ESG Data Center

The Chair, President, and Chief Executive Officer reviews and approves the strategic direction for Carlisle’s sustainability approach. Carlisle’s sustainability approach is guided to execution through the Vice President of Sustainability and the ESG Steering Committee. The Vice President of Sustainability, reporting to the Chair, President, and Chief Executive Officer, leads the ESG Steering Committee, which is composed of key executives in the areas of human resources, COS, legal, and finance. The ESG Steering Committee develops strategy, provides oversight, and monitors accountability in our ESG and climate-related initiatives through the deployment of the Carlisle Environmental Sustainability Policy. On a periodic basis, Carlisle's Board of Directors reviews the status of our ESG initiatives.

The Vice President of Sustainability and members of the ESG Steering Committee work with senior leadership within our business units to deploy and accelerate our sustainability strategy. Under the Environmental Sustainability Policy, a management representative is appointed for each of our business units who, in addition to other responsibilities, shall ensure that the requirements of the Environmental Sustainability Policy are met at each facility within the business unit.

Risks and opportunities are considered over near-term (0-3 years), medium-term (4-6 years) and long-term (7-10 years) time horizons to assess resiliency. We primarily consider 5 key drivers in our assessment process: Economic Trends, Emerging Regulation, Reputation, Technology, and both acute and chronic Physical Risk.

Carlisle analyzes risks and opportunities based on criteria such as likelihood, materiality to our business, and stakeholder perception. Climate risk assessment results are integrated into our existing Enterprise Risk Management (ERM) System.

Transition Risks

Climate-related policy and regulation:

We are subject to various environmental regulations, including those relating to air emissions, GHG emissions, wastewater discharges, and chemical and hazardous waste management and disposal, as well as the obtainment of and compliance with environmental permits. Changes in environmental and climate change laws or regulations could lead to new or additional investment in Carlisle’s products or facilities and could increase environmental compliance expenditures. Changes in climate change concerns and the regulation of such concerns including climate-related disclosures, could subject us to additional costs and restrictions, including increased energy and raw material costs and other compliance requirements. These could negatively impact our reputation, business, capital expenditures, results of operations, and financial position.

To date, our costs of complying with these regulations have not had a material effect on our capital expenditures, earnings, or competitive position of any business segment. Carlisle did not have any significant accruals related to potential future costs of environmental remediation as of December 31, 2023, nor were any material asset retirement obligations recorded as of that date. However, the nature of our operations and long history of industrial activities at certain of its current or former facilities, as well as those acquired, could potentially result in material environmental liabilities or asset retirement obligations.

Reputational risks relating to ESG commitments:

Carlisle has made several public commitments regarding our intended reduction of GHG emissions, including commitments to achieve net zero GHG emissions by 2050 and the establishment of science-based targets to reduce GHG emissions from our operations and the operations of our value chain. Although we intend to meet these commitments, we may be required to expend significant resources to do so, which could increase our operational costs. Further, there can be no assurance of the extent to which any of our commitments will be achieved, or that any future investments we make in furtherance of achieving such targets and goals will meet investor expectations or any binding or non-binding legal standards regarding sustainability performance. Moreover, we may determine that it is in the best interest of our company and our stockholders to prioritize other business, social, governance, or sustainable investments over the achievement of our current commitments based on economic, regulatory, and social factors, business strategy or pressure from investors, activist groups, or other stakeholders. If we are unable to meet these commitments, then we could incur adverse publicity and reactions from investors, activist groups, and other stakeholders. This could adversely impact the perception of our brands, products and services by current and potential customers, as well as investors, which could in turn adversely impact the results of our operations.

Increased costs of raw materials:

Carlisle utilizes petroleum-based products, chemicals, resins, and other commodities in our manufacturing processes. Raw materials, including inbound freight, accounted for approximately 67% of Carlisle’s cost of goods sold in 2023. Significant increases in the costs of these materials may not be recovered through selling price increases and significant disruption to our supply chains or significant shortages of materials could adversely affect Carlisle’s business, financial condition, results of operations, and cash flows. We also rely on global sources of raw materials, which could be adversely impacted by unfavorable shipping or trade arrangements, including import and export tariffs and global economic conditions. Changes in climate-related concerns, or the regulation of such concerns, could further subject Carlisle to increases in the cost of goods sold from raw materials.

