1.    PURPOSE

Sustainability is core to Kraton’s value proposition, as we deliver on our promise of Sustainable Solutions. Endless Innovation.™ We commit to sustainable operations in the interest of all Kraton stakeholders. We believe that long-term value in a resource constrained world can only be achieved by a commitment to safe, compliant, socially and environmentally sound operations that deliver sustainable, useful, and competitive solutions to our customers.

Kraton cannot deliver on these commitments without the commitment and contributions of our key partners along the value chain. We value business relationships that are sound, effective, and built on trust, mutual respect and common values. This policy seeks to provide a framework showcasing these values, within which procurement activities will result in a positive social and environmental impact.

2. BACKGROUND

Kraton’s procurement mission is to facilitate the connection of customer needs with supplier solutions. This Sustainable Procurement policy is an extension of our Procurement Policy and a key component of our commitment to sustainable leadership. It highlights essential elements of our Compliance Standards and Health, Safety, Environment and Security (HSES) Standards as well as Corporate Purchasing Standards that we expect suppliers to comply with.

Kraton is a proud member of Together for Sustainability (TfS), a joint sector initiative and global network of major chemical companies, delivering the de facto global standard for environmental, social and governance (ESG) performance of chemical supply chains. The TfS program is based on the United Nations Global Compact (UNGC) and Responsible Care® principles.

Kraton is an engaged participant in the American Chemistry Council Responsible Care® initiative. Responsible Care® is the chemical industry’s world-class health, safety, environmental and security performance initiative, designed to ensure the business of chemistry is safe, secure, and sustainable. Sustainable and ethical practice by suppliers is an essential element of UNGC.

As a critical component of our overall sustainability commitment, Kraton is a participant signatory enterprise to the United Nations Global Compact (UNGC)initiative. The Ten Principles of the UNGC cover Human Rights, Labor, Environment and Anti-Corruption. We also identified the United Nations Sustainable Development Goals (SDG) that are relevant to Kraton’s business model. Our selected SDGs reflect our commitment to sustainability at every level of our operations – from supply chain to product development to manufacturing.

Kraton actively supports the Principles of the UNGC by:

• Identifying and committing to Sustainable Development Goals (SDG) relevant to our business,
• Being an active member of the American Chemistry Council (ACC) and Conseil Européen des Fédérations de l’Industrie Chimique/European Chemical Industry Council (CEFIC)
• Signing the Declaration of Support for the Responsible Care Global Charter.

Committing to frameworks such as the UNGC, joining industry sustainability forums such as Together for Sustainability and partnering with EcoVadis for our third party CSR assessment, enables Kraton to stay abreast of the developing global sustainability agenda and emerging best practices, and ensures we are continuously improving.

To achieve our goals, we seek active collaboration with our supplier partners to ensure Kraton delivers on current and future ESG ratings and reporting framework requirements.

Additionally, this Sustainable Procurement Policy aims to drive:

• Integration of ESG considerations as part of companywide decision-making that can lead to operational and process efficiencies. This can be achieved through sustainable supply chain management practices to reduce the scope 3 environmental impact across the value chain and costs.
• Risk reduction: avoidance of supply chain disruptions driven by non-sustainable business practices (e.g., non-compliance with environmental regulations, child labor).
• Value creation: Additional revenue through innovation and organic growth by providing more sustainable solutions to our customers and in the value chain (i.e., ISCC PLUS alternatives). Kraton knowledges ESG data as a core element of value exchange across product chains and expects suppliers to be able to provide credible and auditable data via Life Cycle Assessment (LCA) and Product Carbon Footprint (PCF). We expect our suppliers to engage actively in decarbonization initiatives and have clear short term and long term commitments towards sustainability via target setting on scope 1,2 and 3 emissions, and ideally Science-Based Targets.
• Talent attraction and retention: Sustainability is a key element of our value proposition as an employer and an essential driver for employee engagement.

3. SUSTAINABLE PROCUREMENT POLICY STATEMENT

Kraton believes that Sustainable Procurement is an essential contribution to our company’s success and, as such, we are committed to creating a positive social and environmental impact in our supply chain through our Procurement practices. We are committed to conducting business in adherence to laws and regulations and we take responsibility for the impact of our operations through our value chain.

We adhere to the following guiding principles in all of our Procurement activities globally:

• Integrity and Ethics: Kraton requires all of our suppliers to conduct business ethically, with integrity and in compliance with all applicable laws, rules, and regulations, and adhere to our Supplier Code of Conduct.
• Human Rights and Labor: Kraton requires suppliers to respect the human rights of their employees and treat them fairly, in accordance with all applicable laws, rules and regulations. We do not tolerate suppliers that utilize child labor, forced labor or any other form of unethical labor practices.
• Supplied Materials: Kraton requires suppliers to use responsible sourcing practices, and able to be reliable source of consistently high-quality, conflict-free, certified materials that meet our expectations.
• Health, Safety, Environment, and Security: Kraton is committed to the Responsible Care™ management system and expects our suppliers to make similar commitments to continuously improve their environmental, health and safety performance.
• Climate Change: Kraton collaborates with suppliers to measure, understand, and address the greenhouse gas emissions in our and their supply chains.

