Urban gro : ESG Report 2024

Environmental, Social, Governance

ESG Report

2024

Table of Contents

Introduction	3
What is ESG?	4
The World Economic Forum Framework	5
ESG Committee Overview	6
About urban-gro	8
ESG Approach	9
Environmental	10
Social	14
Governance	20
Upcoming	29

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Introduction Letter

On behalf of urban-gro, Inc., it is my pleasure to present our inaugural Environmental, Social, and Governance (ESG) report. At urban-gro, maximizing shareholder value is a top priority, and we recognize the critical role that sustainable and responsible business practices play in shaping a resilient and prosperous future. This report reflects our commitment to transparency and the integration of ESG principles into our core business strategies.

In an era where businesses are increasingly evaluated not only for their financial performance but also for their impact on the environment, society, and governance structures, urban-gro is proud to embrace its role as a conscientious corporate citizen. This report is a testament to our dedication to making a positive contribution to the world around us.

Key Highlights of the report includes:

1. Environmental Stewardship: Details on our efforts to minimize our ecological footprint, reduce carbon emissions, and promote sustainable resource management.
2. Social Responsibility: Insights into our initiatives to foster diversity and inclusion, ensure the health and safety of our employees, and contribute to the well-being of the communities in which we operate.
3. Governance Practices: An overview of our governance structures and policies aimed at maintaining ethical conduct, transparency, and effective oversight.

As we navigate the opportunities and challenges of the 21st century, urban-gro is committed to aligning its business practices with global sustainability goals and ethical standards. By sharing this ESG Report, we aim to provide stakeholders, investors, and the wider community with an understanding of our ESG priorities and the approach we are taking to create lasting value for all our stakeholders.

We invite you to review the details of our ESG initiatives and welcome any feedback or questions you may have. Let's work together to continue building a sustainable and responsible future.

Thank you for your ongoing support and partnership.

Bradley Nattrass	David Hsu
Chairman of the Board and	Board Member, Chairman
Chief Executive Officer	ESG Committee

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What is ESG?

ESG Refers to the Environmental, Social, and Governance Factors that Influence a Company's Operations, Practices, and Performance

In this inaugural ESG report, urban-gro is not formally aligning to a specific framework, but rather, is using the World Economic Forum (WEF)'s Stakeholder Capitalism Metrics as a guide for our reporting. We recognize the evolutionary nature of ESG regulations and believe that the WEF's framework based on the four pillar principles of Planet, People, Prosperity, and Governance serves as a sound baseline to guide our ESG journey.

Planet	People	Prosperity	Governance
We work with	Tracking and	xxx	The definition of
A commitment to	governance is
clients and	reporting on	supporting the
stakeholders to	Diversity, Equity,	social vitality of	evolving but the
responsibly	and Inclusion (DEI)	our communities	principles of
manage natural	initiatives like	paired with a spirit	agency,
resources and	hiring practices,	of innovation	accountability,
reduce Greenhouse	pay equity, and	delivers against	and stewardship
Gas (GHG)	health and safety	our goals for a	continue to be
emissions through	fosters a more	prosperous future.	vital for good
sustainable design.	inclusive and		governance.
	equitable
	workplace.

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The World Economic Forum (WEF) Framework

Straightforward, Globally Recognized Framework

As previously outlined, urban-gro is not formally aligning to a sustainability framework but is utilizing the WEF framework as a guide for reporting. In evaluating options, WEF presented as a notable option for several reasons, including:

Pathway to ISSB Standards: The WEF Stakeholder Capitalism Metrics (SCM) are seen as a "readiness tool" for reporting on the International Sustainability Standards Board's (ISSB) inaugural standards-IFRS S1 and IFRS S2. By reporting on the WEF SCM now, urban-gro is establishing a pathway to transition to these standards in the future, if desired.

Global Application: Endorsed by the World Economic Forum, the WEF SCM are accepted internationally and are applicable across all industries and geographies.

Simplicity: The WEF SCM are designed to be easily understood and accessible for companies of all sizes, limiting undue reporting burden.

Interoperability: The WEF SCM incorporates insights from various other sustainability frameworks and guidelines, offering a consolidated set of guidelines informed by industry best practices.

Support for Risk Management: Unlike frameworks with limited scope, the WEF SCM inclusion of supply chain management can help identify and mitigate a broader range of ESG-related risks.

