The Shyft Group is pleased to renew its support of the Ten Principles of the United Nations Global Compact on human rights, labor, environment and anti-corruption. We remain committed to continuing to make the UN Global Compact and the Ten Principles part of our strategy, culture, and day-to-day operations.

This annual Communication on Progress (COP) describes our Company’s implementation of the Ten Principles. Specifically, it describes practical actions the Company has taken to implement the principles and how we measure the outcomes of our progress. We’re delighted to make this submission and share this information with our valued stakeholders.

Sincerely,

Daryl Adams
Chief Executive Officer
The Shyft Group

Respect for human rights is a fundamental value of The Shyft Group. We strive to respect and promote human rights in accordance with the UN Guiding Principles on Business and Human Rights in our relationships with our employees, suppliers, customers and other stakeholders.

Our approach to human rights and social responsibility is guided by international human rights principles encompassed by the Universal Declaration of Human Rights, including those contained within the International Bill of Rights. Our aim is to help increase the enjoyment of human rights in the communities where we operate. Our actions to protect human rights and promote social responsibility are aimed to protect our most important asset – our people.

To achieve our goals, we have established and will pursue actions that promote:

• A respect for Human Rights
• Community and stakeholder engagement

Our Human Rights Statement is aligned with our Code of Conduct, which is posted on our external website at www.theshyftgroup.com/about-us/policies-charters.

DIVERSITY EQUITY AND INCLUSION
We value and advance the diversity, equity, and inclusion (“DEI”) of the people with whom we work. We are committed to equal opportunity and are intolerant of discrimination and harassment. We work to maintain workplaces that are free from discrimination or harassment on the basis of race, sex, color, national or social origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression, political opinion or any other status protected by applicable law.

Beginning in 2021, we engaged with the Center for Automotive Diversity Inclusion and Advancement (CADIA) to establish our DEI 5-year roadmap, with a goal of fostering an even more inclusive culture within all areas of The Shyft Group, a highly equitable work environment, and an increased awareness and appreciation of diversity. While a formalized DEI effort is new to our organization, the Shyft culture has always focused on its people across the country from all walks of life as the core to our success.

The basis for recruitment, hiring, placement, development, training, compensation, and advancement at the Shyft Group includes qualifications, performance, skills, and experience.

We do not tolerate disrespectful or inappropriate behavior, unfair treatment, or retaliation of any kind. Harassment is not tolerated in the workplace and in any work-related circumstance outside the workplace.

These principles are embraced in our Code of Conduct that serves as a guide for how we conduct business.

SAFE AND HEALTHY WORKPLACE
The safety and health of our employees is of paramount importance. We provide a safe and healthy workplace and comply with applicable safety, health laws and regulations, as well as internal requirements. We work to provide and maintain a safe, healthy, and productive workplace, in consultation with our employees, by addressing and remediating identified risks of accidents, injury and health impacts.

To achieve these objectives, we foster leadership and employee involvement, as well as education, in safety and health practices and establish, promote, and drive toward performance goals to ensure continuous safety and health improvements across our operational footprint. We implement standardized operational processes designed to enhance employee safety.

WORKPLACE SECURITY
We are committed to maintaining a workplace that is free from violence, harassment, intimidation and other unsafe or disruptive conditions due to internal and external threats. Security safeguards for employees are provided, as needed, and are maintained with respect for employee privacy and dignity.

FORCED LABOR AND HUMAN TRAFFICKING
We prohibit the use of all forms of forced labor, including prison labor, indentured labor, bonded labor, military labor, modern forms of slavery and any form of human trafficking.

CHILD LABOR
We prohibit the hiring of individuals that are under 18 years of age for positions in which hazardous work is required.

WORK HOURS, WAGES AND BENEFITS
We compensate employees competitively relative to the industry and local labor market. We work to ensure full compliance with applicable wage, work hours, overtime, and benefits laws.

LAND RIGHTS AND WATER RESOURCES
We recognize the significant implications regarding respect for human rights that land use and water use across our value chain may have, which we address through specific actions. The Shyft Group is committed to interacting with Indigenous communities in a way that respects their history, culture, and customs, within applicable legal and constitutional frameworks.

STAKEHOLDER INVOLVEMENT
To maintain the integrity and long-term relevance of our approach to human rights, we actively engage with members of the communities where we operate to ensure we proactively address their concerns. In addition, our Human Rights Statement will be reviewed for effective implementation, continuous improvement, and monitoring by stakeholders across our business and Shyft Group leadership.

PROTECTION OF HUMAN RIGHTS BY SUPPLIERS
Suppliers to the Shyft Group are expected to comply with our Supplier Code of Conduct, which can be found on our external website at https://theshyftgroup.com/about-us/supplier-info, that clearly encompasses the key human rights principles in our Human Rights Statement. We reserve the ability to audit compliance with this expectation and require suppliers to certify in writing compliance with these principles.

