GOVERNANCE

While an acknowledgment of ESG risk factors is important, it is not enough. Appropriate oversight at the Executive and Board level, as well as effective policies and practices, are key contributors to our ability to effectively manage a wide variety of risk factors. Our Board and each of its committees are focused on the oversight of reputational risk. Our Board’s Human Resources and Corporate Governance Committee (“HRCG Committee”) has primary oversight of the Company’s approach to ESG, which includes reviewing key ESG-related policies. These policies and procedures provide transparency of our practices and are generally developed with the consultation of stakeholders, including regulators and investors.

Significant environmental and process safety issues are also reviewed by the HRCG Committee on a quarterly basis to ensure compliance with the Company’s rigorous policies. This includes regular reports from both internal and external experts on Linamar’s progress towards reduction and efficiency targets and the monitoring and resolution of any significant incident reports throughout the Company. The HRCG Committee assists the Board in identifying, evaluating and monitoring public policy trends and environmental issues that could impact the Company’s business activities and performance. It also reviews and makes recommendations for Linamar’s strategies related to corporate responsibility and reputation management.

The Board has published several policies and procedures that guide Linamar’s ESG related activities and updates these policies annually.

These include:

It also reviews the measures implemented, and the key resources committed to developing a positive relationship with the individuals and communities impacted by Linamar’s operations. With respect to the aforementioned Employee Human Rights Code, the Board has ensured that certain fundamental rights and values underpin our relationship with our employees, including:

  • A Basic Code on Working Conditions
  • Standards for hiring youth workers and ensuring there is no child labour in Linamar’s supply chain
  • An employee right to refuse unsafe work

Limitations on working hours and certain rights in respect of overtime pay

  • A prohibition on discrimination and harassment
  • And a right of freedom of association

The Board has also set the ambition target of having all Linamar facilities certified under one standardized environmental management system. To date, Linamar has achieved certification for 61 facilities worldwide under the ISO-140001 standard. ISO-14001 sets out the framework for Linamar’s environmental management systems and creates criteria around leadership, planning, support, operations, performance evaluation, documentation, auditing and improvements in sustainability. The HRCG Committee reviews the high priority audits, investigations and reports that are generated as a product of the ISO-14001 management system and responds accordingly to recommendations made by internal stakeholders and external environmental and sustainability consultants, most notably GHD Environmental Services.

Within that framework, Linamar has invested in sustainable product research and tied part of our Chief Executive Officer’s compensation directly to achievement of certain goals in this area. Please refer to the Company’s Management Information Circular annually to review these goals and their impact on our Stepping Stool compensation structure.

Finally, Linamar’s Board of Directors engages in property risk mitigation strategies that take into consideration extreme weather events such as floods, windstorms, earthquakes and other weather phenomena that may cause catastrophic destruction to its facilities or the facilities of its suppliers. Likewise, these risk assessment strategies take into consideration various climate-related risks and opportunities that the Company has identified in the short, medium and long terms and create operational work-plans to respond. Given the diversity of climates to which Linamar is exposed in its operations, the Company maintains a global property risk control program that includes risk assessment and mitigation strategies to address, amongst other things, environmental related risks to the Company’s businesses, strategy and financial planning.

At the Executive management level, our focus on business standards and reputational risk is fundamental to running our business. Our Senior Executive Group (which includes our CEO, CFO, General Counsel, Chief Technology Officer and President/COO) are dedicated to these critical issues and regularly assesses and makes determinations regarding business standards and practices, reputational risk management, customer relationships and product developments.

With respect to Sustainability, the SEG considers Linamar’s business risk exposure associated with climate and social related matters and what impact that will have in relation to the effectiveness and efficiency of:

  • Operations
  • Reliability and integrity of financial reporting
  • Compliance with laws and regulations, policies procedures and contracts
  • Safeguarding of assets within an ethical organizational culture.

Consistent with Linamar’s balanced approach to business, our enterprise-wide risk and control assessment practices solicit and incorporate the expertise and insight of employees from all areas and levels of the organization. We seek to continuously improve enterprise risk governance by voluntarily:

  • Assessing perceptions of risk resiliency, risk appetite and risk management integration in key decision processes
  • Assigning executive-level owners for managing and mitigating key risks, including climate-related risks
  • Integrating information across our strategic planning process and enterprise risk assessment activities.
  • Adopting new globally accepted ESG measurement and disclosure tools.

While the tone at the top is set by our Board and embodied by our SEG, we reinforce this focus throughout our organization. We ensure that our people are trained on our business standards and culture, underscoring the importance we place on each employee playing his or her part in serving our customers and managing the Company responsibly for all stakeholders.

The Senior Executive Group (“SEG”) communicates these business standards and cultural directions through our proprietary Global Operations System (“GOS”). Established in the early 2000’s, the GOS strengthens our governance by overseeing the standardization of policies and processes in terms of their issuance, approval and application. It covers policy relevancy, revisions and maintenance. It enables us to continually review all policies and procedures that guide employees in their daily decisions and activities. It also provides consistent guidelines and processes for creating and managing policies. Our GOS initiative is driven by the SEG and our ethics and compliance and legal affairs professionals with the support and commitment of all corporate functions and business units. Employees are encouraged to contact the House of Policies whenever they encounter a policy that is difficult to understand, outdated, missing information related to new or updated laws and regulations, culturally insensitive or not applicable to a particular region or business unit.

A Culture of Compliance

At Linamar, good business is based on our culture of ethical behaviour. We value integrity and transparency. These values ultimately shape the decisions we make as an organization, which are guided by our Code of Ethics and Conduct. Our Code addresses a wide range of critical topics, including but not limited to:

  • Avoiding conflict of interest
  • Safeguarding our brand and reputation as well as our company’s assets, information and intellectual property
  • Accepting gifts and benefits.

All team members, including security personnel, as well as our suppliers, vendors, community partners and members of our Board of Directors and Linamar’s SEG share this commitment to personal and professional integrity. The Code is updated and shared annually, and can be found on in our Management Information Circular.

Linamar Anonymous Ethics Reporting Hotline

Through the Linamar Ethicspoint (1-844-486-1641 or linamar.ethicspoint.com) employees and external stakeholders can raise anonymous and confidential questions or file complaints related to accounting, internal controls or ethical issues.

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