Embracer : ESG Report

SUSTAINABILITY REPORT

Embracer Group is a global group of creative and entrepreneurial businesses in PC/console, mobile and board games and other related media. The Group has an extensive catalog of over 900 owned or controlled franchises.

With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its ten operative groups:

THQ Nordic, PLAION, Coffee Stain, Amplifier Game Invest, DECA Games, Easybrain, Asmodee Group, Dark Horse Media, Freemode and Crystal Dynamics - Eidos. The Group has 106 internal game development studios and is engaging more than 11,000 employees in more than 40 countries.

SUSTAINABILITY REPORT

1. INTRODUCTION
2. AN UPDATE FROM OUR SUSTAINABILITY TEAM
3. SOME OF OUR COMMITMENTS
4. OUR STAKEHOLDERS
5. SMARTER BUSINESS FRAMEWORK
6. GREAT PEOPLE

1. SOLID WORK

1. OUR PLANET

1. SUSTAINABILITY RISKS AND OPPORTUNITIES

1. SUSTAINABILITY GOVERNANCE

1. EU TAXONOMY

1. ABOUT THIS REPORT

SUSTAINABILITY REPORT

INTRODUCTION

By integrating a sustainable approach into our business model, we ensure that we take advantage of business opportunities while mitigating risks. Our work is firmly rooted in a strong commitment to acting long-term and creating value for all our main stakeholders. We leverage relations with partners and peers to raise industry awareness and make progress on key issues for our own business and industry.

SUSTAINABILITY THAT SUPPORTS OUR BUSINESS

We have built one of the industry's most diversified games and entertainment businesses, spanning the whole range from smaller niche titles to some of the most iconic names in the games universe. Games and titles produced or distributed through our global group of businesses reach millions of gamers and fans across the globe.

As a company driven by entrepreneurs, our approach to business is inherently centered around empowering great people. As part of our ambition to be an attractive home for talent, we embrace differences and welcome a multitude of perspectives and skill sets. This people-first mindset is also central to how we think about games and entertainment and the well-being of players and fans. We want to make sure that we contribute to an environment that supports accessibility and digital well-being.

Our holistic approach to sustainability also rests on proactive engagement to address and mitigate the environmental impact caused by the Group and the gaming and entertainment industry as a whole.

The Group has in the past year made further headway in risk management, while bolstering intra-Group integration and collaboration regarding sustainability. Thus, our sustainability approach continues to evolve and inform decision-making at all levels in the Group, advancing our capabilities to navigate risks and opportunities.

In FY 2022/23 the Board of Directors set the group´s first sustainability goals. Goals steer our work to create even more value for our shareholders, customers, employees, and other stakeholders. The three goals are:

• Double the number of female Managing Directors/Studio Heads by 2025 compared with the base year 2021/22.
• Reduce our carbon emissions by 45% by 2030 compared with the base year 2021/22.
• Every Operative Group to set sustainability goals during 2023/24.

The major changes in the Group have impacted the three sustainability goals. It was not meaningful for the operative groups to set sustainability goals during 2023/24 due to the ongoing reconstruction program and the decision to transform Embracer Group into three separate, publicly listed companies. We also need to recalculate the baseline for the gender and climate goals to keep them as valuable tools for leading us in the right direction at the right speed. The comprehensive materiality analysis and stakeholder dialogue that led to the board's decision to set these goals have increased awareness within the Group and will provide valuable insights for the three new public companies in their strategic sustainability work.

HIGHLIGHTS OF THE YEAR

• Focus on preparing for upcom- ing EU requirements regarding external sustainability report- ing the Corporate Sustainability Reporting Directive (CSRD). That included conducting a double materiality analysis, which maps the Group's most material sustain- ability issues and will serve as a base for the coming reporting.
• Accelerated the implementation of various internal control and inte- gration processes.