We strive to create workplaces in which open and honest communications among all employees are valued and respected. We are committed to complying with applicable labor and employment laws wherever we operate. We also ensure employees are aware of our Human Rights Statement and our many policies focused on employee relations through training and communication processes.

Any employee who believes a conflict arises between our Human Rights Statement and policies, and the laws, customs, and practices of the place where he or she works, or who has questions about the statement or policies, or would like to report a potential violation of the statement or policies, is encouraged to raise those questions and concerns with local management, Human Resources, or the Shyft Legal Department. Employees can also report suspected violations by calling the Employee Ethics & Compliance Hotline at the toll-free number posted at each of our locations or on our external website, www.theshyftgroup.com/about-us/policies-charters. We will always do our best to maintain the confidentiality of the report of a suspected violation. No reprisal or retaliatory action will be taken against any employee for raising concerns in good faith. We will investigate, address, and respond to the concerns of employees and will take appropriate corrective action in response to any violation.

The Shyft Group constantly monitors the Employee Ethics & Compliance Hotline. All concerns are promptly reviewed and investigated. If corrective action is deemed necessary, The Shyft Group implements such action and follows-up with the relevant individuals to ensure that the concerns have been fully addressed. Even if corrective action isn't deemed necessary, leadership teams periodically review and evaluate the concerns raised in an effort to continuously improve our relationships with our employees. The Shyft Group analyzes the concerns reported on a quarterly basis to identify any trends or substantive areas that may need to be further addressed.

The Shyft Group believes in respecting the rights of others. We want the Company to be a great place to work, where everyone feels safe, valued, and respected.

We do not tolerate disrespectful or inappropriate behavior, unfair treatment, or retaliation of any kind. Harassment is not tolerated in the workplace and in any work-related circumstance outside the workplace.

These principles are embraced in our Code of Conduct that serves as a guide for how we conduct business.

SAFE AND HEALTHY WORKPLACE
The safety and health of our employees is of paramount importance. We provide a safe and healthy workplace and comply with applicable safety, health laws and regulations, as well as internal requirements. We work to provide and maintain a safe, healthy, and productive workplace, in consultation with our employees, by addressing and remediating identified risks of accidents, injury and health impacts.

To achieve these objectives, we foster leadership and employee involvement, as well as education, in safety and health practices and establish, promote, and drive toward performance goals to ensure continuous safety and health improvements across our operational footprint. We implement standardized operational processes designed to enhance employee safety.

WORKPLACE SECURITY
We are committed to maintaining a workplace that is free from violence, harassment, intimidation and other unsafe or disruptive conditions due to internal and external threats. Security safeguards for employees are provided, as needed, and are maintained with respect for employee privacy and dignity.

FORCED LABOR AND HUMAN TRAFFICKING
We prohibit the use of all forms of forced labor, including prison labor, indentured labor, bonded labor, military labor, modern forms of slavery and any form of human trafficking.

CHILD LABOR
We prohibit the hiring of individuals that are under 18 years of age for positions in which hazardous work is required.

WORK HOURS, WAGES AND BENEFITS
We compensate employees competitively relative to the industry and local labor market. We work to ensure full compliance with applicable wage, work hours, overtime, and benefits laws.

Each of our locations is staffed with highly trained human resources professionals who actively ensure the implementation of our many policies focused on employee relations and communications. Their actions are fully supported by the Company as a whole, which is then further supported by oversight from our Board of Directors and the Human Resources and Compensation Committee.

We strive to create workplaces in which open and honest communications among all employees are valued and respected. We are committed to complying with applicable labor and employment laws wherever we operate.

Any employee who believes a conflict arises, who has questions about our policies or practices, or who would like to report a potential violation of our policies, is encouraged to raise those questions and concerns with local management, Human Resources, or the Shyft Legal Department. Employees can also report suspected violations by calling the Employee Ethics & Compliance Hotline at the toll-free number posted at each of our locations or on our external website, www.theshyftgroup.com/about-us/policies-charters. We will always do our best to maintain the confidentiality of the report of a suspected violation. No reprisal or retaliatory action will be taken against any employee for raising concerns in good faith. We will investigate, address, and respond to the concerns of employees and will take appropriate corrective action in response to any violation.

The Shyft Group constantly monitors the Employee Ethics & Compliance Hotline. All concerns are promptly reviewed and investigated. If corrective action is deemed necessary, The Shyft Group implements such action and follows-up with the relevant individuals to ensure that the concerns have been fully addressed. Even if corrective action isn't deemed necessary, leadership teams periodically review and evaluate the concerns raised in an effort to continuously improve our relationships with our employees. The Shyft Group analyzes the concerns reported on a quarterly basis to identify any trends or substantive areas that may need to be further addressed.

