ESG Strategy

Advancing ESG at Novanta

We link technology and economic progress with environmental, social, and governance responsibilities for the well-being of future generations and for achieving our business goals now and in the future. We take to heart our responsibilities to our shareholders, employees, customers, suppliers, business partner and the communities in which we do business. We are committed to creating a brighter future through environmental sustainability initiatives, building a diverse, equitable, and inclusive workforce, and maintaining a robust governance system.

We leverage Novanta’s capabilities and resources to advance company-wide ESG initiatives by enabling our businesses to develop environmental and social aspects on-site that best meet the needs of our stakeholders. An inclusive and attractive workplace, with a diverse and engaged workforce and equitable growth opportunities, is essential for us in driving sustainable performance and innovation.

Based on ESG materiality assessments and the Novanta Way as the framework, we initially set five ESG targets and launched the program in 2020. Since then, we have been tracking progress against these targets.

From a holistic perspective, ESG for Novanta is a shared commitment and focus on (E) environmental sustainability, (S) diversity, equity, and inclusion, and (G) governance transparency. We are concentrating on:

reducing greenhouse gas (GHG) emissions from our operations;
reducing environmental impact of our products and supply chain;
creating an inclusive and attractive workplace, with a diverse and engaged workforce and strong community involvement; and
conducting our business in an ethical and lawful manner toward shareholders, employees, customers, suppliers, business partners, and the communities in which we do business.

We measure our progress, improve continuously and set further ambitious targets. We discuss and analyze with internal and external stakeholders our ESG roadmap and our position in the value chain with regard to environmental aspects for our products and reducing Novanta’s environmental footprint.

What We Measure

We have refined our methodology for measuring, reporting, and managing our impact to include all of our global facilities. We currently track:

Scope 1 and Scope 2 GHG emissions
Waste generation
Water consumption
Gender diversity
Ethnic diversity in the U.S.
Health and safety outcomes

We prepared our 2022 ESG Report in line with two leading global standards—SASB and TCFD. We recognize the impact of our footprint and the role we play in facilitating meaningful change to benefit the people and the places affected by our operations. We are developing action plans to achieve net zero GHG emissions by 2050. We are building the Novanta Way culture that is diverse, equitable, and inclusive across our business units and global sites. And we are expanding our governance reach through our value chain. Please refer to “ESG Metrics and Targets” for our full list of SASB and TCFD disclosures.

Topics We Are Focusing On

Based on our ESG materiality assessment that involved a survey and interview of senior leaders within Novanta and cross-referencing with key industry indicators, we identified a number of ESG topics that we believe are the most relevant to both Novanta and our stakeholders. In the near and medium term, we plan to focus on the following:

GHG emission reduction through improved energy mix
Waste management
Diversity, equity, and inclusion
Business ethics
Product safety and quality
Supply chain traceability
Financial performance

Updates on ESG Targets

In 2020, we set five ESG targets that we aim to achieve by the end of 2023, excluding the impact of new business acquisitions. Below is a summary of our progress to date:

Category	Our Short-term Targets	Current Status as of End of 2022
Environmental	To achieve our long-term goal of net zero GHG emissions by 2050, we set the following short-term objectives: Phase 1: By the end of 2021, determine current energy and GHG emissions status. Phase 2: By the end of 2022, set goals for GHG emissions reductions.	We have achieved both objectives: We have determined our current energy and GHG emissions status and have disclosed Scope 1 and Scope 2 GHG emissions in this report. Our Scope 1 and Scope 2 GHG emissions for 2022 have been successfully audited by a third-party verification firm. 36% of our total energy sources are now renewable for 2022. That is an increase of +8 percentage points compared to 2021. For phase 2, we developed a five-step Energy Efficiency Program focused on clean and reduced energy consumption at our major production sites.
Social	Provide employees with one day of paid time-off (PTO) to volunteer at an approved non-profit organization: Complete 500 days of community service Novanta-wide by the end of 2023.	We set a Novanta-wide goal of sponsoring 250 community service days by the end of 2022. As of December 31, 2022, we achieved 314 community service days.
Social	Expand our diversity, equity, and inclusion efforts: Phase 1: By April 2021, determine existing status of DEI at Novanta. Phase 2: By January 2022, develop roadmap. Increase diversity of Board of Directors.	Achieved all targets: During 2022, we developed our DEI roadmap to include a series of strategic initiatives designed to diversify our workforce, create an inclusive culture, and promote lifelong learning as a part of our culture transformation. As a result of these initiatives, we increased our representation of women within the organization. Additionally, we increased the percentage of employees from underrepresented groups including both individual contributors and leadership roles. Our Culture Council activated an additional Employee Resource Group (ERG) to increase employees’ sense of inclusion and belonging. Presently we have three ERGs: – Multicultural & International ERG – Women’s ERG – Novanta Professionals Network ERG As of December 31, 2022, our Board of Directors was comprised of 50% men and 50% women. Women representation on our Board of Directors increased 17 percentage points in 2022 from 2021.
Governance	Integrate ESG criteria in purchasing.	In 2022, We surveyed all of our key suppliers to better understand their environmental practices, including ISO certification, external ESG reporting, and internal ESG policies. Based on the suppliers’ responses and other evidence provided to Novanta, we developed an environmental risk rating for each supplier. We continue to monitor our suppliers based on the risk ratings and will work with them to extend our expectation for environmental sustainability practices through our supply chain.
Governance	Expand relevant ISO certification to all applicable facilities, including ISO 14001.	In 2022, we completed: EHS audits at all major Novanta facilities; 7 certification / surveillance / recertification audits for ISO 14001; and 3 certification audits for ISO 45001. In February 2023, one additional site has been successfully certified to ISO 14001 standard.