• The Groups sustainability goals for the climate was validated and approved by Science-based Target initiative.
• Formed an Advisory Sustainability Council, chaired by the Head of Sustainability and comprising representatives from the owners, the Board of Directors, and man- agement.

• Annual mandatory trainings for all employees on Privacy and Anti- Corruption were launched.
• Adoption of an AI policy package and was rolled out throughout the Group.
• Support to people of Ukraine. We have continued to make donations from the parent company and con- tinued to support the people of Ukraine due to the ongoing war.

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AN UPDATE FROM OUR SUSTAINABILITY TEAM

INTERVIEW WITH EMMA IHRE, HEAD OF SUSTAINABILITY

Hi Emma! What have been Embracer Group's priorities - from a sustainability perspective

- this past year?

The global backdrop this past year was one of continued volatility. Embracer, too, faced a new array of challenges leading to the announcement of a comprehensive restructuring program and the transformation of Embracer Group into three standalone publicly listed entities. Some of the initial plans on our sustainability agenda, including for operative groups to set individual targets, had to be postponed, as we refocused our priorities in light of broader transformative changes in the Group.

However, this also presented an opportunity to consolidate our work and further develop our internal collaboration with other functions within the company. We have accelerated the introduction of various internal control and integration processes within HR. Collaboration and knowledge-sharing across the operative groups have also progressed, improving our capacity to deliver on accessibility, diversity and inclusion, leadership, and team building.

This year has seen a gradual progress on our sustainability agenda and implementation.

EU's corporate sustainability legislation continues to evolve. How will this impact and contribute to your sustainability work?

We welcome the EU's approach, which contributes to more widely accepted frameworks for sustainability reporting and ensures that companies take responsibility. However, in this process, which is a fundamental change in corporate life, we must also remain cautious that sustainability does not become more about compliance than creating value for different stakeholders and society at large.

Regarding the EU regulations, our focus this past year, but also going forward, is on the upcoming reporting requirements (CSRD). Our readiness and alignment are tracking well. We have conducted a double materiality assessment of our most material sustainability issues and a gap analysis between the requirements of the CSRD and the current state of our reporting. The implementation of CSRD will be done in close collaboration with all operative groups and companies.

Ultimately, the new requirements will help us become even better at reporting on our entire value chain, mapping and addressing risks, and making important progress on integrating sustainability reporting as part of financial reporting.

EMBRACER GROUP AB (PUBL) | SUSTAINABILITY REPORT 2023 / 2024

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SUSTAINABILITY REPORT

SOME OF OUR

AGENDA 2030

Embracer supports Agenda 2030 and the holistic approach to sustainable development established through the UN Sustainable Development Goals (SDGs). Regarding our business operations, we have identified five SDGs that are particularly relevant for our group of companies and studios.

• 4 - QUALITY EDUCATION
  We support developers, creatives, and the broader games ecosystem by dedicating resources to various educational forums in the industry. These initiatives will also support our mission to reach diverse target groups and make progress on diversity and inclusion.
• 5 - GENDER EQUALITY
  One of our key priorities is improving the gender bal- ance within Embracer Group and in the industry.
• 8 - DECENT WORK AND ECONOMIC GROWTH As a people-centeredbusiness, we strive to provide good work-lifebalance and healthy working conditions. We also invest in entrepreneurs to drive innovation and a creative economy.
• 12 - RESPONSIBLE CONSUMPTION AND PRODUCTION
  We are transparent about our environmental impact and take action to contribute to an industry with less carbon footprint.
• 17 - PARTNERSHIP FOR THE GOALS
  We work with industry partners and peers, as well as NGOs and trade organizations, to deliver progress on our prioritized sustainability areas.

