FY 2023

Sustainability Report
Magna International Inc.

Swamy Kotagiri
Chief Executive Offcer

Ahmed Elganzouri
Global Director,
Sustainability and Energy

Our Evolving Sustainability Strategy

Moving the Needle on Sustainability

The automotive industry is undergoing a signifcant transformation as we transition to a net-zeroworld. This transformation affects how people and goods move, as well as how we develop andmanufacture our products.

Since its inception, Magna has been committed to safeguarding our people, products and processes.
We have taken a proactive approach, constantly evolving our products, technologies, and operations tolead by example to create a more sustainable future.

At Magna, we are navigating complexities of this evolving sustainability landscape by focusing
our efforts on areas where we can make the greatest positive impact. I am proud that our efforts
are producing tangible results and refect our consistent company purpose: advancing mobility foreveryone and everything, responsibly.

As a mobility technology company and one of the world’s largest auto suppliers, Magna has a uniquevantage point. With our presence in many segments of mobility and across the vehicle, our progress insustainability has the potential to catalyze advancements throughout the industry. It is our dedication tosustainability and our willingness to evolve that sets us apart. By setting ambitious goals and adopting
a science based approach, we are gaining momentum and empowering our employees across theworld to help make signifcant progress.

Our commitment to a sustainable enterprise began more than 65 years ago and is the foundation onwhich we build today. Our pledge to support the planet is deeply rooted in our culture. Magna has
always been a company that is well respected in the industry and world for doing what is right – notbecause we have to, but because we want to.
This report provides a comprehensive overview of our achievements in 2023, but I am most inspiredby what comes next. The groundwork we have laid in recent years will allow us to build on our
momentum and further yield signifcant competitive advantage. Being a sustainable company benefts
every Magna stakeholder, touches every part of our business, and is the key to making this world abetter place for current and future generations.

In 2023, we embraced the spirit of evolution in our sustainability strategy, driving positive change
across our business and beyond. We partnered with our customers and communities to navigate
the transition to electric vehicles and implement more effcient manufacturing processes. We are
upholding Magna’s core values and helping to build a more sustainable, equitable, and inclusivetransportation future.
As we accelerate change within our company and the automotive industry, we are optimistic that evengreater opportunities to make a difference lie ahead.

Evolving Our Commitment to a Sustainable Future
The fght against climate change is leading to signifcant transformation in the mobility sector. As a global leader within the industry,
Magna has set itself ambitious net-zero targets. Magna has approved near- and long-term science based emission reduction targets
with the Science Based Targets initiative (SBTi), and the SBTi has verifed Magna’s net-zero science-based target by 2050.

Magna’s Decarbonization Targets
TargetTarget Year

Status1-year 5% energy savings in implemented energy projects (From 2022 absolute energy usage)

2023

Achieved

1-year 5% energy intensity reduction (Compared to 2022)

2023

Exceeded

1-Year 10% energy intensity reduction (Stretch goal) (Compared to 2022)

2023

Exceeded

2-Year 10% energy intensity reduction (Compared to 2022)

2024

On Track

Environmental, Social and Governance (ESG) scoring for 90% of supplier spend

2025

In Progress

100% renewable electricity in European operations

2025

On Track

5-year 20% energy intensity reduction (Compared to 2022)

2027

On Track

100% renewable electricity in global operations

2030

On Track

25% reduction in value chain (Scope 3) emissions from 2021 baseline (Near-term science-based target)

2030

In Progress

42% reduction in global operational (Scope 1 & 2) emissions from 2021 baseline (Near-term science-based target)

2030

On Track

Net-zero emissions reduction (90% absolute reduction in Scopes 1, 2 & 3) (Long-term science-based target)

2050

In Progress

Where We Are

Year Over Year Progress

Where We Are Going% of global electricity used that is renewable electricity

22%+500 bps

39%
Expected by 2025

Divisions using renewable electricity

103

+42

>170
Expected by 2025

Divisions with 100% renewable electricity

75

+14

>150
Expected by 2025

Divisions with on-site solar generation

18

+12

19
In progress or currently investigating

Summary
Sustainability Metrics

Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

Table of Contents
06		 Summary Sustainability Metrics
08		 Introduction

12		 Sustainability Governance28		 Climate-Related Opportunities
39		 Climate-Related Risks and Risk Mitigation
54		 Non-Climate Elements of Sustainability
83		 Sustainability Metrics

4

Sustainability:
Signifcant Steps Forward
At Magna, we are not only
building a strong, sustainablebusiness, but one thatmakes a positive impact on
the planet for current andfuture generations. We arecommitted to minimizing
the environmental impactof our activities – partneringwith our customers andcommunities, as well
as operating effcientmanufacturing processes
and recycling programs.

2023 Highlights:· Announced our most ambitious environmental commitment
to date: to achieve net-zero emissions by 2050, an important
step in fghting climate change. This latest effort is partof the Science Based Targets initiative, the benchmark
for decarbonization targets in line with the Paris Climate
Agreement.
· Targeted a 20% reduction in corporate energy intensity inall manufacturing facilities by 2027. We are already halfway
towards our 2027 target, having achieved a 10% reduction
over the last 12 months.
· Pledged to transition to 100% renewable electricity use
in our European operations by 2025 and globally by 2030.
· Targeted a 90% reduction in Scopes 1, 2 and 3 by 2050,
with near-term commitments to reduce approximately
42% in Scopes 1 and 2, and 25% in Scope 3 by 2030.
· Dedicated to addressing not only the emissions we
produce within our own facilities but also those of ourentire supply chain. We are working with our customers
and partners, along side more than 10,000 suppliercompanies, to conserve our natural resources.

Summary
Sustainability Metrics

Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

Topic

ISSB Code

MetricUnit of Measure

Magna 2023 Data(2)Emissions

ISSB S2, 29(a)(i)

Scope 1 emissions

Metric Tons (t) CO2e424,561 t

2.7%

ISSB S2, 29(a)(i)

Scope 2 emissions(1)Metric Tons (t) CO2e

1,150,656 t

5.6%ISSB S2, 29(a)(i)

Scope 3 emissions(3)Metric Tons (t) CO2e

58,655,441 t(4)

—

Topic

SASB Code

MetricUnit of Measure

Magna 2023 Data(2)Change from 2019 Baseline(3)EnergyManagement

TR-AP-130a.1

Aggregate amount of energy consumed

Gigajoules (GJ) MegaWatt hours (MWh)20,077,657 GJ / 5,577,127 MWh

11.0%% of energy consumed supplied from electrical grid

Percentage (%)

59.2%

240 bps% of energy consumed that is renewable energy

Percentage (%)

12.9%

Energy intensity

MegaWatt hours (MWh) / Sales (USDm)

130 MWh / USDm

Energy intensity reduction

MegaWatt hours (MWh) / Sales (USDm)

Target: ≥5% p.a. / Actual: 10.6% (2023)—

Aggregate amount of waste generated frommanufacturing operations

Metric Tons (t)1,365,712 t—% of waste generated that is hazardous

Percentage (%)

3.9%

—

% of waste generated that was recycled

Percentage (%)

91.8%

—

% hazardous waste diverted from landfll

Percentage (%)

91.8%

—

Waste diversion from landfll

Percentage (%)

Target: ≥95% p.a. / Actual: 96.2% (2023)—

Annual water withdrawals

Megalitres (ML)6,571 ML

Water reduction

Percentage (%)

Target: 1.5% p.a. / 15% by 2030 (vs. 2019) /Actual: 15% (2023)

—

Waste
Management

TR-AP-150a.1

—

Water
Management—

Change from 2021 Baseline(3)

—
19.8%

15.1%
—

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Summary
Sustainability Metrics

Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

Topic

SASB Code

MetricUnit of Measure

Magna 2023 Data(2)Change from 2019 Baseline(3)Environmental
Management—

Annual remediation expenses

Reporting Currency (USD)<$1.0m

No Change

Aggregate remediation balance for known events

Reporting Currency (USD)$18.8m40.3%

Environmental violations > $10,000 USD

Number

1—

Amount paid as a result of such environmental
violations

Reporting Currency (USD)$30,000——

Competitive
Behaviour

TR-AP-520a.1

Total amount of monetary losses incurred asa result of legal proceedings associated with
anti-competitive behaviour regulations

Reporting Currency (USD)

NIL

Health and
Safety—Accident frequency rate

1.0 = 1 injury / illness per 100 employees
working 40 hours/week, 50 weeks/year

0.50

51.9%

Accident severity rate

10.0 = 10 lost work days / 100 employees
working 40 hours/week, 50 weeks/year

10.22

17.3%

% of employees who are women(5)Percentage (%)

28.0%

—

% Women in Critical Positions

Percentage (%)

18.0%

—

% Women on the Board of Magna

Percentage (%)

38.0%(6)GenderDiversity—

Notes:(1) Market-based emissions calculation method.
(2) 2023 data with respect to emissions, and water withdrawals have been verifed by an independent third-party verifcation frm. Energy management, waste
management, and health and safety data is preliminary.
(3) Items indicated by a dash were not tracked in applicable baseline year. We have used a 2021 baseline for our emissions reporting in line with our sciencebased near-term and net zero targets. We have used a 2019 baseline for other metrics consistent with our previous sustainability reports. Our 2023 Scope 1
and 2 emissions represent reductions of 17.8% and 28.5%, respectively against our original 2019 baseline.

200 bps(4) Scope 3 emissions data reported is based on 2021 and represents our baseline Scope 3 emissions calculated in connection with our science-based near-term and netzero targets submission in 2023. We performed an inventory covering all 15 Scope 3 emissions categories. Our Scope 3 emissions data includes all relevant categories.
Categories 8, 13, and 15 are not relevant to Magna.
(5) Wholly owned operations only.
(6) As of May 9, 2024, the percentage of women on the Board will be 42%, assuming election of all nominees for Magna’s annual meeting of shareholders.

7Summary
Sustainability Metrics

Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Introduction

Sustainability
Metrics

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Summary
Sustainability Metrics

Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

Introduction
At Magna we are committed to making a
difference through our products and processes,
as well as continuing to demonstrate care andconcern for our people and the communities inwhich they live.

Magna’s Climate Change Commitment
We recognize the reality of climate change and its impact on the planet. As a result, weare focused on doing the right things today so that our corporate interests do not comeat the expense of the viability of life for the generations that follow. Although combatingclimate change requires a collective global response, Magna is determined to play its
part in addressing this existential threat to our planet. We took a signifcant step in 2023
when we submitted our near-term and net-zero emission reduction targets for validationby the Science Based Targets initiative (“SBTi”). Magna has approved near- and long-termscience-based emission reduction targets with the SBTi, and the SBTi has verifed Magna’s
net-zero science-based target by 2050.
The details of Magna’s net-zero commitment are outlined in Section 1.4 this Sustainability
Report.

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Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

Approach to Sustainable Value Creation
Governance

Overall, our approach to sustainablevalue creation involves:
·

·
·

·
·
·
·
·

designing, engineering, manufacturing and delivering innovative
product solutions for our customers, which achieve sharedgoals of reduced weight, lower fuel consumption and reduced
carbon emissions;
optimizing and innovating our manufacturing processes forresource and input effciency, as well as product quality;
enhancing the energy effciency of our plants and transitioning to
100% renewable energy by 2030 to achieve our SBT requirement
to reduce Scope 1 and 2 emissions by 42% from a 2021 baseline;
engaging our supply chain to reduce Scope 3 emissions 25%
by 2030 from a 2021 baseline;
staying focused on our net-zero commitment to reduce
Scope 1, 2 and 3 emissions 90% by 2050 from a 2021 baseline;
treating our employees fairly and looking out for their health,safety and general well-being;
serving as a good community partner, particularly in thecommunities in which our employees live and work; andenhancing the sustainability of our supply chain with respect tohuman rights and working conditions through communication,
monitoring, and where necessary, corrective action.

Strategy
RiskManagement

Metrics
and Targets

This Sustainability Report aims to provide our stakeholders with a better understanding of how we approach thecreation of sustainable, long-term value and our management of sustainability-related risks. The report has been
structured to align with the International Sustainability Standards Board (ISSB) IFRS S1 and S2 Climate Related
Disclosures Standards, as well as the Sustainability Accounting Standards Board’s (“SASB”) Auto Parts accounting
standard, where possible. This includes, for the frst time, reporting of our (2021 baseline) Scope 3 emissions. While
this report may not currently provide stakeholders with all the information sought through the ISSB and SASB
frameworks; we continue to evolve and enhance our disclosure as our collection and validation of the applicabledata improves. While the ISSB and SASB Auto Parts frameworks primarily address climate-related factors, thisSustainability Report aims to go beyond such items to give stakeholders a better understanding of the broad range
of environmental, social and governance initiatives that defne our approach to sustainable value creation.

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Summary
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Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

Producing Parts, Peppers, and Wildfower Honey
Garden-grown teamwork transforms sustainability
and community
Magna gives generously to the communities where we operate.
Magna’s exteriors division in Brampton, Ontario embarked on a mission to make a positive
impact on the world through sustainability. Led by their Health, Safety, and Environmental
Manager, the team believed that collective effort was the key to success.
Since 2016, this facility has achieved zero waste-to-landfll, diverting 269 metric tons ofwaste. They recycled half of this waste, while the rest was converted into energy for the
Ontario grid. Their commitment to sustainability was not just about numbers, but about
real-time resource monitoring through the WAGES (Water, Air, Gas, Electricity, Silos)
program, allowing them to react instantly to concerns.
But their sustainability journey was not just about operational changes. This commitment
extended beyond the factory walls, with the creation of the “Farm” where vegetables weregrown, and a beehive was housed. The frst harvest raised funding for SickKids, a Toronto
hospital, and plans were in place to donate directly to the local food bank next year.

11Summary
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Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Governance

Sustainability
Metrics

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Summary
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Introduction

Sustainability Governance

Climate-Related
Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

1.1 Board Oversight
Magna’s Board of Directors is the company’s highest decision-making body, except tothe extent certain rights have been reserved for shareholders under applicable law or
Magna’s articles of incorporation or by-laws. As such, the Board is responsible for theoverall stewardship of the company by: supervising the management of the business andaffairs of Magna in accordance with the legal requirements set out in applicable company
law (Business Corporations Act (Ontario)), as well as other applicable law; and, jointly withManagement, seeking to create long-term shareholder value. The Board operates under awritten Board Charter, in addition to applicable law, our articles of incorporation and by-laws.
The Board Charter, which has been fled with securities regulatory authorities on SEDAR+( www.sedarplus.ca), and is available in the Leadership & Governance section of Magna’s
website ( www.magna.com), delineates Board oversight responsibilities including withrespect to a number of areas relevant to sustainability such as: corporate culture; corporate
governance; strategy; risk; shareholder engagement; and fundamental corporate actions.
The Board takes an integrated and coordinated approach to oversight (including climaterelated issues). This includes oversight of:
·
·
·
·
·

the Company’s corporate culture, including its commitment to innovation/R&D, as well as
its overall approach to corporate governance;long-term strategy, including sustainability strategy and near-term business plans;
fundamental corporate actions, including acquisitions/divestitures and capital allocation;
major corporate policies;
enterprise risk management, including sustainability risks;

·

·
·
·

our overall system of compensation of Executive Management, rooted in proftability andwhich drives desired management behaviours that are central to our climate strategy,
including operational effciency and acceleration of electrifcation activities.
material public disclosures (including this Sustainability Report);
preparedness of the Company to comply with emerging sustainability/ESG related
legislation; andshareholder engagement, including on sustainability/ESG topics.

Climate-related and other sustainability issues are typically considered by the Board at least
annually through the Board’s strategic planning process. Typically, Magna’s most senior
corporate R&D executive identifes and analyses material “megatrends” impacting theautomotive industry, including automotive and mobility trends arising from climate-related
issues. Signifcant opportunities and risks are then addressed at the annual Board strategy
meeting, while Operating Group Presidents address the opportunities and risks applicable totheir respective business units at the annual business planning meeting. Guidance, feedback
and other outputs from the strategy meeting are incorporated and integrated into business
unit business plans for the next business planning meeting. Sustainability issues may also
arise before the Board in connection with its oversight of fundamental corporate actions suchas review/approval of material acquisitions/divestitures, three-year business plans and capital
expenditures. Additionally, the Board annually monitors our progress in reducing our carbon
footprint and reviews/approves the company’s material public disclosures, including our Annual
Information Form (AIF) / Annual Report on Form 40-F incorporating this Sustainability Report.

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Opportunities

1.1.1 GNSC and TOCC Roles
The Board carries out its duties in part through standing committees composed solely of
independent directors. One such committee, the GNSC, supports the Board’s oversight ofthe company’s approach to sustainability and climate change issues to ensure alignment
with Magna’s overall strategy, including by assessing Magna’s overall approach todecarbonization of its operations, environmental compliance, the Company’s approach tohuman rights and supply chain due diligence, the continued effectiveness of the Company’s
ESG management programs, as well as Magna’s actions to identify, monitor and mitigate
any material risk exposures relating to such areas. The Board’s TOCC also supports theBoard’s sustainability oversight activities by assessing Magna’s approach to certain nonclimate elements of sustainability, including its approach to advancing diversity and inclusion
in our workplace, and occupational health and safety compliance, as well as Magna’s
actions to identify, monitor and mitigate any material risk exposures relating to such areas.
Like the Board, the GNSC and TOCC maintain a written charter which outlines its specifc
roles and responsibilities. The GNSC and TOCC Charters have been fled on SEDAR+ and isavailable in the Leadership & Governance section of Magna’s website ( www.magna.com).
Matters under the GNSC’s responsibility include: corporate governance, sustainability,
and other matters. The scope of the GNSC’s oversight role with respect to sustainability
includes climate-related issues generally, as well as related elements such as environmental
management and compliance. As Magna defnes “sustainability” in a broad and inclusive
manner to include areas that go beyond climate-related issues, the GNSC’s role also
extends to matters such as supply chain sustainability. The GNSC periodically reviews
Magna’s policies, practices and public disclosures relating to sustainability topics, andmakes recommendations to the Board regarding such items. During 2023, the GNSC

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

received updates on Magna’s evolving sustainability strategy, its development of sciencebased near-term and net-zero targets, progress towards its decarbonization andrenewable electricity targets, and its activities in relation to supply chain monitoring. The
GNSC also reviewed, provided input into, and approved the organization’s Sustainability
Report and presented its recommendations to the Board regarding the Board’s approvalof the Sustainability Report. Additionally, the GNSC received reporting relating to theperformance of Magna’s environmental compliance and management program. The
TOCC’s responsibility include: talent management and succession planning, executive andincentive compensation, employee health and safety, and other matters. During 2023, the
TOCC received updates on Magna’s occupational health and safety management program,leadership development and succession planning, culture and employee engagement, anddiversity and inclusion activities.

