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Chairman and CEO Donal D. Charron

Welcome to our Environment, Social and Governance (ESG) report for 2022!

Our ESG Report highlights the long-term environmental, social, and governance principles and practices designed to support our commitment to sustaining “lasting relationships” and achieving “global success” with our stakeholders wherever Kimball Electronics’ touch is felt throughout the world.

This year’s report ties closely to our 2022 Annual Report to Share Owners, both in what it contains and even in how it looks. That is by design. Our Company purpose, “Creating Quality for Life,” supported by our Guiding Principles drives everything we do, including how we approach our work, and particularly relevant for this report, how we demonstrate our leadership as citizens of the world and the communities in which we operate. This is why we have integrated our ESG goals into our business strategy and our operations.

We’ve decided to strengthen our disclosures in this way because our ESG performance is and long has been fundamental to Kimball Electronics’ lasting relationships and success with our customers, our people, and our communities. We want our reporting to show how we proactively address challenges in our business and to our stakeholders and that we recognize the connection between significant ESG issues and the long-term value we deliver to Share Owners.

Customers, consumers, investors, and other stakeholders, particularly in the EMS industry, are increasingly focusing on environmental issues, including climate change, water use, deforestation, waste, and other sustainability concerns. Along with our stakeholders and our broader industry, we have increased our focus on sustainability and measurement of our progress against ESG criteria. We have established sustainability and ESG programs aligned with sound environmental, social, and governance principles.

The challenges we faced in 2022 were both new (record-high input cost inflation and ongoing demand normalization) and known (supply chain disruptions and ongoing COVID-19-related impacts). Still, we continued to execute on our strategic plan, controlled what we could control, and delivered profitable growth and capacity for future expansion on our journey to the next billion dollars in sales.

We’re leveraging the depth of our electronics manufacturing expertise to take advantage of the ever-increasing demand for electrification and connectivity in the vehicles we drive, the medical devices that help professionals deliver medical care, and the smart devices that power our factories and homes. These continued evolutions have led to record quarterly sales in recent quarters and are creating long-term growth opportunities across our portfolio.

We published our first ESG report in 2019. We have learned a lot from our Share Owners and other stakeholders about transparency in ESG reporting since then. In fact, our Board of Directors dedicated two special meetings this past calendar year to ESG issues, including hearing from different internal and external stakeholders.

This year, you will see that we have taken the next step by integrating internationally recognized reporting standards into this report, part of our journey to be leaders in not only protecting but enhancing our world.

A key highlight: We were awarded the “AA” rating in the Morgan Stanley Capital International (MSCI) ESG Ratings for 2022, ranking us among the top 9% of companies in the “Electronic Equipment, Instruments & Components” industry with well-above industry average performance in Governance, Sourcing, and Labor Management measured through the ESG dimensions. KE has outperformed the industry average in MSCI’s ESG ratings since 2020. This result demonstrates our continuous improvement and commitment to sustainability and our excellence in ESG practices.

In addition, Morningstar Sustainalytics, a leading ESG research, ratings, and data firm that supports investors around the world with the development and implementation of responsible investment strategies, rated us #1 among electronics manufacturers for ESG risk. They also placed us in the top 10—not just top 10%, but top 10—of the over 15,000 companies around the world that they rate, because of the robustness of our ESG programs, practices, policies, and disclosures.

I am heartened to see how far we’ve come in ESG reporting in just a short time.

A broad cross-functional team of employees and leaders from our Finance, Legal, Facilities, Audit and Management Services, Human Resources, Marketing, and Communications teams created this report and are advancing our plans for the external assurance of nonfinancial metrics you see reported here.

We’re still in the early stages, but we are excited about our strategy and, most importantly, our continuous improvement of transparency and open communication. Our goal is that when your read our ESG report, you get a holistic view of how our ESG performance integrates into our overall company performance.

As ever, we remain committed to our company purpose of Creating Quality for Life through the many life-saving and life-improving products we provide to our customers and their end users; to our people 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; for our communities through our positive societal and environmental impacts; and for our Share Owners by providing a positive financial return and a sound financial investment.

Thank you for your continued interest in Kimball Electronics!

Thank you.

 Donald D. Charron signature

Donald D. Charron
Chairman and Chief Executive Officer

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World Headquarters
Kimball Electronics, Inc.
1205 Kimball Blvd.
Jasper, IN 47546

www.kimballelectronics.com

2022 Environmental, Social
and Governance Report