Sustainability Report 2020 - Furninova

Sustainability Report 2020

One of Scandinavia's leading producers.

Furninova is one of Scandinavia's leading producers of sofas and armchairs where we have for decades chosen to manufacture our products at our jointly-owned production unit. The offer consists of being able to guarantee our consumers high quality, good craftsmanship combined with good design from our European factory. The passion for sofas and armchairs guides the entire business and the products are produced with care for the environment, health, safety and working conditions. High quality and craftsmanship means a strong commitment to delivering furniture with a long service life. Furninova is a well-known and respected brand that will continue to develop in a responsible and long-term way.

Long-term and sustainable collaboration.

As one of Scandinavia's leading producers of sofas and armchairs, we are responsible for always trying to advance our sustainability work. In our efforts to minimize resources and any negative impact on the environment, we have always focused on being able to offer high quality sofas and armchairs that inspire, are affordable and manufactured responsibly. We must constantly change and innovate in order to meet our and our customers' demands.

In Furninova's culture, it is deeply believed that we should be solid partners. We encourage an open dialogue, we follow laws and regulations and show honour when interacting with our partners. We have an energetic entrepreneurial spirit based on a longterm perspective and in which Furninova always wants to work for sustainable entrepreneurship.

Furninova's goal is sustainable and profitable growth, which requires a work environment where employees feel stimulated and can develop to create commitment and productivity. It is our employees who drive our competitiveness. Therefore, a large part of our sustainability work is about being an attractive employer and a workplace where our employees feel comfortable, proud and take responsibility. We will continue to work for sustainable business development, implement our strategies and formulate clear goals. In this way, we believe we can meet our customers' wishes and be their first choice no matter where and when they shop.

Bjärnum, April 2021 Hans Karlsson MD Furninova

Introduction 3

Stakeholders 4-5

Furninova's value chain 6-7

Furninova's stakeholders in sustainability work.

Together with our partners, we strive to increase our influence in the industry in order to influence some of the major challenges we face.

Customers

We work for a long-term and close collaboration with different chain customers and independent furniture stores with the goal of meeting the different requirements that our customers often have. Our customer service, together with sales representatives and agents, are the most widely used channels in communication with customers, while communication through various social media channels is continuously increasing. Through these channels, we get questions regarding our sustainability work that can be related to our products and their chemical content, but also questions regarding certificates, production processes, working conditions of our suppliers, animal welfare and sustainable forestry occur to a large extent. In order to further improve our sustainability work, we have initiated the work of Svanencertifying (Nordic Swan Ecolabel) one of our sofa models.

Suppliers and subcontractors

Our ambition is to work long-term with our suppliers. In order to ensure that social, environmental and quality requirements on our part are met, we have developed a supplier policy that all suppliers have signed and have to adhere to. Our suppliers must meet REACH (Registration Evaluation, Authorisation and restriction of Chemicals) requirements, which is an EU regulation regarding the production and safe use of chemicals.

An increasing proportion of our fabrics also meet the requirements of Oeko-Tex ® which is a worldwide certification. The certification ensures that the fabrics do not contain chemicals that can cause allergic or other health problems and if you have the highest certification, no use of environmentally hazardous dyes or aids is allowed during production and this certification also affects the social conditions and the working environment. The requirement that our fabrics are to meet Oeko-Tex ® will continue in 2021. Our supplier policy also covers compliance with the following requirements and regulations:

• Requirements according to the UN specialized agency, ILO (International Labor organization), which covers the rights of employees to promote employment and better working conditions worldwide.

• Requirements under the UN Universal Declaration of Human Rights (UN Universal Declaration of Human Rights).

• The requirements in the 10 points cover human rights, labour law rules, the environment and anti-corruption according to the United Nations Global Compact.

In addition to the above requirements, all suppliers must meet local and international requirements regarding the environment, work environment and animal husbandry. Follow-up of compliance with the policy takes place either when we visit, or via telephone calls. This can also be done through a form of self-inspection that is completed by the supplier and sent to us. Together with the suppliers, we focus on sustainability issues such as responsible sourcing and social responsibility, as well as health and safety.

In order to further improve our sustainability work, we are evaluating how, and in what way, we can work to focus on the 17 Global Goals in Agenda 2030 of the Sustainable Development Goals (SDGs), which are the action plan in which UN Member States jointly set sustainable development goals worldwide.

Employees

Our future development is crucial for how we manage to attract, recruit, develop and above all retain the suitable employees. We want to offer interesting tasks in a proactive and developing work environment that is safe and healthy. We ensure the working environment through systematic work including health, work environment and well-being. We encourage an open dialogue where improvement is our focus. Management meetings and department meetings are held continuously in each department to ensure collaboration, communication and improvement focus within the department itself and between other departments. We complement this with regular work environment checkups, health surveys and development talks.

The health surveys cover both physical as well as psychosocial health. After the medical survey, we present the overall result to clarify what improvement measures we should take and which will be discussed further within the management team for action.

We want to continuously strengthen competence advancement and preventive work around health and stress. In connection with personal perfomance discussions the need for competence development are discussed as well as any signs of health issues. We encourage increased physical activity and a balanced lifestyle by offering health activity grants and training during working hours. Our goal with work environment management is ultimately to prevent bad health and absence due to shortcomings in working conditions and in the work environment in combination with a high level of staff satisfaction and impact.