Physical Risks:

Weather related events impact on construction activities and demand for materials:

Adverse weather conditions such as heavy or sustained rainfall, cold weather, and snow can limit construction activity and reduce demand for roofing materials. Increased severe weather events could lead to increased costs due to hiked insurance premiums and building repairs, as well as a loss of active production capacity.

Natural disasters may affect Carlisle's core business operations. Capacity planning is utilized to mitigate risks associated with potential operating disruptions and we have identified which manufacturing sites impose the highest risk due to the risk of a flood, fire, wind, and extreme heat average considering the financial importance to our business. This knowledge is integrated into our annual risk-planning processes.

Opportunities:

Increased demand for low-emission and energy-efficient goods and services:

Global decarbonization trends and the progression of building code energy efficiency standards may cause the demand for Carlisle’s energy-conserving and thermal insulation systems to increase, which will in turn increase revenues. In response to this opportunity, our Research and Innovation teams are working to develop products that are energy-efficient, labor-saving, and have a reduced GHG footprint. For example, our ISCC Plus-certified Polyiso Eco insulation contains 5% bio-based material, lowering the product footprint and providing an eco-conscious insulation solution that upholds performance.

Resource substitutes leading to resilience opportunity:

Recycled end-of-life materials can be used to supplement raw material purchases of carbon-intensive products. Carlisle’s legacy of recycling and continuous improvement began over 100 years ago with the introduction of scrap rubber upcycling into our inner-tube production line. Today, millions of pounds of scrap material feed Carlisle’s production processes and provide post-consumer or production waste to a wide variety of products. Carlisle continues to expand this legacy by introducing and growing its end-of-life programs.

Increase in severe weather events:

Although an increase in severe weather events is a risk to our internal operations, it can also lead to increased demand for our products due to damage sustained on impacted buildings.

We strive to be a leading manufacturer and supplier of innovative building envelope solutions that enable greater building energy efficiency. Our recently launched strategic plan, Vision 2030, builds on our track record of success following the pivot of Carlisle’s portfolio of general industrial businesses to a pure-play building products company. Vision 2030 aims to leverage mega trends around energy efficiency, labor savings, and the re-roofing cycle to generate above-market growth driven by innovation, the Carlisle Experience, and the Carlisle Operating System ("COS").

Climate-related risks and opportunities have influenced Carlisle's businesses, strategy, and financial planning in the following areas:

Products and Services:

Opportunities related to the growing demand for energy and carbon-efficient products have influenced our product strategy. For example, 2023 marked the opening of our Sikeston, Missouri polyiso manufacturing plant, the very first domestic manufacturing plant built to Leadership in Energy and Environmental Design ("LEED") Platinum standards. This new facility manufactures energy-efficient polyiso insulation, which reduces cooling and heating costs for buildings and, in turn, reduces a building's carbon footprint.

We’ve recently released Polyiso Eco, our ISCC Plus-certified insulation containing 5% bio-based material, lowering the product footprint and providing an eco-conscious insulation solution that upholds performance.

Carlisle is well suited to capitalize on strong industry megatrends that are expanding our market opportunity, including pent-up re-roofing demand, growing energy and labor-saving efficiencies, and increased customer preference for full building envelope solutions.

Supply Chain and Value Chain:

Carlisle’s Environmental Sustainability Policy establishes a process to engage our supply chain and monitor compliance with Carlisle's policies for fair labor practices and our Code of Business Conduct and Ethics. We maintain appropriate procedures to evaluate and select suppliers considering their performance and commitment to meeting the requirements of the Environmental Sustainability Policy. We utilize life cycle assessments as a transparent, objective report that communicates a product line's material composition and how it impacts the environment across its entire value chain. These actions allow for significant environmental impacts to be identified and addressed throughout our supply chain.

We make it a priority to work collaboratively and to foster strong relationships with our key suppliers. While our supplier engagement strategies around environmental and social impact are still evolving, we remain dedicated to creating an innovative environment underpinned by shared values. This is exemplified by the initiation of our first major environmentally focused supplier survey in collaboration with Assent. This survey, distributed to our top 100 suppliers, aims to identify areas where we can make the most substantial impact in reducing emissions based on the maturity of our supplier’s sustainability strategies and emissions reduction goals.