Our human resources team meets on a regular basis to review workplace concerns, labor best practices, and opportunities for continuous improvement in how we manage human capital, embrace inclusion, and uphold our commitment to human rights.

Environmental Stewardship is a fundamental value adopted by the Shyft Group, along with the core values of Sustainability, Health, and Safety. We strive to promote a safe, sustainable, healthy, and secure environment to protect our most important asset – our people.
To achieve our goals, we will:
• Protect people and the environment by working to prevent accidents and pollution.
• Promote ongoing environmental and safety achievement across all locations through:
– Continuing leadership and employee involvement and education.
– Establishing, promoting, and driving toward specific performance goals to ensure continuous safety and environmental improvements.
– Setting sustainability targets which align with the 2˚ C initiative.
– Reducing green-house gases.
– Maintaining and operating our facilities and processes in compliance with applicable regulations.

When considering the impact of our Environmental Stewardship, we take a global approach to our operational footprint and the impact of our practices at each operating location and the combined impact across our operations in the U.S and Mexico. Each of the locations uses electricity, natural gas, and water and each produces non-hazardous waste. Certain locations generate hazardous waste in accordance with applicable regulations. Locations that emit volatile organic compounds (VOCs) from coating operations are permitted in accordance with local regulatory requirements.

ENVIRONMENTAL TRACKING
With the implementation of our sustainability program, our initial focus has been our operations in Bristol, Indiana and Charlotte, Michigan, which combined represent more than 50% of our environmental footprint based on square footage and more than 66% of our commercial activity by revenue. Baseline data was collected in 2020 and 2021 at these locations as we began tracking key performance indicators (KPIs) to monitor progress and improvement goals. Our remaining locations are collecting baseline data, with the goal of including this information in our KPI tracking in 2022.

For the in-scope business operations during 2020 and 2021 we used or generated the following data:

KPI 2020 Actual Usage 2021 Actual Usage 2021 Sales Adjusted Usage
Electricity (kwh) 9,134,794 10,667,288 6,940,782
Natural Gas (ccf) 494,691 512,389 333,391
Water (gal) 18,107,306 15,018,901 9,772,204
GHG (MT – Scope 2) 6,459 7,483 4,869
Haz Waste (t) 40 66 43
Universal Waste (t) 11 6 13
VOC (t) 55 110 72

There were no major or minor environmental controversies, spills, or remediation actions required during 2021.

OUR GOALS,PERFORMANCE AND OPPORTUNTIES
Upon establishing our baseline measures and KPIs, The Shyft Group has set the following goals toward the broader 2˚ C initiative. The Shyft Group, Inc. has set the following average minimum improvement targets, assessed on a rolling three-year basis, normalized for the production sales level at each location:
• Electricity: 3% minimum annual reduction
• Water: 3% minimum annual reduction
• Natural Gas: 3% minimum annual reduction
• GHG: 3% minimum annual reduction

Performance against the targets will be tracked and reviewed on a rolling three-year average to assess the impact of environmentally focused process improvements and investment.

Comparing year over year performance for 2021 as compared to 2020, the first two of three years of our baseline measurement average, indicates a decrease, on a sales adjusted basis, in the use of electricity, natural gas, and water and in the generation of GHG. Our continued focus on process improvements and targeted investments drove this performance. We saw nominal increases, on a sales adjusted basis, in generated waste and an increase in VOCs, in each case with the opportunity for efficiency investments to influence future reductions.

CARBON AND CLIMATE - CLIMATE CHANGE IMPACTS RISKS AND OPPORTUNITIES
As of year-end 2021, 193 countries, including the United States, have adopted the Paris Climate Agreement and 2˚ scenario. Consistent with our commitment to creating a more sustainable future, we continuously assess relevant climate related risks and opportunities.

HOW WE WILL MEET OUR GOALS – SHYFT GROUP’S COMMITMENT
In 2021, The Shyft Group continued its investment in sustainability by investing $8.5 million in capital on sustainability initiatives, including the following improvements:
• Installed energy efficient laser fabrication machines
• Installed energy efficient lighting wiring systems at a new R&D facility
• Replaced inefficient lighting systems over various parking lots with energy efficient LED lighting
• Installed high-efficiency paint curing ovens
• Installed test bay water recirculation technology
• Upgraded paint preparation processes

In addition, The Shyft Group invested $6.5 million in 2021 toward the development of our proprietary, purpose-built Class 3 EV chassis in support of our customers’ carbon neutral goals and our commitment to environmental stewardship.

The Shyft Group will ensure that our environmental policy remains appropriate to the nature, scale, and environmental impacts of our activities, products, and services, including commitments to pollution prevention. We are committed to continuously seeking to improve the operation of our facilities through the efficient use energy, the sustainable use of renewable resources, and a commitment to waste reduction, recycling, reducing water usage and carbon emissions, and implementing responsible waste disposal practices.

