09.22.2020

To our dear stakeholders:

I am pleased to confirm that Circular Systems reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption these continue to be imbedded into the fabric of our business.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication as we strive to meet these goals.

Sincerely yours,

Isaac Nichelson
CEO

Circular Systems works diligently to certify its supply chain and is committed to working in areas that uphold the highest regard for human life. In the coming year, we will work to create and set impact goals in the area of Human Rights across our company, including within each jurisdiction in which we currently operate.

We will continue to assess our contract manufacturing agreements with the utmost scrutiny.
- We will encourage our partners to establish suggestion boxes and establish mechanisms so that grievances are heard without the fear of any negative repercussions.
- Circular Systems will continue to build out its CSR department and will allocate responsibilities within the company to ensure the protection of human rights across the organization.
- Circular Systems will continue to be involved in industry-wide consortiums to establish more inter-collaboratory means to achieve these goals and to shed light on the grievances occurring across the company.

Within the next communication period, Circular Systems will establish a periodic review by its senior management to examine any incidents of human rights violations. Although Circular Systems is a young company, it is proud to report that none to date have been reported. Human Rights will be added as a main topic and area of attention to the up and coming sustainability report.

Circular Systems is committed to partnering with companies and manufacturing partners that operate within the bounds of freedom of association. Within the next reporting period, we will establish a written policy that clearly defines that our partners pledge to adhere to the Global Compact Labour Principles.

We will include the topic of labour rights and freedom of association into our first Sustainability report for the company as a whole.
We will make a concerted effort into certifying our top tier mills in fair trade.This has been an informal internal goal and we will formalize this in our upcoming report.

2020 marked the year that Circular Systems established a formal internal mechanism for addressing any human resource concerns this included workplace harassment and any other inappropriate grievances. The two-pronged approach has led to important and much-needed improvements across the organization.

The culmination of this effort is an employee handbook that outlines the goals of the organization, employees' rights, and the next economic principles of employee satisfaction in the workplace. Making sure that not only are employees heard but also empowered to set forth initiatives.

During each hiring period, internal assessments are conducted on employee diversity. Due to the fact that CS operates across several jurisdictions and continents, the employee base is relatively diverse - especially across age groups.
Management is aware that it can improve the number of women in high-level management and is actively looking for ways to address this matter.

The employee handbook mentioned above is critical for employees to understand the r right to voice concerns and their routes for legal repercussions. These analytics will be further investigated in the upcoming sustainability and CSR report.

Circular Systems conducted its first Life Cycle Assessment for one of its product platforms during the reporting period. In addition to this scope of work, CS set an internal strategy and allocated budgets to the formalization of the LCA strategy internally. CS hired a full-time employee to oversee and manage this work with expert guidance on the measurement, recording, and communication of this impact data.

Circular Systems also continued to support several industrywide consortiums and working groups working to find methods to regenerate our natural ecosystems through methods that include regenerative agriculture and efficient resource management.

Circular Systems will increase its research towards the measurement of its impacts across its platforms. This will include the reduction of unnecessary travel, optimizing its production processes, and localizing its supply chains.

The upcoming employee handbook contains company philosophy which includes content related to environmental impact. Circular Systems encourages a great deal of attention to be focused on sustainable lifestyle choices both within the workplace and within personal time.

Circular systems has created a concrete strategy and internal working group to ensure that all partner mills are certified and follow strict environmental regulations. Although CS was founded on environmental principles and has committed itself to use business as a force for good, it will formalize a department/working group to oversee the environmental performance and impacts along its supply chain. This will include internal measurements and will be included in a report to be published within every communication period.

CS will formalize the above and will incorporate this into the periodic review period during each of its quarterly board meetings. Once a year these goals and metrics will be updated and will check-in to ensure that the goals are still relevant based on the companies goals and capabilities.

CS has an internal policy for zero-tolerance for corruption and takes this matter incredibly seriously. A protocol will be established to ensure that staff are aware of how to respond and act if ever confronted with extortion or bribery.

CS will formalize these goals in its upcoming sustainability report.

The leadership at CS will make a concerted effort to inform itself on the topic and establish a protocol to deal with these matters. Until date, this has not been an area of focus for CS. WIth that said, CS has only operated and conducted business with partners with a high degree of transparency.

This will change during the next reporting period and will be properly prioritized.

In the upcoming sustainability report CS will include portions of the protocol outlined in its employee handbook. This will become a standard protocol.