LIGHTING THE WAY TO A
GREENER INDUSTRIAL SECTORSUSTAINABILITY REPORT

2022

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2022 SUSTAINABILITY REPORTCONTENTSOVERVIEWOVERVIEW

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Message From Our CEO
Our Framework
Our Approach2022 Highlights
Influencing Change

OUR PRODUCTS
10 Our Products
11 LED Lighting Case Study

ENVIRONMENTAL
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Environmental Responsibility
Emission Savings & Carbon Footprint
Carbon Reduction Actions & Targets
Product Design
Circular Economy
Water Stewardship

OUR PRODUCTSENVIRONMENTAL

Our People - Health & Safety
Our People - Responsible Employer
Our People - Long Service Recognition
Global Presence, Local Impact
Community Impact

GOVERNANCE
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Board Structure & Governance Principles
Ethical Behaviour
Supply Chain Management
Sustainability-Linked Financing

FRAMEWORKS & METRICS
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Frameworks & Metrics
SASB Index
Sustainability Report & Metrics Data
Sustainability Report & Metrics Data (cont.)

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GOVERNANCEMESSAGE FROM OUR CEOMESSAGE FROM OUR CEO
Fariyal KhanbabiGroup Chief Executive

The past two years have been extraordinary as forces
reshaped society, businesses, and the communities
where we live and work. It has been a time whencompanies have had to lead with courage and takegreater responsibility to benefit all stakeholders. I believe
the future belongs to those who can drive growth that isboth sustainable and inclusive.
We believe that growth is necessary to secure prosperity
and well-being for everyone. Along with driving growth,building resilience for our customers, society andourselves is a priority.
Our products provide a pivotal opportunity to reducecarbon emissions in the near-term by utilising our ultraefficient LED technology that generates up to 60% lessemissions than legacy lighting.
The time value of carbon reductions is magnified by thepace at which the industrial world embraces a significant
adoption of LED. With the guidance from the Science
Based Targets that we need to halve emissions fromelectricity by 2030, the timeliness of action becomes
more crucial.
In addition, the inevitable transition to a decarbonised
grid will in turn be easier to achieve if the overall power
requirements are significantly reduced.
Through our cutting-edge technology we will be bringing
the first fully recyclable product to the market. We are
pursuing science-based targets to decarbonise ourown operations and achieve net-zero impact by 2040.
Our unwavering focus continues to be on meeting theneeds of our industrial customers with solutions that
reduce their carbon impact, are ethically sourced, andincrease safety for their employees.

We aim to create economic opportunity to reduce
inequalities and enable inclusive growth. By investing inhuman capital in the same way we invest in physicalcapital, we can foster workforce diversity and reskill or
upskill people so they can thrive.
In 2020 we created the Dialight Foundation, a nonprofit arm of our company dedicated to helping thecommunities we operate within. The overwhelming
support from our employees around the world has madea meaningful difference in the lives of so many and welook forward to continuing to build on this initiative.
We continue to strengthen our risk management
processes and culture to ensure we meet the highexpectations and ethical standard we have of ourselves.
On behalf of all our colleagues, I am proud of thesignificant steps we have taken on our sustainability
journey this past year. We have a new framework thatbuilds on our sustainable, inclusive growth ambition,
established a sustainability committee to maintain asharp focus, and we continue to evolve our externalreporting—including aligning with the Task Force for
Climate-related Financial Disclosures (TCFD).
Throughout this report, you will find details about the
progress we are making. While I am proud of what wehave accomplished, I am even more excited for what isstill to come.

Sincerely,

Fariyal Khanbabi, Dialight Group CEO“WE PROVIDE A SUSTAINABILITY SOLUTION TO REDUCE CARBON EMISSIONSIN THE INDUSTRIAL SECTOR, WHICH GENERATES 32% OF GLOBAL EMISSIONS”

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GOVERNANCEOUR FRAMEWORKOUR FRAMEWORKACCELERATING SUSTAINABLE & INCLUSIVE GROWTHENVIRONMENTBe the catalyst for decarbonisation with our customers

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GOVERNANCE

Build inclusive communities & workforces that reflect society

Set standards for accountability and compliance

Be a leading catalyst for global decarbonisation byhelping our customers through their sustainability,
climate, and energy transformations

Enhance organisational performance through a morediverse, equitable, and inclusive culture

Continue to evolve and live up to our values every day

Achieve net zero by 2040 and reduce our own emissions
in line with our validated near-term science-based targets

Attract, develop, and retain a diverse workforce while
creating an inclusive environment

Meet the highest professional, legal, and ethical standards- while enhancing transparency and accountability

Help the world stay on 1.5-degree Celsius pathway
and to progress to net zero

Empower our employees to give talent, time, and financial
support to create positive change in local communities

Continue to drive transparency to our stakeholders andensure integrity in everything we do

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OUR APPROACH

OUR APPROACH
ENVIRONMENTKEY OBJECTIVES- Replace environmentally unfriendly non-LED lighting- Enable our customers to reduce costs and theircarbon footprint- Improve industrial safety

SOCIALKEY OBJECTIVES- Ethical treatment of our people and those in the
supply chain- Support local communities

