and designs. Our Employees 1680 full time employees Our Reach +50 countries Our Production Sites 2 production sites Engineered stone site (Israel) Porcelain site (India) Our Models 75 Engineered Stone 37 Porcelain Our Global Presence Mission and stratey Our mission is to be the leading choice for surfaces all around the world. 8 To that end, our stratey relies on creating premium diverse surfaces o‡ering, in either our mineral, quartz and porcelain collections, utilizing our R&D capabilities to develop a superior value proposition, leveraging our strong brand recognition, global footprint and ESG position. In recent years, we underwent a strategic reorganization of our production footprint: transitioning a growing portion of our in-house production to Strategic Production Business Partners (SPBPs) based mostly in Asia. This transformation will also impact our ESG activities for years to come as we incorporate such SPBPs into our goals and plans. 6 countries with direct sales channels Israel, USA, Canada, Australia, UK, Singapore and Sweden with third party distributors in over 40 countries Revenue in 2023 $565.2M For full nancial information, see our annual report 9 Our global business community CANADA USA F R O M T H E C E O A B O U T U S P R O D U C T I N N O V AT I O N & S U S TA I N A B I L I T Y E N V I R O N M E N T S O C I A L G O V E R N A N C E A N N E X UK ISRAEL INDIA SINGAPORE AUSTRALIA Caesarstone Direct Sales Caesarstone Distributors Caesarstone Factories Strategic Manufacturing Partners : Multiply sites 10 12,638 Fabricators who fabricate & install our surfaces 60,799 Architects & Designers 32,759 Kitchen & Bath Stores 23,622 Contractors & Builders Stone 783 Stone suppliers and Distributors 11 ESG highlights for 2023 12 F R O M T H E C E O A B O U T U S P R O D U C T I N N O V AT I O N & S U S TA I N A B I L I T Y E N V I R O N M E N T S O C I A L G O V E R N A N C E A N N E X Product innovation & Sustainability Achievements 49 5 new low crystalline EDP certied models. silica models 67 additional models expected in 2024 Environmental Achievements 0 99% waste to landll at Lioli wastewater recovery 100% and reuse electric forklifts in Bar Lev, reducing fossil fuel usage Social Achievements 40% 4600+ decrease in LTIR fabricators participating compared to 2020 in our health and safety program; Master of Stone 13 ESG management in Caesarstone We are committed to establishing, pursuing, and meeting sustainability goals through continuous dedication and innovation. Our eorts are based on principles of safe, healthy, and environmentally responsible products, and operations. We are currently focusing on meeting our ESG goals, on the continued development of products that include a higher percentage of recycled materials reducing the environmental impact, promoting health and safety across our value chain and specically SPBPs, and acting in a responsible manner. At Caesarstone, ESG goals are integrated in all relevant units, each responsible for topics pertinent to its operations. The holistic integration of ESG management is overseen by a board committee, where Executive-level responsibility for ESG is shared among the CFO, General Counsel, VP of Operations, and VP of HR, all of whom report directly to the CEO. Consolidation of corporate efforts and project management is led by a dedicated ESG manager, who is part of the operations department. Senior management consults with relevant internal and external stakeholders regarding ESG topics, receives relevant input, and acts to implement it in our operations as we strive to meet our stakeholders' expectations. 14 F R O M T H E C E O A B O U T U S P R O D U C T I N N O V AT I O N & S U S TA I N A B I L I T Y E N V I R O N M E N T S O C I A L G O V E R N A N C E A N N E X ESG is also overseen by the Board itself, which receives continuous updates on certain ESG- related topics, such as Occupational Health and Safety (OHS). Specic ESG topics being reviewed by the board as needed. At each of our manufacturing sites, and in the majority of our distribution subsidiaries, we appointed an Environmental Health and Safety (EHS) manager whose primary role is to monitor environmental performance and compliance. Their key duties include ensuring that all processes are aligned with our targets, monitoring adherence to local environmental regulations, maintaining KPIs, and effectively communicating with senior management to report progress or request additional support when necessary. These environmental managers regularly communicate with our global ESG manager to maintain alignment on sustainability goals and practices across the company. As part of our commitment to sustainability, we have established environmental goals within our operations to facilitate our progress and improvement. 15

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