Supplier Code of Conduct

1. SCoC for Komatsu Germany GmbH

1.1 Message of the management board of Komatsu Germany GmbH

Dear Supplier,

"Creating value together" – this is the promise Komatsu makes to its customers and all other stakeholders. Together with you, we can create new values and work towards a sustainable future. The emphasis on “together” indicates the importance we place on partnership.

As a leading manufacturer of construction and mining machinery as well as industrial equipment, it is part of Komatsu Germany's values to act responsibly and to engage with suppliers to build strong, long-lasting and mutually beneficial relationships. This commitment is underpinned by the well-established Midori-kai network.

Komatsu believes in its Corporate Social Responsibility. The work that we do directly supports the growth and improvement of our communities, and society in general. This is why Komatsu pursues its values and principles for compliant, ethical, trustworthy and sustainable business practices towards its suppliers. These principles are anchored in Komatsu Germany’s Supplier Code of Conduct ("Code").

As we face global challenges, it's critical that every Komatsu Germany supplier understands and agrees to the principles set forth in this Code.

This Code supplements the contractual relationship with each of Komatsu Germany's suppliers.

Komatsu Germany may unilaterally amend the Code even after a Contract has been entered into if there is a material reason to do so (such as changed legal requirements or a materially changed or expanded risk situation). Komatsu Germany will notify the Supplier of any such change.

1.2 Komatsu Germany's approach on human rights and responsible sourcing

As anchored in Komatsu Germany's policy statement on the human rights strategy (refer to the website: https://www.komatsu.eu/en/company/komatsu-germany/sustainability) compliance, integrity and a responsible approach concerning human rights and the environment are of utmost importance for Komatsu Germany. Komatsu Germany supports and respects the protection of internationally proclaimed human rights and ensures to not be complicit in human rights violations.

Komatsu Germany's business activities adhere to international human rights principles encompassed by the Universal Declaration of Human Rights, the United Nations (UN) Guiding Principles on Business and Human Rights and the ILO Core Labor Standards and others. All these frameworks flow into Komatsu Germany's principles and values constituting the basis for Komatsu Germany’s business and reflects the principles and values which Komatsu Germany aims to promote along its supply chain.

Komatsu Germany will comply with the laws and regulations of all countries where it conducts its business activities and expects suppliers and business partners to do the same.

The Code reflects applicable laws, particularly supply chain due diligence laws, and widely accepted international human rights frameworks and charters.

Komatsu Germany explicitly requires its business partners and their subsidiaries to adhere to the following principles and values. Moreover, suppliers and business partners must appropriately address them along their supply chains and with their suppliers.

1.3 Human rights-related requirements

(a) No child labor

The protection of children's development, their childhood, dignity, health, safety and education is of utmost importance for Komatsu Germany. Any form of child labor, including the worst forms of child labor (e.g. illegal activities or work that may affect the health, safety or morals of children), is prohibited in Komatsu Germany's supply chain. Suppliers shall ensure the protection of children by appropriate means and will comply in particular with ILO Conventions No. 138 on the Minimum Age for Employment and No. 182 on the Prohibition of the Worst Forms of Child Labor.

In order to implement the prohibition of child labor, suppliers shall implement an appropriate mechanism to verify the age of workers. When employing workers under the age of 18 is permitted by applicable law and ILO Conventions, these workers shall not perform work that is likely to jeopardize their health or safety, including night shifts and overtime.

(b) No forced labor and (modern) slavery

Komatsu Germany expressly rejects any form of forced or compulsory labor, (modern) slavery or human trafficking and expects its suppliers to do the same. Suppliers shall align their practices at least with ILO Conventions No. 29 on forced labor and No. 105 on the abolition of forced labor. Suppliers shall ensure already in the course of recruiting that employees carry out their activities on a voluntary basis and are free to terminate at any time.

Suppliers shall provide employees with a written employment agreement in their native language that contains a description of terms and conditions of employment. Suppliers shall refrain from (directly or indirectly via third parties) hold or otherwise destroy, conceal, or confiscate identity or immigration documents unless required by applicable law. Suppliers shall not demand any recruitment fees or other related fees for their employment.

All forms of slavery, practices akin to slavery, serfdom or other forms of domination or oppression in the workplace, such as extreme economic or sexual exploitation and humiliation are prohibited.

(c) Health and safety

Komatsu Germany is committed to providing a safe, healthful and injury-free workplace for its own employees, but also for employees along the supply chain. Health and safety are – in line with global Komatsu policies – a priority consideration.