4. IMPLEMENTATION

To make this happen, we have embedded the key elements of our Sustainable Procurement Policy in our Procurement and Supplier relationship management process. This process is detailed in our sustainable procurement procedure and consists of the following steps:

• Supplier selection: process based on the supplier ability to meet all of Kraton’s quality and other requirements, at a competitive price and in keeping with Kraton’s supply strategy. Within the supplier selection phase, we evaluate supplier risk (compliance risk, country risk, financial risk, and specific procurement risks e.g., ability to supply). As an example, WorldCompliance™ Data is checked to screen historical compliance performance.
• Supplier Onboarding: we communicate our expectations on supplier performance in general and our sustainability standard more specifically. Our contract templates include our Corporate Social Responsibility (CSR) clause and a reference to Kraton’s Supplier Code of Conduct. With every signed contract and/or placed order, we expect our suppliers to act in compliance with our Supplier Code of Conduct.
• Supplier Performance evaluation: This consists of an annual review conducted amongst internal stakeholders who provide feedback on our key suppliers’ performance, their operational key performance indicator (KPI) – if applicable – and their daily relationship in general. Procurement assesses the suppliers’ competitiveness, reliability, innovation capability and commitment to sustainable practices, as well as the overall relationship. To assess the suppliers’ sustainability maturity and commitment, Kraton uses Third-Party CSR assessments, Certifications/statements and ,in some cases, Onsite audits by third party auditors.
• Supplier development & relationship termination: Suppliers who repeatedly fail to meet the defined requirements are identified, and Kraton works with such suppliers to develop a performance improvement plan. Progress is monitored on a regular basis. If a supplier fails to demonstrate basic performance and refuses to agree to an improvement plan, Kraton restricts business with the supplier and develops an alternative sourcing plan. Kraton expects our suppliers to show engagement towards embedding the principles of our Supplier Code of Conduct into their own operations and across their supply chain.

5. PROCUREMENT MANAGEMENT AND ORGANIZATION

Procurement is integrated into the business units, and managed by selected Procurement leaders, who participate in their respective executive leadership teams. This structure enables alignment of Procurement with the corporate strategy and goals. The Procurement teams are regionally organized into four key areas of expertise, or Procurement Pillars, which include: Raw Materials & Energy, Logistics, Capital Investments and Facilities. These areas are led by Category Managers.

The Category Managers are subject matter experts in their field, as they understand their supply market and ensure the sourcing strategies reflect, among other matters, the sustainability risks that exist today and might arise in the future. Category Managers are responsible for highlighting supply risks of all kinds and for developing risk mitigation plans. All Category Managers and Purchasing Agents receive comprehensive employee training on compliance and key risk areas, such as anti-corruption, anti-bribery, and international trade. Additionally, they receive frequent, in-person training from senior management with greater emphasis on corporate goals and strategies. The high risk-related activities are reviewed by our Internal Audit department and Risk Management Corporate team.

6. SUSTAINABLE PROCUREMENT ASPIRATIONS & KPIS

To reflect the commitment of our policy, the key elements of our sourcing practices are:

• 100% of our purchases conducted ethically, with integrity, and in compliance with the law throughout our entire value chain.
• 100% of our raw materials purchased from responsible sourcing practices.
• 100% of our wood-based derived raw materials procured from suppliers with a valid Chain-of-Custody certification intended to promote sustainable forestry, such as PEFC (Program for the Endorsement of Forest Certification), FSC® (Forest Stewardship Council®) & SFI® (Sustainable Forestry Initiative®).
• 100% of our key suppliers rated by a Third-party CSR assessment.

Translating the above into concrete actions, Kraton has developed operational targets and KPIs for the categories listed below. These are aligned with our participation to the Tfs chemical sector initiative, and enable us to track our progress and performance on a yearly basis. The specific target applicable to each KPI is set in our Procedure established to implement this Policy, and may vary year on year consistent with our evolving sustainability goals and compliance with internal and external initiatives.

1. Percentage of targeted suppliers that have gone through a CSR assessment.
2. Percentage of targeted suppliers that have gone through a CSR on-site audit.
3. Percentage or number of audited/assessed suppliers engaged in corrective actions or capacity building.
4. Percentage of our total raw materials, by mass received annually, for which we’ve obtained a primary product carbon footprint (PCF).
5. Percentage of our key raw materials suppliers assessed on maturity related to sustainability topics. (targets, SBTI commitment, etc.)

7. REPORTING

Kraton’s corporate sustainability program is developed and governed by the Sustainability Council. The council is presided over by the Chief Sustainability Officer (CSO). The council is comprised of members of the Kraton Leadership Team responsible for Commercial, Operations, Finance, Procurement & Supply Chain, Human Resources, and the functional leaders of Procurement & Supply Chain.

The purpose of the Council is to oversee and facilitate the development and implementation of Kraton’s corporate global sustainability strategy and ESG plans, including Sustainable Procurement, including alignment with various frameworks and standards like the UN Sustainable Development Goals. Procurement is instrumental in achieving these goals.

The Sustainability Council oversees the tactical execution of the Sustainability Program through the Polymers and Pine Chemicals Sustainability Task Forces. The Sustainability program is focused on performance management with two objectives: Strategic Sustainability management and Operational Sustainability Management. Strategic Sustainability management means ensuring the long-term sustainability of Kraton and our ability to create value for our stakeholders and to successfully compete in a changing environment. Operational Sustainability Management means managing, measuring, and improving our sustainability performance across Environmental, Social and Governance themes. The Council measures and monitors the progress, tasks, and initiatives of the Polymers and Pine Chemicals’ Task Forces. The Task Forces are responsible for implementation and tactical execution, including critical resource requirements and oversight for effective execution.

As the chair of the Sustainability Council the CSO reports to Kraton’s Board of Directors periodically, through the Strategy, Sustainability & Investments (SSI) Committee of the Board, which oversees the sustainability program, receiving reports on at least an annual basis.

8.    Revision History

The following table provides a list of the information that has changed from the last version.

Version	Changes Made
1.0	Original February 2020
2.0	Reviewed and updated May 2023
3.0	Reviewed September 2023
4.0	Reviewed and updated May 2024