Toromont once again validated its ESG risk and opportunity focus areas.

As part of Connect26, our new three-year business plan, and in alignment with our Enterprise Risk Management approach and stakeholder engagement process, Toromont reaffirmed its key ESG focus areas (see page 10). Gathering the views and priorities of customers, employees, business partners, institutional shareholders, and regulators helped to inform
our actions.

We broadened our offerings to help customers meet their sustainability goals.

The greatest contribution Toromont makes to a sustainable world is providing customers with products, services and technology to improve productivity, efficiency and safety while lowering or eliminating carbon outputs. As customers navigate the complexities of lowering their carbon footprint and transitioning to the use of different forms of energy, they look to Toromont for assistance for several reasons. We represent Caterpillar, a world leader and continuous innovator in electric, alternative energy, fuel-flexible and autonomous machine development. We bring additional value by knowing how to match machine to application and by operating product support infrastructure to keep advanced equipment performing at peak levels. Through CIMCO, our thermal management solutions business, we enable customers to reduce their energy consumption and emissions and use natural refrigerants. Pages 17-21 describe our future-ready solutions. These include technology and services customers use to assess their total cost of equipment ownership (now including carbon taxes), track machine health, efficiency, and fuel consumption, model GHG emissions’ and, in the case of CIMCO, identify opportunities to qualify for clean-energy incentives and meet regulatory requirements.

We made preparations to meet future sustainability disclosure standards now under development by Canadian regulators.

With 2023 issuances of ISSB S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and ISSB S2 (Climate-Related Disclosures), the world is moving closer to implementing generally accepted ESG reporting standards. As regulatory bodies work to develop made-in-Canada SI and S2 standards that will provide clarity, consistency and confidence in public company reporting, Toromont is readying itself for compliance. To advance our program, we recently submitted Toromont’s GHG collection methodology and processes for expert third-party review. We expect to receive an analysis of our approach in 2024. This will help Toromont to confirm that its monitoring and reporting systems produce accurate and consistent GHG emissions data and prepare for anticipated regulatory standards. This is a methodical and diligent approach, which is both necessary and appropriate to ensure Toromont has control systems in place to achieve what our stakeholders expect.

We published our first Report on Modern Slavery.

To respond to Canada’s new Fighting Against Forced Labour and Child Labour in Supply Chains Act, and as a demonstration of our commitment to Human Rights, we issued our first annual Report on Modern Slavery. To support this report, we assessed our supply base enterprise-wide to identify core suppliers and evaluate their respective approaches to modern slavery, including within their supply chains.

Going forward

In 2024, our Connect26 business plan commits us to growth and improvement targets, including those related to environmental and social sustainability, that we will pursue vigorously but also pragmatically, in keeping with Toromont’s long-standing corporate values.

We look forward to equipping our customers, our employees and facilities with tools to build a more sustainable future and in so doing, deliver good results for our shareholders.

Yours sincerely,