Integrated Annual Report 2025-26 252 26. Overview of the entity's material responsible business conduct issues [GRI 3-1, 3-2, 3-3, 201-2] Please indicate material responsible business conduct and sustainability issues pertaining to environmental and social matters that present a risk or an opportunity to your business, rationale for identifying the same, approach to adapt or mitigate the risk along-with its financial implications S. No. Material issue identified Indicate whether risk or opportunity (R/O) Rationale for identifying the risk / opportunity In case of risk, approach to adapt or mitigate Financial implications of the risk or opportunity (Indicate positive or negative implications) 1 Product Stewardship O The Company continuously reviews and improves its product stewardship by integrating advanced quality control processes and aligning product design with the highest safety and sustainability standards. This includes comprehensive R&D initiatives and close monitoring of customer feedback to align with evolving expectations and regulations. NA Positive Impact: Investments in sustainable product development and quality improvements, enhance brand reputation, drive customer loyalty, and result in greater market share and reduced risk of regulatory penalties or product recalls. 2 Resource Circularity (Including Extended Producer Responsibility (EPR) & General Waste Management) R Evolving EPR mandates for various waste categories, such as endof-life vehicles, plastics, batteries, and e-waste, introduce compliance risks and operational challenges. These are compounded by general waste management obligations that require extensive recycling and disposal measures The Company addresses this risk through initiatives like CERO Recycling for vehicle takebacks, onboarding of lithium-ion battery recyclers, authorized plastic recyclers, and used oil collection via dealerships. Supplier engagement ensures compliance across all material streams. Negative Impact: These initiatives involve increased compliance costs and investments in waste infrastructure and traceability. Positive Impact: They reduce the long-term risk of fines and operational disruption due to noncompliance. 3 Water Management R Operating in waterstressed geographies exposes the Company to risks of resource scarcity, operational disruptions, and regulatory restrictions. Water management is critical to ensure long-term production stability. The Company has adopted proactive water conservation strategies, including rainwater harvesting systems, Zero Liquid Discharge (ZLD) installations, and water recycling initiatives across sites to minimize freshwater dependency. Positive Impact: While capital-intensive initially, these measures mitigate long-term operational and regulatory risks, protecting productivity and reducing potential future liabilities. 4 Carbon Emissions R The Company’s operational activities contribute to its carbon footprint. Without mitigation, emissions could lead to inefficiencies, investor concerns, and reputational risks. The Company is investing in renewable energy, improving energy efficiency, and deploying emissions tracking systems. Projects such as 'Project Hariyali' (afforestation) and decarbonization roadmaps form part of the risk mitigation strategy. Negative Impact: These investments lead to higher capital and operational expenditure in the short term. Positive Impact: They help avoid regulatory penalties and maintain competitiveness. 5 Carbon Emissions O The Company’s commitment to becoming carbon neutral by 2040 positions the Company as a sustainability leader. This aligns with global climate goals and presents avenues for innovation, efficiency, and stakeholder engagement. NA Positive Impact: Transitioning early to a low-carbon business model unlocks access to green financing, improves brand equity, and reduces long-term costs through energy savings and process optimization. The Company is transitioning toward low-carbon operations through clean energy adoption, green technologies, and emission offset programs. Internal carbon pricing and decarbonization strategies support the 2040 net-zero target.
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