03/06/2022

To our stakeholders:

I am pleased to confirm that Krost Business Furniture reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

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.

Sincerely yours,

Tyron Krost
Managing Director

As a large employer of over 80 people, Krost is committed to ensuring the health and safety of all of its stakeholders and to ensuring its operations and activities do not affect this. Krost is a staunch supporter and follower of internationally accepted human rights. Krost’s policies are founded on the principles of respect and fairness for all. This Statement is published by Krost Business Furniture, in accordance with the Modern Slavery Act 2018. It sets out the steps taken by Krost Business Furniture and its subsidiaries to monitor, prevent and eradicate forced labor and human trafficking in its company operations and supply chain.

Krost is committed to conducting our business in a manner that reflects our ethical values. We aim to encourage, educate and support and where appropriate mandate requirements that will assist our suppliers to comply with social and environmental standards. We cooperate closely with our suppliers and business partners in pursuit of this aim. Accordingly, we have prepared a code of conduct to illustrate what we expect of our suppliers and business partners. Our code of conduct complies with ISO 9001:2015 and ISO 45001:2018 standards and all other conventions including human rights, workers’ rights, the environment and anti-corruption.

Krost draws on important international labour standards protecting workers’ rights such as International Labour Organisation (ILO) conventions and declarations, the United Nations (UN) Guiding Principles on Business and Human Rights.

Krost’s senior management team acknowledged that their supply chain’s and the ethical manufacturing of their products is critical to the company’s ethos and way in which it wants to operate.

As such, Krost is stringent in ensuring that every supplier overseas is assessed by an Australian based quality assurance agency with offices throughout Asia. In this way, without having company representation at every factory where componentry is made for Krost, they are able to assess that products are being manufactured in line with the principles set forth by Krost at the outset of the engagement. Further, Krost makes note of the countries listed on the 2018 Global Slavery Index by the Walk Free Foundation (https://respect.international/wp-content/uploads/2018/07/The-Global-Slavery-Index-2018-Walk- Free-Foundation.pdf) and makes an effort to not purchase from those countries that are most vulnerable to modern slavery practices.

Krost’s board requires all levels of management to follow the below principles. This includes constant support and monitoring:

• Freedom of Association and Collective Bargaining
• Elimination of forced/compulsory labour and human trafficking
• Elimination of any and all forms of discrimination in regard to employment or occupation
• The health and safety of the entire workforce being the primary objective

Moreover stakeholder’s in Krost’s procurement and operations must adhere to these principles.

Krost’s direct employees predominantly live and work in Australia, which has strict and generally well applied laws pertaining to fair working conditions. Unlike most Australian office furniture companies, Krost’s factory at Smithfield, NSW continues to manufacture more than 50% of the product that we supply throughout
Australia. This enables strict monitoring of the company enacted principles . For any overseas partners that Krost engages with, as part of the contractual agreements suppliers agree to comply with audits by third parties to demonstrate compliance with the guiding principles.

If a staff member or external supplier fails to meet any aspect of the principal requirements, Krost works to implement strict corrective actions and demonstrate compliance through a follow up assessment and staff training.

In order to uphold the Human Rights Policy and Guiding Principles, Krost provides face to face and online training modules. Training on the current Human Rights Policy is a standard online training that is available for all employees. Employees are encouraged to report any violations of policy or law relating to forced labor and
human trafficking.

In the coming years, Krost intends to continue to increase in its monitoring efforts, recruitment practices and to update its guiding principles as required. Technological applications can be utilised to improve recruitment and employment practices so the effectiveness of its policies can be assessed and updated. Additionally,
training and seminar initiatives will continue to maintain the policies and goals related to the elimination of forced labor and human trafficking in all company operations.

Krost has a core commitment to treating all staff, contractors, clients, and suppliers with dignity and respect. Krost Business Furniture’s company standards, include categorically prohibiting forced labor and human trafficking. This includes policies against forced labor, freedom of association, child labor and abuse of labor.
Krost's directors and senior managers review the company's human and workplace rights policies yearly. This enables the group to track respect for human and workplace rights in the businesses practices, in its procurement and in the communities in which the company operates from.