1.1.2 Other Board Committees
In addition to the GNSC and TOCC, the Board maintains two other standing committees– the Audit Committee and the Technology Committee. While neither of these committees
have specifc sustainability responsibilities, each may have a role with respect tosustainability risks and opportunities that arise indirectly out of the committee’s primary roleand responsibilities.
Magna’s Audit Committee supports the Board through its oversight of fnancial and auditrelated matters, including fnancial risks and disclosures. To the extent that climate-related
or other sustainability risks are or could be fnancially material, the Audit Committee would
be involved through its consideration of the fnancial statement or other disclosure of thenature and scale of the risk. During 2023, the Audit Committee received updates on fnancial

14Summary
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Climate-Related
Opportunities

reporting of sustainability matters, and Magna’s Ethics and Legal Compliance Program,including administration of our Code of Conduct and Ethics, compliance training initiatives,and activities of the Company’s Compliance Council.
The Technology Committee supports the Board’s oversight duties by advising it ontechnology trends, related opportunities and risks, R&D and innovation, and technologyfocused acquisitions, as well as the alignment between the company’s technology and its
strategic priorities. As such, the scope of the Technology Committee’s role includes products
and processes that seek to realize opportunities created by climate-related challenges. In
this regard, the Technology Committee engaged in “deep dive” reviews of technology trends,
opportunities and risks, including battery enclosures technology landscape, integrated
systems, digital transformation and automation and Factory of the Future. In addition, theTechnology Committee reviewed Magna’s R&D/innovation initiatives in relation to Magna’s
overall strategy.

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

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Metrics

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Sustainability Governance

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Opportunities

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

Sustainability
Metrics

1.2 Management
Climate-related issues are part of the CEO’s responsibility. As Magna’s highest-ranking
member of management, the CEO guides and directs Executive Management andOperating Group Presidents with respect to product portfolio and strategic planning,business planning, capital expenditures, innovation/R&D, manufacturing productivity andeffciency, as well as other critical areas, including the setting of the near-term and netzero commitments announced by Magna in 2023. The CEO is also the highest executive
responsible for customer management, shareholder engagement/investor relations, as well
as talent management. The criticality of climate sustainability to the future of the automotive
industry generally means that climate-related issues are interwoven through all of theforegoing areas of the CEO’s responsibilities. At the same time, the importance of making
demonstrable progress with climate sustainability goals requires CEO-level engagementand direction to ensure organizational alignment.
To assist our CEO, one of Magna’s Presidents functions as an executive “champion” forclimate-related sustainability matters (the “Sustainability Champion”). The Sustainability
Champion reports directly to Magna’s CEO on sustainability matters and helps coordinate
and align sustainability priorities across the company’s Operating Groups. Operating Groupmanagement is responsible for development of product strategies to address megatrends,
industry trends, and business opportunities and risks, including those which arise due toclimate-related challenges.

We also have a bottom-up sustainability structure (See Magna’s Decarbonization
Organizational Structure below) with representatives at each of our three main managementlevels (Divisional, Operating Group and Corporate). Approximately 95% of our manufacturing
Divisions have an energy management champion who works with members of our Global
Energy Team to identify and implement high-priority energy management projects. The
Global Energy Team functions across all of our Divisions and Operating Groups to shareenergy effciency/management case studies and best practices. Each Operating Group’s
day-to-day sustainability activities are coordinated through a Group sustainability “lead”.
Operating Group sustainability leads routinely interact with our Global Director, Sustainability& Energy who oversees and tracks key sustainability metrics and KPIs, such as theenergy reduction goals. The Global Director, who reports to the Sustainability Champion,collaborates with Operating Group sustainability leads and cross-functional corporate
leaders, including operational improvement, environmental, purchasing, legal, fnance, realestate, to develop Magna’s long-term sustainability and decarbonization strategy and nearterm goals. In connection with our evolving sustainability strategy and our commitment toreaching our near-term and net-zero targets, our energy reduction progress and initiatives
are reported to our Sustainability Champion, helping to increase the visibility of these
initiatives across our Operating Groups through the Sustainability Champion’s regularinteraction with Operating Group Presidents.

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Summary
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Introduction

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Climate-Related
Opportunities

A number of initiatives intended to help us achieve our near-term and net-zero targets areunderway, including energy optimization initiatives at most of our operating Divisions and aphased in transition to renewable electricity globally. In 2023, we launched new initiatives
within our Operating Groups focused on Life Cycle Assessments (LCA), Sustainable
Materials and Supply Chain Decarbonization. Each initiative is led by an Operating Grouplevel champion in their respective subject matter that directly supports the execution of
our decarbonization strategy. LCA Champions oversee Operating Group LCA processes
and requirements, including understanding frameworks governing LCAs and customer
requirements. Sustainable Materials Champions assist in the development of sustainable
materials sourcing plans, identify potential sustainable materials relevant to current and future
products, identify and oversee participation in sustainable materials certifcation schemes,
and support our purchasing team in communicating with OEM customers and suppliers
on relevant sustainable materials topics. Supply Chain Sustainability Champions assist on
all ESG related supply chain topics for their Operating Groups and support supplier ESG
monitoring and corrective action. They will also oversee Operating Group compliance with
ESG nomination criteria being developed.
Aspects of sustainability beyond climate change concerns are typically managed througha matrix structure in which corporate-wide functions support initiatives implemented or
managed by Operating Groups and Divisions. Examples of functional areas managed inthis manner include: environmental management and compliance; occupational health andsafety; quality and operational improvement; talent management, including diversity andinclusion; ethics and legal compliance; lobbying and political engagement; cybersecurity;
data privacy; and supply chain management.

Climate-Related Risks
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Summary
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Climate-Related
Opportunities

Sustainability Governance

Climate-Related Risks
and Risk Mitigation

Non-Climate Elementsof Sustainability

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Metrics

Magna Board of Directors and its
standing committees including GNSC

CEO

Magna’s
Decarbonization
Organizational
Structure

Executive Leadership
CFO | CHRO | CLO | CDIO | CSMO

Global Functional Teams

Operational Group Presidents& Executive Teams

Global Director
Sustainability & Energy

Group Sustainability Leads

Global Sustainability TeamGroup/Division
Sustainability Teams
Group LCA Champions

Finance
Health, Safety & Environmental

Decarbonization Team

Information Technology

Energy Team with
Regional Leads

Legal
Marketing & Communications

Supply Chain &Product Sustainability

Purchasing

Reporting & Disclosure

Research & Development

Group Supply Chain
Sustainability Champions
Group Sustainable
Materials Champions
Division Sustainability
Champions
Division Energy Champions

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Sustainability Governance

Net-Zero
Guiding Principles
Operational Emissions
Magna’s operational decarbonization strategy
is focused on energy conservation andrenewable electricity procurement. We
are working with our partners andstakeholders to identify emerging
technology that will tackle
energy-intensive processes.

1

2

Climate-Related Risks
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Renewable Energy

3

A regional portfolio approach to renewable energy, including: Power
Purchase Agreements (PPAs), Energy Attribute Certifcates (EACs) andself-generation, where feasible

Energy Effciency
Through energy effciency measures, machinery and equipment can be optimized and specifc
energy consumption improved. The aim is to reduce energy consumption to a necessary minimum.

Energy Transparency
Energy transparency refers to the openness and accessibility of information and data regarding energy consumption at alllevels of use within a division. This is critical to the development of strategies and projects that minimize energy use and is
the foundation of energy management.

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3
2
1

Introduction

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Manage Emissions
Managing Scope 3 emissions sources is important for reducing emissions
across the value chain and demonstrating a commitment to sustainability.
It can also result in cost savings, improved effciency, and reduced
environmental impact.

Monitor Sources
Monitoring Scope 3 emissions sources is important for tracking progress towards reduction
targets and improving transparency and accountability.

Develop Plan

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20

Net-Zero
Guiding Principles

Value Chain Emissions
While all value chain emissions may not be
actionable for every Magna location at this time,
the framework below is used to quantify andcontrol value chain emissions globally. This
framework will also be applicable for
Scope 3 emissions projects at
our divisions.

Developing a plan for Scope 3 emissions reduction is important for identifying opportunities to reduce emissions acrossthe value chain and for demonstrating a commitment to sustainability.

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Operational Emissions

Framework& Timeline

1.5

2023

Stretch 10% energy intensity reduction target

2025

EMISSIONS(CO2e Million metric tonnes)

Europe 100% renewable electricity

2027

20% energy intensity reduction target

2030

Our energy consumption and renewable energy goals should
help us achieve our SBTi near-term commitment of reducing
Scope 1 and 2 emissions by 42% by 2030, against a
2021 baseline. Beyond that, we are prioritizing HVAC
decarbonization and focusing on researching
and implementing emerging technologies in
HVAC, comfort heating and cooling, andmanufacturing operations to achieve
net-zero by 2050.

Rest of world 100% renewable electricity

2040

Decarbonization of comfort
heating and cooling

100% RE(EU)

100% RE
(ROW)

2050

HVAC Decarbonization

Reduction in natural gas usage

Operational Decarbonization

Net-zero02021(Baseline)

2025

2030

2035

2040

2050

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Value Chain Emissions
There are 15 categories of Scope 3 emissions. We know there
are two signifcant categories for Magna: Use of Product andFocusing on high-emitting commodities
Purchased Goods and Services. Magna’s Sustainability
team is currently conducting an assessment to create abreakdown by supply chain category/material and an
25% reduction
inventory of Magna products that impact our Scope 3(SBTi net-zero commitment)
emissions. A Supply Chain Sustainability Steering
Committee is developing the tools and will bereaching out to each group for consultation
and rollout. While a detailed roadmap
Roadmap to be developed by an internal steering committee
similar to the one made Scope 1 and 2
and in consultation with various external stakeholders
cannot be created at this time, oursuch as suppliers and customers to support a low
current commitments can show
carbon mobility industry and products.
the scale of change required
to hit our near-term SBTitargets and long-term
net-zero goals.

EMISSIONS(CO2e Million metric tonnes)

58.5

Baseline

90% reduction(SBTi net-zero commitment)

Net-zero02021(Baseline)

2025

2030

2035

2040

2050

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1.3 Evolution of Our Sustainability Program
In 2023, our Sustainability program evolved in a
number of ways, including:
·
·

·
·

·

Establishing global near-term (to 2030) and net-zero (to 2050) science-based targets(discussed in detail in Section 1.4 of this Sustainability Report).
Our near-term science-based target aims to achieve a 42% reduction in Scopes 1 and 2
emissions, and a 25% reduction in Scope 3 emissions by 2030, from a 2021 baseline.
In support of our near-term commitment, we are targeting 100% renewable energy in
our European operations (by 2025) and globally (by 2030).
Our net-zero science-based commitment requires a 90% reduction in Scope 1, 2 and 3
emissions by 2050 from a 2021 baseline.
Introducing a net-zero module to Magna’s global Fundamentals of Sustainability Training,which was rolled out in 11 languages and completed by approximately 66,000 employees
since the training was introduced in 2022. The training provides a review of sustainability
basics and their relation to our business, and helps our organization continue to cultivateinterest, ideas and opportunities for improving our operations, products and our worldin general.
Launching new initiatives within our Operating Groups focused on Life Cycle
Assessments (LCA), Sustainable Materials and Supply Chain Decarbonization. Eachinitiative is led by an Operating Group-level champion in the respective subject matterthat directly supports the execution of our decarbonization strategy. These initiatives

·

·

·

·

will help Magna continue to integrate sustainability within our operations and makeprogress on our near- and long-term decarbonization goals.
Rolling out a new supplier roundtable program. The objective of this round table
program is to initiate a dialogue and collaboration between Magna and our suppliers
to promote sustainability practices across the supply chain. The focus is on sharing
best practices, discussing challenges, and identifying opportunities for improvementin sustainability initiatives.
Continuing to grow our annual Commitment to Sustainability Awards that recognize
how sustainable activities beneft our Divisions, our environment, and all stakeholders.
In 2023 we received approximately 300 submissions, an increase of over 60%, yearover-year. Our Sustainability awards winners are detailed on pages 81 and 82 of thisSustainability Report.
Aligning the sustainability module in our MAFACT system to our net-zero commitment.
The module includes fve scoring levels that assess a Divison’s performance onsustainability, including: carbon/air emissions, water usage, waste, and support for
United Nations Sustainable Development Goals. Scoring is based on development ofa strong foundation for data collection (level 1) through to achieving 100% Renewable
Energy (level 5).
Implementing a Sustainability Ambassador program that aims to educate, inspire andcreate relationships across Magna from senior management to Divisional employees.
The inaugural meeting took place in December 2023, and included the participationof nearly 150 employees from across the world.

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1.4 Magna’s Net-Zero Commitment
1.4.1 Science Based Targets

1.4.2 Roadmap for Fulflling Our Commitment

The fght against climate change is leading to major transformation in the mobility sector.
As a global leader within the industry, Magna has set ambitious targets as discussed under
Magna’s Climate Change Commitment on page 9.

Achieving net-zero is an ambitious and complex challenge. We have taken the frst step
to indicate our commitment and outline our net-zero emissions strategy. We have also
developed a framework through collaboration with internal and external stakeholders.
By leveraging experts across all Operating Groups and Divisions to identify the mostappropriate technical solutions, while monitoring for emerging technologies, we will continue
to progress towards our net-zero goal. Our strategy and roadmap will continue to evolve,
including through the development of climate scenario analysis and a formal climatetransition plan as discussed in Section 1.4.3 below.

Magna prides itself on continuous improvement and innovation. For over 65 years, wehave showcased our commitment to design and deliver some of the most sophisticatedmobility solutions; and we continue to leverage this ingenuity and entrepreneurial spirit totackle one of our world’s most pressing challenges: climate change. Focus is needed ontrue decarbonization and elimination of carbon to keep global warming below 1.5 degrees
according to the latest Intergovernmental Panel on Climate Change (IPCC) 2023 Climate
Change Report. To meet our communities’, customers’, and stakeholder expectations,
Magna has evolved its previous carbon neutrality commitment to the science based nearterm and 2050 net-zero commitments.
Magna’s pursuit of net-zero begins with our near-term commitment of 42% reduction in
Scopes 1 and 2 emissions, and 25% reduction in Scope 3 emissions by 2030, each froma 2021 baseline. Our near-term commitments are the launch point towards our net-zeroby 2050 commitment which requires 90% reduction in Scope 1, 2 and 3 emissions froma 2021 baseline, as required by the SBTi Net-Zero Standard.

We are focused on the following four pillars as we continue to evolve our net-zero roadmap:

Awareness +Engagement

Data
Collection

Strategy +Roadmap

Training and dialogue
to understand andbuild needed tools

Develop data
platforms & rollout
internal policies andrequirements

Identify feasible
cost-viable
technologies andsolutionsExecution
Implementation of
decarbonization
initiatives

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As Magna carries out activities within each pillar, with support from Operating Groups
and Divisions, our focus will continue to be on energy conservation and reduction. In thenear-term, our net-zero commitment is supported by our goal of achieving 100% renewableelectricity in Europe by 2025 and globally by 2030. To support this effort, Magna’s Global
Energy Leads have been integrated directly into our global sustainability organization. Each

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Division’s Energy Champion is critical to achieving our net-zero commitments working
to deliver emission reductions, as well as cost savings and risk minimization. Progress isalready being made in our manufacturing operations which implemented approximately
280,000 MWh of energy saving projects in 2023. Magna also successfully achieved its
2023 stretch goal of a 10% energy intensity reduction (compared to the prior year).

Magna’s Road to Net-Zero25

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1.4.3 Evolution of our Roadmap
Over the next 12 months, Magna expects to complete a double materiality assessment,
scenario analysis and develop a climate transition plan to further evolve our commitment
to sustainability and transparency. A double materiality assessment is a tool we will use toevaluate environmental and social risks and opportunities through the lens of fnancial andimpact materiality. Scenario analysis enables us to support our net-zero strategy by exploring
various future pathways based on different climate scenarios. A climate transition plan will
act as a blueprint for achieving net-zero.

1.4.4 Addressing Scope 3 Emissions
Magna has established near term energy saving goals (details on page 34) and renewableelectricity goals (details on page 24) to tackle our Scope 1 and 2 emissions. For Scope 3
emissions, our near-term and net-zero targets are reductions of 25% by 2030 and reductionsof 90% by 2050, respectively, taking into account all 15 emissions categories (12 of which
are relevant to Magna). While Magna intends to work on reducing the impact in all relevant
categories; there will be a signifcant focus on category 1 (Purchased Goods and Services)and category 11 (Use of Sold Product) which account for the vast majority (approximately
90%) of our Scope 3 emissions based on our current Scope 3 emissions inventory. Two
working groups (discussed above): Sustainable Materials, and Supply Chain Sustainability,
have been created with a champion from each Operating Group and led by the Magna’s
Global Sustainability Team. These cross-functional groups contribute in-depth knowledge
on commodities and technologies that will be instrumental in executing our net-zero strategy.

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What You Do Matters
It’s more than just a motto for a Poznań seating plant
With the support of the 18 Shift Leaders, Magna’s seating division in Poznań,Poland launched an annual Energy Saving Week and “Do What Matters”
campaign. Throughout the week, Shift Leaders lead daily 15-minute meetings
where all employees are invited to actively participate in discussions about energy
waste within the division.
The inclusive approach yielded signifcant results. Following Energy Saving Week,
the number of ideas related to energy reduction increased by 300%. A follow-up
audit conducted in February 2023 showed a 53,000 kWh decrease in energy
consumption.

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2.1 Corporate Strategy
The automotive industry is being defned by a number of global megatrends that haveshaped our long-term strategy, including:

EconomySociety

Mobility

Megatrend

Impact on Automotive

Globalization

Industry built through globalization appears to be undergoingregionalization

Environmental Impact

Concern for environment/climate change driving vehicle electrifcation,
including through acceleration of sustainability-related legislation

Natural Resources& Energy

Access to critical battery minerals and availability of suffcient
renewable energy may defne success of drive to vehicle electrifcation

Demographic Change

Product design will be infuenced by aging population

Digital Transformation

Connectivity and digitization impact both product and process.
New vehicle architectures that connect the subsystems along with
software functionality creates additional value to products. Process
is also impacted due to increased digitization, driven by increased
requirements for productivity and quality

Individualism

Product design will be infuenced by growing individualism, including
desire for greater personalized experiences

Health & Well-Being

ADAS and autonomy take rates will be driven both by consumer
preferences as well as regulatory requirements tied to increased safety

Urbanization

Continued growth in urban population will lead to changes in mobility
as a result of increased density and congestion with an increase in
EV adoption and new transport modalities

New Mobility

Emerging new mobility eco-system offers a range of potential
opportunities for new products and services, including automateddelivery and mobility solutions

We have distilled the impacts of the global megatrends into four long-term strategic factors
which we see defning the “Car of the Future” – electrifcation, autonomy, new mobility, andconnectivity. We believe we are well-positioned to capitalize on opportunities in each area:
Electrifcation | We possess an enhanced e-Powertrain portfolio with arange of products that addresses the roadmap for the transition to EVs.
We continue to win new EV business.
Autonomy | We possess full ADAS capability and complete ADAS system
expertise. We take a systems level approach in developing ADAS building
blocks for OEM customers with a focus up to level 2+/3 ADAS capabilities.
New Mobility | We have expanded our collaboration ecosystem andcontinue to look for opportunities to leverage new business models.
The breadth of our capabilities make us a key enabler of OEM customers
and new entrants in the New Mobility space.
Connectivity | We possess software-enabled functionality in our electronic
control unit-related products. This functionality could help optimize
performance and effciency in connected products, such as our connected
powertrains.

