Shepherd Material Science exists solely for the purpose of Creating Value that Brightens Lives. This is our “Core Purpose” and a reflection of my family’s commitment to having a positive long-term effect on the people we impact. “Whose lives?” one might wonder. Specifically, those of our customers, our team members, our neighbors, society in general, and our shareholders. Value for each of these constituencies means delivering more benefit than their best alternative while being good stewards of the environment and the earth’s resources. We are very intentional about this.

• For customers value includes quality products reliably delivered at prices
  that provide the most value, PLUS a technically expert partner with whom
  they can co-develop their own value creating, sustainability enhancing
  products.
• For our team members (of which I am one) value includes good and
  reliable pay and benefits, a place where we belong, a safe and fulfilling
  work experience, and a purpose of which we are proud.
• For our neighbors value includes attractive jobs, community leadership
  and philanthropic assistance, clean water and air, and tax revenues that
  support local governments.
• For society in general value includes good for the world end-products
  such as automotive air bags, energy efficient buildings, and more
  recyclable plastics, the efficient use of resources, and the absence of
  detrimental elements such as pollution, waste, and corruption.
• For our shareholders value includes persistent acceptable returns on
  investment, deep and long relationships with those listed above, and the
  knowledge that we are creating value that brightens lives and
  contributing to a better, more sustainable world.

Shepherd Material Science is committed to pursuing innovations that simultaneously brighten the lives of all constituents. While such
innovations are rarely easy to find and often difficult to carry out, they can be profoundly sustainable and productive when realized. Recent
successes include product and process innovations that simultaneously use less energy, generate less waste, are less challenging to produce, and enable the development of our customers’ own sustainability innovations.

• We will continue to establish meaningful sustainability goals and
  strategies in the areas of safety, belonging, product stewardship,
  water and energy usage, water and air emissions, and community
  outreach.
• We are committed to understanding and reporting each operating
  company’s scope 1 and 2 greenhouse gas emissions and to
  developing appropriate improvement targets.
• We will pursue these ends at a pace that creates value, aiming each
  day to be more sustainable than we were the day before.
• As requests for sustainability reports are vast and diverse, we are
  unable to respond to every inquiry in the manner requested. Instead,
  we have chosen to adopt pertinent sustainability standards at each
  operating company and maintain a vital few internal improvement
  metrics to be shared with customers and other stakeholders.

Shepherd has a rich history filled with stories of delivering innovative solutions to customers. The R&D team is the catalyst and driving force behind these innovative outcomes. Shepherd’s New Product Development (NPD) process is an iterative and collaborative process to develop new products that are tailored to meet customers’ needs. The NPD process stage-gates ensure that the environmental and sustainability impacts of each project are analyzed. This includes safer chemistry reviews, circularity assessments, greenhouse gas (GHG) emission calculations, and identification of opportunities to reduce waste.

Across Shepherd’s operations, opportunities are identified and acted on to recycle packaging, equipment, and waste streams. One of Shepherd’s significant waste reduction activities is the reclamation of metals through wastewater treatment. Removing these materials from wastewater while simultaneously innovating to reduce waste from process units supports compliance efforts, reduces costs, and drives sustainability.

Shepherd seeks to improve the energy efficiency of site operations and fund projects to achieve such improvements. Existing product lines are prioritized for cross-functional innovation efforts. The prioritization process includes consideration of waste streams and energy consumption.

Shepherd always considers the risks of its products in the intended and designed application of their use. The company works to understand and communicate the hazards, risks, and appropriate risk controls to relevant stakeholders. The team at Shepherd continually monitors changes in regulations and available information on hazards and risks.

In recent years, the team at Shepherd has invested significant effort towards improving the sustainability of a high-volume product. The manufacturing process for a personal care additive has evolved with a growing emphasis on sustainability. The original process, while functional, presented challenges related to resource consumption and waste management. It involved multiple steps that required substantial water use and resulted in various byproducts, creating additional environmental concerns.

In 2024, Shepherd implemented a custom near miss reporting program across its US Operations. The goal of this program is to more proactively understand EHS&S and Quality performance and to implement preventive actions to address near misses. The program also aims to increase employee engagement with safety while decreasing the administrative workload for near misses.

Near miss submissions are analyzed to understand trends that go beyond any single event. All submissions are summarized and shared using a custom dashboard. Action items are tracked within this dashboard as well for accountability and transparency.

SafeStart is a training program used to reduce incidents by decreasing the frequency of common states and human errors that increase the likelihood of such incidents.

At Shepherd, SafeStart has been baked into the culture for over a decade. The program includes regular company-wide training, sharing experiences, and competency checks through interactive team engagement. SafeStart provides a framework for reflection and self-awareness that can be used to reduce errors both at work and at home.

Shepherd’s climate program is based on the Greenhouse Gas (GHG) Protocol standards and guiding principles. The company currently tracks and reports on Scope 1 and Scope 2 emissions. Efforts are ongoing to understand and improve Scope 3 emissions, with a particular focus on Scope 3.1 (Purchased Goods and Services). These efforts are also informed by Together for Sustainability (TfS) and the GHG Protocol Scope 3 Standard. Shepherd also continues to develop a Product Carbon Footprint (PCF) database.

