Kimball Electronics : Our Guiding Principles Report

About This Report

About This Report Welcome From Our CEO Who We Are

Awards and Recognitions

Our Guiding Principles

Our Sustainability Priorities

Customers

People

Citizenship

Profits

Appendices

Welcome to Kimball Electronics' annual sustainability Report of our global business operations. This Report covers calendar year 2023 unless otherwise noted. This Report is written in accordance with the Global Reporting Initiative (GRI) Standards and is aligned to the United Nations (UN) Sustainability Development Goals (SDG) and Global Compact (UNGC), the Sustainable Accounting Standards Board (SASB) Electronic Manufacturing Services & Original Design Manufacturing Standard, and the Task Force on Climate-related Financial Disclosures (TCFD) framework. This Report builds on our demonstrated commitment to transparency and focuses on how our business materially impacts people, the environment, and the economic well-being of our stakeholders for whom this Report is intended-our customers, employees, communities, investors, and suppliers. This Report is published on our public website.

Forward-Looking Statement

This document contains certain forward-looking statements. These are statements made by management, using their best business judgment based upon facts known at the time of the statements, or reasonable estimates, about future results, plans, or future performance and business of the Company. Such statements involve risk and uncertainty, and their ultimate validity is affected by a number of factors, both specific and general. They should not be construed as a guarantee that such results or events will, in fact, occur or be realized as actual results may differ materially from those expressed in these forward-looking statements. The statements may be identified by the use of words such as "believes," "anticipates," "expects," "intends," "plans," "projects," "estimates," "forecasts," "seeks," "likely," "future," "may," "might," "should," "would," "could," "will," "potentially," "can," "goal," "predict," and similar expressions. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historical results. We make no commitment to update these factors or to revise any forward-looking statements for events or circumstances occurring after the statement is issued, except as required by law. At any time when we make forward-looking statements, we desire to take advantage of the "safe harbor" which is afforded such statements under the Private Securities Litigation Reform Act of 1995 where factors could cause actual results to differ materially from forward-looking statements.

Creating Quality for Life is our purpose statement, and it sums up why we exist as a company beyond earning profit. It articulates the enduring value we deliver to our broad base of stakeholders, including our customers and end users; our people and their families; our communities; and our Share Owners.

Welcome From Our CEO

If you have followed our ESG journey since our first annual ESG Report in 2019, you probably noticed a big change on this year's cover.

Gone from the Report's title is the reference to ESG. In its place: Guiding Principles Report.

While the Report remains strategically focused on our environmental, social, and governance principles and practices, we renamed the Report to better reflect the deep roots those principles and practices have in our Guiding Principles: Customers, People, Citizenship, and Profits.

Our Guiding Principles, all 468 words, continue to stand the test of time and remain extremely meaningful to us. They define us as a company and they differentiate us from other companies. We hear this from so many of our new hires when they tell us the key reasons they wanted to become part of our global family. I should know. It was one of the key reasons I joined Kimball Electronics in 2023.

For decades, these principles have been the foundation for our reputation as a company that customers depend on for lasting relationships. They demonstrate our purpose of Creating Quality for Life for all our stakeholders.

As you read this Report, you will notice another first regarding our ESG journey. This year's Guiding Principles Report is written in accordance with the Global Reporting Initiative (GRI) standards, the world's most widely used sustainability reporting framework.

This required us to conduct a materiality assessment based on GRI's requirements to identify where we can have the greatest impact, through both our risks and ouropportunities, on people, the planet, and the economy.

This assessment is helping us ensure we're focusing our efforts to control our most significant ESG risks and develop our greatest ESG opportunities. As part of our continued commitment to transparency, we obtained independent, third-party assurance of the data and narrative within this Report from Keramida, which provides sustainability services worldwide and is one of the few companies in the U.S. certified to train others how to report sustainability based on the GRI framework.

In 2023, we also enhanced our sustainability efforts by hiring our first Director of Sustainability, Sara Leeman, and our first Director of Social Responsibility, Scott Saalman, to join our Director of Safety, Environmental, and Facilities, Chris Whann, on the sustainability team led by our Chief Legal & Compliance Officer, Doug Hass. Our expanded team will help us further develop our corporate strategies and enhance our ESG disclosures.