GOVERNANCE
KEY OBJECTIVES- Promote ethical business practices internally and in
our supply chain- Measure and report on performance to promotetransparency

FOCUS AREAS

FOCUS AREAS- Educate on the benefits of LED lighting and stimulate
demand to improve adoption- Continued innovation to produce the most efficientindustrial lighting products- Design products with lowest emissions footprint- A culture that promotes all aspects of health & safety- Dialight Foundation’s specific purpose is to support
communities- Localisation of supply chain to reduce carbon
footprint and increase the proportion of local purchases

FOCUS AREAS

MEASUREMENTMEASUREMENTMEASUREMENT- Dialight emissions plus those from customers using
our products are on page 33- Accident rates, near-miss rates and diversity
are reported on page 32 and 34- KPI’s in place and reported under SASB and otherrelevant metrics are on page 32

ALIGNMENT WITH SUSTAINABLE
DEVELOPMENT GOALSALIGNMENT WITH SUSTAINABLE
DEVELOPMENT GOALSALIGNMENT WITH SUSTAINABLE
DEVELOPMENT GOALS- Our focus and our policies are designed to ensurecompliance with

- Our focus and our policies are designed to ensurecompliance with- The principles of governance on sustainability are
similar to those from an overall business perspective- We use the ESG Committee as the conduit formonitoring sustainability issues- Suppliers have to agree to Code of Conduct- Carbon footprint verification- ISO 45001, 9001, 14001, 14064 compliance72022 SUSTAINABILITY REPORTCONTENTSOVERVIEWOUR PRODUCTSENVIRONMENTAL

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2022 HIGHLIGHTS

2022 HIGHLIGHTS
We are a sustainability solution business that exists to reduce the carbon footprint of the industrial sector, while improving human safety in harshindustrial applications. Over the past 18 months we have bolstered our market-leading position with credentials from leading organizations within
the sustainability reporting space.

GREEN ECONOMY INDEXIn 2022 Dialight was judged by FTSE
Russell to have 100% Green Revenue.
“Green revenue” is defined as revenues
from products and services that contributeto positive environmental outcomes.

SCIENCE BASED TARGETS
We completed analysis of our internal
processes which will form part of our SBTi
2050 Net Zero targets to be agreed with
SBTi in H1-2023. Our internal target is toachieve this by 2040.

ECOVADISThe EcoVadis sustainability assessment
evaluates how a company has integrated
the principles of sustainability into theirbusiness and management system. In 2022
we maintained our Silver sustainability
rating with them and increased the overall
percentile ranking to 79th compared to73rd in 2021.

ENVIRONMENTAL PRODUCTDECLARATION (EPD)
We expanded our portfolio of EPD’s tocover 7 product families and this forms thebasis for work on the first Net Zero product.

TCFD
We reported under the requirements of
TCFD for the first time in March 2022 in
our Annual Report.

CARBON DISCLOSURE
PROJECT
Our 2022 ratings are Climate Change B
and Water Security B- (2021 both rated
C), reflecting continued progress on
sustainability reporting.

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INFLUENCING CHANGE

INFLUENCING CHANGE
Dialight promotes sustainability through contributions to industry forums and leveraging
thought leadership through published articles to educate industrial stakeholders about
solutions to help them achieve their carbon goals. Examples over the past year are:Dialight’s CEO addressed the National Association of Electrical Distributors (NAED) women in industry
forum earlier this year.
This forum provides an environment where female professionals within the male dominated electrical
distribution industry can connect with senior female leaders in industry-leading companies. This
provides a springboard for career development and increasing the industry diversity at a senior level.

SUSTAINABILITY MAGAZINEPOWER SYSTEMS DESIGNHow Dialight’s LED Lighting
Addresses Workplace Safety

5 Ways Better Lighting Impoves
Steel Plant Safety & Sustainability

CLICK HEREFOR THE ARTICLE

CLICK HEREFOR THE ARTICLE

OUR PRODUCTS

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GOVERNANCEOUR PRODUCTSOUR PRODUCTS

All our products use LEDs rather than legacy lighting technology. Industrial lighting is focussed on reductions in electricity usage and emissions
while providing safety benefits, the remaining portfolio is aimed mainly at safety in specific applications which may or may not have legacy
technology.

INDUSTRIAL LIGHTINGThe orange lighting (in the picture above) is from sodium based products that has not yet been converted to LED, High Pressure Sodium fixtures are up to 60%
less efficient than LED and gives poor quality light output. The white lighting comprises of LED fixtures which provide better quality lighting, enhance safety andare more sustainable due to their lower carbon footprint and not utilising hazardous materials.

OBSTRUCTION LIGHTING
We provide the beacons that go on top of the towers / chimneys, the marker lights that go on the side and the control system at the base that can be remotely
monitored to warn the network operator of any failures that have to be notified to the FAA.

COMPONENTS & VEHICLE LIGHTING
We provide component indicator lights used in control panels of electronic equipment to provide equipment status to operators. We make side marker lights forbuses and trains plus bus headlights to make them more visible and thereby prevent accidents.