In 2020, total sick leave was 1.85 per cent. Which is basically equal to the previous year. Staff turnover was 0 per cent during the year, which is a decrease compared to previous years. All our employees in Sweden are covered by collective working agreements. We are members of the employers' organization Swedish Trade and the Confederation of Swedish Enterprise and work continuously to have a good dialogue and cooperation with the trade union parties, which takes place through the monthly reconciliation meeting with the local trade union club.

Owners

Our overall goal is to create increased value for the owners in the long term, where good profitability combined with strategic sustainability work are the guidelines. The most important issues are primarily responsible behaviour from management and the board of directors. Our owners have a long-term financial interest and also work actively with us. By constantly being responsive to our market demands and also to demands from our stakeholders, the right conditions are created for wise decisions in sustainability work.

Furninova’s value chain

Product development and choice of materials.

We believe in increasing environmental awareness where a focus on quality, long service life and good design combined with lower environmental impact is vital. It is in line with our efforts to offer products that can be used for many years. As we all know, the increased lifespan of a product means a smaller climate impact.

We want to contribute to more sustainable consumption and production and therefore we do not offer pre-manufactured products. A miscalculation of product ranges and trends would mean a stock of products that would ultimately have to be discarded, which in turn would mean unnecessary raw material consumption and negative climate impact. For this reason, we produce in principle only customer order-driven products that have a specific end customer already at the manufacturing stage.

Our production unit and partner, MTI-Furninova, is FSC® certified (Forest Stewardship Council ®) which is a guarantee that the wood comes from sustainably grown forest. We are also certified according to FSC® which means that the chain is certified in its entirety, from raw material to finished furniture. All board material in our products are in the classification E05, which reach high demands of formaldehyde levels.

Production - Manufacturing

Long-term and close relationships with our suppliers contribute to increased transparency and presence. Safe products and safe production are a high priority for us. The production stage includes sustainability challenges but also the opportunity to influence for a reduced environmental impact.

Our main producer and partner MTI-Furninova is part of the same group as us. Working under a joint owner contributes to even more openness and presence between the companies. Our purchasing and design departments continuously follow up on complaints and customer comments. In the event of an identified increase in complaints, work begins to identify the problems and to rectify them in order to avoid further complaints of the same nature.

With a focus on improving efficiency and work environment, our producer MTI-Furninova will in 2021 open a completely new production facility that will coordinate the previous three production facilities in one location. Coordination means a reduced share of internal transport, which reduces fuel emissions, improved environmental aspects in general as a new building is more resource-efficient than older buildings and contributes for an improved working environment.

Transportation

We always strive for the most efficient logistics management in order to minimize the negative consequences on the environment. By constantly trying to optimize the filling rate in trucks and containers, the environmental impact is reduced. The majority

of our products are sold as order-driven products, which means that the filling rate of the shipments may vary based on what the customer ordered. Our customers have the opportunity to have their deliveries delivered directly by truck or by coordinating deliveries to several customers to optimize shipping volumes. When coordinating, delivery usually takes place to a transhipment warehouse for further coordination and distribution to the customer. In 2020, the filling rate was 97 percent, which is an improvement of a couple of percent compared to 2019. Our goal is to minimize CO2 emissions from business travel by continuously increasing the proportion of Microsoft Teams meetings or other types of IT-based meetings in general but especially regarding internal meetings.

We also require that the environmental impact of company cars should be as small as possible, taking into account the type of car. When replacing cars, cars with lower emission values than the previous car should primarily be selected. The cars must belong to environmental class Euro 6 or higher. Furninova intends to evaluate increased use of hybrid cars in 2021/ 2022.

Reuse and Waste

Good product quality and systematic complaint handling where you offer and care for spare parts as well as some reprocessing of products, prevent waste. Every year, large proportions of textile waste are deposited or incinerated in the EU, of which only a few percent are recycled. In order to contribute to increased recycling and reuse, we offer customers who buy fabrics and textiles, to buy expired textiles at greatly reduced prices. We strive to ensure that our production packaging is collected and recycled as much as possible. A packaging fee to the Packaging and Newspaper Collection (FTI) is paid annually and in this way we are involved in financing the more than 5,000 recycling stations located around Sweden, where consumers can deposit their packaging for recycling. Every year we report the amount of expected waste to FTI. In many other countries, we have similar arrangements for recycling waste. In Germany, for example, we have an agreement with the recycling supplier Interseroh. We work continuously to reduce the proportion of plastic materials when packaging our products.

Risks and risk management

In order to ensure a good overview of the risks to which the business is exposed, we work continuously to identify, analyse, evaluate and manage these risks. Awareness among society about climate change is likely to result in new laws and regulations that will affect our business in one way or another. Restrictions on emissions and new and changed taxes on energy abstraction in production are just a few examples. This, combined with climate change, may mean that the availability and cost of raw materials can change over time. Customers' consumption patterns can, and will most likely, change due to the growing awareness of climate change. New demands from the outside world contribute to innovation and development around both production and ranges that takes into account climate and environmental impact, and there we shall be part of the journey and be a familiar and respected brand that continues to develop in a responsible and long-term way.