The supplier shall obey to the occupational safety and health obligations applicable under the law of the place of employment, in particular to avoid (i) obviously insufficient safety standards in the provision and maintenance of the workplace, workstation and work equipment; (ii) the absence of appropriate protective measures to avoid exposure to chemical, physical or biological substances; (iii) the lack of measures to prevent excessive physical and mental fatigue, in particular through inappropriate work organization in terms of working hours and rest breaks; and (iv) the inadequate training and instruction of employees.

Suppliers shall warrant for appropriate processes to identify, assess and reduce actual and potential accidents and health risks, the recording and investigation of incidents, the training and instruction of employees in a form that they can understand, the provision of suitable work equipment and protective gear, and appropriate measures for emergency prevention and defense.

To do so, Komatsu Germany encourages suppliers to obtain a ISO 45001 certified management system (or a similar certification) to prevent accidents and illnesses in the best possible way.

(d) Freedom of association

Komatsu Germany acknowledges the positive impact of a sound cooperation between the company and the employees to the benefit of the company, the employees and the local communities.

The supplier must not disregard the freedom of association, according to which (i) employees are free to form or join trade unions, (ii) the formation, joining and membership of a trade union must not be used as a reason for unjustified discrimination or retaliation, (iii) trade unions are free to operate in accordance with applicable law of the place of employment, which includes the right to strike and the right to collective bargaining.

Workers and/or their representatives shall be able to openly communicate and share ideas and concerns with management regarding working conditions and management practices without fear of discrimination, reprisal, intimidation, or harassment.

(e) No discrimination

The supplier is obliged to comply with the prohibition of unequal treatment in employment, for example on the grounds of national and ethnic origin, social origin, health status, disability, sexual orientation, age, gender, political opinion, religion or belief, unless this is justified by the requirements of the employment; unequal treatment includes, in particular, the payment of unequal remuneration for work of equal value.

(f) Adequate living wage

The supplier shall not withhold an adequate living wage; the adequate living wage amounts to at least the minimum wage as laid down by the applicable law and, apart from that, is determined in accordance with the regulations of the place of employment.

(g) No harmful environmental effects and no deprivation of land

The supplier shall not cause any harmful soil change, water pollution, air pollution, harmful noise emission or excessive water consumption that (i) significantly impairs the natural bases for the preservation and production of food, (ii) denies a person access to safe and clean drinking water, (iii) makes it difficult for a person to access sanitary facilities or destroys them or (iv) harms the health of a person.

The supplier shall not unlawfully evict. The supplier shall not unlawfully take land, forests or waters, the use of which provides a person's livelihood, when acquiring, developing or otherwise using them.

(h) No uncontrolled use of security forces

The supplier is prohibited of hiring or usage of private or public security forces for the protection of the enterprise's project if, due to a lack of instruction or control on the part of the enterprise, the use of security forces (i) is in violation of the prohibition of torture and cruel, inhumane or degrading treatment, (ii) damages life or limb or (iii) impairs the right to organize and the freedom of association.

1.4 Environment-related requirements

Environmental protection has high priority for Komatsu worldwide. Komatsu Germany is ISO 14001 and ISO 50001 certified and endeavors to reduce or counterbalance any burdens on the environment related with its business activities.

Komatsu Germany encourages suppliers to implement a certified environment management system. Suppliers shall have appropriate processes to identify, assess and reduce actual and potential environmental risks.

Suppliers agree to support the elimination of materials and methods that pose environmental and health risks (or hazards) and agree to work to minimize the impact of their operations and that of their own suppliers on the environment. Waste and other materials posing a hazard to humans or the environment are to be identified, labeled, and managed properly to ensure their safe handling, movement, storage, use, recycling or reuse, and disposal. This applies in particular to:

(a) Mercury

The supplier shall not manufacture mercury-added products pursuant to Article 4 (1) and Annex A Part I of the Minamata Convention on Mercury of 10 October 2013 (Minamata Convention), use mercury and mercury compounds in manufacturing processes within the meaning of Article 5 (2) and Annex B Part I of the Minamata Convention from the phase-out date specified in the Convention for the respective products and processes or treat mercury waste contrary to the provisions of Article 11 (3) of the Minamata Convention.

(b) Persistent Organic Pollutants

The supplier shall not produce and use chemicals pursuant to Article 3 (1) (a) and Annex A of the Stockholm Convention of 23 May 2001 on Persistent Organic Pollutants (POPs Convention), or collect, store and dispose waste in a manner that is not environmentally sound in accordance with the regulations in force in the applicable jurisdiction under the provisions of Article 6 (1) (d) (i) and (ii) of the POPs Convention.