UN GLOBAL COMPACT

Embracer has been a member of the UN Global Compact since 2021. Supporting it aligns with our core values and facilitates cooperation with other companies and stakeholders. Collaboration and knowledge-sharing are central elements to accomplish sustainable change, and our membership allows us to build on that. During the year, Embracer Group AB (the parent company) and Eidos Interactive participated in the Target Gender Equality

COMMITMENTS

Accelerator program. As participating companies, we receive access to cutting-edge data and research supporting gender equality in business. We collaborate with UN partners and experts to fast-track progress, developing action plans based on insights gleaned from the program. This nine-month initiative, available to United Nations Global Compact members, empowers us to establish and achieve ambitious goals for women's representa- tion, equal pay, and leadership. Through a combination of performance analysis, workshops, peer learning, and dialogue across different levels, we deepen our implementation of the Women's Empowerment Principles and enhance our alignment with Sustainable Development Goals (SDGs). Through the Global Compact Academy, the Embracer sustainability Ambassador Group has access to extensive sustainability training, reports, research, and the networks provided through our membership.

SBTi COMMITMENT

The Science Based Targets initiative (SBTi) guides our greenhouse gas emissions reduction planning and actions. We have set targets in line with the SBTi, which were validated and approved in December 2023.

This validation encompasses our absolute reduction targets for greenhouse gas emissions, addressing both direct and indirect emissions (Scope 1 and 2) and emissions from our value chain (Scope 3). SBTi has officially confirmed that these targets align with the 1.5°C pathway, the primary objective outlined in the Paris Agreement.

Establishing emission targets provides a clear roadmap for managing carbon dioxide emissions. Using 2021 as the baseline year, we have set ambitious goals to reduce absolute Scope 1 and 2 emissions by 45% and to achieve a minimum 51.6% reduction in Scope 3 emissions by 2030. The targets were approved during this fiscal year, and we will provide updates on our progress toward achieving our 2030 goals in the coming years. This commitment reflects our dedication to contribute to a sustainable future. Our next step is to develop a transition plan with sub-targets for the group.

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SUSTAINABILITY REPORT

OUR STAKEHOLDERS

Our stakeholders are individuals or groups that have an interest in or are affected by Embracer Group's actions, decisions, and performance. They have a stake in our success and can influence or be influenced by our activities and outcomes.

Embracer Group is in continuous and close contact with our stakeholders, which for instance includes employees, non-governmental organizations (NGOs), media, industry, regulators and authorities, financial markets, gamers and other customers. The dialogue with our stakeholders is an everyday ongoing activity. We conduct our own stakeholder dialogues, as it is a way for us to ensure that we live up to expectations and gain valuable insights. Corporate transparency is a central value in our sustainability work. We aspire to have two-way communication to both learn and share knowledge to continuously develop and improve the quality of our work.

Our stakeholder dialogue is crucial for our materiality analysis because it provides diverse perspectives, insights, and concerns from stakeholders directly affected by Embracer Group's activities. This dialogue helps us identify and prioritize issues that are most significant to our stakeholders and Embracer Group's long-term value creation and risk management.

Gamers

& otherEmployees customers

Financial	NGOs
markets

Regulators &	Media
Authorities

Additionally, games and entertainment often stimulate cognitive abilities, enhance problem-solving skills, and offer a sense of achievement through challenges and rewards. Overall, they contribute to enhancing quality of life and promoting emotional well-being for users. Gamers and other entertainment users have the power to shape the direction, success, and reputation of gaming and entertainment companies through their engagement, spending habits, and advocacy efforts.

EMPLOYEES

Embracer Group wouldn't exist and create value for our customers without our great employees and how we act as an employer and company affects our employees.

Representatives from all operative groups are included in what we decided to name the Ambassador Group, which is led by the Group Sustainability Manager. During the year, the Ambassador Group has developed more strate- gically, with the Group taking more responsibility for being a local promotor for sustainability. Over the past year, and with the challenges we have faced, we have emphasized listening to the group situation, and valuable dialogues have given us a clearer picture of the current challenges and opportunities in each part. Important responsibilities for the Ambassador Group are promoting the Smarter Business Framework and the Group sustainability goals, sharing insights, and anchoring initiatives. In FY 2023/24, the group comprised over 40 members, representing all eleven operative groups and having a good gender bal- ance. Members of the Ambassador Group have taken part in the UN Global Compact Target Gender Equality Accelerator, a one-year commitment to strengthening our work on gender equality.