Environmental
Our Short-term Targets To achieve our long-term goal of net zero greenhouse gas emissions by 2050, we set the following short-term objectives: Phase 1: By the end of 2021, determine current energy and greenhouse gas emissions status; Phase 2: By the end of 2022, set goals for greenhouse gas emissions reductions.
Current Status as of End of 2022 We have achieved both objectives: We have determined our current energy and GHG emissions status and have disclosed Scope 1 and Scope 2 GHG emissions in this report. Our Scope 1 and Scope 2 GHG emissions for 2022 have been successfully audited by a third-party verification firm. 36% of our total energy sources are now renewable for 2022. That is an increase of +8 percentage points compared to 2021. For phase 2, we developed a five-step Energy Efficiency Program focused on clean and reduced energy consumption at our major production sites.

Environmental

Our Short-term Targets

To achieve our long-term goal of net zero greenhouse gas emissions by 2050, we set the following short-term objectives:

Phase 1: By the end of 2021, determine current energy and greenhouse gas emissions status;
Phase 2: By the end of 2022, set goals for greenhouse gas emissions reductions.

Current Status as of End of 2022

We have achieved both objectives:

We have determined our current energy and GHG emissions status and have disclosed Scope 1 and Scope 2 GHG emissions in this report.
Our Scope 1 and Scope 2 GHG emissions for 2022 have been successfully audited by a third-party verification firm.
36% of our total energy sources are now renewable for 2022. That is an increase of +8 percentage points compared to 2021.
For phase 2, we developed a five-step Energy Efficiency Program focused on clean and reduced energy consumption at our major production sites.

Social
Our Short-term Targets Provide employees with one day of paid time-off (PTO) to volunteer at an approved non-profit organization Complete 500 days of community service Novanta-wide by the end of 2023.
Current Status as of End of 2022 We set a Novanta-wide goal of sponsoring 250 community service days by the end of 2022. As of December 31, 2022, we achieved 314 community service days.

Social
Our Short-term Targets Expand our diversity, equity, and inclusion efforts: Phase 1: By April 2021, determine existing status of DEI at Novanta. Phase 2: By January 2022, develop roadmap. Increase diversity of Board of Directors.
Current Status as of End of 2022 Achieved all targets: During 2022, we developed our DEI roadmap to include a series of strategic initiatives designed to diversify our workforce, create an inclusive culture, and promote lifelong learning as a part of our culture transformation. As a result of these initiatives, we increased our representation of women within the organization. Additionally, we increased the percentage of employees from underrepresented groups including both individual contributors and leadership roles. Our Culture Council activated an additional Employee Resource Group (ERG) to increase employees’ sense of inclusion and belonging. Presently we have three ERGs: – Multicultural & International ERG – Women’s ERG – Novanta Professionals Network ERG As of December 31, 2022, our Board of Directors was comprised of 50% men and 50% women. Women representation on our Board of Directors increased 17 percentage points in 2022 from 2021.

Social

Our Short-term Targets

Expand our diversity, equity, and inclusion efforts:

Phase 1: By April 2021, determine existing status of DEI at Novanta.
Phase 2: By January 2022, develop roadmap.
Increase diversity of Board of Directors.

Current Status as of End of 2022

Achieved all targets:

During 2022, we developed our DEI roadmap to include a series of strategic initiatives designed to diversify our workforce, create an inclusive culture, and promote lifelong learning as a part of our culture transformation.
As a result of these initiatives, we increased our representation of women within the organization. Additionally, we increased the percentage of employees from underrepresented groups including both individual contributors and leadership roles.
Our Culture Council activated an additional Employee Resource Group (ERG) to increase employees’ sense of inclusion and belonging. Presently we have three ERGs:
– Multicultural & International ERG
– Women’s ERG
– Novanta Professionals Network ERG
As of December 31, 2022, our Board of Directors was comprised of 50% men and 50% women. Women representation on our Board of Directors increased 17 percentage points in 2022 from 2021.

Governance
Our Short-term Targets Integrate ESG criteria in purchasing.
Current Status as of End of 2022 In 2022, We surveyed all of our key suppliers to better understand their environmental practices, including ISO certification, external ESG reporting, and internal ESG policies. Based on the suppliers’ responses and other evidence provided to Novanta, we developed an environmental risk rating for each supplier. We continue to monitor our suppliers based on the risk ratings and will work with them to extend our expectation for environmental sustainability practices through our supply chain.

Governance

Our Short-term Targets

Integrate ESG criteria in purchasing.

Current Status as of End of 2022

In 2022,

We surveyed all of our key suppliers to better understand their environmental practices, including ISO certification, external ESG reporting, and internal ESG policies. Based on the suppliers’ responses and other evidence provided to Novanta, we developed an environmental risk rating for each supplier. We continue to monitor our suppliers based on the risk ratings and will work with them to extend our expectation for environmental sustainability practices through our supply chain.

Governance
Our Short-term Targets Expand relevant ISO certification to all applicable facilities, including ISO 14001
Current Status as of End of 2022 In 2022, we completed: EHS audits at all major Novanta facilities; 7 certification / surveillance / recertification audits for ISO 14001; and 3 certification audits for ISO 45001. In February 2023, one additional site has been successfully certified to ISO 14001 standard.

ESG Strategy

Advancing ESG at Novanta

What We Measure

Topics We Are Focusing On

Updates on ESG Targets

2022 ESG Achievements