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ESG Board Committee Overview

The decision to form urban-gro's Environmental, Social, and Governance (ESG) Board committee was driven by a recognition of the increasing importance of sustainable, ethical business practices, and responsible governance in the modern business landscape. The ESG Committee is a standing committee comprised of three independent Board members. In partnership with the urban-gro Board of Directors, the ESG committee aims to:

1. Strengthen the alignment of our corporate values: The ESG committee reflects a commitment by urban-gro'sleadership team to align business practices with our core values.
2. Align stakeholder expectations: With accountability to a diverse set of stakeholders, including investors, clients, partners, employees, and communities, we understand the increasing prioritization of ESG considerations as we deliver overall value to our shareholders and stakeholders. The formation of this dedicated committee reflects our responsiveness to this expectation and commitment to transparency.

1. Manage risk: We recognize that ESG-related issues can pose risks to business operations and reputation. urban-gro established this committee to systemically identify, assess, and manage these risks. This proactive approach helps safeguard against potential adverse impacts.
2. Compliance: The complex and evolving regulatory landscape means that establishing an ESG committee helps us to stay informed of regulatory changes, ensure compliance, and mitigate risks.

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ESG Board Committee Overview, Continued

1. Support investor relations: It's understood that the influence of ESG factors on investment decisions is prevalent. The formation of a committee signals to the investor community that we understand this association and are committed to creating long-termvalue.
2. Enhance the brand: ESG commitment and awareness is a key component of our brand identity. By forming a committee, we are demonstrating a strategic effort to enhance brand association with responsible business practices and corporate citizenship.
3. Boost innovation and efficiency: Formation of the ESG committee serves to enhance the exploration and implementation of sustainable business practices which can lead to cost savings, improved resource efficiency, and competitive market advantage.

1. Boost employee engagement: Commitment to ESG values resonates with our urban-groemployees who prioritize working for a socially responsible organization. It reinforces urban-gro'scommitment to fostering a positive workplace culture, attracting top talent, and promoting employee engagement.
2. Create long-term value: By committing to sustainable business practices, urban-groaims to create enduring value for stakeholders through the integration of sustainability into our strategic goals.
3. Adapt to changing trends: We acknowledge the importance of staying on the leading edge of evolving expectations. The formation of our ESG committee demonstrates a commitment to proactively addressing emerging trends in corporate responsibility.

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About Urban-Gro

urban-gro, Inc.® (Nasdaq: UGRO) is an integrated professional services and Design-Build firm. We offer value-added architectural, engineering, and construction management solutions to the Controlled Environment Agriculture ("CEA"), industrial, healthcare, and other commercial sectors.

Innovation, collaboration, and creativity drive our team to provide exceptional customer experiences. With offices across North America and in Europe, we deliver Your Vision - Built.

Learn more by visiting www.urban-gro.com.

Our Purpose

At urban-gro, our commitment to purposeful action is at the core of our operations. We believe that extraordinary product quality and client service can only be achieved through a genuine dedication to our vision and values. Our company culture revolves around several key principles, including a client-centric approach, a steadfast commitment to honoring our promises, fostering innovation, simplifying complexity, attracting top talent, and promoting a cohesive team spirit.

Our unwavering commitment to our clients and employees extends to the communities in which we operate. We actively seek opportunities to make a positive impact on at-risk populations by providing financial and in-kind donations to organizations dedicated to creating meaningful change.

Furthermore, by focusing our design-build approach on building optimization, we ensure that our solutions not only align with our clients' goals but contribute to a more sustainable future. We will continue to prioritize the efficiency and long-term performance of our best-in-class solutions to further demonstrate this commitment to sustainability.

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ESG Approach

urban-gro has partnered with an ESG service provider to proactively embark on our corporate ESG journey. While we are not formally aligning to a specific framework, we are using the World Economic Forum (WEF)'s Stakeholder Capitalism Metrics as a guide for our reporting.

Much of the essential groundwork to achieve our ESG goals was begun in 2023 including:

• Formation of an ESG committee comprised of independent board members, with key internal stakeholders as advisors
• Creation of an ESG Committee Charter
• Launch of a Materiality Assessment to gauge stakeholder interests and priorities (employees, board members, investors, clients, and vendors surveyed)
• Completion of a Board Diversity Matrix
• Preparation of a Board Skills Matrix

In 2024, we aim to continue building on this momentum by:

• Focusing our ESG initiatives and reporting on the material topics identified in our inaugural Materiality Assessment
• Further integrate ESG considerations into our overall business strategy
• Continue to engage and involve stakeholders and our local communities
• Roll out updated policies and practices
• Remain actively engaged in our communities
• Complete a board skills matrix

• Incorporation of environmentally conscious in-office practices
• Revision of policies and practices guided by WEF framework
• Time and monetary donations to benefit our local communities

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Environmental

Greenhouse Gas Emissions	11
Taskforce on Climate-Related
Financial Disclosures (TCFD)	12
Implementation
Land Use & Key Biodiversity Areas	12
Water Consumption	12
Recycling & Single-Use Plastics	13

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