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We have developed our corporate strategy
to realize the opportunities from these trends.
Key elements of such strategy include:
Increasing capital deployment toward high-growth areas aligned with the“Car of the Future”

Impact of Megatrends

We are proactively managing our portfolio and evolving our product mix based on alignment
with the Car of the Future, which we see as electrifed, connected, assisted/autonomous,
personalized and sustainable. We seek to grow our business and capabilities in areas
which are positively impacted by the megatrends discussed earlier through an approachthat emphasizes functionally integrated solutions, systems development, and cross-groupcollaboration. Examples of such areas include powertrain electrifcation, ADAS and battery
Positive Impact··

eDrives and Components
Battery Enclosures
Active Safety

Aligned

·
·
·
·
·
·
·

Lighting
Active Aerodynamics
Body & Chassis
Dual Clutch Transmissions
Mirrors
Mechatronics
Seating

Negative Impact···

Manual Transmissions
4WD/AWD
Fuel Tanks

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enclosures, as well as our contract vehicle manufacturing operations. As illustrated below,
we believe that a substantial proportion of our product areas are not adversely impacted
by the global megatrends, including our body, chassis, lighting, active aerodynamics, dual
clutch transmissions, mirrors, mechatronics, and seating products. The strong returns andcash fow from these product areas enable us to fund the R&D and capital investments
required to realize the opportunities in high-growth products which are benefting directlyfrom the global megatrends.
Lastly, there are elements of our product portfolio which are negatively impacted by the
global megatrends and are expected to be less directly relevant to the Car of the Future.
Examples of such products include manual transmissions, mechanical AWD/4WD systems
and fuel tank systems. Despite their declining long-term strategic importance, our assets
and expertise associated with these products remain relevant to, and can be redeployed for,growing product areas aligned with the Car of the Future.

Magna Sales
Over Time

2020

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Driving Operational Excellence
We are committed to manufacturing excellence. We continue to elevate our approach to
manufacturing by implementing “factory of the future” initiatives including: enhanced useof big data and analytics; advanced robotics, additive manufacturing and augmented
reality. The ultimate goal is to achieve greater proftability through further enhanced quality,
production effciency, reduction of foor space and improved return on investments. Criticalelements of our approach to operational excellence include our operational excellence
initiatives and MAFACT operating system, which are discussed in “Section 6 – Descriptionof the Business – Manufacturing & Engineering” in our AIF. Additionally, our sustainability
strategy dovetails with our efforts around operational excellence, due to the focus on energy
optimization and minimization of water withdrawals, as well as waste streams to landfll.

Unlocking New Business Models and Markets
The new mobility landscape, which is generally urban, electrifed, autonomous andconnected, is creating new business models and markets. We believe that our systems
and complete vehicle knowledge, including elements of our portfolio such as EV and ADAS
platforms, provide us with an advantage in pursuing such opportunities. In addition, ourability to use capital effciently, launch programs reliably and help speed products to market,
makes Magna a key enabler of new entrants. Additionally, we are using our capabilities andplatform technologies to enter the micromobility market. For example, we invested in the
Yulu electrifed two-wheeler shared mobility business in India and related battery-swapping
business and have a number of activities underway involving Magna-developed and third
party-developed robots for potential industrial and last-mile delivery applications.

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Our long-term strategy is well-aligned with climate change-related trends impacting theautomotive industry, including vehicle electrifcation, operational effciency to minimize
manufacturing inputs and waste outputs, as well as the pursuit of new mobility businessmodels. We cannot determine for certain how quickly the market for the declining products
in our portfolio may deteriorate, but products such as AWD/4WD systems appear to havecontinuing relevance for the next decade. However, we believe that our physical assets,human capital and know-how related to the mechanical solutions can be repurposed as
vehicle development plans migrate toward electrifed AWD/4WD solutions. We currently offer
multiple alternatives to manual transmissions, including effcient dual-clutch, hybrid dual-clutch
and dedicated hybrid transmissions, as well as complete e-drive systems, and expect to beable to continue growing our market share in the drivetrain market. Fuel tank systems are nota material part of our business, but also have continuing relevance for a number of years tocome. The physical assets, human capital and know-how related to fuel tank systems could
be repurposed for adjacent product areas such as vehicle hydrogen storage tank systems.

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2.2 Markets & Products
The transition to a lower-carbon economy has provided, and is expected to continue
to provide, opportunities to enter new product and service markets. Some recent new
products developed to take advantage of opportunities from such transition include:

Recent new products developed to take advantage
of opportunities from such transition include:
Next Generation 800v eDrive
Magna’s next generation 800v eDrive solution is a drop-in
solution that incorporates several advanced technologies,
resulting in signifcant reductions in weight and size,enhanced performance, extended driving range andgreater sustainability. The innovation offers enhanced
fexibility due to its lightweight (75 kg) design and 20%
reduction in height from Magna’s prior generation
eDrive. A key technology and a supplier industry-frst
advancement is the ability to rotate the eDrive 90 degrees around the drive axis, whichallows improved system integration in the front and rear vehicle space. Delivering peak
power of 250 kW and a peak axle torque of 5,000 Nm, the system also achieves up to 93%
effciency in real-world driving (including Worldwide harmonized Light vehicles Test Cycles(WLTC) and highway driving), which signifcantly improves effciency across a wide range ofvehicle speeds. The eDrive system requires less aluminum and heavy rare earth materials,
resulting in a signifcant reduction of CO2 emissions during production by approximately 20%
compared to previous generation eDrives.

Etelligent Terrain with Ebeam™
The EtelligentTerrain is a battery electric
4WD powertrain system designed tomaintain full on- and off-road capabilities
with no compromise of payload and towing
capabilities. The system is powered by
Magna’s steerable eBeam™ Mid at the front
and an eBeam™ High at the rear, with a combined output of 426 kW of peak power. The
eBeam™ drops into the place of traditional beam axles, reusing existing suspension andbrake systems, and avoiding the need for expensive restructuring of existing truck platforms.
These benefts help automakers simplify the transition toward electrifcation of these vehicle
segments. Seamless decoupling capability of the front axle means more effcient operation.
Magna’s sophisticated Energy and Motion Control software controls the two eBeams™
which provides off-road specifc drive modes (selectable crawl, auto hill ascent/descent)and torque distribution capabilities (high range, e-selectable low range). The scalable design
is applicable to passenger sport utility, pickup trucks, and light commercial vehicles.

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Battery Enclosures
Magna has been awarded nine global customer programs for its battery enclosures, including
the all-electric Ford F-150 Lightning, GMC Hummer EV, and Chevrolet Silverado EV. The
product illustrates our ability to expand structural product opportunities as electrifcation
grows. The enclosures, which all EVs require, house high-voltage batteries, electricalcomponents, sensors, and connectors, contributing to the structural and safety aspects ofa vehicle’s frame and protecting critical components from potential impact, heat, and water
intrusion. These complex assemblies are available in steel, aluminum, and multi-material
confgurations including lightweight composites.

Modular eDecoupling Unit
Magna has started production of a frst-to-market, modular eDecoupling unit to
support multiple battery electric vehicle programs for a German premium OEM. A bolton, stand-alone solution for BEVs, Magna’s electro-magnetic eDecoupling is a robust
product technology that is integrated as a complete module. The eDecoupling is an

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electromechanical device that
disconnects the e-motor from thedriveshaft in EVs when propulsion
power is not needed, reducing energy
consumption, and increasing effciency.
It contributes to increased electric
driving range of up to nine percent,a signifcant beneft for all EVs. Thisis achieved by reducing drag torquelosses of the e-motor and gearbox
while its eDecoupling controls software smoothly operates all shifting sequences. The unit
which has an activation time of less than 100 milliseconds, features a compact design tominimize added package space and weight in both axial and radial direction.
In addition to Magna’s highlighted product innovations above, we continue to seek out
ways to support decarbonization initiatives in the industry. To this end, Greentown Go Move
2022 a startup-corporate partnerships accelerator program led by Greentown Labs from2022-2023 united BASF and Magna with fve climatetech startups to drive solutions that
decarbonize the automotive industry’s life-cycle impact. Beyond electrifcation, transforming
the transportation sector necessitates sweeping changes. This Greentown Go program, isfocused on material innovations across three critical areas: (i) automotive effciency (ii) sharedand future mobility (iii) recycling processes. The fve participating startups – Carbonova,
Endeavor Composites, FibreCoat, Heartland Industries, and MITO Material Solutions –were meticulously selected from nearly 100 applicants spanning 27 countries. Throughout
the accelerator program, the startups collaborated with BASF and Magna to de-risk theirtechnologies, explore potential industrial applications, and devise go-to-market strategies.

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2.3 Resource Efficiency
2.3.1 Energy
Our aggregate global energy spend
in 2023 amounted to approximately$537 million broken down by typeas follows:

Electricity: approximately

Natural Gas: approximately$432 million$85 million

As part of our sustainability and operational effciency efforts, we are focused on optimizing
energy use, which may result in savings in overall energy costs. However, as we continue
to forecast growth in Sales and number of facilities over the medium-term, we anticipate
that our aggregate energy consumption may increase. Accordingly, we are focused on
becoming more energy effcient (measured by energy consumption relative to Sales) sothat, at minimum, our rate of increase in energy consumption slows.
In connection with our efforts to promote energy effciency, in 2023 we established one-,two- and fve-year energy reduction targets for each of our Operating Groups, as illustrated
below. We achieved our 1 year target in 2023 (completing energy projects that amounted toa 5% reduction of each Operating Group’s 2022 absolute energy usage). We also exceededour 1-year stretch target aimed at reducing energy cost intensity by 10% (achieving
approximately 11%) in 2023 (compared to 2022). Our remaining 2-year and 5-year energy
intensity reduction targets remain on track.

Exceeded

Other (Propane; Liquid Petrol; Diesel;
District Heat; Steam; Coal Gas):$23 million

1Year

Achieved

1Year

On Track

2 Year

5 Year

10% reduction inenergy cost intensity(Cost/Production Sales)(Y/E 2023 vs. Y/E 2022)

Complete energy
reduction projects
in 2023 that equate toat least a 5% reductionof a Group’s 2022 actual
absolute energy usage

A minimum 10%
reduction inenergy intensity(kWh/Production Sales)(Y/E 2024 vs. Y/E 2022)

A minimum 20%
reduction inenergy intensity(kWh/Production Sales)(Y/E 2027 vs. Y/E 2022)

Stretch Target

On Track

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Approximately 95% of our Divisions have active energy teams pursuing energy effciency
measures in their respective Divisions (100% when excluding our acquisition of the Veoneer
Active Safety Business midway through 2023). These teams are supported at the corporate
level by a Global Energy Team which helps identify and promote energy reduction initiatives,
including through: training courses designed to promote strategies for reduced energy use;regional benchmarking sessions; regular communication through newsletters; an internalenergy savings collaboration site; and best practice sharing.

Some of the incremental changes made by
our Divisions to their facilities and processes
to reduce our energy consumption and improveenergy effciency include:
·
·
·
·
·
·

Installation of LED lighting and installation of lighting controls into the building
management system (BMS);
Equipment start-up/shut-down/idling procedures to achieve energy-savings during
production downtimes;
Compressed air leak identifcation and repair initiatives;
Use of ceiling fans to blend air temperatures evenly within our operations;
Computer-controlled utility and HVAC systems to allow for improved performanceand energy reduction;
Installation of energy metering and monitoring systems, a requirement for all our
manufacturing facilities;

·
·
·
·
·
·
·
·
·

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Door and dock seal repairs to reduce heat loss;
High effciency chiller and compressor upgrades;
Integration of air economizers and heat recovery units into HVAC systems;
Software-managed and occupancy-sensor-controlled lighting and energy effcient
lighting retrofts;
Use of solar panels at certain facilities;
Installation of insulation mattresses on equipment and heating units;
Recovery of waste heat from certain high heat processes for use in other areas;
Installation of variable frequency drives on motors and pumps; andParticipation in energy savings and incentives programs offered by utilities providers
in some jurisdictions in which we operate.

In 2023, our Global Energy Team implemented
an Energy Transformation Program tofurther evolve our energy effciency activities
and contribute to achieving our net-zerocommitment. The holistic Program creates amore standardized globa approach that aims
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the CO2 footprint through four phases aimed at
detailed investigation of areas for improvement:
Identifcation; Development; Implementation;
and Evidence Phase.
Our efforts to reduce energy consumption and operate facilities on a more energy effcientbasis forms part of our formal MAFACT system – the primary operational assessment audit
tool used to support our operational excellence. The MAFACT system establishes standards
for achieving operational effciencies, identifes benchmarks and promotes best practice
sharing among Divisions in Magna. The integration of energy management elements into acore operational assessment tool such as MAFACT is intended to reinforce the importanceof energy management throughout the organization and help realize potential cost savings.
In 2023, we implemented over 1,400 energy projects across all of our Operating Groups
which resulted in approximately 76,000 tons of CO2 equivalent in annual savings using thelocation-based method and approximately 62,000 tons of CO2 equivalent in annual savings
using the market-based method. Given the importance of energy optimization in meeting
our net-zero targets and to further incentivize our Divisions, we have established a separate
approval category for energy effciency and sustainability-related capital improvements. We
have also developed a phased-in renewable energy strategy focused on Europe and the
U.S. frst, followed by the other markets in which we operate. In 2023, 22% of our global
electricity purchase was from renewable energy sources evidenced by renewable Energy
Attribute Certifcates (EACs) or from on-site generation from photovoltaic (solar panel)or solar thermal systems. 103 of our Divisions currently use renewable electricity, with

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75 Divisions currently using 100% renewable electricity. In the near- and medium-terms,
adoption of renewable energy may increase our energy costs, but we are working to offset
the impact of such increases through energy use reductions. While we currently have a few
examples of renewable energy self-generation at certain facilities, self-generation is not asignifcant opportunity for us primarily since the vast majority of our facilities are leased, as
well as other factors such as footprint constraints for solar panels at certain owned facilities,
and/or facilities in locations with relatively clean electrical grids that make self-generation
economically unfeasible.

2.3.2 Water
We have implemented a 1.5% per year water reduction target, with the aim of reducing
water use 15% by 2030, in each case referencing 2019 as the baseline year. To date, wehave met this target, having achieved a reduction of 15% at the end of 2023. While we are
not a signifcant water user, achievement of water reductions would be expected to result incost savings, potentially by offsetting (in whole or in part) any increase in the rates charged
by applicable water utilities. Overall, we do not anticipate that any savings will be material.

2.3.3 Waste
We have also implemented a zero waste to landfll (“ZWTL”) target. Waste sent to landfll
bears both an economic cost borne by Magna, and an environmental cost borne by society
as a whole. Although achievement of our ZWTL target will help reduce or eliminate theeconomic cost, we do not anticipate any such savings will be material. In 2023 we diverted
96.2% of waste generated away from landfll.

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2.4 Resilience
The automotive industry
as a whole is investing ininnovations aimed at adapting
mobility products and service
solutions to a lower carbon
economy.
The risk mitigation factors in “Section 3 – ClimateRelated Risks and Risk Mitigation” and initiatives torealize opportunities discussed in this Section of the
Sustainability Report, together with factors addressedin “Section 4 – Our Business & Strategy” of our AIF, areexpected to promote our ability to adapt and succeed
in a lower carbon economy.

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Advancing Circular Manufacturing
Making any (and every) Magna part for reuse
Magna’s transmission plant in Bari, Italy, is a leader in circular manufacturing. With
900 employees, the division produces around 500,000 new transmissions annually.
Their Magna Commitment to Sustainability award-winning project explored thepossibility of converting sludge from grinding machines into reusable materials using
biological solvents.
The remanufacturing program began with approximately 5,000 transmissions
stored by dealerships across Europe. Through meticulous dismantling, inspection,and cleaning, the division successfully recovered and reused around 60% of coretransmission components, including gearsets, housings, and electronic parts.
Today, these remanufactured transmissions are easily identifable by their yellow
labels, cost about 40% less than new aftermarket transmissions, and save
approximately 45,500 kilowatt hours of electricity, reducing CO2 emissions. The
remanufacturing process is faster, maintains the same level of quality, and eliminates
the need for machining new transmission parts.

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Magna maintains both top-down and bottom-up processes for identifying andassessing sustainability-related risks within the governance structure described in“Section 1 – Sustainability Governance” of this Sustainability Report. In order to fully
understand the risks set out below, you should also carefully consider the risk factors
set out in “Section 5 – Risk Factors” in our AIF.

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3.1 Transition Risks and Risk Mitigation
3.1.1 Regulatory Policy Actions

Applicable near-term policy actions related toclimate change generally fall into one of thefollowing categories, each of which may havean indirect effect on Magna:
Average Fleet Emissions or Fuel Effciency Regulations: Governments in key auto
producing regions have set challenging average vehicle feet emissions or fuel effciency
targets which OEMs must meet, including the European Union (“E.U.”), China, and the U.S.,
as detailed below. We regularly monitor changes in regulation relating to emissions and fueleffciency as part of our strategic planning processes:
European Union: E.U. regulations generally require OEMs to have achieved E.U. feetwide average emissions of 95g CO2/km from 2021 through to 2024, which corresponds to
4.1 litres/100 km of gas or 3.6 litres/100 km of diesel. Vehicle manufacturers with an average
feet economy in excess of the target must pay an excess emissions penalty for each vehicle
registered within the E.U. The 2021 average emissions level forms the baseline for a further
15% feet-wide average emissions reduction from 2025 onwards; and 37.5% from 2030
onwards. In addition, in 2023, the E.U. approved its “Fit for 55” legislation to aggressively

increase such targets to a 55% reduction by 2030 and a 100% reduction by 2035 (asdiscussed below). Penalties levied on non-compliant OEMs may be passed on to vehiclebuying consumers, which could impact demand for such vehicles and thus demand for
Magna products supplied for such programs. Additionally, E.U. regulations contain incentives
aimed at promoting the development of Zero- and low-emission vehicles (“ZLEVs”). The
CO2 emissions targets applying to any particular OEM will be relaxed if its share of ZLEVs
registered within the E.U. in any year exceeds 25% from 2025 to 2029; however, suchincentives will be eliminated under the Fit for 55 legislation from 2030 onwards. The Fit for
55 legislation will be integrated into the E.U. member states through domestic legislation.
China: In China, effective July 1, 2021, stringent China VI emissions regulations addressing
particulate emissions were implemented, which could affect consumer demand for vehicles,or powertrain options for vehicles, that do meet the new emissions standard. For example,
in 2019, one of our equity-accounted joint ventures in China experienced a signifcant drop
in demand for one transmission model supplied to a Chinese OEM. One of the factors
underlying the drop in demand was the fact that the transmission would not have met
the China VI standard, had it been in effect at that time. In 2023, a new phase of China’s
emission standards was implemented whereby non-compliant vehicles are no longer
allowed to be produced, imported, or sold in China (subject to a 6-month grace period that
ended December 31, 2023).
United States: In the U.S., the current administration issued an executive order with a nonbinding target of 50% of all new vehicles sold in 2030 to be zero-emission vehicles (“ZEVs”),

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including battery electric, plug-in hybrid electric, or fuel cell EVs. Subsequently, the EPA
fnalized new vehicle emissions standards for passenger cars and light-duty trucks withmodel years 2023-2026 which increase in stringency through that period, and would resultin a feetwide average fuel economy of approximately 40 mpg in 2026. In March 2024, the
EPA issued its new emissions standards that would increase in stringency each year frommodel year 2027 to model year 2032. The new standards would result in an industry-wide
average target of:··

85 grams/mile of CO2 for light-duty vehicles by 2032, representing a 50% reduction inprojected feet average GHG emissions compared to 2026 model year standards, and274 grams/mile of CO2 for medium-duty vehicles by 2032, representing a 44% reductionin projected feet average GHG emissions compared to 2026 model year standards.