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LED LIGHTING CASE STUDY

LED LIGHTING CASE STUDYSEWERAGE PLANT - BRIDGEWATER, NJ“I’ve never seen this building lit up like this in
my 25 years at the facility”
Plant Superintendent
This is a 32 acre site that runs 24/7 and had electrical and lighting
systems that were not only outdated, but had an amalgam ofdifferent lighting that made procuring replacement bulbs andother parts extremely difficult. The antiquated lighting provided
inadequate lighting in many places.
The installation of 400 Dialight fixtures to replace the antiquatedtechnology has been a major success. Not only are the newlights guaranteed for 10 years, they reduce energy consumption,
maintenance costs and carbon emissions significantly.
Due to their robust design, they can cope with the impact ofhydrogen sulfide, a corrosive by-product that caused the older
halogen fixtures to fail.
The lighting upgrade has also substantially improved safety
at the facility which has a high volume of truck traffic bringing
effluent for processing. The improved visibility makes it easierfor staff to monitor traffic, ensuring vehicles and pedestrians are
more visible and prevent accidents.
CLICK HEREFOR CASE
STUDY

CLICK HEREFOR THEVIDEO“THE IMPROVEMENT IN LIGHTING IS LIKE DAY AND NIGHT”
Manager of Engineering

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GOVERNANCEENVIRONMENTAL RESPONSIBILITYENVIRONMENTAL RESPONSIBILITY
The impact of climate action in the short-term is undervalued. To understand this we needto consider the Time Value of Carbon (TVC). The TVC is the concept that greenhousegas emissions cut today are worth more than cuts promised in the future, due to theescalating risks associated with the pace and extent of climate action.
A company that stops emitting CO2 this year creates a benefit for the climate system eachyear into the future. Companies that start to cut in 2030 will have spent another ten years
drawing from the global carbon budget, and by then the 1.5 degree goal could be out ofreach. This is why long-dated climate goals with no short term action are unacceptable. It
is also why we believe that near term action creates considerable value.
The industrial sector accounts for 32% of global emissions so we have a responsibility
to assist with actions to combat the impact of climate change. We will continue to makeindustrial lighting more efficient and to provide the innovation that reduces both electricity
usage and also emissions for our customers. Switching to LED as part of a Net Zero strategy
allows customers to make an immediate reduction in their carbon footprint, improve
operational site safety and save money on lighting on a whole life basis.

We are focused on sustainability in our own operations and on
providing our customers with products that increase sustainability
in their business and support their journey to Net Zero

Cutting carbon today is morevaluable than in the future andcustomers can reduce theirlighting emissions by up to
60% by switching to LED

Since we started sellingindustrial LED lighting, wehave helped our customers
reduce their emissions by c.
20m tonnes

This is equivalent to removing
4m cars from our roads for a
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EMISSIONS SAVINGS & CARBON FOOTPRINTEMISSIONS SAVINGS & CARBON FOOTPRINTOUR PRODUCTS PROVIDE A NET SOCIETAL BENEFIT BY HELPING CUSTOMERS AVOID MORE CARBON EMISSIONS THAN
THE ENTIRETY OF EMISSIONS GENERATED DURING PRODUCTION AND USE PHASE OF OUR LIGHTSLighting by its nature, consumes energy in order to perform its required task. By designing our products to maximize efficiencyand usable lifespan,
we are working to continually reduce the impact of using lights. In addition, we are re-evaluating the materials used to make our fixtures to minimise
the largest portion of carbon from internal processes. Both of these are helping to drive meaningful change in the harshest industrial sectors. As
renewable energy sources gain more traction in powering the grid, emissions from the use phase of our lights will decrease even further and there
will also be a TVC benefit.

Without conversion to LED our 2021 customers would havegenerated 2.5m tonnes of carbon over a 10 year period

REDUCTION OF
1.6m TONNES

By converting to LED, these emissions drop to 0.9m over thesame period and are counted as Scope 3 emissions by Dialight

DIALIGHT CARBON FOOTPRINT FOR 2021
Scope 1, 2 and 3* (excluding usage of lights)*		

0.1m

Scope 3 usage of lights**				

0.9m* Externally verified ** Internal calculations

1.0m

Avoided emissions from customers switching to LED lighting**

1.6m
1.6m

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GOVERNANCECARBON REDUCTION ACTIONS & TARGETS

CARBON REDUCTION ACTIONS & TARGETS
We have committed to be a Net Zero business by 2040. As part of our commitment, we will be submitting our carbon reduction plans to the Science
Based Targets initiative (SBTi) in H1 2023.
While we are keenly focussed on reducing the carbon footprint in our own operations, we realise that our largest opportunity
to affect change in overall carbon emissions worldwide, is to focus on reducing lighting-related emissions by maximizing
the efficiency and lifespan of our products and promoting the use of LED and advanced controls systems which provide
significantly better environmental and safety benefits than legacy lighting technologies, especially in industrial applications.

CLICK HEREFOR THE ANNUALREPORT

INTERNAL PROCESSESPRODUCT DESIGN

We will continue to work on site-wide efficiency improvements in the nearterm through selected investment in upgrading machinery and process
refinements. This will be an on-going exercise which also dovetails with the
reduction in fixture size and material composition. We are also exploring theuse of internally generated renewable power where possible.