We also distribute risk assessment surveys to our top suppliers annually. These surveys cover key environmental and social indicators such as alignment with international sustainability frameworks, emissions management strategies, health and safety performance, environmental and ethics policies, and compliance methods related to bribery, corruption, and human trafficking. We also regularly connect with our top suppliers for progress updates on their internal sustainability targets and projects and advocate for increased transparency of environmental metrics. Working with our suppliers to drive decarbonization and the development of a sustainable supply chain strategy is crucial to achieving our goal of net zero by 2050.

Investments in R&D:

Another fundamental element to Carlisle’s business strategy is to drive innovation through enhanced focus on research and development to continue to introduce proprietary, differentiated value-add products and solutions.

Our research and development activities include the development of new product lines, the modification of existing product lines to comply with regulatory changes, and the research of cost efficiencies through raw material substitution and process improvements. Risks and opportunities related to climate change are considered in Carlisle’s R&D investments as Carlisle aims to provide products with proven long-term performance, lasting energy efficiency, greater weather resistance, excellent heat and UV resistance, and industry-leading resilience. Our new product pipeline currently represents 15% of our revenue. Carlisle’s Vision 2030 goal is to achieve 25% of revenue through new product introductions, driven by our commitment to increase R&D investment to 3% of sales by 2030.

In 2023, Carlisle achieved more than a 250,000 metric ton of CO2e reduction in our emissions due to the reformulation of our products, including transitioning hydrofluorocarbon ("HFC") blowing agents to hydrofluoroolefin ("HFO") alternatives that have minimal global warming potential. Additionally, we have increased the volume of recycled raw materials that are used in the manufacture of our products, including the use of carbon black made from recycled tires and polyiso facer paper made from post-consumer corrugate waste. These initiatives decrease the embodied carbon in our products.

Innovation is a fundamental practice at Carlisle and is integral to our ability to achieve both our economic and sustainability goals aligned through Vision 2030. The growing demand for energy and labor-saving efficiencies, as well as increased preference for full building envelope solutions, creates opportunities for Carlisle to provide new, innovative solutions that create value for both our customers and the environment. In recognition of these trends, we have committed to tripling our investment in research and development as part of our Vision 2030 strategy.

We plan to continue innovating by leveraging energy efficiency trends, bringing solutions to solve contractors’ need for more labor-saving efficiencies, and driving more content per square foot with integrated system solutions.

Operations:

Carlisle utilizes the Carlisle Operating System (COS) to drive operational excellence using principles of Lean and Six Sigma. COS is a continuous improvement process that defines how we conduct business and is deeply embedded in our culture throughout Carlisle’s operations. Waste is eliminated and efficiencies are improved enterprise-wide, driving both improvements to our sustainability efforts by reducing our carbon footprint and increasing profitability. These efforts expand beyond production areas, as COS drives new product innovation, engineering, supply chain management, warranty, and product rationalization. With the accelerating demand for energy-efficient solutions for sustainable buildings of the future, we will continue to seek ways to improve our manufacturing processes to lower carbon emissions through COS.

2023 also marked the opening of our LEED Platinum Sikeston, Missouri polyiso manufacturing plant. Contributing LEED attributes include solar power generation, LED motion sensor lighting, daylighting, noise isolation and control systems, and the restoration of local wetlands.

As a primary initiative of our Environmental Sustainability Policy, Carlisle utilizes COS to further our endeavor to certify all our manufacturing facilities to the ISO 14001 Environmental Management System by the end of 2025. In 2024 we are certifying ten additional manufacturing facilities to the ISO 14001 Environmental Management System standard, bringing our total ISO 14001 certified footprint to over 35 facilities, representing over half of our manufacturing footprint. The ISO 14001 standard contributes to the management of our environmental impacts, mitigating our operational and value chain emissions. We have also begun the process of installing real-time energy meters in our plants in preparation for ISO 50001 implementation. ISO 50001 will aid us in ensuring that our plants are running at a best-in-class energy efficiency standard.