In addition, the U.S. National Highway Traffc Safety Administration (NHTSA) issued new
corporate Average Fuel Economy (CAFE) standards – regulating how far our vehicles musttravel on a gallon of fuel. The new CAFE standards for passenger cars and light trucks
manufactured in model years 2024-2026, would increase fuel effciency requirements by
8% annually (compared to 1.5% annually under previous standards) for model years 20242026 and increase the estimated feetwide average fuel economy by 12 miles per gallon formodel year 2026 vehicles, relative to model year 2021. In 2022, the U.S. also announced
stricter standards on smog-forming emissions from trucks, vans and buses starting in the2027 model year. The new EPA rules are more than 80% stronger than current rules andrepresent the frst update to clean air standards for heavy-duty vehicles in over 20 years.
The tightening emissions standards in the E.U., China and the U.S. are intended to promote
the transition to ZEVs. OEMs have been spending signifcant sums in R&D in order to meetthe higher regulatory standards. Although production of ZLEVs/ZEVs is accelerating due toregulatory requirements, to the extent that ZLEVs/ZEVs do not sell at the levels expected,

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production volumes may need to be reduced. Lower than forecast production poses arisk to our ability to recover pre-production expenses amortized in the piece-price of our
product, as discussed above.
Phase-Out of New ICE Vehicles: In addition to more stringent feet emissions and fueleffciency standards, the number of national and subnational jurisdictions committing to,or accelerating existing commitments to, phase-out of the sale or registration of new ICE
engines is growing. As part of its Fit for 55 legislation, the E.U. will require 100% reduction
in CO2 emissions by 2035 effectively banning the sale of new gasoline and diesel fueledvehicles in E.U. member countries by that date, with an interim reduction of 55% by 2030.
The United Kingdom introduced new regulations (the Zero Emission Vehicle (ZEV) Mandate)in January 2024 requiring 22% of all new cars and vans sold by OEMs in the UK to be zero
emission, with the percentage rising to 80% by 2030, and culminating in the complete banon the sale of new ICE vehicles by 2035.
In North America, Canada has accelerated its mandatory phase out of ICE and diesel
powered vehicles through a newly adopted regulation (the Electric Vehicle Availability
Standard) that requires all new sales of light-duty vehicles to be ZEVs by 2035; with interim
targets requiring 20% ZEVs from 2026, and at least 60% by 2030. Companies offering
vehicles for sale in Canada will be required to offer a growing percentage of their feet as
ZEVs starting in 2026 and increasing to 100 per cent by 2035.
In the US, the State of California’s, California Air Resources Board (CARB) has adopted theAdvanced Clean Cars II regulations. The regulations ban ICE-powered vehicles in California
by 2035, and include progressive targets for ZLEVs in the intervening years. Several US
States and the District of Columbia have existing laws that require state emissions policies
to mirror those of California. Currently 17 US states have adopted all or part of California’s
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adopted California’s Advanced Clean Cars II regulations: Colorado; Delaware; Maryland;
Massachusetts; New Jersey; New Mexico; New York; Oregon; Rhode Island; Vermont;
Virginia; Washington and the District of Columbia.
Given the long lead times for vehicle development such regulation and proposed regulation
are expected to increasingly impact OEM and automotive supplier product planning anddevelopment this decade, and have led to several OEM establishing EV targets for specifc
brands or their complete vehicle offerings. Each of our top six customers plan to reach 50%
EV production within the next 10 years. EVs accounted for approximately 13% of total of
global light vehicle production in 2023, and are projected to reach 43% by 2029 based on
current IHS Light Vehicle Production Forecasts.
Vehicle Restrictions in Congested Urban Centres: Municipal governments in a numberof cities around the world have introduced restrictions on personal-use vehicles in congested
urban centres, in an effort to reduce CO2 emissions and improve urban air quality. Examplesof the types of restrictions include: car-free zones; toll charges; and use restrictions bylicense plate. Continued expansion of such initiatives could reduce the demand for personaluse vehicles, which could affect our proftability. As a result of measurable air quality
improvements in many cities during COVID-19-related mandatory lockdowns/stay-at-homeorders, an expansion of restrictions on personal-use vehicles in urban centres is likely.
We attempt to mitigate applicable policy risks relating to climate change-related regulation
in a number of ways, including:··monitoring and evaluating global regulatory developments;
early-stage interaction with our OEM customers to understand their product priorities
and regulatory compliance requirements;··

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in-house R&D, including our ongoing analysis of megatrends and the “Car of the Future”,
combined with investment strategies in mobility and technology start-ups; andstrategic planning processes at both Operating Group and Corporate levels, including
Board oversight of strategic plans.

In terms of direct policy actions affecting our operations, we anticipate continued
strengthening of environmental regulations related to industrial emissions and dischargeof pollutants to air, water and ground. We currently face strict environmental regulations in
the countries where we operate and have developed a global environmental management
program in order to comply with or exceed regulatory standards. Our environmental
management program is regularly updated to address changing environmental laws andregulations. Refer to “Section 4.1 – Environmental Stewardship” in this Sustainability Reportfor a description of the program.
In considering the potential impact of the above or other climate-related policy actions,readers are encouraged to review the following risk factors in “Section 5 – Risk Factors”
in our AIF:
·
·
·
·
·
·
·

Regional Volume Declines
Deteriorating Vehicle Affordability
Consumer Take Rate Shifts
Misalignment Between EV Productionand Sales
Alignment with the “Car of the Future”
Growth of EV-focused OEMs
Risks of Conducting Business with
Newer EV-Focused OEMs

·
·
·
·
·
·
·

Fisker’s Ability to Continue
as a Going Concern
Impairments
Changes in Laws
Market Shifts
Customer Purchase Orders
Customer Pricing Pressure/Contractual Arrangements
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Over the medium- to long-term, carbon pricing initiatives may present a risk to ourproftability. According to the World Bank, in 2023 there were 73 carbon pricing initiatives
implemented or scheduled for implementation in 39 countries and 33 sub-national
jurisdictions, which would cover emissions representing 23% of global GHG emissions.
Currently, certain of our operations are impacted by two emissions trading schemes:··

E.U. Emissions Trading Scheme (ETS): Our Magna Steyr complete vehicle assembly
operations participate in the E.U. Emissions Trading Scheme which works on the ‘capand trade’ principle. A cap is set on the total amount of certain GHG that can be emitted
by the operators covered by the system. The cap is reduced over time so that total
emissions fall. Within the cap, operators purchases or receive emissions allowances,which they can trade with one another as needed. The limit on the total number ofallowances available ensures that they have a value. The price signal incentivizes
emission reductions and promotes investment in innovative, low-carbon technologies,
while trading brings fexibility that ensures emissions are cut where it costs least to do
so. After each year, an operator must surrender enough allowances to cover fully its
emissions, otherwise heavy fnes are imposed. If an installation reduces its emissions,
it can keep the spare allowances to cover its future needs or else sell them to anotheroperator that is short of allowances.
Ontario Emission Performance Standards (EPS) Program: While none of our facilities
are currently mandated to join the EPS Program, one of our Exterior Operating Groupfacilities in Ontario voluntarily joined the Program in 2022 and several other of ourOntario facilities are in the process of voluntarily opting in. The Province of Ontario
Emissions Performance Standards Regulation is used to determine an emissions limit

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that industrial facilities must meet each year, with the intent of, among other things,
encouraging Ontario’s industrial sector to reduce greenhouse gas emissions. Facilities
registered under the Ontario EPS must quantify and report their GHG emissions data to
the authorities, have such emissions data verifed and must comply with their emissions
limits. The compliance obligation for a facility under the Ontario EPS program is thedifference between its verifed total emissions and its verifed total annual emissions limit
imposed by the Ontario EPS program. A facility can satisfy its compliance obligation
either by reducing its GHG emissions or submitting a compliance instrument. The twocompliance instruments available are (i) excess emissions units (EEUs) where the facility
pays a carbon price per tonne of CO2e for exceeding the annual emissions limit; and(ii) emissions performance units (EPUs), which are credits earned by a facility for emitting
less GHG that its annual emissions limit under the Program. The Program aligns carbon
prices for future years with Canada’s federal benchmark, which will result in the price of
EEUs to increase annually.
The carbon pricing schemes discussed above have not signifcantly impacted ourproftability to date. We are pursuing energy reduction measures and developing
decarbonization strategies for our manufacturing facilities as detailed in this Sustainability
Report. However, over the medium- to long-term, carbon pricing initiatives could affectour proftability to the extent we are unable to implement cost-saving or energy reduction
measures within a timeframe and/or at a cost which enables us to offset or avoid the costof carbon pricing initiatives.

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3.1.2 Customer-Driven Policy Actions
A number of our OEM customers have set carbon reduction targets and are challenging
Tier 1 Suppliers to support such targets. Some such OEM targets and expectations are
more aggressive than our own decarbonization targets. In some cases, we are being
asked to quote the supply of future programs based on 100% renewable energy use for
production. Although we expect to meet or exceed our customers’ expectations, the inability
to do so within the timeframes expected could result in the loss of some future business.

3.1.3 Climate-Related Litigation
We do not currently believe that climate-change related litigation represents a signifcant legalrisk for us. However, if OEMs are adversely impacted by climate-change litigation, there is apossibility that Tier 1 Suppliers like Magna could face additional pricing pressure. Readers
are encouraged to review the “Customer Pricing Pressure/Contractual Arrangements” risk
factor in “Section 5 – Risk Factors” in our AIF.

3.1.4 Technology
Investments in automotive technologies that support the transition to ZLEVs can besignifcant, particularly in product areas such as battery systems for hybrid and EVs. While
our product strategy does not currently include battery systems or other components
which generate or store energy for ZLEVs, we have been awarded several battery enclosure
programs and currently offer a range of electrifed drivetrain products, hybrid dual-clutchtransmissions (“HDTs”), dedicated hybrid transmissions (“DHTs”), as well as complete
electric-drive (“e-Drive”) systems. We have also expanded our product offering into other

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areas relevant to ZLEVs – for example, in conjunction with a joint venture partner, we canoffer customers a complete EV platform. Our R&D spending for electrifcation solutions has
been signifcant over the last few years and is expected to continue to be in coming years
as electrifcation-related technologies continue to evolve. Additionally, our OEM customers
are making signifcant investments in the development of ZLEVs, which is impacting theirproftability and could lead to increased pricing pressure on us.
As ZLEVs increase their proportion of the overall vehicle market over the medium- to longterm, we expect our sales of manual transmissions and traditional DCTs to decline, andsales of HDTs, DHTs and e-Drive systems to increase. The increasing adoption of electrifed
drivetrain solutions adversely impacts our AWD and 4WD businesses over the long term,since it is possible to achieve AWD through the use of electric motors in hybrid or fullyelectrifed drivetrains. However, OEM product plans show mechanical AWD and 4WD
programs extending out for approximately the next decade. We seek to offset displacementof mechanical AWD and 4WD systems through increased sales of electrifed productofferings such as e-Drive systems.
Overall, we believe that the range of products we offer our OEM customers provides us witha competitive advantage and an effective hedge against the market uncertainties associatedwith the transition to ZLEVs. As illustrated below, a substantial majority of our products are“agnostic” with respect to the type of vehicle propulsion system used, and therefore remain
relevant to ZLEVs:

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ICE

Powertrain-AgnosticEV

Included in Magna’s portfolio

Power Electronics –EV, HV Hybrid

E-Drivetrain

Battery Pack

Interior Systems
and Seating

Body Structure

Sensors (ADAS)

Body Exterior (incl.
Lighting and Mirrors)

Driving Systems(incl. chassis)

Electronics – Other

Transmission

Engine Systems

ECUs/DCUs

Thermal Management

Exhaust Regulation Components

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In the case of drivetrain products, we view the know-how gained from our mechanicaldrivetrain expertise as being critical to our ability to deliver innovative electrifed solutions
that meet our customers’ needs. In addition to continuing to offer a range of mechanicaland electrifed drivetrain products, we aim to mitigate technology transition risks through:···early-stage interaction with our OEM customers to understand their product priorities
and regulatory compliance requirements;
in-house R&D including our ongoing analysis of megatrends and the “Car of the Future”,
combined with investment strategies in mobility and technology start-ups; andstrategic planning processes at both Operating Group and Corporate levels, including
Board oversight of strategic plans.

In considering the potential impact of the above or other climate-related policy actions,readers are encouraged to review the following risk factors in “Section 5 – Risk Factors”
in our AIF:
·
·
·
·
·
·
·
·
·

Intense Competition
Consumer “Take Rate” Shifts
Growth of EV-Focused OEMs
Risks of Conducting Businesswith Newer EV-Focused OEMs
Fisker’s Ability to Continue as a
Going Concern
Deteriorating Vehicle Affordability
Misalignment Between EV Productionand Sales
Alignment with the “Car of the Future”
Customer Purchase Orders·

Restructuring Costs
Technology and Innovation
Changes in Laws
Market Shifts
Dependence on Outsourcing
Impairments
Customer Pricing Pressure/Contractual
Arrangements
Investments in Mobility and·Technology Companies
Intellectual Property

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·
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3.1.5 Market
Some of the risks impacting the market for our products in the transition to a lower
carbon economy are described above under “Section 3.1.1 – Regulatory Policy Actions”
and “Section 3.1.4 – Technology”. Additionally, there are potential risks to the demand for
personal mobility vehicles, and thus for our products, from technology-driven shared mobility
solutions such as ride hailing and ride sharing.
To date, such shared mobility solutions have not had a material impact on the demand for new
vehicles and no such adverse effect is expected in the near- to medium-term. In any event,
our own strategy related to new mobility seeks to mitigate risks to our business and realize
opportunities based on the breadth of capabilities we can offer new mobility customers.
Additionally, in order to enhance our understanding of potential shifts in consumer behaviour,
we conduct our own analysis of various factors that are expected to drive future personaland shared mobility trends, including through:
·

·
·
·

monitoring and analysis of social, digital, demographic, regulatory, industry, geopoliticaland other trends which may create demand for and drive development of new
automotive and mobility technologies;
review of academic research;collection and screening of ideas submitted through innovation programs; andearly-stage interaction with our OEM customers and new mobility market entrants tounderstand their product priorities.

We do not currently anticipate long-term supply constraints on key commodities requiredby us in our business, including steel, aluminum or resin. However, production processes
for steel and aluminum are carbon intensive, with relatively scarce supply of low-carbon
alternatives.

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As the entire industry’s decarbonization and net-zero efforts increase, the price of lowcarbon steel and aluminum may increase in the near- and medium-terms until the supplyof low-carbon product is suffcient to meet growing demand. In the near- and mediumterm, the increasing production of ZLEVs may also strain supplies of the rare earth minerals
and other metals required for vehicle battery systems, which we do not supply, including
nickel, cobalt and lithium used in EV batteries, copper for EV charging infrastructure andrare earth metals for EV motor magnets. However, such supply constraints could help spurthe development of alternative battery technologies or low carbon fuels and/or promotetechnological breakthroughs that could facilitate market penetration of hydrogen fuel cellor other technologies. We intend to continue developing and offering solutions such as
e-Drive systems which are neutral as to electric power source (battery or hydrogen fuelcell stack) in order to mitigate potential risks related to supply constraints of rare earth
minerals or other commodities needed for current ZLEV power source technologies.
In considering the potential impact of market risks, readers are encouraged to review
the following risk factors in “Section 5 – Risk Factors” in our AIF:
·
·
·
·
·
·
·
·

Intense Competition
Consumer “Take Rate” Shifts
Deteriorating Vehicle Affordability
Misalignment Between EV Productionand Sales
Alignment with the “Car of the Future”
Growth of EV-Focused OEMs
Risks of Conducting Businesswith Newer EV-Focused OEMs
Fisker’s Ability to Continue as a
Going Concern

·
·
·
·
·
·
·
·

Supply Chain Disruptions
Quote/Pricing Assumptions
Commodity Price Volatility
Technology and Innovation
Market Shifts
Dependence on Outsourcing
Customer Pricing Pressure/Contractual
Arrangements
Investments in Mobility
and Technology Companies

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3.1.6 Reputation
Since light vehicles are contributors to global GHG emissions, Tier 1 suppliers like Magnamay face reputational risks from participation in the automotive industry. Examples ofsuch risk types include potential loss of business from sustainability-focused customers,
reduced investor demand for our shares, and challenges attracting talent. A number of
our OEM customers are embedding sustainability criteria in their sourcing decisions andcould reduce purchases from us if they perceive Magna to lag other suppliers with respect
to sustainability. Stakeholders, including investors and employees, as well as prospective
employees are increasingly focused on companies’ sustainability efforts. Investors may sellshares of investee companies perceived to be less sustainable. In addition, millennial andother components of the workforce want to work in companies they perceive as sustainable,
making it diffcult for companies to attract such talent if the company is perceived as lagging
in sustainability. However, OEMs and Tier 1 Suppliers have been proactively adapting toclimate change and transitioning to a lower carbon economy, as evidenced by the signifcant
spending on R&D and technological innovation to reduce CO2 emissions, particularly
through electrifcation and powertrain effciency, as well as the setting of decarbonization
targets in their own operations. At the same time, particular OEMs may be viewed as moreor less sustainable based on their sustainability strategies and commitment to transitioning
to a lower-carbon economy. Equally, particular vehicle models or even entire vehicle
segments may be perceived to be more or less sustainable. As a supplier of a broad rangeof systems to all major OEMs, we do not anticipate any consequences to our reputation
by virtue of the fact that we may supply to any particular OEM, vehicle or vehicle segment.
In any event, we believe that our R&D and technological innovation, which is focused onlightweighting, improved fuel economy and lower emissions, together with our sustainability
strategy, including our net-zero commitments, serve to mitigate potential reputational risks.

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3.2 Physical Risks and Risk Mitigation
3.2.1 AcuteWith the increased frequency and severity of extreme weather events associated with
Climate change, including foods, windstorms, wildfres, tornados, tsunamis, hailstorms andother natural weather hazards, we face the risk that such an event could cause signifcant
damage to one or more of our facilities or those of our customers and/or sub-suppliers.
While our primary concern in an acute climate event affecting one of our facilities would be
the safety and well-being of our employees, property damage and business interruption
would represent the primary fnancial risk.
An acute climate event that signifcantly damages one of our facilities, could disrupt our
production and/or prevent us from supplying products to our customers. Such an event
could lead to us incurring a number of costs, many of which may be unrecoverable, including:costs related to the physical repair of any damage to our facility; costs related to premium
freight or re-sourcing of supply; penalties or business interruption claims by our customers;
loss of future business and reputational damage; and higher insurance costs going forward.
Extreme climate events could also disrupt supply chains for the entire industry over thenear-, medium- and long-term. The National Centers for Environmental Information, a U.S.
federal agency, estimates that the number of billion-dollar weather and climate disasters in
the United States has risen signifcantly to an annual average of over 20 in the last fve years,

from an annual average of three per year in the 1980s. In recent years, a number of supply
disruptions resulting from extreme weather have occurred around the world, including:
·

·
·

·

a rare and extreme storm impacted the U.S. state of Texas that disrupted oil production
and thus supplies of resins and materials required for automotive seating. The storm
also forced three major semiconductor facilities clustered in the Austin, Texas area totemporarily shut down, which exacerbated the global semiconductor shortage;
fooding in central China that disrupted supply chains for commodities and forced theclosure of several automotive OEM plants;a typhoon in Malaysia that damaged Southeast Asia’s second-largest port, causing a
disruption in the semiconductor supply chain and causing some U.S.-based automotive
OEMs to temporarily suspend operations; andthe Rhine river, Europe’s most important commercial waterway, experienced bothbursting from heavy rainfall and snowmelt, as well as, low water levels from drought
conditions. The conditions halted shipping for extended periods, forced reduced cargoloads, and disrupted both inbound raw material and outbound product deliveries, which
impacted the German automotive industry, in particular.