We recently launched the most efficient heavy industrial high bay on themarket with efficiency of up to 200 lumens per watt (LPW) that can seamlessly
integrate with factory automation for even greater energy savings. While wecontinue to strive for even greater efficiency in all our fixtures, the reality is
we are reaching a threshold of what is scientifically possible, making the next
frontier all about material science.

Target: SCOPE 1 & 2 REDUCTION OF 3% AS A % OF REVENUE

Target: FIRST NET ZERO INDUSTRIAL FIXTURE

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PRODUCT DESIGNPRODUCT DESIGN
We consider every aspect of our products from material science and supply chain through to product assembly and end of life. Part of thisanalysis includes conducting EPD evaluations for each of our major product lines to identify the carbon footprint of materials used in our
products. This information has already informed our material choices for our next generation of products.
We are using the data from this to understand the impact of three major factors• Material choice, aluminium has a higher carbon impact than Glass Reinforced Plastic (GRP) but we need to do more work to understandthe End of Life (EOL) implications• Material source – the aluminium impact can be greatly reduced depending on whether renewable energy is used in the smelting process• Weight of the fixture – regardless of the material choice and source, using less of it reduces the carbon footprint
We have produced some prototypes that significantly reduce the carbon footprint and are evaluating selected customer feedback on the
products. This is essential as the appetite for change must be shared by the customer.

EXTENDING PRODUCT LIFEREPLACEABLE PARTS
If a failure occurs in the field, it is likely to relate to the power supply as that is the most complex aspect of the fixture. Newer fixtures such as
the Reliant High Bay have field replaceable power supplies that will prolong the fixture life beyond the original 10 year life.

RETROFITTABLE UPGRADES
The ability to upgrade in the field is being incorporated into newer fixtures with a dedicated external slot for plug and play sensors to be
added. This allows new safety features/efficiency features to be subsequently added.

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CIRCULAR ECONOMYCIRCULAR ECONOMY
The circular economy is very important as a way to ensure resources are managed effectively and to reduce waste and cost.

RECYCLING DURING MANUFACTURING
Three of the four operational sites use Environmental Management Systems certified to ISO 14001. All sites have well established recycling programs that
ensure that as much waste as possible does not go to landfill. The in-house processes are light industrial and do not generate significant waste. The major
waste items relate to inbound packaging for materials and some metal off-cuts from machining.
Hazardous waste generation during manufacture is minimal and mainly is industrial alcohol and solder paste, see metrics on page 32.

RECYCLING AT END OF LIFE
The ability to recycle is dependent on several factors:a) The type of materials used in the fixtureb) The geographic location of the end userc) Types of electrical recycling schemes in operation
In Europe, all lighting sales are covered by the Waste Electrical and Electronic Equipment (WEEE) legislation and by paying a levy at the point of sale, thisallows any of our fixtures to be disposed of through a WEEE partner. The level of recycling that can be achieved varies but our UK partner can recycle up
to 96% of components of the fixture. There are no similar schemes in the Americas or Australia currently, but nonetheless, we have recycling partners thatcan process the Aluminium in these locations.
Given the long life of our products we expect that this ability will be enhanced over the coming years and programs similar to WEEE will be introduced
globally by the time many of our longlife fixtures reach end of life. The level of recycled fixtures is very low at the moment due to the extended product life
cycle, it is mainly product failures/older model fixtures that are recycled from the field. Field failures returned to the factories are passed to local certified
recycling facilities and other failures can be disposed via WEEE partners in Europe or other recycling partners such as Veolia in North America.

RECYCLING PARTNERS

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WATER STEWARDSHIPWATER STEWARDSHIPAs a responsible business, we need to ensure that our water usage is minimised as much as possible so that there is an equitable distribution of
freshwater. Access to clean water and sanitation is a basic human right and aligns with the United Nations Sustainable Development Goal (UNSDG) 6 “Clean water and sanitation”.
We voluntarily disclose our water management by completing the CDP water security questionnaire.
Water usage in the production processes is not extensive and accounts for c. 30% of water usage. Where there is any contamination from theseprocesses, water is treated before release to public sewers. The majority of water usage relates to WASH (Water, Sanitation & Hygiene) services
for staff and is therefore discharged to public sewers.
Nonetheless, our facilities in Mexico which account for 49% of water usage are in high water stress areas and we are therefore looks at ways
to reduce usage. We have set a target of reducing water consumption by 5% per annum as a % of revenue. This target was exceeded in 2021
with a reduction of 10%.