These enhancements exemplify how, true to our company culture, we focus on sustainable development, a common thread that runs through all four pillars of our Guiding Principles.

The 2023 Guiding Principles Report is the next evolutionary step in our strategy for contributing to sustainable development, as well as for our high level of transparency. We continue to gain recognition for our efforts from prominent entities across the ESG landscape (see page 4).

Strong ESG performance is a manifestation of our Guiding Principles and an increasingly important factor in communicating shared values. Ratings from ISS ESG and others arevaluable guides for those seeking to identify sustainable companies like ours.

I am very proud of how we champion transparency and accountability.

Today, we owe much of our ESG success to our Guiding Principles, and I assure you that those are the same Guiding Principles that will continue to guide our future success. They embody the heart of our company's culture.

When I became Kimball Electronics' CEO in March 2023, I knew I had made the right choice because I saw firsthand how our people around the globe took great pride in their connection to our Guiding Principles and demonstrated those philosophies and beliefs. Put simply, our Guiding Principles are not just words that make for nice window dressing.

I inherited a framed copy of our Guiding Principles from Don Charron, our former CEO, upon his retirement. I equate that to Don having given me the key to our future global success. Those Guiding Principles still hang on my office wall, and I am committed to living by those words. Our Guiding Principles are where it starts for me, each and every day.

Thank you for your continued interest in Kimball Electronics!

Richard D. Phillips Chief Executive Officer

Who We Are and What We Do

About This Report Welcome From Our CEO Who We Are

Kimball Electronics is a global, multifaceted manufacturing solutions provider recognized for its reputation of excellence. Founded in 1961, we deliver award-winning service across our highly integrated global footprint, which is enabled by our largely common operating system, procedures, and standardization. We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service.

Awards and Recognitions

Our Guiding Principles

Our Sustainability Priorities

Customers

People

Citizenship

Profits

Appendices

Diversified Portfolio of End Markets-Calendar Year 2023

Automotive

• • Electronic Power Steering

• • Electronic Braking Systems

• • Body Controls

Our global footprint supports our customers' specialized manufacturing needs. Whether the requirement is in-region support for an end market, access to a lower cost market, or proximity to a customer team, Kimball Electronics has a solution.

Medical

• • Sleep Therapy and Respiratory Care

• • AED

• • Image Guided Therapy

• • In Vitro Diagnostics

• • Drug Delivery

• • Patient Monitoring

Our Global Presence

North America Jasper, Indiana (Manufacturing and World Headquarters) Indianapolis, Indiana Tampa, Florida

San Jose, California Reynosa, MexicoEurope Poznan, Poland Timisoara, Romania

Asia

Nanjing, China Suzhou, China Trivandrum, India Chiba, Japan

Laem Chabang, Thailand Ho Chi Minh City, Vietnam

Awards and Recognitions

About This Report Welcome From Our CEO Who We Are

Awards and Recognitions

Our Guiding Principles

Our Sustainability Priorities

Customers

People

Citizenship

Profits

Appendices

MSCI ESG Ratings provide an assessment of the long-term resilience of companies to environmental, social, and governance (ESG) issues. We are ranked "LEADER" among the Electronic Equipment, Instruments & Components industry.

We earned the #24 spot on Newsweek's Most Trusted Companies in America in the Technology Hardware category.

ISS Corporate Rating: Prime status and 1st Decile rating within our industry.

We continue to receive all 1s-the best scores possible-on each Environment, Social, and Governance rating in ISS ESG's QualityScore.

Ranked 1st in Sustainalytics' ESG in Electronics Manufacturing and 4th overall of nearly 16,000 rated companies. Ratings cover three dimensions: Preparedness; Disclosure; and Performance.

CDP Climate Change Rating: B CDP Water Security Rating: BRanked #13 on Forbes' America's Most Successful Small-Cap Companies list. We were the highest ranking company in the Technology Hardware & Equipment industry and the highest ranked Indiana-based company on the list.

Earned Silver medal sustainability ranking by EcoVadis (82nd percentile).

Recognized by 50/50 Women on Boards for having a Board comprised of at least 20% women.

Scored in the 95th percentile out of 9,365 companies across 62 industries assessed in S&P's 2023 Corporate Sustainability Assessment.