Such events can cause shortages of critical materials, which in turn drives prices higher.
Efforts to mitigate the impact of such events often result in higher near-term costs until
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costs for substitute materials. As the frequency of such events increases, we may be forced
to maintain higher inventories of various materials and components required for production,
to minimize potential disruptions.
We maintain a global property risk control (PRC) program to support our efforts to mitigate
risks to our employees’ safety, physical property risks and potential for business interruption
due to extreme weather events. The program, which includes risk engineering with support
from a third party property risk engineering consulting frm, includes the following elements
to promote the physical resiliency of our facilities and minimize the risk of disruption to ouroperations: pre-screening of facility site selection; acquisition risk assessments; periodic
facility inspections; facility construction design review and recommendations; and training
and education. Our third party risk engineering consultant typically engages in over
200 physical on-site assessments annually to evaluate various risks, including those relating
to natural hazards and also conducts targeted analysis of areas of concern. Using the SwissRe NatCat database, the advisor has analyzed over 400 unique Magna locations to assessclimate related exposures, including: food, wind, storm surge, wildfre, tornado, tsunami,
hailstorm, lightning, temperature change, precipitation, sea level rise risk and water security.
The results of the analysis form the basis of discussions with our PRC group regarding
potential risk control recommendations to be implemented in our facilities.
In certain circumstances, the program extends the risk assessment to our direct suppliers
by identifying and evaluating potential exposures to our direct supply chain (including natural
hazards) which could potentially disrupt business operations. To augment our monitoring
capabilities, we use a third party software platform that, among other things, includes
live monitoring of supply chain risks, including weather events such as drought, foods,
earthquakes, landslides, and tropical storms. Where such supply chain exposures are

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identifed, a more detailed assessment may be performed to better understand the supply
chain risk, including further on-site assessment, where practicable.
In considering the potential impact of acute physical risks, readers are encouraged to review
the following risk factors in “Section 5 – Risk Factors” in our AIF:
·
·
·
·
·

Supply Chain Disruptions
Semiconductor chip supply disruptions and price increases
Regional Energy Supply and Pricing
Legal and Regulatory Proceedings
Climate Change Risks – Transition and Physical Risks

An extreme weather event that damages any of our manufacturing Divisions and results ininjuries or fatalities among employees at such Division could have a material adverse effecton our reputation and could result in legal claims being brought against us.
Climate change considerations may impact the availability of and premiums for insurance
coverage in general, and in particular, for properties in high-risk locations. Additionally, we
may need to self-insure a higher level of risk, which could result in a material adverse effecton proftability in the event of an extreme weather event which causes damage to one ormore of our facilities.

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3.2.2 Chronic
As part of our PRC program, we have retained an advisor to map our global footprint against
identifed earthquake, wind exposed/hurricane, food exposed and wildfre zones, as well
as areas with low water security, in order to assist us with footprint planning, as well as
our understanding of, and efforts to address, potential risks associated with such typesof natural catastrophes.

This footprint mapping exercise provided thefollowing conclusions:
Property Risk Concentrations: There are ten geographic regions (in Austria, Canada,
Germany, Mexico and the U.S.) in which we have concentrations of property/asset risk,
meaning multiple locations within a 35 km radius, and comprising approximately 46% of thetotal insured value (“TIV”) under our property risk program. All of the regions of concentrated
property/asset value are considered to be “Low” seismic hazard zones
and are not exposed to tropical cyclones.
Seismic Zones: We have operations in Austria, Germany, Slovenia, Slovak Republic,
Morocco, Portugal, India, Turkey, Japan, Italy, Romania, North Macedonia, China, the U.S.,
and Mexico comprising approximately 19% of the TIV under our property risk program,which are located in regions of “Moderately High” or greater seismic hazard. None of ouroperations are in regions where the seismic hazard is considered “Very High” or “Extreme”.

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Tropical Cyclone Zones: Operations in certain parts of Mexico, Japan, China, India, Korea
and the U.S. comprising approximately 4% of the TIV under our property risk program arelocated in hurricane risk Zone 1 to Zone 5, as per Munich Re’s Natural Hazards Assessment
Network (NATHAN) categorization. TIV by Tropical Cyclone Zones are as follows:

Munich Re (NATHAN) Tropical Cyclone Zone

Proportion of TIV

Zone 5: > 300 km/h

NIL

Zone 4: 252-300 km/h

NIL

Zone 3: 213-251 km/h

0.6%

Zone 2: 185-212 km/h

0.4%

Zone 1: 142-184 km/h

3.2%

Zone 0: 76-141 km/h

24.2%

No hazard: < 76 km/h

71.6%

Flood Zones: Flood risk is typically categorized as 50-year, 100-year, 200-year and
500-year food risks. Defnitions of these categories based on Swiss Re’s CatNet Global Flood
Zone (GFZ) categorization showing the number of our locations and the proportion by TIV foreach category are as follows:
Category

Flood Probability

Number of
Locations

Proportion of TIV
within 5 km Radius

50 year1 in 50 (2%) chance of occurring in a year

22

1.5%

100 year

1 in 100 (1%) chance of occurring in a year

68

10.8%

200 year

1 in 200 (0.5%) chance of occurring in a year

103

12.1%

500 year

1 in 500 (0.2%) chance of occurring in a year

36

2.7%

OutsideOutside recognized food zones

522

73.0%

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Climate change is associated with a rise in sea levels, which places properties located withina fve kilometre radius of the current coastline at greater risk of coastal fooding. A total of 13
of our Divisions are located fve kilometres or closer to a coastline and thus may be at higher
risk from the effects of climate-change related sea rise:

negligible. Wildfre risk is reviewed based on proximity toforests and grasslands with consideration of topography
and climate conditions.

No. of Divisions

Location(s)Body of Water

2

Michigan, U.S.

Lake Michigan

1Ohio, U.S.

Lake Erie

Water scarcity is a chronic condition in a number of regionsof the world, and it is expected to be amplifed due to theeffects of climate change.

1

California, U.S.

San Pedro Creek

1

Ontario, Canada

Lake Ontario

1

Liverpool, U.K.

River Mersey

1Bari, Italy

Adriatic Sea

1

Kocaeli, Turkey

Lake Sapanca

1

Tangier, Morocco

Atlantic Ocean

1

Santa Catarina, Brazil

Rio Piral1

Hangzhou, China

East China Sea

1

Taizhou, China

East China Sea

1

Kanagawa, Japan

Onda River

Two of such Divisions (Kocaeli, Turkey and Taizhou, China) representing less than 0.5% of TIV
are located within one kilometre of a coastline.
Wildfres
One of our Divisions located in Brazil, representing less than ≤1% of TIV, is considered as
being exposed to signifcant wildfre risk. All other wildfre risk is considered moderate to

Water Security

As part of our PRM program we conducted an assessmentof water security risk in 2022. Water security suggests thereliability/security of an acceptable quantity and quality ofwater, since water is a critical input in many production
processes as well as the lifeblood of sprinkler protection
systems. A reduction or failure of water supply could causea signifcant impact on operations in the affected region.
The methodology for determining water security exposure
was based on the “Baseline Water Stress” 4 of the World
Resources Institute (WRI) Aqueduct Global Maps 3.0,
that measures the ratio of water withdrawals to available
renewable surface and groundwater at the catchment scale.
Water withdrawals include domestic, industrial, irrigation,and livestock consumptive and non-consumptive uses.
Available renewable water supplies include the impact
of upstream consumptive water users and large dams
on downstream water availability. The indicator used is

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calculated by inverting the “Baseline Water Stress” scores and converted to a 0-100 scale torepresent “Water Availability” as a percentage. Low values represent water stressed areas,
due to either high water withdrawals or low water supplies.
Our assessment showed 61 locations in regions deemed to have “low” water security,
comprising approximately 14% of 2022 TIV at the time. The assessment indicated exposure
locations in China, Germany, India, Italy, Mexico, Spain and the United States. However,Mexico represented the most signifcant region for us in terms of exposure to water security
risks as approximately 50% of the affected locations were in Mexico. While we currently
attempt to mitigate the impact of water scarcity risks through water reduction and re-use
activities, including the use of treated waste water for irrigation of green areas on a site, thewater security analysis is used for additional discussions with our risk engineering consultant,including potential additional recommendations for action plans to mitigate water security
risks in the affected regions.
In considering the potential impact of chronic physical risks, readers are encouraged toreview the following risk factors in “Section 5 – Risk Factors” in our AIF:···

Supply Chain Disruptions
Regional Energy Shortages and Pricing
Climate Change Risks – Transition and Physical Risks

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Smart Energy Savings
Positive effects going beyond the division
Consumers who want to reduce their household energy bills often
install smart temperature sensors that automatically adjust the heating
and cooling system to save money and keep everyone comfortable.
The maintenance team Magna’s structures division in Ramos Arizpe,
Mexico, envisioned doing the same thing – but on a much bigger scale.
Today, the 130 temperature sensors throughout the facility’s offces andmanufacturing operations are controlled by a smart plant-wide HVAC
system that keeps everything at a pleasant 73 degrees.
This energy-conscious pilot project has conserved seven million kilowatt
hours of electricity at the division that makes chassis components
for several automakers. That same amount of electricity would power
approximately 1,600 electric vehicles for a year or be the emissions
equivalent of removing 1,100 gas-powered vehicles from the road.

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4.1 Environmental Stewardship

270+

Facilities ISO 14001
Certifed

25+
Facilities ISO 50001
Certifed

Magna strives to be an industry leader in health, safety
and environmental practices in all operations throughtechnological innovation and process effciencies tominimize the impact of our operations on the environment
and to provide safe and healthful working conditions. In
furtherance of this objective, Magna’s Health, Safety andEnvironmental Policy (“HSE Policy”) commits Magna to,among other things:··

complying with, and exceeding where reasonably
possible, all applicable health, safety and environmental
laws and regulations and conforming with our internal
standards based on generally accepted environmental
practices and industry codes of practice;
regularly evaluating and monitoring past and present
business activities impacting on health, safety andenvironmental matters;

·
·
·
·

·

·

improving the effcient use of natural resources,
including energy and water;
minimizing waste streams and emissions, including CO2e;
implementing environmental sustainability targets
as defned in the Magna Environmental Principles;utilizing innovative design and engineering to reduce
the environmental impact of our products during vehicle
operation and at end of life;
ensuring that a systematic review program is
implemented and monitored at all times for each of
our operations, with a goal of continuous improvement
in health, safety and environmental matters and zeroaccidents or environmental incidents; andreporting to the Board at least annually.

The full text of the HSE Policy is located on Magna’s website( www.magna.com).

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4.1.1 Environmental Compliance
Magna is subject to a wide range of environmental laws and regulations relating toemissions, soil and ground water quality, wastewater discharge, waste management
and storage of hazardous substances. Magna maintains a global environmental program

Audits & Inspections

Risk Assessment & Action Plan···

Each fnding identifed in an audit or inspection
is assigned a risk score, with the risk scoresof all fndings combined to establish an overall
environmental performance rating for the Division
The Division is provided a report containing
recommendations which are prioritized basedon the level of risk identifed in the risk assessment
The Division is required to develop a corrective action
plan to address the identifed risk

which consists of both internal and third party audits and inspections of our facilities
for compliance with local regulations, internal corporate environmental requirements
and industry best practices as detailed below:

Oversight, Performance Tracking & Reporting
·

·
·
·

·

Magna’s Environmental Department provides ongoing assistance to Divisionpersonnel in resolving action plan items, including by reviewing and approving
action plans that have been submitted to close-out identifed risks
Audit/Inspection fndings are also communicated to our Operating Groupmanagement to enhance oversight and commitment to resolving action items
A performance review takes place quarterly with Operating Group management
An escalation process is in place to deal with fndings that are not being resolved
on a timely basis, with additional environmental risk awareness training provided
to the relevant Division, where necessary
Magna’s Environmental Department provides periodic environmental complianceupdates to the GNSC

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General environmental awareness training isprovided to employees by Division management
as well as Magna’s Environmental Department
as part of ISO 14001 certifcation compliance.
In addition, Magna’s Environmental Department holds regular conferences forrepresentatives of our manufacturing facilities in order to:···

reinforce Magna’s commitment to environmental responsibility;communicate changes in local and regional regulations; andshare best practices with respect to environmental protection, compliance andsustainability initiatives.

4.1.2 Hazardous Waste and Industrial Emissions
We operate a number of manufacturing facilities that use environmentally-sensitive
processes and hazardous materials. We believe that all of these operations meet, in allmaterial respects, applicable governmental standards for management of hazardous waste
and industrial emissions. Occasionally our operations may receive a notice of violation orsimilar communication from local regulators during routine reviews. We have in the past andwill continue in the future to address any such notices promptly. Based on our preliminary
data, approximately 4% of the aggregate waste generated by Magna in 2023 was hazardous,
similar to 2022. We attempt to reduce the amount of hazardous waste that ends up in secure
landflls through: recycling, reuse or energy recovery initiatives. Approximately 91% of thehazardous waste generated by Magna in 2023 was diverted from secure landflls throughsuch initiatives.

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4.2 Fairness and Concern for Employees
4.2.1 Our Commitment to Magna Employees
We are committed to an operating philosophy based on fairness and concern for people.
This philosophy is one in which employees and management share in the responsibility ofensuring our company’s success. Our Employee’s Charter, a foundational document in ourbusiness, sets out this philosophy through the following principles:
·

·
·
·

Job Security – Being competitive by making a better product for a better price isthe best way to enhance job security. Magna is committed to working together with
employees to help protect their job security. To assist employees Magna will provide job
counselling and training, as well as employee and family assistance programs.
Safe & Healthful Workplace – Magna is committed to providing employees with aworking environment which is safe and healthful.
Fair Treatment – Magna offers equal opportunities based on an individual’s
qualifcations and performance, free from discrimination or favouritism.
Competitive Wages & Benefts – Magna provides employees with information whichenables them to compare their total compensation, including wages and benefts,
with those earned by employees of their direct competitors and local companies their
Division competes with for people. If total compensation is found not to be competitive,
it will be adjusted.

···

Employee Equity & Proft Participation – Magna believes that every employee shouldshare in the fnancial success of the company.
Communication & Information – Through regular monthly meetings between
management and employees, continuous improvement meetings and through various
publications and videos, we keep our employees informed about company and industry
developments. We also conduct regular employee opinion surveys to help facilitate
employee engagement and to receive valuable feedback from employees to help drive
continuous improvement.
The Hotline – Should an employee have a problem, or feel the above principles are notbeing met, we encourage them to contact the Hotline to register their complaint(s). Those
using the Hotline do not have to give their name, but if they choose to do so, it will beheld in strict confdence. Hotline Investigators will respond to those using the Hotline.
The Hotline is committed to investigating and resolving all concerns or complaints andmust report the outcome to Magna’s Global Human Resources Department. We also
maintain a confdential and anonymous whistle-blower hotline for employees and otherstakeholders that is overseen by our Audit Committee. See Section 4.5 – “Corporate
Ethics and Compliance” below for further details.

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We also maintain a Global Labour Standards Policy,
which codifes our existing practices consistent with our
Fair Enterprise culture. This Policy provides a frameworkfor our commitment to fundamental human rights
and international standards that help support positive
employee relations, including:
·

·
·

·
·
·
·

promoting the importance of diversity, inclusion,and respect for one another, regardless of personal
differences;
not tolerating harassment of any kind, including
physical, sexual, psychological or verbal abuse;ensuring employees do not face discriminationin accordance with the protections afforded byapplicable law, including discrimination based on
race, nationality or social origin, colour, sex, religion,
gender identity, disability or sexual orientation;condemning child labour;
rejecting forced or compulsory labour;
maintaining safe and healthy workplaces; andproviding employees with appropriate rest andleisure time.

We publish a Slavery and Human Traffcking Statement
setting out the steps Magna has taken to address therisk of slavery and human traffcking in our operations

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and supply chain. The statement can be found in the “Financial Reports & Public Filings” section of our website,at www.magna.com. Our commitment to our business and our employees garnered recognition as one of
Fortunes World’s Most Admired Companies in 2023 & 2024 in addition to the below:

Forbes: World’s Best
Employers (2023) – Our
7th consecutive year
receiving this accolade

Forbes: America’s Best
Large Employers (2023)

Great Place To Work®:
Turkey (2022 & 2023)

Mercier China:
Healthiest WorkplaceAwards (2022 & 2023)

Forbes: Canada’s Best
Employers (2023 & 2024)

Built in: Best
Places to Work
(2023 & 2024)

Open Company:
Certifcation from
Glassdoor

Austria, Canada & Mexico

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Zhaopin: China Best
Employer Award (2023)

Universum:
Most Attractive Employer
Award – Austria, Canada& Mexico (2023)

51job: 100 Excellence
Employer of China of2023; Excellence in
Women’s Leadership
Development (2023)

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4.2.2 Collective Rights
We are committed to providing workplace environments that promote the dignifed, ethical,
and respectful treatment of our employees, as refected in the standards contained in our
Global Labour Standards Policy and our Code of Conduct and Ethics (“Code”).
Our Global Labour Standards Policy articulates our respect for employees’ right to associate
freely and to choose for themselves whether or not they wish to be represented by a third
party in accordance with local laws. We operate both unionized and non-unionized facilities
across multiple regions, as well as having facilities where other forms of representative
structures exist, such as works councils, and/or where industry-wide tariff agreements
apply. In our core regions such as the Americas, Europe and Asia, we have a number oflocations formally represented by trade unions, where local collective bargaining agreements
are in place. Where such arrangements exist, we strive to maintain positive and productive
business relationships with these organizations, resulting in competitive industry agreements.
Employees in our unrepresented facilities beneft from a system of progressive and peoplefocused human resources policies, coupled with consultative concern resolution programs
which include our Fairness Committee, Employee Advocates, Employee Opinion Survey,
Open-Door Process and our Hotline, all designed to proactively address individual andworkplace issues in a constructive and respectful manner.

4.2.3 Magna’s Open-Door Process
Magna maintains a comprehensive Open-Door Process, whereby employees are
empowered to bring issues and concerns forward to leadership at all levels of theorganization, without fear of retaliation. This process enables management and employees
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Employee Opinion Surveys, focus groups, and local continuous improvement action plans,
focused on maintaining a positive workplace environment.
As a part of our Open-Door Process, we maintain Fairness Committees in many of our
North American and European manufacturing facilities, as well as at various manufacturing
facilities in India and China. These Fairness Committees enable employees to have manyof their concerns resolved by a peer review committee comprised of both management
and fellow employees. Most of our North American manufacturing facilities also have an
Employee Advocate who works with our employees and management to help ensure thatany concerns that arise in the workplace are addressed quickly and in accordance with our
Employee’s Charter, Global Labour Standards Policy and Operational Principles.