VOLUNTARILY DISCLOSE TO CDP - WATER SECURITY RATING BREDUCTION TARGET OF 5% ON AN INTENSITY BASIS
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HEALTH & SAFETYOUR PEOPLE - HEALTH & SAFETY

Our goal is zero harm, not as a statistical target, but as a moral imperative. This can be achieved by establishing a strong,
proactive safety culture. All new factory staff are trained in Health & Safety using local language presentations to ensure thatthey understand the briefing.
At operational sites PPE equipment is provided free. Safety footwear is compulsory at operational sites and eye protection
is mandatory on the production floor. In 2021, due to the continued focus on this culture we had zero reportable incidents
across all our sites and the number of near misses reduced by 10% (see metrics on page 32). All near misses are reported andinvestigated to establish root cause and put actions in place to prevent recurrence.
We have a doctor on site in our largest facility in Mexico plus access nurses at both Mexican sites. There are also free rotational
Covid testing. Our facility in Penang runs an in-house clinic with health checks and vaccinations available.

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GOVERNANCERESPONSIBLE EMPLOYEROUR PEOPLE - RESPONSIBLE EMPLOYER
We recognize that the skill and commitment of our employees plays a large part in the successof our Company and we recognize that each person has their own individual contribution to
make. It is through our people that we will progress our strategy and ensure that we realise thepotential for growth. Developing a high performing and inclusive culture is a key enabler in ourability to deliver strategic growth.
Engaged, motivated, empowered and appropriately skilled employees are integral to our
success. We support all our people by creating a safe, inclusive environment, where every
individual is able to work and contribute to the development of the business.

In Mexico all wage rises for staff below managerial
grade are mandated annually by the Government
based on inflation and we increase wages accordingly

WORKING
CONDITIONS

•
•
•
•
•

All staff paid at or above minimum legal requirements
Working hours in accordance with local legislation
Overtime is paid according to local legislation
Minimum 60 days maternity pay
Canteen/subsidised food provided at operational sites

DISCRIMINATION

•
•
•
•

No restriction imposed on freedom of association
Anti-discrimination policies in operation at all sites
50% of total workforce is female
Hiring based on ability•

We strive for diversity across gender, age, background,
education and disabilities
We are committed to meeting minimum legal standards
where we operate and often exceed these requirements

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LONG SERVICE RECOGNITIONOUR PEOPLE - LONG SERVICE RECOGNITION
We feel it is important to recognise the achievements of our people and the long service awards are part of that process. The awards reflect
the length of time that Dialight has been established in the local areas with the longest being a 50 year award in Farmingdale New Jersey for an
employee who started when the LED was invented. Our oldest plant in Roxboro, US celebrated two long-term employees, with 35 and 40 years
service. Our presence in the Ensenada region of Mexico gave rise to several people collecting awards to recognise 15 and 20 years service. Our
Penang factory opened in 2012 recognised staff with 5 and 10 years service.

FARMINGDALE, NJ, USA

ROXBORO, NC, USA

50

35-40

YEARS
PENANG, MALAYSIAYEARSENSENADA, MX

5-10
YEARS

15-20
YEARS

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GLOBAL PRESENCE, LOCAL IMPACTGLOBAL PRESENCE, LOCAL IMPACT• We have had a long-term presence in many of our operating locations, contributing to the prosperity of the regions and communities bygenerating socio-economic value.
• We are proud to be a longstanding employer in the communities in which we operate, using local management and a local workforce whereveravailable.
• We use local supply chain for non-specialty components• We comply with tax legislation in each country in which we operate – providing the relevant tax returns and tax payments within statutory
timescales and disclosing any errors to the tax authorities should this ever occur.

ROXBORO, NC, USA

ENSENADA, MX

PENANG, MALAYSIA

Dialight opened the
Roxboro facility in 1985
and currently employs anaverage of 70 staff

Dialight has been a local
employer since 2001 andcurrently employs anaverage of 1,000 staff

Dialight has had a presence inPenang since 2012 and moved toa larger site in 2019. We currently
employ an average of 160 staff

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GOVERNANCECOMMUNITY INVOLVEMENTCOMMUNITY IMPACT
We recognize that as a business we have social, cultural, and environmental responsibilities in our local communities.

THE DIALIGHT FOUNDATIONThe Dialight Foundation was formed in June 2020 in the midst of a global pandemic
upon seeing how deeply affected our local communities were by COVID-19. Its mission
is to transform the lives of people in need in the local communities near our facilities,
with a focus on supporting children and women’s causes. To date, the Foundation
has provided materials and support to two children’s orphanages in Mexico, provided
school supplies to two elementary schools in Roxboro, NC in under-privileged areas,and partnered with the Women’s Earth Alliance and local grassroots organization,
Espacio Migrante, to provide on-the-ground support in Tijuana, Mexico in the height of
the global COVID-19 pandemic and local migrant crisis.

WOMEN’S EARTH ALLIANCE
WEA is on a mission to protect our environment, reverse climate change,and ensure a just, thriving world by empowering women’s leadership.
Continuing our partnership with the Women’s Earth Alliance, in 2022 theDialight Foundation became a sponsor of the 2022 Grassroots Accelerator
Program Clean Energy Track. The WEA model identifies grassroots womenleaders working on the frontlines to reverse climate change and protect theircommunities’ natural resources, livelihoods, and health - investing in theirlong-term leadership through training, funding, and networks of support.
These women leaders spread their solutions to many others for years beyond project investments creating a ripple effectthat benefits communities, regions, our Earth, and future generations. This long-term sustainable approach to tacklingenvironmental issues whilst benefitting the community is a perfect fit with the sustainability ethos of Dialight.