(c) Hazardous waste

The supplier shall not export hazardous waste within the meaning of Article 1 (1) and other wastes within the meaning of Article 1 (2) of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal of 22 March 1989 (Basel Convention), (i) to a party that has prohibited the import of such hazardous and other wastes (Article 4 (1) (b) of the Basel Convention), (ii) to a state of import as defined in Article 2 no. 11 of the Basel Convention that does not consent in writing to the specific import, in the case where that state of import has not prohibited the import of such hazardous wastes (Article 4 (1) (c) of the Basel Convention), (iii) to a non-party to the Basel Convention (Article 4 (5) of the Basel Convention) or (iv) to a state of import if such hazardous wastes or other wastes are not managed in an environmentally sound manner in that state or elsewhere (Article 4 (8) sentence 1 of the Basel Convention).

The supplier shall not export hazardous wastes from countries listed in Annex VII to the Basel Convention to countries not listed in Annex VII (Article 4A of the Basel Convention, Article 36 of Regulation (EC) No 1013/2006).

The supplier shall not import hazardous wastes and other wastes as defined in the Basel Convention from a non-party to the Basel Convention (Article 4 (5) of the Basel Convention).

2. Governance and compliance-related requirements

2.1 Compliance with applicable laws, regulations and policies

Suppliers shall comply with and are encouraged to exceed all laws, regulations, and this Code wherever they conduct business.

(a) Avoidance of conflicts of interest

Suppliers will neither, without proper disclosure and approval by Komatsu Germany, offer personal services, payments or loans to Komatsu Germany employees, nor knowingly allow a close family member of a Komatsu Germany employee to work for the supplier in a capacity that could influence the Komatsu Germany employee's decisions when acting for Komatsu Germany.

In addition, without prior authorization by Komatsu Germany and/or unless done for the purpose and in the course of the business relationship with Komatsu Germany, suppliers agree not to provide confidential information about their company to Komatsu Germany employees.

(b) Avoidance of improper gifts and gratuities

Suppliers undertake to not improperly influence business decisions of Komatsu Germany employees or acts of public officials. If suppliers ever provide gifts, hospitalities or entertainment to Komatsu Germany employees, they must never be in cash (or cash equivalents) and must be infrequent.

Business-related entertainment or social contact may be appropriate only if it is infrequent and not lavish.

(c) Fair competition

Suppliers agree to compete strictly on the merits of their products and services and not to attempt to restrain or restrict trade in violation of applicable antitrust or competition laws.

(d) Anti-bribery

Suppliers agree to comply with applicable anti-corruption laws (in particular but not limited to U.S. Foreign Corrupt Practices Act and the UK Bribery Act) wherever they do business.

Neither Komatsu Germany's suppliers nor any of their own suppliers, subcontractors or agents shall give or offer to give – directly or indirectly – anything of value to or for the benefit of any government official to obtain or retain any contract, business opportunity or other advantage, or to influence any act or decision of that person in his or her official capacity. Suppliers undertake to appropriately train their employees on these requirements.

(e) Compliance with trade restrictions and controls

Suppliers agree to comply with applicable legal licensing requirements and restrictions on exports and trade, including prohibitions on exports to a prohibited country, imports from or trade in goods originating in a sanctioned country, travel to or from a sanctioned country, investment in a sanctioned country, or financial transactions and dealings involving a sanctioned country or designated individuals and entities.

(f) Data privacy

Suppliers will comply with all applicable privacy and data security laws and regulations and will be responsible and transparent in their use of data. This includes employee-, customer-, and supplier data.

Suppliers shall take the necessary steps to comply with these requirements in accordance with the state of the art.

(g) Reporting / whistleblowing requirements

In order for a company to earn and maintain the trust of society, the company must promptly identify and remedy any deficiencies it may have. In addition to a supervisor reporting system and auditing system, a whistleblowing system constitutes part of such "self-purification function".

This is why Komatsu Germany fosters an open speak up culture to earn and maintain the trust of society. A trustworthy, easy to use and effective whistleblowing and grievance mechanism plays a vital role in doing so.

Komatsu Germany encourages its employees and suppliers, including indirect suppliers and their employees and those otherwise directly affected by economic activities along the supply chain, to report any activity that may indicate a violation of applicable laws or this Code or that is inconsistent with ethical business practices. We expect our suppliers to join us in this effort.

Komatsu Germany's grievance mechanism is open for everybody including employees along the supply chain and persons affected by the business activities of Komatsu Germany or its suppliers (and their representatives).