4.2.4 Leadership Development / Talent Management
We have implemented, and continue to enhance, our Leadership Development System
to help identify, train and develop future leaders with the skills and expertise needed to
manage a complex, global business. We have also based our talent management strategy
on our current business objectives and strategy and our understanding of the transformation
taking place in the automotive industry. Given that an effective workforce will increasingly berequired to be lean and digitally adept, we are focused on building such a workforce throughattraction and recruitment, professional development, succession planning, promoting
diversity and inclusion and preservation of our Fair Enterprise culture.

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Sustainability Governance4.2.5 Employee Training

To support our talentmanagement programs andemployee career development
we provide numerous learning
opportunities to our employees.
These include:
·
·

·
·

·

·

Required training for designated employees, including:Global Compliance, Legal and Ethics training (discussed
in section 4.5 of this Sustainability Report), including withrespect to our Code and supplementary policies;
Information Security/Cybersecurity and data classifcation;
Sustainability objectives and priorities, including genderequality, industry innovation and infrastructure, safety,
good health and well-being, which has been completedby almost 50,000 employees to date;Continuous learning opportunities supported by a global
team, with localized resources in our major footprint
locations in the following areas for employees on the
shop foor to senior management:
Manufacturing operations, technical skills, andapprenticeships;··

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Business and functional knowledge and skills;
Interpersonal skills, mentoring , and coaching.

Magna’s Leadership Development Framework is built
on best practices in the business and manufacturing
environment that includes multiple levels of incumbent
programs. All new employees are required to receive
compliance on-boarding training on Code and related
topics as part of their on-boarding process when joining··

the company. Finally, all new people managers receive
advanced ethics training; and all customer facing employees
receive advanced anti-trust training upon hiring.
In order to support our talent management programs andemployee career development, we provide numerous
training resources and opportunities for our employees.
These include:···

required training for designated employees with regard
to global compliance topics (discussed in Section 4.5of this Sustainability Report), including our Code andsupplementary policies;
required training for designated employees with respect
to various topics, including: information security/
cybersecurity and data classifcation;
training with regard to sustainability objectives andpriorities, including gender equality, industry innovationand infrastructure, and good health and well-being,·

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which has been completed by approximately 33,000of our employees to date;providing a Leadership Excellence Program (LE), built
on best practices in the business and manufacturing
environment;
online Magna Training Centres (MTCs) for Canada/USA,
Mexico, Austria, Germany, Czech Republic, Slovakia,
Poland, China and India. The MTCs offer programs
to develop technical, leadership and business skills to
support the learning and development needs of Magna
employees from the shop foor to senior management;
andmaintaining an online Learning Hub to provide employeeswith the ability to enhance and future proof their technicaland other skills.

Approximately 25% of our total workforce (i.e. all of ourwhite collar employees) receives e-learning training eachyear, consisting of one course on the Code (including the
topics of bribery, corruption, antitrust, and competition)
and a second course on one ethics-related topic selected
for that year. All new employees are required to receive
compliance on-boarding training on Code and related
topics as part of their on-boarding process when joining
the company. Finally, all new people managers receive
advanced ethics training; and all customer-facing employees
receive advanced antitrust training upon hiring.

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4.3 Diversity and Inclusion in our Workplaces
Magna is committed to attracting, retaining and developing under-represented talent acrossthe globe. In order to pursue this commitment, Magna’s identifed strategic pillars for Diversity
and Inclusion (“D&I”) success are reviewed by our Executive Management with the Chairs of
our Diversity and Inclusion Council. Periodic updates are provided to the Board of Directors
about how the company is progressing the D&I strategy.

Our key D&I priorities are to create expand
inclusion programs; cultivate an inclusive
culture; and to further strategic partnerships,
as discussed below:
4.3.1 Expanding Inclusion Programs
Our employees are critical stakeholders in our business. The principle of Fair Treatment,
outlined in our Employee’s Charter – one which we reinforce through employee meetings,
training and communications – has been a key element in fostering an inclusive workplaceat Magna. Any employee who feels that we are not living up to the principles of the Chartercan seek redress through the Magna Hotline.
We seek to abide by all applicable labour and employment laws, including those prohibiting
discrimination and harassment and those providing for the reasonable accommodation ofdifferences. We are committed to providing equal employment and career advancement
opportunities, without discrimination based on sex, race, ethnic background, religion,
disability or any other personal characteristic protected by law. This is addressed in our
Code documentation and training, which all Magna employees must complete. Building on
the foundation of awareness, education, and constructive dialogue established at Magna,
we are prioritizing the expansion of inclusion programs to support our employees along
additional dimensions of diversity.

4.3.2 Cultivating an Inclusive Culture
Our Executive Management continues to reinforce the importance of an inclusive and diverse
organization. We continue to roll out facilitated workshops to all leadership levels to better
equip leaders with tools and resources to drive inclusive behaviour. We also host “listening
sessions” to understand racial barriers and issues faced by diverse employees. We promoteand embed diversity through our talent attraction and management processes. We haveprovided diversity and inclusion training for certain employees and have made various D&I
tools and resources available for all employees. To further advance our D&I progress, wehave implemented three employee-led, volunteer resource communities: Race & Ethnicity(EDGE); LGBQT+ and Allies (PRIDE); and the Women’s eXchange. These communities
support the execution of Magna’s D&I strategy, raise awareness and help foster a more
inclusive environment. The employee resource communities provide, among other things,
opportunities for mentoring and career development. Our objective is to be an organization

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that enables every employee to reach their full potential. We are prioritizing ensuringconsistent outcomes and experiences for our employees.

4.3.3 Strengthening Strategic Partnerships
We continue to enhance our capabilities by working with diversity and inclusion thought
leaders, associations and non-proft organizations dedicated to the advancement of women,
racial minorities, and employees of diverse backgrounds; promotion of inclusive work
cultures; as well as strategies and actions to address the needs of a diverse workforce.
These partnerships help us to benchmark our activities and progress, as well as provide
insight into best practices and emerging topics for our D&I agenda. Recognizing theimportance of improving gender diversity within key technical career streams and to support
the development of the next generation of the talent in science, technology, engineering, andmathematics (STEM), we have formed strategic partnerships with a number of organizations
that promote gender diversity in technical career streams. Our current strategic partnerships
include: Automotive Women’s Alliance; Build a Dream; Centre for Automotive Diversity,
Inclusion & Advancement (CADIA); Catalyst; FIRST Robotics – Girls in STEM; her Career;
Institute of Electrical and Electronic Engineers (IEEE); Indspire; Inforum; KnowledgeStart;
National Society of Black Engineers (NSBE); Queen’s University Engineering Society; Societyof Hispanic Professional Engineers; Society of Women Engineers (SWE); WISE (Womenin Science and Engineering); and Women in Manufacturing. We also participate in various
automotive advisory groups to ensure the focus on Diversity and Inclusion in the industry
remains strong. We are leveraging the experience of organizations focused on inclusion
to ensure Magna continues to be positioned as an employer of choice and to enhance
our partnership criteria to embed diversity and inclusion into evaluations, selections, andagreements.

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4.3.4 Gender Diversity
We are continuing to progress our agenda to increase the number of women in Magna. On
a global basis, approximately 28% of the employees in our wholly owned operations are
women. A total of approximately 4,958 employees in our wholly owned operations occupy
critical roles with 885 of such employees, or 18%, being women. Both the percentageof women in our wholly owned operations, and the percentage of women in critical roles
increased slightly from the previous year. Underrepresentation of women in our workforce
is most pronounced in IT, operations, and product engineering career streams, which
is a consistent trend throughout the automotive industry. We recognize that there are
improvements to be made and we are pursuing strategies to accelerate the progressionof women, in director and managerial level roles, and in our most critical operational andtechnical roles, where there is the greatest level of underrepresentation.
As part of our succession planning program we continue to identify high-potential,
diverse talent candidates and implement accelerated development plans to support theirprogression to advanced roles. During talent and succession discussions, there is anincreased level of focus on the number of women and diverse candidates nominated into
each of our succession pools.
In addition, the Board as a whole continues to advocate for improved gender representationand other diversity in leadership and other critical roles, as well as STEM career streams.
In addition to their strong advocacy, the female directors of the Board, currently representing
38% of our Board of Directors, have also sought opportunities to mentor and share
their experiences with the company’s high-performing female employees. Recognizing
the important example set by the Board with respect to its own composition, the Board
adopted a Board Diversity Policy (located in the Board Charter) targeting gender parity by

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December 31, 2023, subject to a minimum of not less than 30% female director prior tothat time, and successfully achieved this target. Consistent with the recommendations of
the Canadian Coalition for Good Governance, gender parity will be achieved if the balance
between male and female directors ranges between 40% and 60% over a rolling three-yeartime frame. As of May 9, 2024, the percentage of women on the Board will be 42%, assuming
election of all nominees for Magna’s annual meeting of shareholders. In addition to theBoard gender representation discussed above, 42% of nominees for election at Magna’s
annual meeting of shareholders are diverse nominees (based on LGBTQ+ or being an
underrepresented minority in their home country).

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4.4 Occupational Health and Safety
4.4.1 Health and Safety Standards and Compliance
Our health and safety program at our Divisions must include specifc areas of risk
assessment and evaluation that at a minimum includes: machinery and equipment
safety; incident and accident management; personal protective equipment; emergency
preparedness policies and action plans; fre protection; ergonomics; mental health/stress;
industrial hygiene and handling of chemical/biological substances; and working at heights
and confned space.
Our commitment to providing a safe and healthful work environment is fulflled through aregular program of health and safety audits and inspections of our global facilities. These
audits and inspections cover the specifc minimum topics listed above. Audits are designed
to address documentation requirements, while inspections assess physical hazards. Audits
and inspections are conducted on-site and followed with a report requiring the facility todevelop an action plan to address defciencies or best practices. The action plans arereviewed quarterly by senior Operating Group management.
The compliance program incorporates international and regional standards, including:
ISO 45001, Canadian Standards Association (CSA), American National Standards Institute(ANSI), Conformité Européenne (CE), as well as country-specifc standards. Audits andinspections are conducted by specialists with knowledge of Magna’s standards andcountry-specifc requirements. Legislative changes, accident trends and changes to industry
standards are incorporated into the program as part of the annual review of the programand updates of audit requirements are conducted every three years.

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The key elements of the program are detailed below:

Audits & Inspections

Risk Assessment & Action Plan···

Each action item identifed in an audit or inspection
is assigned a risk score, with the risk scores of allaction items combined to establish an overall healthand safety performance rating for the Division
The Division is provided a report containing
recommendations which are prioritized based on
the level of risk identifed in the risk assessment
The Division is required to develop a corrective
action plan to address the identifed risk

Oversight, Performance Tracking & Reporting
·

·
·
·

·

Our Health and Safety Department holds regular conferences with representatives of ourDivisions to reinforce our commitment to providing a safe and healthful work environment,
as well as to share best practices with respect to occupational health and safety. An
employee who believes we have not fulflled our promise to provide a safe and healthfulworking environment can seek redress through the Magna Hotline.

Magna’s Health and Safety Department provides ongoing assistance to Divisionpersonnel in resolving action plan items and also reviewing action items that have been
submitted for closure from Divisions
Audit/Inspection fndings are also communicated to our Operating Group management
to enhance oversight and commitment to resolving action items
A performance review takes place quarterly with Operating Group management
An escalation process is in place to deal with action items that are not being resolved ona timely basis, with additional health and safety risk awareness training provided to therelevant Division, where necessary
Magna’s Health and Safety Department provides periodic health and safety complianceupdates to the TOCC

4.4.2 Ergonomics Program
Magna is committed to minimizing and eliminating ergonomics risk factors. A key programfor supporting employee well-being is our ergonomics program which aims to reduce therisk of musculoskeletal injuries. Managed by each Division’s ergonomic committee andwith the support and guidance of corporate ergonomists, the program regularly evaluates
Division ergonomics against a set of established criteria.

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4.5 Corporate Ethics and Compliance4.5.1 Code of Conduct and Ethics
We are committed to conducting business in a legal andethical manner globally. Our Code, which applies equallyto all our directors, executive offcers and employees,
articulates our compliance-oriented values and expectations.
The principles of the Code have been and continue tobe reinforced by our Chief Executive Offcer, Executive
Management, Operating Group management and the Board.

The Code addresses standardsof conduct in a number of
specifc areas, including:
·

·
·
·

how to report suspected violations of the Code, andprohibiting retaliation against persons who report such
violations in good faith;
respect for human rights, diversity and inclusion;
conducting business with integrity, fairness and respect;
giving and receiving gifts and entertainment;

·
·
·
·
·
·
·
·
·
·
·

complying with all laws and regulations, including
anti-corruption/bribery and antitrust/competition laws;
lobbying and political contributions;full, accurate and timely public disclosures, including
fnancial reporting;prohibiting insider trading;compliance with environmental, and occupational
health and safety laws;
protecting personal data;
respect for human rights, diversity and inclusion;
careful communication, and protecting confdential
and personal information;
managing conficts of interest;
giving and receiving gifts and entertainment; andcompliance with related corporate policies.

The Code, which is disclosed on the “For Employees”
section of our website ( www.magna.com) and posted
on our employee intranet in 26 different languages, isreviewed regularly with all amendments approved by the
Board. We have also supplemented the requirements of
the Code through the adoption of policies covering specifc

topics, including: bribery and improper payments, toolingpractices, gifts and entertainment, anti-retaliation, careful
communication, conficts of interest, sanctions and tradeembargoes, antitrust and competition, data privacy, and the
conduct of internal ethics investigations (all of which are alsoavailable on our website ( www.magna.com)).

4.5.2 Global Compliance Program

In order to help our employees understand the values,
standards and principles underlying our Code, we have
implemented a global compliance program (the “Program”)
overseen by the Audit Committee, which includes trainingof employees through different modalities (e-learning live inperson, and virtual instructor-led) on various topics relating
to compliance and ethics. We also provide specialized67

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compliance training modules which target specifc functional audiences and high-risk
regions. In addition to providing training on compliance and ethics topics generally, these
specialized modules are designed to be interactive and incorporate real-life scenarios andexercises, which we believe amplify our Program expectations and resonate more powerfully
with participants.
The Program is supervised by the Magna Compliance Council (“Compliance Council”), a
body that includes key corporate offcers representing our fnance, legal, human resources,
operations, internal audit, sales and marketing, technology, information, research anddevelopment, and compliance functions. The Compliance Council is tasked with, among
other things, providing overall direction for our Program, approving key initiatives andensuring that the required elements of our Program are being carried out globally by ourcross-functional Operating Group Compliance Committees.
For the third year in a row, in 2024 Magna was selected as a World’s Most Ethical Companies
Honoree® by Ethisphere, a global leader in defning and advancing standards of ethicalbusiness practice.

~40,000 ~100%~100%

of customer facing
employees completed
antitrust training since 2015of new or recently promoted
people managers completed
advanced ethics training
since 2015

employees completed
annual Code of Conduct
e-learning in 2023

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4.5.3 Magna Hotline
The Magna Hotline is a whistle-blower hotline. The Hotline is confdential and reporters canremain anonymous (except where local law requires disclosure of a reporter’s identity), andis available for employees and other stakeholders such as customers and suppliers at alllevels of our supply chain to make reports by phone or online at any time in 27+ languages.
Reports are received and tracked by an independent third party service provider. Reports
to the Magna Hotline (other than reports of an HR nature) are reviewed by our Internal Audit
Department and, when appropriate, an investigation is conducted in accordance with our
Policy on Internal Ethics Investigations. Investigations are conducted by Magna’s Internal
Audit Department, Corporate Security team, In-House lawyers and/or external counsel(where applicable). We maintain an Investigations Oversight Committee, a sub-committeeof the Compliance Council, which meets quarterly (and on an ad hoc basis, as needed)
to review such investigations to ensure consistency of discipline and promote early
awareness and oversight. The Audit Committee receives quarterly presentations from theVice-President, Internal Audit regarding Magna Hotline activity and details of compliance,
fraud, fnancial reporting, and other investigations (other than HR-related investigations).

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4.6 Lobbying & Political Engagement
Magna is committed to upholding the highest
standards of integrity in our lobbying activities
and political engagement. Our approach to
conducting such activities in accordancewith applicable law and ethical norms, and inalignment with our sustainability commitments,
is as follows:
4.6.1 Core Commitments
Our core commitments in this area are:··

Lobbying: Magna pledges to comply with applicable law and uphold the highest levels
of integrity in all lobbying efforts. Our lobbying strategies and practices are designedwith the best interests of our stakeholders in mind and refect thecore values of our company. We are committed to honest and ethical engagementwith policymakers.
Political Engagement: Magna is committed to being a responsible corporate citizen,
which includes ensuring compliance with applicable law regarding political contributions
and expenditures.

·

Comprehensiveness of Commitment: Our commitment to integrity in lobbying is
holistic, encompassing all areasof our business and supported by senior management. A dedicated governancestructure ensures adherence to this strategy, with accountability assigned at thecorporate level.

Our strategy supports Magna’s interest in promoting public policies relevant to Magna andeducating policymakers about our business, while complying with all relevant laws andregulations governing lobbying and political contributions or expenditures for federal, state,
or local elections, including the reporting and disclosure of such amounts.

4.6.2 Implementation Measures
In order to give effect to our commitments we undertakea number of measures:···

Disclosure: Detailed information about our lobbying activities as required by law.
Approval Procedures: Magna has established a pre-approval procedure (“Disclose It”
reporting system) for expenditures or government offcials.
Stakeholder Engagement: While our strategy is comprehensive and supported bymanagement, we recognize the importance of involving stakeholders in the development
and discussion of our lobbying strategies at the corporate level. Efforts to enhance
stakeholder involvement are ongoing.

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Magna will comply with all applicable laws and regulations governing campaign fnance,
political contributions, or expenditures for elections and political activities, including reportingand disclosure requirements. Magna regularly consults inside and outside legal counsel toconfrm its political expenditures and other political and lobbying activities are undertaken
in compliance with applicable law and this strategy. Magna’s lobbying strategy is subject
to regular review and updates to refect changes in legal requirements, and industry
best practices.

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4.7 Data and Cybersecurity/Privacy
4.7.1 Enterprise Cybersecurity
Our enterprise cybersecurity strategy was developed by our Information Security, Risk and Compliance Department (“ISRC”)
which ultimately reports to our EVP and Chief Digital and Information Offcer. The strategy has been designed using guiding
principles from our Code as well as enterprise risk considerations and aligns with industry standards including the National
Institute of Standards and Technology, relevant ISO standards, and applicable customer requirements. Our Board has risk
oversight responsibility for Magna’s enterprise IT/information security systems and cybersecurity program and receives
reports regarding the program at periodic meetings.

Our cybersecurity initiatives are based on fve key considerations:

Identify

Protect

DetectRespond

RecoverDevelop an
organizational
understanding ofcybersecurity risk tosystems, people, assets,
data, and capabilities.

Develop and implement
appropriate safeguards
to ensure against
cybersecurity risk andcontinue to delivercritical services.

Internal and external
24 × 7 monitoring of
all information traffc
for cyber-attacks,
including ransomware
and other malware.

Our Security Operations
Centre has appropriate
incident response plans/
processes and thenecessary resources andexpertise to respond to
detected threats.

Our Security Operations
Centre works with IT
operations to recoveras quickly as possible
by rebuilding affected
systems and restoringdata back-ups.