Our Guiding Principles

Our Guiding Principles, first put to paper in 1990, define who we want to be as a company when it comes to Creating Quality for Life for our key stakeholders.

Customers

Customers

People

Citizenship

Profits

Appendices

• • Our customer is our business. We must provide innovative products and services that excite our customers and exceed their expectations of quality, features, and enduring value. We also must recognize and respond quickly and creatively to ideas of others, both internally and externally.

• • Long-term customers are more important than short-term results. We will promise only what we know can be delivered; we will strive to deliver more than was promised.

• • We seek to consistently demonstrate a sense of warmth, humor, and mutual respect in our relationships with our customers, to be the company with which they most enjoy working.

People

• • Our people are the Company. Kimball has been built upon the tradition of pride in craftsmanship, mutual trust, personal integrity, respect for dignity of the individual, a spirit of cooperation, and a sense of family and good humor. We seek to enhance this culture as we grow.

• • We cultivate a leadership style that embraces the attitudes of personal autonomy and empowerment; individual initiative and teamwork; employee involvement and continuous improvement; and open, non-defensive communication.

• • We shall foster an organizational structure, information systems, and development of personal skills that maximize our peoples' flexibility to respond to our customers on their own terms.

• • We want employees to share in their company's success, both financially and through personal growth and fulfillment.

• • The most unfair system of all is one that blindly treats all situations the same. Therefore, we discourage rigid rules and policies in favor of a philosophy of individual responsibility and flexibility, so that real needs, rather than the rules, are met.

• • Offering ideas for improvements and new products is an opportunity we all share, a responsibility we must all accept. We seek to promote and reinforce an entrepreneurial spirit- a conviction that growth and continuous improvement is everyone's job.

• • We seek a diversified group of employees who can be committed to preserving and enhancing these values.

• • Suppliers are our partners, an extension of our company. They must share our commitment to total quality that exceeds our customers' expectations.

Citizenship

• • The environment is our home. We will be leaders in not only protecting but enhancing our world.

• • Recognizing that an attitude of pride in the company and the community are intertwined, we seek to share, but not impose, our values within the communities in which we live. We also strive to help our communities be great places to live.

  CITIZENSHIP

• • We believe the greatest contribution we can make to the prosperity and quality of life of the communities in which we operate lies in being a dynamic, growing company.

Profits

• • Profits are the ultimate measure of how efficiently and effectively we serve our customers and are the only true source of long-term job security. Profitability and financial resources give us the freedom to shape our future and achieve our vision.

PROFITS

CUSTOMERS

PEOPLE

Our Sustainability Priorities

Reporting in Accordance with the GRI Standards

Materiality Matrix ES&G Commitment

Customers

People

Citizenship

Profits

Appendices

We were proud to add our first sustainability director to our global family this past August. Shortly thereafter, we embarked on our journey to assess and report our material economic, environmental, and social impacts in accordance with the GRI Standards for the first time.

We know that through our activities and business relationships we can impact the economy, environment, and people, and, therefore, we can impact sustainable development. We strive to meet the needs of the present without compromising the needs of future generations.

Using the GRI Standards this year provides more transparency on our ESG impacts and increases our organizational accountability. By reporting in accordance with the GRI Standards, we are reporting information about our impacts, credibly and comparably. This supports users of this information in making informed assessments and decisions about our impacts and contributions to sustainable development.

Our process to determine our material topics followed the GRI Standards' methods for identifying actual and potential impacts on the people, planet, and economy.

We considered all GRI Topics in our evaluation of our own impacts as well as our influence on stakeholder assessments and decisions.

To measure our direct impact, we considered those impacts already identified through our internal environmental and safety assessments, applicable ESG regulations, as well as our enterprise risk management processes. We also considered our ESG strategic priorities and the measured materiality impacts reported throughout our value chain.

Our stakeholders include our employees, customers, suppliers, investors and other shareholders, the communities where we operate and live, regulators, and the people in our supply chain. When considering how we influence stakeholder assessments and decisions, we considered feedback collected through our Guiding Principles Employee Survey and other communication channels, including our third-party ethics hotline. We also considered global problems and risks reported by World Economic Forum's Global Risk Reports and those being addressed by the United Nations Sustainability Development Goals and Global Compact Principles. We considered the important topics identified by third-party sustainability ratings and rankings services. Finally, we considered our customers' sustainability goals and requirements.