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BOARD STRUCTURE

BOARD STRUCTURE & GOVERNANCE PRINCIPLESThe Governance principles in relation to Sustainability are the same core principles applied in relation to the rest of thebusiness - ethical behaviour, transparency and accountability.
The Board are committed to developing and monitoring progress against Dialight’s sustainability strategy and performance with primary oversightin Board Meetings where sustainability is a standing agenda item. In the 2021 Annual Report, the Board has committed to introducing sustainability
targets as part of Executive variable remuneration in 2023. We publish sustainability data in our Annual Report and also in the appendices to thisreport to be transparent and as a basis for accountability.
With the removal of many travel restrictions in 2022, the Workforce Engagement Non-Executive Director (Gaelle Hotellier) has been able to visit
several Group sites to meet staff and discuss any concerns that they have in an open forum without management in attendance. These meetings
have resulted in several positive actions to address staff concerns.

DAVID
THOMASFARIYALKHANBABICLIVEJENNINGSGAËLLE
HOTELLIER

DAVID
BLOOD

GOTTHARD
HAUG

NIGEL
LINGWOODINTERIMBOARD CHAIRGROUP CHIEF
EXECUTIVE

CHIEF
FINANCIALOFFICERWORKFORCEENGAGEMENTNON-EXECUTIVEDIRECTORNON-EXECUTIVEDIRECTORNON-EXECUTIVEDIRECTORNON-EXECUTIVEDIRECTOR*Board as at 01 January 2023

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GOVERNANCEETHICAL BEHAVIOURETHICAL BEHAVIOUR
Dialight is committed to conducting its business in an ethical and responsible manner at all times, and in full compliance with all applicable laws
and regulations. Our Code of Conduct, which sits alongside our Operational Framework, embraces our fundamental values of Safety, Excellenceand Innovation. It provides direction to all employees on legal, ethical and risk issues that they may encounter in their day-to-day activities. All
employees and all third parties who act on the Group’s behalf are required to comply with our standards of behaviour and business conduct, as
set out within the Code, and applicable laws and regulations in all of the countries in which we operate.
We require all our employees and suppliers to act in accordance with our ethical Code of Business Conduct.

WE EXPECT OUR EMPLOYEES AND SUPPLIERS:•

To behave professionally, honestly and with integrity at all times•

To avoid situations that involve a conflict between personal interests and those of Dialight•

To avoid deceptive, dishonest or fraudulent acts or omissions•

To ensure that they do not instigate or participate in bribery or corruption•

To avoid instigation or receipt of gifts and hospitality designed to make the recipient feel obligated in a certain way•

To ensure they do not engage with suppliers in countries that are subject to sanctions and embargoes•

To ensure that they do not engage with suppliers that do not adhere to the Anti-Slavery and Human Trafficking legislation•

To ensure that all staff have a safe and secure working environment free from discrimination•

To ensure all staff are paid a fair wage and do not have to work beyond legal requirements

CLICK HERE FOR
WHISTLEBLOWINGPOLICY

CLICK HERE FOR
ANTI-BRIBERY& CORRUPTIONCLICK HERE FOR
MODERN SLAVERYPOLICY

CLICK HERE FOR
BUSINESS ETHICSPOLICY28

2022 SUSTAINABILITY REPORTCONTENTSOVERVIEWOUR PRODUCTSENVIRONMENTAL

SOCIAL

GOVERNANCE
SUPPLY CHAIN

SUPPLY CHAIN MANAGEMENTThe Group is committed to respecting human rights in the countries in which we do business. Our Codeof Conduct and other applicable policies under the Operational Framework support our commitment.
We continue to use both the Assent and the GAN platform as part of our due diligence on materials,
supply chain and customers.
All suppliers are required to comply with the Dialight Code Of Business Conduct and self-certify that they
check compliance of materials with:• Conflict minerals legislation• REACH, RoHS, California Prop 65
They also have to certify that they check that:• Slavery and human trafficking is not being used in the supply chain• Staff are paid a fair wage and not required to work beyond legal requirements

Used for materials compliance tocheck whether they contain any
harmful substances, like heavy
metals. Compliant with REACH/
RoHS, California Prop 65.

For business practices they are required to:• Not engage with suppliers in countries subject to sanctions and embargoes• Behave professionally, honestly and with integrity at all times
In addition, we recently undertook a survey of our top 30 suppliers (c. 70% of supply chain value) toestablish whether:• They had sustainability ratings• To understand their sustainability processes and due diligence processes in more detail
The survey showed that the top 30 vary from having an EcoVadis platinum rating down to having norating at all. We intend to engage with those at the lower end of the scale in order to set expectations ofsustainability requirements and any improvements needed.

Checks for negative publicity on
sustainability issues that are in the
public domain.