We are committed to working with our customers andother stakeholders to ensure that appropriate cybersecurity
standards and requirements are continually monitored
and implemented as required. In addition, we ensure that
we comply with all governmental rules and regulations
regarding cybersecurity or privacy regulations (such as
GDPR as defned and detailed below), which directly affectcybersecurity requirements. Our selection process for third
party (e.g. Cloud-based) services includes a due diligenceapproach that ensures that such services are evaluatedusing industry standard security assurance approaches toassess and address the risks associated with third party
technology services and aligns with our overall approach to
cybersecurity.
We regularly evaluate and adjust our information security
management strategy based on a variety of considerations
including risk assessments, continuous monitoring andperiodic independent cybersecurity maturity evaluations.
This enables the ISRC to identify and prioritize responses
to residual risk arising from changes to our business or the
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implemented centralized enterprise cybersecurity policies, compliance measures, as wellas training and awareness programs designed to ensure that our cybersecurity strategy
is executed to minimize our exposure.
Governance of cybersecurity over our shared global telecommunications and computer
infrastructure is centralized under the ISRC. The ISRC facilitates identifcation of our risk
exposures and mandates the implementation of appropriate security controls. We haveprocesses in place to ensure that our IT systems receive appropriate upgrades, including
patching and other protective measures, in a timely manner.

4.7.2 Product-Embedded and Solution Software Cybersecurity
In addition to the above centralized initiatives, our decentralized operating model assigns
cybersecurity accountability to our Operating Groups with respect to risk/security issues
inherent in products. However, the ISRC provides various standards-based approaches
to assist our Operating Groups in assessing their respective product cybersecurity risk
and maturity. From this assessment, our Divisions and Operating Groups are then able todetermine appropriate cyber solutions that may be required. Our Technology Committee
supports the Board through the committee’s risk oversight responsibility for Magna’s
product-embedded or solution software cybersecurity.

4.7.3 Privacy
tes our approach to the privacy of our employees and protection of their personal
information. We only collect, use and disclose personal information for legitimate businessor employment purposes, as required by law, or with an individual’s consent. In addition,
like any other asset, confdential information which includes trade secrets and proprietary
information is a valuable part of our business and we aim to safeguard it.

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Magna has established a data privacy organization and program in our divisions in the E.U.,
Morocco, Brazil, Thailand, and China. The program includes the issuance of policies andprocedures, employee training, gap assessments and the implementation of a data privacy
management system.
In addition to our general privacy and confdentiality commitments, our Global Data Privacy
Policy (the “Privacy Policy”) has been established. The Privacy Policy is designed to guideour compliance with, among others, the E.U. General Data Protection Regulation (“GDPR”),
China’s Personal Information Protection Law, the Brazilian General Data Protection Law and
Thailand’s Personal Data Protection Act.
The Privacy Policy sets out general data protection principles, responsibilities of data
controllers and processors, circumstances under which personal data can be transferred,
rights of data subjects and actions that must be taken in case of data breach, as well as
addressing data retention periods. The Privacy Policy is accompanied by a variety of formal
and comprehensive procedures, developed and overseen by our Compliance Council.
A training program has been implemented to address general data privacy awareness for all
employees and provide more specifc rules for those employees who are handling personal
data as part of their daily work. Finally, those employees across our organization responsible
for handling privacy requests by data subjects or for addressing data breaches have been
provided with the tailored training and resources to carry out such responsibilities.
Furthermore, Magna continues to monitor legislative and regulatory developments in the
fast-changing data privacy landscape in other regions with Magna operations.

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4.8 Supply Chain Responsibility
4.8.1 Supplier Code of Conduct
We hold ourselves and our suppliers to high ethical standards. Our Supplier Code of Conduct
and Ethics (“Supplier Code”) is a foundational document in our business relationships with
suppliers. It outlines the principles we apply internally at Magna through our Code, as well as
expectations we have for every company that supplies goods or services to Magna, relating
to, among other things:···

ethical business conduct, such as compliance with antitrust/competition, anti-corruption/bribery and export controls laws; confict minerals reporting; avoidance and reportingof conficts of interest; and protection of Magna intellectual property and confdential
information;
employee rights, including those rights set out in our Employee’s Charter, Global Working
Conditions and Global Labour Standards Policy; andenvironmental responsibility and compliance.

The Supplier Code forms an integral part of our overall contractual relationship with our
suppliers. We expect the standards set out in the Supplier Code to be met by our suppliers,
even in jurisdictions where meeting such standards may not be considered part of the usualbusiness culture and a failure to do so can result in the termination by Magna of the supply
relationship. The full text of our Supplier Code is available on our website ( www.magna.com).
We continue to support and participate in industry efforts to develop common standards
relating to business ethics, environmental standards, working conditions and employee

rights. We will continue to engage with our suppliers to raise awareness of the importanceof sustainability in our supply chain.

Human Rights and Global Working Conditions in our Supply Chain
Magna seeks to fully comply with all applicable labour and other laws in all jurisdictions in which
we operate. While such jurisdictions have a range of different laws, Magna’s policy framework
applies equally to all our operations across the globe to establish a common and consistentbaseline for the fair treatment of our own employees, as well as those in our supply chain. This
policy framework, which includes our Code, Supplier Code and Global Labour Standards,
articulates our fair enterprise culture and serves as a general endorsement of the humanrights and international labour standards refected in the United Nations Universal Declarationof Human Rights, International Labour Organization (“ILO”) Fundamental Conventions, andILO Declaration on Fundamental Principles and Rights at Work. Our policy framework, which
is discussed in greater detail in Sections 3.2.1, 3.5.1 and 3.7.1 of this Sustainability Report,
refects an express and unequivocal prohibition on the use of forced or child labour – bothinternally and by suppliers. We expect that our supply chain will adhere to our Global Working
Conditions and our Supplier Code, which have a strong focus on protection of human rights
and working conditions, including prohibitions on the use of child, underage, slave or forced
labour. Our Global Working Conditions are an integral part of our supplier package thatemphasize the importance of maintaining global working conditions and standards that resultin dignifed and respectful treatment of all employees within all our global operating locations,73Summary
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as well as those of our supply chain. A failure by any of our suppliers to comply with its
terms can result in the termination by Magna of the supply relationship.
With respect to third party service providers and staffng agencies, we maintain a numberof oversight and due diligence practices, including:
·

·

·
·
·

a global policy on “Doing Business with Staffng Agencies and 3rd Party Service
Providers” that sets out best practices when doing business with 3rd party vendors
supplying labour-related services to Magna, including: due diligence requirements;
prohibition on the use of fees or worker debt arrangements that might result in conditions
leading to debt bondage; requirements for transparent employment terms; andconducting checks on contract workers for the purposes of verifying ethical and legallycompliant employment conditions;service agreement templates for use with 3rd party labour suppliers to ensure that
contingent workers are subject to the same ethical standards applicable to Magna’s
regular full-time employees. The service agreement templates include, among otherthings, robust audit and investigation provisions;a system for reporting non-compliant suppliers and which is designed to ensure that
we do not do business with prohibited suppliers; anda global Labour and Employment Audit program designed to assess HR compliancerelated issues, policies, and practices at the local
Divisional level and adherence to both Magna policy and local laws, in a variety of areas,
including fair working conditions and prevention of forced and child labour.

In addition, during the frst half of 2024, we are planning to roll out mandatory enhanced
compliance training on responsible sourcing and global supply chain laws, covering such
issues such as child labour, human traffcking, forced labour, and the responsible use ofthird party labour brokers.

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4.8.3 Supply Chain Management
4.8.3.1 General
Magna’s supply chain management group focuses on a number of elements that we
believe are integral to world class supply chain management, such as: standardized supplierquality and delivery performance ratings; specifc roles and responsibilities; processes
and standards; global training; and risk management. The supplier quality and delivery
performance ratings have been established to help optimize business award decisions.
We use cross-functional sourcing teams, in the majority of our sourcing decisions, to help
ensure compliance with our internal standards when we place new business within our
supply base. In order to promote awareness of the key elements of our supply chain risk
management program, including the requirements in our Supplier Code, we provide global
on-line training on an ongoing basis to internal purchasing employees.
We continue to increase digitization of our supply chain management, including focusing
on spend analytics and online transportation risk tracking, as well as electronic tagging andtracing of certain assets.
As part of our strategy to improve sustainability performance across our supply chain, weare developing an ESG component for our program award criteria, as discussed under“Supplier Reviews” below.

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Our governance framework and key activities with respect to supply chain ESG risk management is set forth below:

Governance
Cross-functional team led by Supply Management, a function within Procurement, with cross-functional representationfrom legal, ethics and compliance, human resources, sustainability and other functions, that determines Magnastandards and oversees global implementation and execution of key due diligence and other supply chain activities

Policies··

Supplier Code Global Labour
Standards
Terms & Conditions Sourcing
Requirements

Engagement····

Day-to-day direct interactions with
suppliers
Dedicated Supplier ESG Roundtables
Communications through Supplier portal
Integrated Supply Management withOperating Group Procurement leaders
Live “All supplier” communications

Assessment & Monitoring
·
·

·
·
·

·
·

Supplier Self-Assessment
Questionnaires (“SAQs”)
Third-party AI platform for supply
chain mapping, supplier scoring,and live alert monitoring
Supplier emissions reporting platform
Other third party tools and databases
RSCI on-site audits, where necessary
Internal or customer initiated risk
assessments
Grievance mechanism with dedicatedsupplier tierInternal Supplier ratings to support
sourcing/desourcing decisions

Investigation & Remediation···

Investigation and case management
system to gather information andexecute control and oversight ofany necessary mitigating actions
Corrective action plans generated
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4.8.3.2 Supply Chain ESG – Continuing to Enhance Transparency andSustainability Performance
In order to enhance transparency into our supply chain and work towards a moresustainable supply chain, we have made several enhancements to our supply chain
management program in recent years:
·

·

·

·

We have implemented a third party supply chain risk monitoring and mapping tool, whichmonitors and provides real-time alerts affecting supply chains, including: human rights
risks (i.e. forced/child labour), operational issues, fnancial or legal issues, CSR incidents(i.e., environmental incidents, poor working conditions), industrial accidents, productincidents (i.e., recalls), cyber risks, natural disasters, governance risks (i.e., corporate
wrongdoing), labour unrest, and political unrest;
We request our suppliers to report on their energy usage and emissions – a critical stepin better understanding our Scope 3 emissions and executing on reductions in Scope 3
emissions in order to meet our near-term and net-zero science-based targets;
We invite certain suppliers to respond to self-assessment questionnaires through NQC,
a third party supply chain management organization who will be responsible for datacollection and analysis via their SupplierAssurance platform. The self-assessment
questionnaires (currently SAQ 5.0) which is a standard automotive industry sustainability
questionnaire developed by global OEMs. The SAQ which Magna completes forrequesting OEM customers annually, requires information, including documentation,
relating to several topics, including, among other things: sustainability management;
working conditions and human rights; health and safety; business ethics; environmental
compliance; supplier management; and responsible sourcing of raw materials, as well as
questions specifcally addressed to German Act (as defned below) compliance;
During 2023, we enhanced our complaints mechanism, the Magna Hotline, to create
a separate submission tier for our supply chain;

·

·

·

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We have launched Supplier Roundtables to engage key suppliers on topics including
energy reduction, decarbonization, sustainable materials and products, supply chain
resiliency, and human rights and working conditions;
Magna is a founding member of the Responsible Supply Chain Initiative (RSCI), an
association of automotive OEMs, Tier 1 Suppliers and industry associations, which
has established an assessment program for due diligence in the automotive supply
chain relating to social compliance, occupational safety and environmental protection.
We initiated several RSCI audits of suppliers in 2023 and are planning to grow ourthird-party audit program in 2024. Magna has also had several of its employee trained
as RSCI auditors to support our supply chain due diligence activities; andWe have been accepted as a member company of the German automotive industry
dialogue (“Branchendialog Automobilindustrie”). The industry dialogue is a multi-stakeholder
forum consisting of relevant participants from the automotive industry as well as civil society
with expertise on human rights risks in automotive supply and value chains.

We continue to monitor compliance withemerging supply chain regulations that apply
to our operations, including:·the German Supply Chain Due Diligence (Lieferkettensorgfaltspfichtengesetz (LkSG))(the “German Act”) which came into force January 1, 2023, and which imposes a dutyon companies, including several Magna subsidiaries in Germany, to make reasonable
due diligence efforts to determine if there are violations of human rights or environmental
obligations in their own business operations or in the their supply chain. We haveappointed a Human Rights Offcer (HRO) to oversee our compliance with the German

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·

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Act. Senior personnel that reports directly to the HRO, coordinates implementation ofactivities implemented to meet obligations under the law, together with a cross-functionalteam that includes representatives from our compliance, legal, HR, environmental andpurchasing functions. We also have a global advisory board comprised of senior Magnaleadership that provides guidance and receives periodic reports on the activities of the
HRO and the German Act compliance team. We are in the process of fnalizing a global
Company Statement focusing on Human Rights and Environmental issues as required by
the German Act. Our frst report for our subsidiaries under the German Act will be fled in
Spring 2024;
the U.S. Uyghur Forced Labor Prevention Act, which requires companies, starting in
June 2022, to rebut the presumption that goods coming from Xinjiang, China were notmade using forced labour, by meeting forced labour due diligence standards set forthin the Guidance published by U.S. Department of Homeland Security;
Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act(the “Canadian Forced Labour Act”) which came into force January 1, 2024. Magna’s
frst reporting obligation under the Canadian Forced Labour Act will arise in May 2024;
the E.U. Corporate Sustainability Due Diligence Directive (CSDDD) approved by theEuropean Council in March 2024 that, once formally adopted, would mandate supply
chain due diligence relating to human rights and environmental matters in E.U. member
states; andthe E.U. provisional agreement on a new forced labour regulation that, once formally
adopted, would ban products made with forced labour from being sold in, or exported
from, the E.U.

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4.8.3.3 Supplier Reviews
We currently review production suppliers in order to assess their overall operational,
performance and fnancial health. We use a scorecard to provide ongoing monitoring andassessment of suppliers, which tracks (among other things) whether suppliers have certain
industry-recognized environmental and health and safety certifcations, such as ISO 14001
and ISO 18001. We are in the process of introducing another pillar covering ESG to our
supplier review scorecard process.
No production suppliers were terminated in 2023 as a result of a violation of working
conditions or human rights. We have terminated business relationships with a number of
temporary staffng/labour agencies that did not meet the requirements of our global staffng
agency policy discussed in Section 4.8.2 above.

4.8.3.4 Phytosanitation Program
We maintain a phytosanitation program aimed at preventing the introduction and spread ofplant diseases (i.e., pests and mold) through the cross-border import/export process. Our
phytosanitation policy which applies to suppliers and shippers aligns with the International
Plant Protection Convention (IPPC) standard for treatment of wood packaging material(e.g., wooden pallets), and includes the requirements of ISPM-15 (International Standards for
Phytosanitary Measures). Our phytosanitation program includes training sessions for internal
employees and suppliers, as well as reviews aimed at confrming compliance with our policy.

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4.8.3.5 Supplier Diversity

4.7.3.6 Confict Minerals Reporting

To support the supplier diversity efforts which form part of our supply chain management
program, we participate as a corporate member of several industry-recognized supplier
diversity organizations, including:Consistent with the approach taken by our customers, suppliers and other fellow membersof the Automotive Industry Action Group with respect to “confict minerals”, we are engaged
in an annual process of determining whether any products which we make or buy containsuch “confict minerals”. Our latest confict minerals report is available on our website
www.magna.com and on the SEC’s EDGAR website ( www.sec.gov/edgar). We
continue to engage with our suppliers to increase awareness, and accuracy, of “confict
minerals” reporting requirements and, through our membership in the Responsible Minerals
Initiative (RMI), support continuing cross-industry efforts to identify and validate confict-freesmelters and refners. We also report to requesting OEM customers with respect to Cobalt
and Mica.

·
·
·
·
·
·
·
·
·
·

the National Minority Supplier Development Council (NMSDC)
the Canadian Aboriginal and Minority Supplier Council (CAMSC)
Women Business Enterprises Canada Council (WBE Canada)
Michigan Minority Supplier Development Council (MMSDC)
National Veteran Business Development Council (NVBDC)
the National LGBT Chamber of Commerce (NGLCC)
Great Lakes Women’s Business Council (GL-WBC)
Women’s Business Enterprise National Council (WBENC)
Disability: IN
WEConnect International

In addition, we are supporters of the Michigan Hispanic Chamber of Commerce (MHCC),
the US Hispanic Chamber of Commerce (USHCC), the Asian Pacifc American Chamberof Commerce (APACC), the Detroit LGBT Chamber of Commerce, the Veteran Owned
Business Roundtable (VOBRT), the Council of Supplier Diversity Professionals (CSDP),
the Mid-South Minority Business Continuum (MMBC), and The National Business League.
We are also involved with a number of supplier diversity advocacy events, conferences,and procurement fairs, including many organized by our OEM customers, such as GM
Supplier Inclusion Board, Stellantis MatchMaker, BMW Supplier Diversity Conference, Toyota
Opportunity Exchange and Honda Network Partnership.