Industry

The following groups are three of our most important stakeholders:

GAMERS AND OTHER CUSTOMERS

The reason for Embracer's existence is to create great games and entertainment for our end customers. Games and entertainment create value for users by offering immersive experiences, fostering creativity, and providing opportunities for social interaction and relaxation. Games and entertainment allows users to temporarily disconnect from reality and engage in enjoyable activities.

FINANCIAL MARKETS

Our stakeholders in the capital markets expect that we act responsibly and sustainably to align with their values and contribute to higher risk-adjusted returns.

Embracer has become a part of Sustainalytics's 2023 list of Top-RankedESG-Companies. ESG ratings are used by investors and creditors to understand companies' ESG risks and make it easier for investors to consider sustainability in investment decisions and their ongoing portfolio management. Embracer also reports to S&P Global and UN Global Compact COP.

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SUSTAINABILITY REPORT

SMARTER BUSINESS

FRAMEWORK

At Embracer Group, we focus on the areas where we can make the most positive impact. To that end, we have developed the Smarter Business Framework, built around three pillars: Great People, Solid Work, and Our Planet. The framework structures our work and ensures that we as a Group prioritize our key issues. The framework reflects most of our material topics, which were identified as part of our materiality analysis of how our business impacts people and the planet. Our prioritized key issues are continuously evaluated through ongoing dialogues with employees, investors, NGOs, and other stakeholders.

OUR SUSTAINABILITY PILLARS

Our operative groups continue to work on their individual sustainability targets to address the most important topics to their business. The Smarter Business Framework plays an important role in setting shared priorities for

our sustainability efforts. We can track progress in the Group's prioritized areas through alignment, collabora- tion, and various internal control processes.

GREAT PEOPLE

The employees are vital to our ongoing success. By creating more diverse and inclusive work-­ places, presenting opportunities for development, and supporting employee well-being, we can attract and retain industry- leading talent.

Main topics:

• Diversity and inclusion in skillsets and perspectives
• Employee well-being
• Career development
• Community engagement

SOLID WORK

We want to create great games and entertainment. Our ambition is to provide quality content and support digital well-being and accessibility for all users of our games and entertainment.

Main topics:

• Diversity and inclusion in games and entertainment
• Digital well-being
• Accessibility
• Player community engagement
• Responsible marketing

OUR PLANET

By limiting our own emissions and investing in projects supporting the green transition, we can reduce the entire group's environmental impact.

Main topics:

• Carbon emission reduction
• Raising awareness within the industry about environmental impact
• Part of the movement for a climate-neutral industry

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SUSTAINABILITY REPORT

GREAT PEOPLE

We know that embracing creative independence and inclusion, enabling employee well- being, and supporting our communities will pay off in engagement. This will help us attract and retain talented people who want to be part of the Group and contribute to our work.

Main topics:

• Diversity and inclusion in skillsets and perspectives
• Employee well-being
• Career and creative development
• Community engagement

PROGRESS OF COMMITMENTS

Embracer recognizes the valuable contributions that diverse perspectives and skills bring to our work environ- ment. We believe in fostering a culture where everyone feels included and valued, resulting in positive outcomes for our people and business. We aim to cultivate an atmosphere encouraging creativity and supporting our dedicated employees in generating innovative ideas. Together, we strive to maintain a harmonious and engaging workplace where everyone can thrive.

Diversity and inclusion in skillsets and perspectives Embracing diversity and inclusion in skillsets and perspectives is integral to our vision of fostering a vibrant and inclusive workplace. Recognizing the importance of diversity not only in recruitment but also in retaining talented employees is of the utmost importance.