Krost Business Furniture is committed to providing a dignified working environment. Krost's Anti-Discrimination and Harassment policy is aimed at ensuring staff members and potential staff members enjoy equal employment opportunities, are treated fairly and are not subjected to discrimination, bullying, harassment, victimisation or vilification. Inappropriate behaviours such as discrimination, harassment, bullying, victimisation and vilification in the workplace decrease productivity, increase absenteeism and are against the law. Such behaviour will not be tolerated.

All suppliers Krost engages with will comply with the minimum employment age limit defined by national law or by international Labor organization (ILO) Convention 138, whichever is higher. The ILO Convention 138 minimum employment age is the local mandatory schooling age, but not less than 15 years of age, subject to exceptions allowed by the ILO and national law.

Krost shall not use any type of forced labour, which means any work or service performed involuntarily under threat of physical or other penalty, such as prison, indentured or bonded labour. In addition, workers should not be restricted in their movement by controlling identity papers, holding money deposits or any other action to prevent workers from terminating their employment.

The company has a responsibility to take reasonable steps to prevent discrimination, harassment, bullying, victimisation and vilification from happening in the workplace. If a staff member makes a complaint regarding any of the behaviours discussed in this policy, it will be taken seriously and will be dealt with sensitively and in a confidential manner. The complaint will be investigated and, if substantiated, appropriate warnings or other disciplinary action will be taken. The company aims to ensure that any staff member making a complaint is not victimised or treated unfairly for making a complaint.

Krost is an equal opportunity employer. It is committed to selecting, recruiting, training and promoting the best qualified persons in all job classifications in a fair and non-discriminatory manner. It aims to ensure that this occurs by measuring applicants against objective selection criteria.

Krost aims to give every staff member fair access to all workplace opportunities and benefits. All managers and supervisors are required to make fair, non-discriminatory decisions about all work related matters. This includes such things as:

- Training and development opportunities
- Promotion opportunities
- Work allocation
- Hours of work
- Salary levels and packages
- Leave arrangements (of all types)
- Pregnancy arrangements and maternity and parental leave; performance assessment
- Disciplinary procedures
- Restructuring

Wages and benefits, as a minimum shall meet minimum national legal standards or industry benchmarks, whichever is higher. All workers should be provided with a written and comprehensible contract outlining their wage and conditions and method of payment. Workers shall not work excessive hours, including overtime and have the option of at least one day of in seven. Weekly working hours should not on a regular basis be more than 48 hours. Workers should always receive overtime pay for all hours worked over and above normal working hours, minimum in accordance with relevant legislation. We expect recording keeping will be accurate and transparent at all times.

Krost is committed to maintaining a working environment where employment and progress within the company are based on merit and performance. All inappropriate behaviour outlined in their policy is contrary to the company policy, and may result in the taking of serious disciplinary action against the alleged perpetrator, including termination of employment.

Managers and supervisors have an important role in the prevention of inappropriate workplace behaviour.

Firstly, managers and supervisors must ensure that they themselves do not discriminate against, harass, bully, victimise or vilify other staff members or clients.
Secondly, managers and supervisors must ensure that their team understand and implement this policy. When they observe inappropriate behaviour, managers and supervisors must take steps to stop it and warn the person of the consequences if the behaviour continues. If a person approaches them with a complaint about inappropriate behaviour, they should take appropriate steps to resolve it.

Outlined in Krost's Anti-Discrimination and Harassment policy, staff members who believe that they are being discriminated against, harassed, bullied victimised or vilified should take the steps set out below:
- Where possible, tell the person that their behaviour is unacceptable, and that it must stop. This is important as silence may be misconstrued as consent.
- Report the behaviour or incident to management.
- Keep the complaint confidential - this will minimise gossip and the possibility of defamation proceedings against either the staff member or the company.