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4.9 Contributing to Communities in Which We Operate
4.9.1 Commitment to Communities and Society
Magna recognizes the importance of giving back to society. We have a long history of supporting many global social and charitable causes, primarily in the communities around the world inwhich our employees live and work. While much of our corporate giving is to general philanthropic causes, we have identifed seven United Nations Sustainable Development Goals that mostdirectly relate to our business. Examples of Magna’s activities and accomplishments with respect to each relevant Development Goal is as follows:

Ensure healthy lives and promote well-being for all at all ages
Since 2017, more than $1.3M has been raised from employee donations
and Magna’s Matching program through annual participation in theWorld Vision Global 6K for Water, which aims to bring life-changing
clean water to communities in need. The Suppliers Partnership for
the Environment (SP) – an association of global automakers and their
suppliers working together to advance environmental sustainability
through the automotive supply chain – previously awarded Magna
SP’s Community Impact Award for our support of the Global 6K for
Water challenge
Magna’s corporate wellness initiatives help support the ongoing physicaland mental health of employees globally

Magna has contributed over $25M toward medical infrastructure and over $1M to the
Red Cross and other organizations to aid with global disaster relief efforts. Magna’s
Employee Disaster Relief Fund provides fnancial assistance to eligible employees andtheir families in the event they are victims of a disaster. In 2023, the program helped
46 employees in Austria, Canada, China, Czech Republic, India, Italy, Mexico, Poland,
Slovenia, Turkey, and the United States. An additional 403 employees in China were
supported with humanitarian aid relief after a typhoon destroyed a local community,and Magna also made a donation to the Red Cross to assist their efforts in responseto the earthquake in parts of Turkey and Syria
Magna locations around the globe organize food drives and fundraisers to support local
foodbanks and to address food security

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Ensure inclusive and equitable quality education and promote
lifelong learning opportunities for all

Achieve gender equality and empower all women and girls

Magna sponsors and actively participates in FIRST Robotics globally to encourage
students to consider careers in science, technology and engineering. FIRST organizes
mentor-based programs that help participants build science, engineering and technology
skills while also fostering self-confdence, communication skills and leadership
Magna embraces a culture of learning, including a program that pays for employees
to pursue job-related certifcate programs and university degrees
Employees can access Magna-sponsored scholarships for their children to pursue
university degrees
We have partnerships in several countries with universities and technical institutions
to develop a talent pipeline and help promote skilled trades development
Magna sponsors several regional and international skills competitions through WorldSkills
to enhance technical trades development and growth opportunities for students
We support the Canadian Institute for Advanced Research a Canadian-based global
research organization that brings together teams of top researchers from around theworld to address important and complex questions
We support Skills USA and Ontario, organizations that champion and stimulate thedevelopment of world-class technological and employability skills for youth
In 2023, we began to support Relay Education’s Renewable Energy STEM (Science,
Technology, Engineering, and Math) workshops which provide support for thousandsof kids in communities Magna operates in, from the United States, Austria and Mexico.
These workshops bring interactive STEM experiences to students who otherwise may
not have access to such programming

Magna’s Women’s eXchange Employee Resource Community strives to empower,
develop and recognize its female employees and encourage students to pursue
STEM careers
We hosted the Women of Inforum@CES 2023 networking event in conjunction with
Inforum, a nonproft dedicated to accelerating the careers of women and building
talent initiatives at companies
Magna’s Board has adopted a Board Diversity Policy targeting gender parity (achieved
if the balance between male and female directors ranges between 40% and 60%,
assessed over a three-year timeframe). Currently, 38% of our Board members are
women, rising to 42% on May 9, 2024, assuming election of all nominees for Magna’s
annual meeting of shareholders
Since 2016, Magna has spent more than $2.1 billion with women-owned businesses/
suppliers as part of its overall supplier diversity program
Magna celebrates and honors the many contributions of women around the world,
including annually celebrating International Women’s Day through live global eventsfor employees to connect with and honor outstanding women in the company

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Build resilient infrastructure, promote inclusive andsustainable industrialization and foster innovation

Magna:
completed thousands of energy/sustainability projects in recent years, resulting insignifcant and ongoing energy, emission, and costs savings throughout its global
operations. Some examples of sustainable projects in our company are:a Cosma Division in Mexico installed a photovoltaic (solar) panel system which can
produce approximately 825 MWh of electricity annually
An Exteriors Division in China installed a photovoltaic (solar) panel system which can
produce approximately 5,200 MWh of electricity annuallycreated a Global Bold Perspective Award to showcase student vehicle designs of the
future. The automotive design competition annually selects a winner from entries fromstudents in North America, Europe and China
Sponsored the development of The Scanlon Creek Nature Centre in Ontario. Based onuniversal design and net-zero carbon principles, construction of this new building will
create a community hub where people of all ages and abilities can access award-winning,
innovative programming that connects them to nature while building environmental
knowledge and awarenessContinued to grow our annual Commitment to Sustainability Awards, which are open
to Magna’s Divisions globally and focus on three categories: (i) product excellence andinnovation; (ii) process improvements that advance lean and sustainability efforts; and(iii) people-programs that overcome employee and community challenges in the areasof education and training, health and safety, diversity and inclusion, and other areas ofsocial impact

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Reduce inequality within and among countries

Magna’s race and ethnicity-focused (EDGE), LGBQT+ and Allies (PRIDE) Employee, and
Women’s eXchange Resource Communities, support employee-led learning opportunities
to foster open dialogue and understanding, as well as opportunities for mentoring andcareer development
42% of Board nominees for election at Magna’s annual meeting of shareholders arediverse nominees (based on LGBTQ+ or being an underrepresented minority in theirhome country)
Since 2016, Magna has spent more than $3.7 billion with Minority-owned businesses/
suppliers as part of its overall supplier diversity program
Unconscious bias training is required for all managers and available to any Magna employee
Magna partners with various United Way agencies in North America to support a broad
number of organizations that are delivering community-based solutions to address
poverty and inequalities
Magna has partnered with other industry leaders to support a variety of poverty-reduction
efforts in the Greater Detroit and Greater Toronto Areas, including support for PopeFrancis Center and Inn from the Cold, organizations that provide vital services to people
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Ensure sustainable consumption and production patterns

Magna:
has implemented a zero waste to landfll target. Approximately 92% of total waste outputs
from operations in 2023 were recycled or diverted from landflls, rising to approximately 96%
if energy recovery is included
purchased 22% of its global electricity from renewable electricity sources (13% of our global
energy purchase was renewable)
reduced its energy intensity by approximately 11%, exceeding the 1-year 10% stretch goal
set for 2023
met its long-term (2030) water use reduction target, having achieved a 15% reduction inwater withdrawals in 2023 against our 2019 baseline
has received Performance Standard certifcation from the Aluminum Stewardship Initiative(ASI) for fve of its Divisions in Europe. ASI is the only voluntary sustainability standard for thealuminum value chain
ASI’s independent third-party certifcation focuses on material stewardship, including as
it relates to product design, life cycle assessments, management of process scrap, andrecycling of products at end-of-life
recognized our Cosma Division in Mexico with a Commitment to Sustainability Award for its
innovative process allowing savings in electricity consumption and automated temperature
controls at the facility

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recognized its Seating Division in Poland with a Commitment to Sustainability Award for
hosting education sessions on sustainability that lead to brainstorming and energy treasurehunts at the facility
is pursuing several packaging and logistics initiatives and aligning with industry partners tolimit the overall use of materials and to increase transportation effciency across the supply
chain, including publication of automotive packaging guidelines through a committee of the
Suppliers’ Partnership for the Environment which Magna Co-Chairs

Take urgent action to combat climate change and its impacts

Magna:
has approved near- and long-term science-based emission reduction targets with the
SBTi, and the SBTi has verifed our net-zero science-based target by 2050
is committed to achieving 100% renewable electricity usage by 2025 in its European
operations and by 2030 in its global operations. 103 Divisions currently use renewableelectricity, with 75 Divisions at 100% renewable electricity
is a fnancial sponsor of the Technical Offce of the International Sustainability Standards
Board (ISSB) that is establishing a comprehensive global baseline of climate changerelated disclosure standards

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In this Sustainability Report we report according to the SASB framework, and the ISSBIFRS S2 Climate Related Disclosures Standard in relation to Scope 1, 2 and 3 emissions.
SASB establishes and maintains industry-specifc standards that assist companies
in disclosing sustainability information to investors. SASB metrics indicated below are
identifed by the relevant SASB Auto Parts Sustainability Accounting Standard code. We
currently obtain independent, third party validation of our Scope 1 and 2 emissions data,
as well as our water withdrawal data. We are committed to continuing to enhance both thedata collection/validation processes and thus the quality of the data, in the coming years.

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5.1 Energy Managementand Emissions
5.1.1 Energy
Energy management data is set out below.
SASB Accounting Metric (TR-AP-130a.1)

2023

2022

2021

Aggregate amount of energy consumed by Magna

20,077,657 GJ
5,577,127 MWh

19,859,666 GJ
5,516,574 MWh

19,681,540 GJ
5,467,094 MWh

Percentage of energy consumed by Magna thatwas supplied from grid electricity

59.0%

58.0%

57.0%

Percentage of energy consumed by Magna that isrenewable energy

12.9%(1)8.8%(2)

8.2%

2023

2022

2021

130 MWh/
USDm

146 MWh/
USDm

149 MWh/
USDm

Notes:(1) The percentage of renewable electricity used in 2023 was 22% (17% in 2022).

Energy intensity relative to Sales is as follows:

Energy Intensity (MWh/Sales (USDm))

In connection with our efforts to promote energy effciency, we developed 1-year, 2-year, and5-year energy reduction targets as detailed in Section 2.3.1 above. In 2023, we met our 1-year
stretch target of reducing our energy intensity (measured in MWh/USDm sales) compared to2022, achieving an approximately 11% reduction.

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5.1.2 Emissions
Energy consumed can be converted to CO2 emissions based on regional conversion
factors. In order to help us and our stakeholders better assess trends related to theemissions we generate, we track emissions “intensity” on the basis of total sales, employee
headcount and aggregate square footage of our facilities and offces. These intensity metrics
assist us in determining whether we are becoming more effcient by normalizing emissions
on a per dollar of sales, per employee and per square footage basis. The raw data for
Scope 1 & 2 emissions, together with intensity metrics are set out below. Magna adheresto the GHG Protocol Corporate Accounting and Reporting Standard (“GHG Protocol”) for
its Scope 1 and 2 reporting. Magna adheres to the GHG Protocol Corporate Value Chain(Scope 3) Standard and guidance from the SBTi for its Scope 3 reporting. We use commonly
accepted emission factors such as those available from the GHG Protocol, International
Energy Association (IEA), United States EPA, including its eGrid database, United Kingdom
Department for Energy Security and Net Zero, ecoinvent and CEDA (Comprehensive
Environmental Data Archive), as well as other local or regional references. Our Scope 1
and 2 emissions data is verifed annually by an independent third party verifcation frm.

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ISSB S2, 29(a)(i)

2023

2022

2021(1)

Scope 1 Emissions (metric tons)

424,561433,636436,267

Scope 2 Emissions (metric tons)(1)1,150,656

1,168,803

1,089,730

Scope 1 & 2 Emissions (metric tons)(2)

1,575,217

1,602,439

1,525,997

Sales (USD, millions)

42,797

37,84036,242

Sales Intensity (CO2 metric tons/$ Sales)

0.0000368

0.0000424

0.0000421

Employees

179,000

168,000

158,000

Employee Intensity (metric tons/employee)

8.8

9.5

9.7

Square Footage (million sq. ft)

83.8

84.4

83.5

Square Footage Intensity (metric tons/sq. ft.)

0.01880.01890.0183

Notes:(1) Market-based emissions calculation method.
(2) Sales Intensity, Employee Intensity and Square Footage Intensity are calculated based on combined Scope 1 and 2 Emissions.

In connection with our net-zero commitment and submission of near-term and net-zerotargets to SBTi for validation, we submitted our Scope 1, 2 and 3 baseline emissions for2021 as per the table below:
Emission Type

2021 Baseline Year

Scope 1 (tCO2e)436,267

Scope 2 (tCO2e)

1,089,730

Scope 3 (tCO2e)

58,655,441

Total

60,181,43885

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5.2 Water and Waste
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Waste data is set out below:

5.2.1 Water
We have implemented a 1.5% per year water reduction target, with the aim of reducing
water use 15% by 2030, in each case referencing 2019 as the baseline year in which we
withdrew 7,740 ML of water. Our water withdrawals in 2023 represent a 15% reduction fromour 2019 baseline, meeting our overall 2030 target. Water withdrawal data is verifed annuallyby an independent third party verifcation frm.
Water withdrawal data is set out below:
Description

2023

2022

2021

Water withdrawals (ML)

6,571

6,292

6,922

5.2.2 Waste Management
Waste reduction and scrap elimination are important considerations in our manufacturing
activities, including as part of our efforts to achieve operational excellence in our facilities
globally. We have implemented a zero waste to landfll target, with the aim of eliminating
landfll-bound waste.

SASB Accounting Metric (TR-AP-150a.1)2023(1)

2022

2021

Aggregate amount of waste generated frommanufacturing by Magna

1,365,712 t

1,476,282 t

1,178,619 t

Percentage of waste generated by Magna thatis hazardous

3.9%(2)

4.3%(2)7.0%

Percentage of waste generated by Magna thatwas recycled

91.8%(3)87.2%(3)88.4%

Notes:(1) Preliminary data.
(2) Approximately 92% of such hazardous waste was diverted from secure landflls through recycling, reuse, or energy recovery initiatives in 2023 (90% in 2022).
(3) For 2023, this fgure would be 96.2% if energy recovery was also included as a category of recycled waste (90.9% in 2022).

5.3 Environmental
Remediation
The aggregate costs incurred in complying with environmental laws and regulations,
including the costs of clean-up and remediation, have not had a material adverse effecton Magna to date and are set out below.
DESCRIPTION

2023

2022

2021

Annual remediation expenses<$1.0m<$1.0m<$1.0mAggregate remediation balance for known events$18.8m$16.3m$14.1mEnvironmental Violations > $10,000 USD

1

0

—

Amount paid (in USD) as a result of such
Environmental Violations$30,000

N/A

—

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5.4 Product Safety

5.5 Fuel Effciency

Magna is at risk for product warranty, product liability and recall costs, and is currently
experiencing increased customer pressure to assume greater warranty responsibility.
Certain customers seek to impose partial responsibility for warranty costs where theunderlying root cause of a product or system failure cannot be determined. For most typesof products, we only account for existing or probable product warranty claims. However,for certain complete vehicle assembly, powertrain systems and electronics contracts,
Magna also records an estimate of future warranty-related costs based on the terms of thespecifc customer agreements and/or Magna’s warranty experience. Product liability andrecall provisions are established based on Magna’s best estimate of the amounts necessary
to settle existing claims, which typically take into account: the number of units that may bereturned; the cost of the product being replaced; labour to remove and replace the defective
part; and the customer’s administrative costs relating to the recall. Where applicable, suchprovisions are booked net of recoveries from sub-suppliers and along with related insurance
recoveries. Due to the uncertain nature of the net costs, actual product liability costs could
be materially different from our best estimates of future costs. In 2023, our warranty expense(net) decreased by $16 million compared to 2022. See Note 15 of our consolidated fnancial
statements for the year ended December 31, 2023, which have been fled on SEDAR+
www.sedarplus.ca and are on Magna’s website ( www.magna.com).

Our product strategy, which is discussed in “Section 4 – Our Business & Strategy – Our
Corporate Strategy” of this AIF, includes as a core element the supply of product solutions
which support our customers’ objectives of increased fuel effciency and reduced vehicle
CO2 emissions. We do not currently track total revenue from products designed to increase
fuel effciency and/or reduce emissions.

5.6 Materials Sourcing
The SASB Auto Parts Standard identifes critical materials as defned by the U.S. National
Research Council (NRC) of which cobalt, magnesium, tantalum and tungsten are most
relevant to our products. We do not purchase such materials in their raw form, however, they
may be present in components and sub-assemblies that we purchase. Our key purchased
raw materials are steel, resin and aluminum, and our key purchased components include:
stampings, electronics, chips, molded parts, die casting, forging, coverstock, and wire
harnesses. See the discussion in “Section 6 – Description of the Business – Manufacturing& Engineering – Key Components and Raw Materials” of our AIF.
We address strategic risks regarding critical materials with more limited supply and key
commodities/raw materials in a number of ways, including: diversifcation of suppliers; carrying
excess inventory, where appropriate; and, designing and engineering our products to minimize
the use of scarce/limited materials, where not constrained by customer specifcations. Risks
related to continued impact from the global shortage of semiconductors that has materiallyaffected global automotive production volumes since 2020 and may continue having some87

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impact in 2024 is discussed in greater detail in “Section 4 – Our Business & Strategy –Macroeconomic, Political and Other Trends” and “Section 5 – Risk Factors” of our AIF.
We are a member of the Aluminum Stewardship Initiative (ASI), and fve of our Powertrain
Divisions have received certifcation under ASI’s Performance Standard, which supports
responsible aluminium supply chains by among other things: providing a common standard
for assessing ESG performance in the aluminium value chain, and establishing requirementsthat can be independently audited to provide objective evidence for meeting the criteria
for certifcation, including product design, life cycle assessments, management of process
scrap, and recycling of products at end-of-life.
With respect to reputational risk related to critical materials, we maintain a confict minerals
program, including an annual process of determining whether any of our products containconfict minerals, and through our membership in the responsible mineral initiative (RMI)
supporting continuing cross-industry efforts to identify confict-free smelters and refners.
We also report to requesting OEM customers with respect to Cobalt and Mica.

5.7 Competitive Behaviour
Magna’s policy is to comply with all applicable laws, including antitrust and competition laws,
and we have implemented a robust compliance training program to mitigate against therisk of an antitrust violation. Our Corporate Ethics and Compliance Program is described in
Section 4.5 − “Corporate Ethics and Compliance” of this Sustainability Report.
We previously completed a global review focused on antitrust risk and do not currently
anticipate any material liabilities in connection with the review. See “Section 10 – Legal
Proceedings” of our AIF.

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SASB Accounting Metric (TR-AP-520a.1)

2023

2022

2021

Total amount of monetary losses incurred asa result of legal proceedings associated with
anti-competitive behaviour regulations

NIL$1.2m(1)

NIL

Note:
(1) June 2022 settlement with the Conselho Administrativo de Defesa Economica (CADE), Brazil’s Federal competition authority, in connection with an administrative
proceeding commenced in 2019 into alleged anticompetitive behaviour regarding the supply of automotive door latches and related products.

5.8 Health & Safety
We are committed to providing a safe and healthful workplace for our employees.
This commitment is fulflled through a regular program of health and safety audits andinspections of our global facilities. In connection with our health and safety program
we track the frequency and severity of workplace accidents and conduct post-accident
reviews to develop action plans to reduce/eliminate similar accidents in the future.
Description2023(1)

2022

2021

Accident Frequency Rate(2)(4)

0.50

0.62

0.59

Accident Severity Rate(3)(4)

10.2

12.4

17.4

Notes:(1) Preliminary data.
(2) Frequency 1.0 translates to 1 injury or illness per 100 employees working 40 hours/week, 50 weeks/year.
(3) Severity 10.0 translates to 10 lost work days per 100 employees working 40 hours/week, 50 weeks/year. Severity Rate is reported as of March 27, 2024, but couldchange, including as a result of employees who continue to accrue lost work days in relation to an accident.
(4) Global production facilities and certain engineering locations.

The occurrence of injuries and fatalities is a matter of signifcant concern for bothmanagement and the Board. The TOCC reviews the circumstances related to signifcant
injuries and all fatalities of employees or third parties on Magna properties and reports
same to the Board. In 2023, there was 1 employee fatality at Magna facilities.

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5.9 Diversity

5.10 Reporting

Diversity within our employee population is important to us and we strive to create an
inclusive work environment throughout our company. As part of our efforts to promote
an inclusive workplace, we track metrics relating to gender diversity in our workforce.

In addition to this Sustainability Report, we participate in CDP, a not-for-proft project
designed to provide investors with information relating to corporate GHG emissions,water use, deforestation risk and perceived corporate risk due to climate change. Ourcurrent CDP submission is available on our website at www.magna.com. We also fle
a confict minerals report, available on www.sec.gov/edgar, in accordance with SEC
requirements, and publish a slavery and human traffcking statement on our website,at www.magna.com. Magna also provides sustainability reporting directly to ourcustomers. These assessments are supplier requirements and typically follow common
reporting templates approved by automotive industry associations in North America(Automotive Industry Action Group) and Europe (CSR Europe/Drive Sustainability).

DESCRIPTION

2022

2021

2020

Percentage of global employees who are women(wholly owned operations)

28.0%

28.0%

27.0%

Women in critical roles

18.0%(1)

18.0%

16.0%

Women on the Board of Magna

38.0%(2)

42.0%

42.0%

Notes:(1) 885 women in critical roles out of 4,958 such roles.
(2) As of May 9, 2024, the percentage of women on the Board will be 42%, assuming election of all nominees for Magna’s annual meeting of shareholders.

We also continue to monitor the acceleration of climate/sustainability reporting initiatives
by regulators, including:···the European Union’s European Sustainability Reporting Standards (ESRS) andCorporate Sustainability Reporting Directive (CSRD) which will frst apply to certainof Magna’s European subsidiaries in 2025 and will be reported on in 2026 for such
subsidiaries;
initiatives by securities law regulators to mandate climate disclosure, including therecently adopted climate disclosure rule adopted by the U.S. SEC; andthe proposed implementation of Canadian sustainability standards through theCanadian Sustainability Standards Board (CSSB), based on the ISSB Sustainability
Disclosure Standards, and any proposed rule changes from Canadian securities
regulators incorporating such standards.

89Magna International Inc.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1
Telephone: (905) 726-2462

magna.com/sustainability