Detailed information on the grievance mechanism and the handling of grievances can be found on the company website: https://www.komatsu.eu/company/komatsu-germany-gmbh/sustainability

Grievances can be reported through the link provided on the website or through email (compliance.KGC@komatsu.eu or compliance.KGM@komatsu.eu).

It is Komatsu Germany's policy to prohibit retaliation against anyone who reports a violation in good faith. Komatsu Germany expects suppliers to refrain from retaliation also.

Suppliers shall establish their own equivalent grievance mechanism and investigate any grievance and to take the necessary action if required.

Suppliers are required to inform Komatsu Germany of any violations of this Code, legal proceedings, government investigations or criminal proceedings that may affect Komatsu Germany's business or negatively impact the reputation of the supplier and Komatsu Germany.

2.2 Management processes

Suppliers undertake to implement the following appropriate management processes:

(a) Compliance and management responsibility

Supplier’s management should be accountable for compliance. This comprises compliance with this Code and agreements with Komatsu Germany, and applicable laws and regulations. Suppliers shall develop and monitor policies for the ethical conduct of business within their organization to a reasonable extent.

(b) Human rights- and environment-related processes and management system

Suppliers shall use reasonable endeavors to implement appropriate processes to prevent, mitigate and end human rights- and environment-related risks and violations (supply chain due diligence). This may comprise conducting risk assessments and implementing risk management systems.

(c) Regular training for employees

Providing training to employees is crucial to raise awareness. Komatsu Germany will offer appropriate and regular training to suppliers (own resources or via third parties or industry initiatives) and their employees on the human rights- and environment-related expectations and this Code. The supplier shall make reasonable endeavors to allow its employees to participate in the training.

(d) Inform employees about reporting channels

Suppliers shall inform employees and their suppliers about available reporting channels opened by Komatsu Germany and the supplier.

(e) Contractual passing-on of requirements contained in Komatsu Germany's SCoC

Suppliers undertake to cascade the requirements of this Code down to their own suppliers and require them to cascade down to their supply chain.

(f) Documentation and information requirements

Document compliance with this Code and retain such documentation for at least seven years from their creation. The supplier shall provide such documentation upon request to Komatsu Germany.

2.3 Cooperation concerning remedial actions (in case of human rights- and/or environment-related legally protected positions)

The supplier will cooperate with Komatsu Germany in investigating and remedying (imminent) violations of the Code or applicable laws. This applies in particular to (imminent) violations of human rights and environmental obligations.

The supplier will take immediate action to remedy (imminent) violations.

Komatsu Germany is entitled to set a reasonable grace period for the supplier to bring its conduct into compliance with these regulations. The grace period shall be at least four weeks, unless a shorter period is required to protect the life, body or health of a person.

If the violation cannot be ended in the foreseeable future, the supplier shall immediately notify Komatsu Germany and, together with Komatsu Germany, develop a concept with a time schedule for ending or minimizing the violation. Komatsu Germany shall provide reasonable assistance to the supplier in implementing the plan to the extent permitted by law.

In the event of a serious violation of human rights or environmental law, Komatsu Germany reserves the right to suspend business relations with the supplier until the violation has been ended.

In the event of a temporary suspension of business relations, the parties shall not be obliged to perform their contractual obligations. Komatsu Germany shall notify the Supplier in writing of the suspension of business relations.

2.4 Audit and information rights

Komatsu Germany shall be entitled to audit compliance with the laws and this Code annually and, for good cause (such as sufficient factual indications of violations of this Code), also on several occasions, upon prior notice and during normal business hours, at the Supplier's premises via Komatsu personnel or by external experts, in writing or on site, in accordance with the applicable legal provisions. Each inspection shall take into account the legitimate confidentiality interests of the Supplier and, to the extent possible, not interfere with business processes.

2.5 Termination rights

In case of a breach of this Code or of human rights or environmental law, if the breach cannot be ended or other remedial action is not taken within the grace period and appropriate evidence thereof is provided to Komatsu Germany, Komatsu Germany may terminate the contract with the supplier with immediate effect.

Notwithstanding the foregoing, Komatsu Germany may terminate any agreement with the supplier with immediate effect and may terminate the entire business relationship with the supplier if:

After such termination, the Supplier shall not be entitled to any claims for compensation for services not yet rendered. Furthermore, claims for damages or other claims arising from or in connection with such termination shall be excluded.

• the violation of a protected legal position or an environmental obligation is assessed to be very serious,
• the implementation of the measures elaborated in the concept does not remedy the situation after the expiry of the time specified in the concept,
• ·no other milder means are available, and
• an increase in the level of influence does not appear promising.

2.6 Claims for damages