Staff members are aware that they are responsible for their own actions and that claims of discrimination, harassment, victimisation and vilification may be brought against them directly (for example, if they are the alleged perpetrator or if they permit or somehow assist in the alleged behaviour) and against the company (if it is alleged that the company somehow authorised the behaviour).

Krost’s impact on the environment has become a key measure of their success over the past 10 years. They have endeavored to extend beyond environmental
regulations, to design products around their impact on the environment, and to limit their impression on natural resources.

As an organisation, Krost wishes to ensure that their conduct has the least possible adverse environmental impact; and at the same time need to be pragmatic and
understand that it is impossible to avoid such impact altogether. Krost has been proudly ISO 14001 certified for environmental management control for over 10 years.
They strive to be as efficient as possible in everything they do and are determined to maintain these certifications which demonstrate their commitment to sustainable business practices. Additionally, many products are certified with AFRDI Green tick or GECA accreditations (https://geca.eco/licensees/krost/) and Krost purchases all wood laminate substrates only from Laminex or Polytec to ensure the highest Australian environmental standards of board production are being followed.

Obtaining these various certifications for their product range is part of the ongoing process for Krost. Established products are regularly sent for testing and products that are not certified can be submitted based on customer request wherever practical to do so.

Krost’s ISO 14001 certification requires them to create a system that integrates environmental considerations into every level of the company. This is accomplished through their Environmental Management System which outlines feasible and practical ways Krost can continue to reduce its environmental impact.

Overall, Krost operates in accordance with the following standards for the supply, delivery and installation of commercial furniture:
- ISO 14001 Environmental Management System
- ISO 9001 Quality Management System
- AS/NZS 4801 O&S Management System

These quality systems ensure that Krost have a framework to constantly improve their systems and processes and an overall company focus towards the environment means the benefits to the environment are amplified.

Krost understands office furniture can leave a big footprint on the environment, and has made it a responsibility to minimise that footprint as much as possible through the use of environmentally friendly materials and production processes.

Krost recognises that not only materials matter, but the product's lifespan, reusability and versatility are equally important. Krost’s furniture is designed to be reusable, as well as recyclable. For example, workstation componentry can be reconditioned and reused to update or create new settings based on the evolving changes and needs of the client’s space. Krost’s systems are adaptable and can be disassembled and reassembled. So, if a relocation is required, the office furniture can be moved and refitted.

Krost also places a strong focus on local manufacturing and, in the last few years, has developed an increasing number of product ranges within their own Australian factory. Through their product offering, Krost is committed to using components and supplying products that are sourced and manufactured in an environment that is safe for all and limits the use or emissions of hazardous substances. Krost is selective with its supply chain partners and takes all reasonable steps to monitor its network.

Additionally, Krost rarely engages in new partnerships with overseas suppliers and prefers to develop long-standing relationships, this ensures a higher level of trust and better understanding of each other's business.

Krost stopped manufacturing veneer and solid woodwork surface or detailing options in 2014 because they are inherently worse for the environment than laminate alternatives. Krost has exclusively manufactured only laminate options since then.

Krost purchases all their wood laminate substrates from Australian suppliers Laminex and Borg (Polytec) whose products are Global Green Tag Certified. They both practise responsible forest management and hold timber and environmental certifications across manufacturing sites. They both hold Chain of Custody (CoC) certifications under various standards (Australian Forestry Standards, Responsible Wood, PEFC). CoC is the process of tracking wood and forest products
originating in certified forests through all phases of ownership, transportation and manufacturing from defined forest acres to the final product and delivery to the end consumer. Certified products purchased are from legal, well-managed forests. In addition, all Laminex and Polytec melamine products used by Krost are manufactured from E0 MDF or particleboard panels with the lowest level of formaldehyde emissions. The Green Tag certification tests for compliance with indoor environment quality, such as VOCs, including formaldehyde.

