Dear ESG Reader,

I am very excited to welcome you to our 2021 Environmental, Social, and Governance report.

When we published our first ESG report in 2019, we did so with the expectation that in the following years this report would demonstrate how we had evolved as a company and improved our environmental, social, and governance practices. As I look back now on our three ESG reports, I believe we have met that expectation. To me, each report represents our commitment to the continuous improvement of our ESG philosophies. The broader ESG community has recognized our progress on ESG transparency, too. Our ESG scores that measure risk across the Environmental, Social, and Governance pillars improved by 60%, 83%, and 67% respectively since the start of 2020, according to a leading provider of corporate governance and responsible investment solutions.

I’m proud to know that our ESG philosophies, with roots dating back to our company’s founding in 1961, are more than just words to us: they are our actual practices; they are our promises to the world.

Before I talk more about our ESG efforts, I’d like to acknowledge that Covid-19 continues to be a concern for all of us. Unfortunately, our global workforce has experienced four deaths due to Covid-19 complications. These employees, their families, and their close coworkers remain in our thoughts and prayers. We are a global family—and we have lost four of our own.

Despite the challenges posed by the pandemic and the global parts shortage, we not only delivered strong top line growth, excellent margin expansion, and impressive earnings growth in Fiscal 2021 but we also refused to be distracted from our ESG practices, all of which support our company purpose of Creating Quality for Life. Our people are the Company, and our customer is our business. Even in a tumultuous year, we achieved high satisfaction scoring via our employee engagement metrics and in our customer loyalty metrics.

Our number-one priority has remained the health and safety of our employees. We know that adversity created by Covid-19 is ongoing. To keep our people safe, we continue to follow appropriate crisis requirements, from increased social distancing, the use of PPE, temperature scanning, and enhanced sanitizing requirements, to strongly encouraging the vaccination of our employees. We have assisted, whenever possible, in making the vaccine available to our people worldwide.

I am so proud of our collective response to the Covid-19 pandemic and of the entire Kimball Electronics team who helped keep us moving forward at each of our global facilities. One fascinating example was our Global Equipment Services (GES) facility in Vietnam. Last summer, when Ho Chi Minh City faced another wave of Covid, the government had no choice but to limit travel, thus jeopardizing our customer commitments. In response, our facility there boldly adjusted its production plan, allowing employees to work and live on site in a safe, Covid-free environment—until the pandemic situation improved. We provided meals around the clock, sleeping arrangements at night, and opportunities for employees to bond via entertainment and exercise throughout their stay. We worked with local health officials to provide periodic Covid testing and vaccinations onsite. Employees lived and worked at the facility for over eight weeks until the government loosened travel restrictions and they could safely return to their homes and families. Their efforts did not go unnoticed by our customers, one of whom observed that, “The GES team has been doing an excellent job in spite of Covid limitations. The GES team has gone above and beyond in many instances to help us stay on schedule. We appreciate the amazing level of commitment and effort.”

Our GES team was not alone. Worldwide, our people continued to demonstrate an amazing level of commitment that enabled us to deliver on our promises to our customers, our employees, and our communities.

Without a doubt, the past two years have been among the most difficult in which to do business during our company’s 60- year history. Through it all, we continued to be resilient—and successful! That success, as always, is shared with our people through the elements of their total rewards package. One way Kimball Electronics creates quality for life for our people is through a respectful and rewarding Company culture that encourages meaningful work, promotes a sense of family (at work and at home), and keeps their best interests in mind.

While 2021 has posed business challenges that have, at times, kept me awake at night, I have never doubted our people’s collective passion to do the right thing when it comes to our environmental, social, and governance practices. Their passion never falters. The information in this report and in our other ESG disclosures like the Carbon Disclosure Project (CDP) and our expanded Human Rights Policy and annual Supply Chain Transparency Policy and Statement is a testament to that. In this report and elsewhere, we share both our successes and our challenges as we pursue a prosperous and environmentally stable future that meets the needs of our customers, our people, and our communities.

In the Environmental section of this report, we have included additional details this year about our progress toward our 2025 goals to reduce greenhouse gas emissions, water usage, electrical usage and air emissions, goals that we first made public in 2019. We remain committed to our Guiding Principle that states, “The Environment is our Home.”

In the Social section of this report, you will see how we have become more transparent in the past year regarding Human Rights. We have demonstrated our dedication to open dialogue that promotes cultural understanding via virtual all-employee events showcasing the personal stories of our African American, Asian American, Pacific Islander, Hispanic, Latino, and female team members around the world.

The Governance section in this report further illuminates our philosophies and practices that make us stand out (favorably) compared to other companies when it comes to transparent governance.

That’s all I’ll specifically mention about the content of each section this year. It’s not that I don’t want to ruin any surprises—if you know our company, none of this ESG information will come as a surprise. Mainly, I just don’t want to steal any thunder from the rest of this report. I’d prefer that you visit each section yourself to get a sense of the intense pride we feel in all that we do to demonstrate our company purpose of “Creating Quality for Life” for our various stakeholders.

Throughout 2021, our locations around the world demonstrated fun and meaningful ways to celebrate our 60th anniversary. Now that this major milestone year has ended, we have great confidence that our time-proven principles that have driven the successes of our ESG practices will continue with us on our journey into the next 60 years—and beyond.

I hope you enjoy this year’s ESG report.

Thank you.

Donald D. Charron
Chairman and Chief Executive Officer