292022 SUSTAINABILITY REPORTCONTENTSOVERVIEWOUR PRODUCTSENVIRONMENTAL

SOCIAL

GOVERNANCE
FINANCING

SUSTAINABILITY-LINKED FINANCING

We have renewed our existing $34m Revolving Credit Facility (RCF) in July 2022 as asustainability-linked RCF with part of the covenant requirements based on sustainability
goals, as follows:•

Reduction in Scope 1 & 2 emissions as % of revenue•

Reduction in water usage as % of revenue•

Increase in community hours donated by staff

Recognising that Dialight is a sustainability solution business that aligns withstakeholder values and targets, HSBC was very willing to incorporate sustainability
goals as part of the RCF extension process.

FRAMEWORKS & METRICS

31

2022 SUSTAINABILITY REPORTCONTENTSOVERVIEWOUR PRODUCTSENVIRONMENTAL

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GOVERNANCE
TCFD

FRAMEWORKS & METRICSTASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURE (TCFD)In March 2022, we reported in line with the requirements of TCFD. [Annual Report] We set out our disclosureson Governance, Strategy, Risk Management and Metrics & Targets. The TCFD requirements are an extension of
the existing business strategy that is in place. The ability to help our customers achieve Net Zero generates asignificant opportunity which has been the main business focus over the past 10 years as we have developed
our portfolio of ultra efficient LED industrial lights. The sustainable nature of our products makes them ideal as areplacement for less environmentally friendly technology that is currently in widespread use.

OPPORTUNITIESRISKSThere are two main aspects to the opportunities:

The risks fall into two categories:

1.

The level of market adoption of LED increasing driving revenue growthlegislative change which bans older lighting technology as countries
seek to achieve Net Zero targets - companies seeking to achieve theirown Net Zero target.

1.

Transitional risk- product redesigns to adapt to changing customer
working environments as heavy industry transitions to lower carbon
processes- climate related disruption causing shortages in the supply
chain- sufficient capacity to cope with significant surge in demand.

2.

Greater resource efficiency driving down product costs- Our work on
EPDs means that we understand the cost and emission implications of
the materials currently in our fixtures and are designing smaller, lower
cost alternatives- localisation of supply chain will not only result in lessbusiness risk and lower emissions but it will also reduce operating costsusing renewable energy at our facilities, where possible, will reduce
operating costs and emissions.

2.

Physical risk- changing weather patterns impacting logistics- Extreme
weather events causing one-off issues at operational sites- Drought
causing water shortages in high water stress areas (Mexican operations),
see page 32.

The potential impact of carbon pricing is another risk but the Group’s internal processes are not energy intensive. The largest carbon exposure relates to the Scope 3 embedded carbon
of purchased goods and services as well as transportation. Whether this risk materialises depends on where in the value chain the responsibility for the cost lies and whether or not any
cost increase can be passed on.

322022 SUSTAINABILITY REPORTCONTENTSOVERVIEWOUR PRODUCTSENVIRONMENTAL

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GOVERNANCE
SASB INDEXSASB INDEXSASB Compliance Table
Compliance with therequirements of the
Sustainability AccountingStandards Board (SASB)
for 2021, 2020 and 2019
The following table sets out thedisclosures we are currently
able to report under the sector
specific standard for Electronic
Manufacturing Services. Not all of
the sector disclosures are relevant
to Dialight and those conconsidered
non-relevant are excluded.

*LED lighting does not contain substances
requiring hazardous disposal. During the
manufacturing process certain residues
are created, for example, industrial alcoholthat has been used to clean all fixtures,some remnants from the painting process
and soldering waste. We have used the
Resource Conservation and Recovery Act(RCRA) compliance monitoring guidelinesof the Environmental Protection Agency(EPA) in the USA to classify this waste.
All of this waste is collected by registeredenvironmental waste contractors. They
have not confirmed that any can berecycled.

Topic

Accounting Metric

Type

UOM

2021

2020

2019

Code

Water Management

Volume of water withdrawn
Volume of water consumed% of both in areas of high water stress

Quantitave
Quantitave
Quantitave

Gigalitres
Gigalitres
%

14.6
13.1
49%

14.6
13.1
60%

12.1
10.9
53%

TC-ES-140a.1
TC-ES-140a.1
TC-ES-140a.1

Waste Management*

Quantity of hazardous waste from manufacturing% of hazardous waste from manufacturing recycled

Quantitave
Quantitave

Tonnes
%

7.6
0%

8.4
0%

9.1
0%

TC-ES-150a.1
TC-ES-150a.1

Labour Practises

Number of work stoppages
Total number of days idle

Quantitave
Quantitave

Number
Days

0
0

0
0

0
0

TC-ES-310a.1
TC-ES-310a.1

Total Recordable Incident* Rate (TRIR) - Direct
Employees (per 200,000 hours worked)

Quantitave

Rate

0.0

0.1

0.1

TC-ES-320a.1

Labour Conditions2

Near Miss Frequency Rate (NMFR) - Direct
Employees (per 200,000 hours worked)

Quantitave

Rate

17.3

17.5

25.7

TC-ES-320a.1

Product Lifecycle Management

Weight of EOL products and e-waste recovered

Product Lifecycle Management% of EOL products and e-waste recycled

The industrial LED lighting sector is in its infancy and we have ramped up our sales
over the past decade. The product lifecycle for most of these is at least 10 years so
we are not yet seeing any volume of EOL.