We are proud to report that 30% of our workforce comprises female employees, marking an increase from last year's 26%. While this represents a modest yet upward trend since we began tracking gender diversity, we remain committed to furthering our efforts. It's equally crucial for us to ensure that diversity is reflected in our management teams, with the female ratio among managers improving from 23% to 26% since last year, approaching parity with the overall ratio. Notably, the representation of females among employees under 30 stands higher at 34%, demonstrating a promising upward trajectory. Our Board of Directors is comprised of an equal number of men and women.

As part of our commitment to upholding the UN's Declaration of Human Rights, we maintain a zero-tolerance policy against all forms of discrimination and harassment within the Group. During the year we re-conducted our annual Code of Conduct training where 7,942 people out of a total of 11,000 employees (excluding Saber Interactive and Gearbox Entertainment) so far have participated in completing the training. Employees are encouraged to report breaches of our Code of Conduct to their immediate managers. They can also anonymously report breaches using the whistleblower communication channels. In its legal sense, zero incidents falling under the legal definition of whistleblower matters, were reported and handled within the Group in the past year.

AGE DISTRIBUTION	2023/24	2022/23	2021/22	2020/21
<30 years	25%	30%	36%	29%
of which women	34%	32%	27%	25%
30-50 years	67%	64%	60%	66%
of which women	28%	25%	21%	18%
>50 years	8%	6%	4%	5%
of which women	30%	30%	31%	30%

EMPLOYEE SURVEY	2023/24	2022/23	2021/22	2020/21
Average satisfaction rate	76/100	80/100	81/100	79/100
Work environment	78/100	81/100	82/100	79/100
Collaboration	81/100	83/100	82/100	80/100
Engagement	79/100	82/100	83/100	82/100
Management culture	67/100	73/100	-	-

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NEVERWINTER

Arc Games | Cryptic Studios

The diverse skills and perspectives that this global presence brings are invaluable to our ongoing success and serve as a source of pride within the Group.

Increasing the representation of female employees and managers remains a top priority for us. Encouragingly, the positive trend observed, particularly among junior employees, continued throughout FY 2023/24, reaffirming our commitment to fostering diversity and inclusion at all levels of the organization.

Employee well-being

During the year, we have continued our efforts to develop leadership and teams within the group. Our employee survey is a tool that indicates the well-being of employees in the group and how they perceive various aspects of their workplace. The employee survey forms the basis for our leadership, teambuilding and well-being work. This year, we have expanded the

process with interviews to even more precisely address the challenges and opportunities for improvement at each specific workplace. This is the third year we have had systematic support for this important work, and we see that it is becoming an increasingly prioritized issue driven by the groups themselves. We are moving towards a more proactive approach than reactive work and are seeing progress in this area.

In March 2024, the Group's fourth annual employee survey was performed. Over 7,400 people in over 170 of our entities across the globe participated in the survey. The Global Employee Survey is based on a six-scaleself-assessment format from "completely disagree" to "completely agree" that is recalculated in index points from 0 to 100, where 100 reflects the best result. With an 83% (85%) response rate in the Group the results form a solid base for analysis and conclusions made about satisfaction and engagement.

EMPLOYEE TURNOVER	2023/24	2022/23	2021/22	2020/21	2019/20
Total turnover	19%	18%	13%	10%	10%
Women turnover	19%	19%	13%	12%	11%
Men turnover	19%	13%	13%	9%	10%
Distribution
Women's share of turnover	30%	28%	23%	24%	23%
Men's share of turnover	70%	72%	77%	76%	77%

NEW HIRES	2023/24	2022/23	2021/22	2020/21	2019/20
Total new hires	16%	28%	27%	20%	32%
Share of total women	18%	31%	31%	25%	33%
Share of total men	15%	20%	26%	28%	31%
Distribution
Women's share of total new hires	34%	30%	27%	26%	23%
Men's share of total new hires	66%	70%	73%	74%	77%

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