Krost’s manufacturing processes also provide an excellent example of sustainable initiatives. All the offcuts from their typically 3.6m by 1.8m sheets of laminate with a particleboard substrate are sorted separately and put into specially designed boxes, designed by Krost, made from material offcuts and cover sheets, that configure together like giant puzzle pieces and are sent back to the particleboard supplier to use in new particleboard sheets. Additionally, Krost uses state-of-the-art software to ensure that board usage is optimised and any offcuts or wastage parts from raw material is minimised in their production workflow.

Moreover, as an ISO 14001:2015, ISO 9001:2015 and ISO 45001:2018 certified company, Krost is committed to reducing their impact on the environment, to ensuring the safety of its workers and to providing a safe work environment.

With the recent move of their factory to a state-of-the-art premises, Krost endeavoured to set the best working environment for all. For example, the environment to manufacture is much cleaner and the dust extraction system is far more advanced. Krost actively and continuously attempts to improve product compositions and their employees’ wellbeing and ensures the highest standards of formaldehyde emissions in their factory are being met.

On a similar note, Krost’s recently custom-built factory and warehouse has attained a Green Building Council of Australia 5 Star Green Star rating (Design and As-Built v1.1).

Krost’s products are packaged almost exclusively in recyclable cardboard boxes and contain paper and limited amounts of plastic materials on the inside of the boxes to protect the product. Krost’s delivery and/or installation teams ensure to remove all packaging after delivery, assembly and installation and recycle as much of the
waste as possible or dispose of it in an environmentally sustainable manner in waste bins located at the Krost warehouse.

Krost reuses their plastic chair bags as much as possible, because they find most customers want Krost to remove them as soon as they are positioned. Larger components and items of furniture (such as desktops or locally made storage units) that are assembled in Krost warehouse are wrapped and protected with blankets during transportation.

In a similar vein to their product packaging, in an effort to reduce their footprint from marketing materials, Krost mailed out their 2021 catalogue wrapped in a biodegradable plastic wrap and used Ecostar recycled paper stock to print on.

Furthermore, many of Krost’s products are certified with AFRDI Green tick or GECA accreditations (https://geca.eco/licensees/krost/). Obtaining these various certifications for their product range is part of an ongoing process for Krost. Established products are regularly sent for testing and products that are not certified can be submitted based on customer request wherever practical to do so.

The management and staff of Krost are committed to the identification of environmentally efficient manufacturing, storage and fabrication strategies for the delivery of products to its clients. The company recognises that compliance with environmental legislation is a shared responsibility which requires the cooperation of all people in the workplace, including consultants and suppliers. Some of the strategies are managed by contractors who are audited by Krost to measure compliance with agreed environmental plans for their activities.

Krost has been proudly ISO 14001:2015 certified for environmental management control and ISO 9001:2015 certified for their quality management processes since 2010. They strive to be as efficient as possible in everything they do and are determined to maintain these certifications as part of their commitment to delivering above and beyond customers’ expectations.

In order to do so, Krost regularly conducts internal audits, with two trained employees in the organisation reviewing specific processes within the company. Annually, Compass Assurance Services (Compass) conducts an external audit, reviewing Krost’s processes in accordance with ISO9001:2015, AS/NZS 45001:2018 and ISO 14001:2015. A full review is conducted every three years and a surveillance audit is undertaken each year between then.

Krost has accredited policies to prohibit bribery and corruption and has zero-tolerance towards either on both purchasing and selling sides. The founders of the company are both immigrants and abhorred those practices in their previous country. Krost pays all taxes owing and all vendors in a fair and timely manner. There is no use of cash in Krost’s entire operations. Krost holds the view that they do not need to engage in any unscrupulous activities to gain business, because their products, services and marketing will stand for themselves.

Similarly, Krost has had sparingly few consumer issues in its 30-year history because of their principal tenets of providing the customer with the best experience and the highest quality products.

Krost implements policies related to anti-corruption in their company handbook, given to all staff. Employees are encouraged to report any violations of policy or law relating to anti-corruption.

Krost measures their anti-corruption performance as part of their ISO 9001: 2015 ISO 14001:2015 ISO 45001:2018 audit report.