In alignment with our approach to Environmental Stewardship and the principles of the 2˚ C initiative, The Shyft Group tracks electricity, natural gas and water use, waste generation and GHG emissions.

When reviewing our operations, we consider activities based on their actual or potential impact on the environment, specifically land, air, water, or a combination thereof. We assess the risk of each factor on a scale of 1–5, in three areas: severity; frequency of occurrence probability; and detectability. Specific actions are developed to minimize our risks to the environment.
• Land: Many of our operations and processes create scrap material, including steel, aluminum, wood, and cardboard which is diverted from landfills through recycling programs. Certain of our processes, such as paint, may create hazardous waste which is disposed in compliance with all applicable regulations.
• Air: We view the impact of our operations on air quality based on a broad view both upstream and downstream, in addition to the direct impact from our operating activities.
– Upstream, we use electricity which may be generated by a variety of providers using various fuel sources. Certain locations conduct regulatory permitted
coating operations which generate VOCs and hazardous air pollutants (HAPs) below permitted limits.
– Downstream, we produce vehicles that are used in the transportation and delivery space, which generally use fuel for combustion engines while our electric
vehicles (EV) use electricity generated by local providers.
– Internally, our production facilities use natural gas for heating and LP gas for powering forklifts. In addition, the operation of paint booths or welding cells may
create VOCs or other emissions that are mitigated through a variety of methods required by regulation.
• Water: The primary use of water is within our paint operations as well as in water test operations for vehicles we produce.

The Shyft Group Code of Conduct sets out the Company's Core Values, which guide employees in the way they conduct business. It also establishes standards of behavior expected of employees in support of the Core Values. The Code makes clear that it applies to every employee, regardless of their job or location. All employees must follow the Code, and The Shyft Group expects that its business partners act consistent with the Code.

The Code expressly states that we have a zero-tolerance policy for bribery and corruption. The Company makes the following commitments within the Code:
• We will not offer, give, or accept anything of value that could be viewed as improperly influencing a business decision or obtaining a business advantage. This can include cash, gifts, entertainment, hiring a family member or friend, or making charitable donations.
• We will not tolerate corrupt practices of any kind.
• We will comply with applicable anti-bribery and corruption laws.

The Company also explains what is expected of employees:
• Don’t give, offer, or accept a payment, gift, or hospitality with the expectation or hope that a business advantage will be received, or to reward a business advantage already given.
o Within the course of a business relationship, an appropriate exchange of gifts or corporate hospitality is permitted, but the item must be reasonable with
respect to nature, frequency, and cost. It cannot be excessive. And it should be transparent.
• Don’t use someone else (like a sales agent or business partner) to go around these guidelines. Someone who acts on our behalf must also behave consistently with the Code.
• Be sure that all payments to third parties are based on authorized agreements and proper billing methods.
• Don’t use The Shyft Group name, funds, or assets to support political parties or candidates.
• Report any known or suspected bribery incidents to the Shyft Group Legal Department.

Our terms and conditions of business mandate compliance with all applicable laws, including anti-corruption laws. Those conducting business with The Shyft Group must not only comply with these laws, but also represent that they will not engage in corrupt business practices.

Although our primary operations are based in the United States which maintains a relatively low Transparency International risk rating, we are keenly aware of the potential for corrupt practices, including in the global footprint of our supply base, and accordingly focus on anticorruption in our policies and training practices.

All employees receive a copy of the Code of Conduct. They are required to read it and acknowledge it. They are also encouraged to ask any questions if they are unclear about the behaviors that are expected. Each employee must agree to follow the Code.

The Code of Conduct is also publicly available at https://theshyftgroup.com/about-us/policies-charters/.

The Company routinely conducts training on its Code of Conduct and anti-corruption practices to ensure employees are aware of the expected behaviors, how to report concerns, and where to go with questions.

Further, The Shyft Group has an active internal audit function to ensure compliance with the Company's ethical standards. Additionally, The Shyft Group enlists an external, independent company to log reports on its Employee Ethics and Compliance Hotline.

The Shyft Group constantly monitors the Employee Ethics & Compliance Hotline. All concerns are promptly reviewed and investigated. If corrective action is deemed necessary, The Shyft Group implements such action and follows-up to ensure that the concerns have been fully addressed. Even if corrective action isn't deemed necessary, leadership teams periodically review and evaluate the concerns raised in an effort to continuously improve the business. The Shyft Group analyzes the concerns reported on a quarterly basis to identify any trends or substantive areas that may need to be further addressed.

Additionally, The Shyft Group has an active internal audit function to ensure compliance with the Company's ethical standards, which is supported by an external third-party consulting firm. Our internal audit function is actively engaged in the evaluation of any matter raised that implicates the potential for a corrupt practice.