Scope 1 direct emissions include emissions of the Kyoto Protocol GHGs from fuels combusted on site, process emissions, and refrigerants. Scope 2 indirect emissions include purchased electricity. Shepherd uses the market-based approach for Scope 2 emissions due to its procurement of renewable electricity.

Shepherd Chemical’s core purpose is to Create Value that Brightens Lives.
The company is committed to continually increasing the positive impact of its products and operations on society. Shepherd also commits to continually improving the environmental impact of its operations, including the impact on climate change. This will be accomplished through investments in operational efficiency and clean energy infrastructure, and through collaboration with supply chain partners.

Shepherd has been one of the largest manufacturers of bismuth compounds for over 40 years. These compounds play a crucial role in advancing customers’ various industrial processes, acting as a safer alternative to other harmful heavy metals such as tin and lead. Bismuth boasts a unique set of properties, including a low melting point, diamagnetism, and even the ability to form organized iridescent oxide layers when recrystallized. It is not just a heavy hitter in the chemical industry though; it is also commonly used in medical devices and pharmaceuticals.

In addition to being a versatile additive for many industries, Shepherd’s bismuth carboxylates are mainly used as curative agents and cross linkers for polyurethanes. While tin-based catalysts have been widely used for decades in these applications, studies have shown bismuth carboxylates exhibit comparable catalytic activity to tin counterparts but with reduced environmental impact. Shepherd has continued to promote and lead the way in this new age of sustainable polyurethane production.

Other highlights include Bismuth Subcarbonate, which is used as a biocompatible x-ray opacifier that makes plastic tubing visible to surgeons during procedures. While the traditional option of barium sulfate is generally considered safe, its high density and insolubility can pose challenges in certain applications. Additionally, research is exploring the use of bismuth-based nanoparticles as contrast agents, which could offer improved imaging capabilities and reduced overall material usage.

In automotive tire manufacturing, cobalt has remained the go-to when it comes to rubber adhesion promoters. Cobalt, while effective, has been linked to health and environmental risks and again, bismuth compounds can offer a less toxic alternative. Preliminary data suggests that Shepherd’s bismuth-based adhesion promoters can achieve comparable or even superior bond strength in rubber-to-metal applications. Considering the staggering amount of tire waste generated globally each year, bismuth-based adhesion promoters offer a pathway towards reducing used tires’ environmental impacts.

Bismuth’s lower toxicity offers comparable or superior performance in many applications and positions it as a safer, greener, next-generation heavy metal. Compared to the alternatives, Bismuth results in safer manufacturing processes and reduced environmental impact during disposal.

Baby Bear is a community initiative in Norwood, Ohio, dedicated to supporting families with young children. Established in December 2018 by Stephanie Downs and Shepherd Material Science, Baby Bear hosts monthly events to provide essential items—such as clothing, toys, food, and diapers—to families in need.

These events take place at Grace and Truth Church in Cincinnati, where families can freely access the supplies they need, no questions asked. This open-door approach ensures that all families, regardless of their situation, can get the resources they require to care for their children.

The success of Baby Bear depends on the generosity of local residents and organizations. Donations are carefully organized and distributed at each event. In addition to the essentials, Baby Bear also offers a free meal to families, creating an opportunity for connection and support within the community. Beyond meeting immediate needs, Baby Bear fosters a warm, welcoming environment where parents and guardians can engage with others and share their experiences.

Disclaimer: The information contained in this report is for informational purposes only and does not create any legal rights or obligations. Readers are cautioned not to place undue reliance on past performance or forward-looking statements. Forward-looking statements are based on current assumptions and expectations, which are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Inclusion of information in this report does not necessarily mean it is material to the company’s financial performance. Non-financial data included in this report is based on estimates and assumptions. This data is not subject to the same level of scrutiny as financial data and should be interpreted accordingly.

Scope: The Shepherd Chemical Company (“Shepherd”), a private company headquartered in Norwood, Ohio, U.S., prepared this sustainability report on a consolidated basis for U.S. operations, except where otherwise noted, which may include global operations. For Greenhouse Gas (GHG) emissions, Scope 3 is excluded.

Reporting Period: The report covers the 2024 calendar year, unless otherwise noted.

Trademarks, Trade Names, and Logos: All trademarks, trade names, and logos mentioned or used in this report are
the property of their respective owners.

Changes, Uncertainty, and Verification: While we strive to ensure the accuracy and completeness of the information in this report, it is subject to change and may not be exhaustive. We do not assume any liability for any errors or omissions. Changes to the scope of this report, corrections, base year changes, mergers, acquisitions, and divestitures, or significant methodology changes will be reported in the next edition of the sustainability report. An uncertainty analysis is currently not performed on the data included in this report. Data included in this report is currently not third-party assured or verified.