We then prioritized identified impacts based on their significance, considering the severity and likelihood of our impacts, the priority given by our value chain partners through their materiality disclosures, and the frequency that stakeholders referred to particular GRI Topics in our evaluation. We gave extra weight to impacts we had previously identified, as well as our customers' requirements and expectations.

We distributed the Topics we measured in a materiality matrix (shown on the next page of this Report) and deemed material all topics falling into the upper right quadrant. We also included as material any topics outside of that quadrant that we had already identified as having a material impact.

Kimball Electronics is proud to issue our first Guiding Principles Report in accordance with the GRI Standards for the period January 1, 2023, through December 31, 2023.

Sara Leeman, Director of Sustainability, Kimball Electronics

Our Materiality Matrix Aligned to Our Guiding Principles

Customers

Materiality Matrix ES&G Commitment

People

Citizenship

Profits

Appendices

OUR INFLUENCE ON STAKEHOLDER ASSESSMENTS & DECISIONS

OUR ECONOMIC, ENVIRONMENTAL, & SOCIAL IMPACTS

*Topics 305b and 201 included as material due to applicable regulations and our focus on charitable giving.

• 1. Responsible Sourcing

  GRI 414: Supplier Social Assessment GRI 408: Child Labor

  GRI 308: Supplier Environmental Assessment GRI 301: Materials

• 2. GRI 305a: GHG Emissions

• 3. GRI 418: Customer Privacy

CustomersPeople

• 1. GRI 405: Diversity and Equal Opportunity

• 2. GRI 403: Occupational Health and Safety

• 3. Employee Benefits, Development & Retention GRI 404: Training and Education

  GRI 401: Employment

• 1. GRI 306: Waste

• 2. GRI 303: Water and Effluents

• 3. *GRI 305b: Other Emissions

CitizenshipProfits

• 1. Energy Efficiency GRI 302: Energy

• 2. Giving

  *GRI 201: Economic Performance

Materiality Matrix ES&G Commitment

Customers

People

Citizenship

Profits

Appendices

Doug Hass, Chief Legal and Compliance Officer and Secretary

Our Social, Environmental & Governance Commitment

Kimball Electronics champions transparency and accountability for itself. This transparency and accountability includes our commitment to report regularly and to create awareness of environmental, social, and governance issues.

Our Board of Directors oversees policies and operational controls related to our environmental, health and safety, and social risks. Our Nominating and ESG Committee serves as our Sustainability Committee. We provide comprehensive updates on ESG risks, impact assessments, and issues, including human rights and climate-related risks and our compliance and mitigation efforts, to the Committee at their regular quarterly meetings and whenever it is appropriate. The Committee and our Board review and provide input on this Report. We update and seek input on sustainability issues from our Executive Leadership Team, our Human Resources Department, our Legal Department, our Global Procurement Team, and at regular monthly meetings of our global Safety, Environmental, and Facilities (SEF) Council convened for this purpose.

We firmly believe that identifying and understanding employee health, safety, and environmental issues, including any potential human rights concerns, are critical to our supply chain, our business development efforts, and our acquisition activities. We actively monitor and audit internal compliance with our Code of Conduct and our responses to any reported concerns. We conduct thorough due diligence investigations prior to engaging with suppliers or vendors, acquiring businesses, and selecting partners, and we will apply appropriately higher levels of scrutiny where there are traditionally higher risks of compliance violations and/or human rights abuses.

Recycling is always on the minds of our people. In August 2023, we began composting our HQ break room coffee grounds and composted nearly 100 pounds worth of grounds by year end. Our HQ also eliminated all single-use plastic bottles from our vending machine and common areas.

We escalate and remediate any issues after our relationship with a third party begins and as we integrate operations that we acquire into the Kimball Electronics family.

Our customer ZOLL's Supply Chain team was on site to celebrate our Thailand manufacturing facility's 2023 performance related to ramping up production for automated external defibrillators (AED), awarding our employees with a T-shirt touting our relationship.

Customers

Responsible Sourcing GHG Emissions Customer Privacy

People

Citizenship

Profits

Appendices

Customers

Our customer is our business. They depend on us for lasting relationships. How we champion human rights, support the environment, and demonstrate our corporate citizenship is critical to sustaining these relationships.