Acquisitions and investments:

We focus our mergers and acquisitions strategy on building envelope opportunities. We intend to continue to seek synergistic acquisitions that will enhance our ability to service our customers with a broader set of energy-efficient solutions, while also seeking to divest businesses that no longer fit well into the strategic direction of Carlisle.

As part of our climate-related risks and opportunities assessment, we completed a scenario analysis aligning to multiple climate scenarios. These include the Share Socioeconomic Pathway (SSP1) 2.6 /Representative Concentration Pathway (RCP) 2.6, SSP2-4.5/RCP 4.5, and SSP5-8.5/RCP 8.5 climate scenarios, which align our assessment with the most recent publicly available information from the IPCC sixth assessment report (AR6). This assessment considered near-term (0-3 years), medium-term (4-6 years) and long-term (7-10 years) time horizons to assess resiliency and primarily considered 5 key drivers: Economic Trends, Emerging Regulation, Reputation, Technology, and both acute and chronic Physical Risk.

The results from this analysis are incorporated into our existing risk assessment processes and better prepare us to serve our customers and adapt to changes throughout the next decade and beyond.

We recognize that buildings are evolving, and their improved energy efficiency is pivotal to the world meeting its environmental goals. With many product and service innovations underway, Carlisle is positioned to address trends impacting the building space such as product circularity, energy conservation, localization, emerging material technologies, construction labor efficiency, evolving building use, technology proliferation, and job site transformation. In addition, COS and our culture of continuous improvement allow deeper technology integration alongside gains in operational efficiency and product quality.

Carlisle analyzes risks and opportunities based on criteria such as likelihood, materiality to our business, and stakeholder perception. As a part of our most recent climate-related scenario analysis, Carlisle created a materiality matrix mapping potential risk drivers against financial impact on business and impact to stakeholders. Key drivers of business risk and opportunity were identified from TCFD and IFRS guidance and were placed on this matrix accordingly. The top 5 most material drivers were selected for analysis of climate risk and opportunity for Carlisle. Climate risk assessment results are integrated into our existing risk management processes.

Describe the organization’s processes for managing climate-related risks.

Carlisle manages enterprise risks, including climate and sustainability-related risks, using a systematic approach to ensure the long-term sustainability and success of the organization, enhance the long-term total return to our stockholders, and to drive continuous improvement. Our enterprise risk management system uses a structured materiality and likeliness framework to identify high-probability risks and inform strategic responses. We assess potential risks to our enterprise by rating them based on relevance, taking into account likelihood, magnitude, risk velocity, risk persistence, and several other factors. The assessment of risks deemed to have a potential substantive financial or strategic impact is reviewed annually and incorporated into annual financial reporting. We assign each identified risk a management maturity rating to ensure we’re allocating the right amount of the right resources to the right risks. This annual exercise allows us to strengthen our strategic resilience and competitive advantage by being better able to anticipate, prepare for, and respond to significant disruptions and crises when risks materialize.

Carlisle tracks metrics including:

• - Scope 1, 2, and 3 GHG emissions
• - Energy and Water use
• - Waste and Recycle volumes
• - Product revenue aligning to LEED attributes

We consider proposed global carbon pricing for emerging regulations to inform our assessment of climate-related transition risks. For more details on sustainability metrics used by Carlisle, please refer to our 2023 Corporate Sustainability Report or to our ESG Data Center at esgdatacenter.carlisle.com.

In 2022, Carlisle announced our commitment to achieve net-zero greenhouse gas emissions across our entire value chain by 2050. We have proposed near-term greenhouse gas reduction targets through the Science Based Targets Initiative (SBTi).

In 2023, Carlisle received validation of our scope 1 & 2 absolute and scope 3 intensity targets from the Science Based Targets Initiative (SBTi). Our targets have been determined to be in alignment with a 1.5°C trajectory, the most ambitious pathway offered by SBTi. These targets include a 44.9% absolute reduction in our scope 1 and 2 emissions by 2030 (from a 2021 base year) and a 51.6% reduction in our scope 3 GHG emissions per pound of product produced within the same timeframe. This achievement demonstrates our commitment to taking ambitious action to abate our emissions and do our part to reduce the emissions intensity of the buildings sector.