Material Sourcing

Description of the management of risks around
critical materials

D&A

Labour Conditions1

1
2

We have been minimising the use of sole suppliers over the past
few years as well as introducing more commonality of parts in
new products. In common with many industries, we have been
impacted by logistical challenges and material shortages but wehave overcome most of these challenges and production in 2021
was 10% higher than in 2020.

TC-ES-410a.1
TC-ES-410a.1

TC-ES-440a.1

We define a recordable incident as one requiring 3 days or more away from work
Working hours in 2020 was higher due to inefficiency from Covid restrictions, absolute number of near misses fell by 10%

Topic

Accounting Metric

Type

UOM

2021

2020

2019

Code

Facilities

Number of manufacturing facilities

Quantitave

Number4

4

4

TC-ES-000.A

Facilities

Area of manufacturing facilities

Quantitave

Sq. Feet

369,000

369,000

369,000

TC-ES-000.B

Employees

Number of employees

Quantitave

Number

1,679

1,614

1,801

TC-ES-000.C33

2022 SUSTAINABILITY REPORTCONTENTSOVERVIEWOUR PRODUCTSENVIRONMENTAL

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GOVERNANCE
SUSTAINABILITYSUSTAINABILITY REPORT & METRICS DATA
Topic

MetricRevenue

Emissions

Type

UOM

2021

2020

2019

Quantitave£m’s£131.6£119.0£151.0

Scope 1

Quantitave

Tonnes

1,188

1,168

1,563

Scope 2

Quantitave

Tonnes

4,377

4,464

5,475

Scope 3 (excluding customer usage phase)

Quantitave

Tonnes100,820

123,218

n/a+

Total excluding customer usage*

Quantitave

Tonnes106,385

128,850

n/a

Scope 3 customer usage**

Quantitave

Tonnes882,000

800,000

988,000

Total emissions

Quantitave

Tonnes988,385

928,850n/a

Emissions saving from customers switching to LED***

Quantitave

Tonnes1,614,000

1,548,000

1,920,000

Emission savings for customers as % Scope 3 excluding
customer usage (internal processes, materials and logistics)

Quantitave

Rate

15.2

12.0

n/a+

Emission savings as % of total emissions

Quantitave

Rate

1.6

1.7

n/a

Usage

Quantitave

Gigawatts

11.0

10.2

10.4

Intensity measure per £m of revenue

Quantitave

Rate

0.08

0.09

0.07

Withdrawn

Quantitave

Megalitres

14.6

14.6

12.1++

Intensity measure per £m of revenue

Quantitave

Rate

0.11

0.12

0.08++

Electricity

Water*These are the verified numbers (by 3rd party) which vary slightly from those reported in the Annual Report for 2021 due to the timing of verification process**This is an internal calculation based on a set of assumptions on hours of usage, country of usage and expected emission factors				***This is an internal calculation based on a set of assumptions on hours of usage, country of usage, difference in electricity usage per fixture and expected emission factors+
2020 was the first year that we measured Scope 3 emissions excluding customer usage++
Due to some elements of production still being outsourced during 2019, the water withdrawn and intensity calculation is not comparable with 2020 and 2021. Our calculations are that on a comparable basis,
the water intensity factor would have been 0.12 and electricity factor would have been 0.11

342022 SUSTAINABILITY REPORTCONTENTSOVERVIEWOUR PRODUCTSENVIRONMENTAL

SOCIAL

GOVERNANCE
SUSTAINABILITYSUSTAINABILITY REPORT & METRICS DATA
Topic

MetricAverage number

Type

UOM

2021

2020

2019

Quantitave

Female

835

673

743

Quantitave

Male

844

941

1,058

Quantitave

Total

1,679

1,614

1,801

Quantitave

Female %

50%

42%

41%

Quantitave

Male %

50%

58%

59%

Quantitave

Total

100%

100%

100%

Quantitave

Female91011Quantitave

Male

26

26

23

Quantitave

Total

35

36

34

Quantitave

Female %

26%

28%

32%

Quantitave

Male %

74%

72%

68%

Quantitave

Total

100%

100%

100%

Quantitave

Female342

Quantitave

Male

4

4

4

Quantitave

Total

7

8

6

Quantitave

Female %

43%

50%

33%

Quantitave

Male %

57%

50%

67%

Quantitave

Total

100%

100%

100%

Labour diversity(Total workforce)

Average proportion

Average number

Labour diversity(Management)

Average proportion

Average number

Board Diversity

Average proportion

THE FUTURE IS BRIGHT
We believe that lighting has a critical role to play in helping businesses become net zero.
We’ll keep leading the way, creating products and systems that make a positive, visible
difference in the most demanding industrial and hazardous environments.

CLICK HERE FOR DIALIGHT’S CORPORATE SUSTAINABILITY VIDEO

Dialight plc
Leaf C, Level 36, Tower 42
25 Old Broad Street
London, EC2N 1HQ
North America HQ1501 Route 34 South
Farmingdale, NJ 07727

SUSTAINABILITYREPORT
2022 REPORT