Boundaries and Methodology

Novanta management determined that the Company will define its organizational boundaries for GHG emissions disclosures in accordance with the Financial Control model required under the SEC’s proposed rule on climate-related disclosures. Therefore, beginning in 2022, all consolidated subsidiaries included in the consolidated financial statements of the Company are included in the scope of our GHG emissions reporting. 
 
As part of our continuous improvement efforts, the reporting boundaries of Novanta’s GHG inventory have been expanded since our first report in 2021. Because of this expansion and for transparency of reporting, Novanta’s GHG data have been presented in this report on both an “Organic” basis, reflecting comparable sites in 2022 as in our 2021 report, and on a “Reported” basis, including all sites regardless of size and all businesses acquired in the prior year but excluding businesses acquired in the current year.  
 
Due to the impracticality of collecting partial year environmental data for new acquisitions in any given year, we have adopted a policy of excluding from our ESG reporting any environmental data related to new acquisitions in the year in which the acquisition is consummated. We will begin to include the new acquisitions in the scope of our ESG report beginning in the first full year following the acquisition date. We believe this methodology will enhance the transparency and comparability of GHG emissions data from one year to the next when the data is presented both on an Organic basis and on a Reported basis. Additionally, we have adopted a rolling base year methodology under which the first full year following the year of acquisition(s) or divestiture(s) will be set as the new base year for future GHG emission reduction goals and reporting. We believe this rolling base year methodology will help guide the Company to stay on course for working towards our long-term goal of Net Zero carbon emissions. 
 
Novanta uses a centralized approach to gathering data. Individual facilities report all activity data in its raw form to the corporate level where all unit conversions and emissions calculations are completed by the Global ESG Coordinator. The data collected and included in our GHG inventory represent the full year of 2022. 
 
For environmental data normalized by revenue, revenue amounts represent reported consolidated revenues minus revenues from business acquisitions consummated during the current fiscal year for which GHG emissions are excluded from the scope of the reported data in this report.