ANNUAL REPORT

LETTER FROM THE CHAIRMAN 2

DIRECTORS' REPORT OF THE CONSOLIDATED GROUP

CAF GROUP BUSINESS MODEL AND OUTLOOK 8

BUSINESS PERFORMANCE AND RESULTS 14
RAILWAY SEGMENT 22
BUS SEGMENT - SOLARIS 30
INVESTMENTS 36

I.1 MAIN RISKS AND UNCERTAINTIES

STOCK MARKET INFORMATION
38
44
OTHER INFORMATION 46
Events after the reporting period
Acquisition and disposal of treasury shares
Payments to suppliers
Alternative performance measures
ANNUAL CORPORATE GOVERNANCE REPORT 51
ANNUAL REPORT ON DIRECTORS’ REMUNERATION 51

NON-FINANCIAL INFORMATION STATEMENT - SUSTAINABILITY REPORT

How we understand sustainability 5
Good corporate governance 26
I.2 Responsible business and innovation
The excellence of our team
Contributing to the care and decarbonisation of the environment
57
86
117
The social value of our activity 144
Additional information 159

AUDITOR'S REPORTS 3
FINANCIAL STATEMENTS OF THE CONSOLIDATED GROUP 16
Balance Sheets 16
Statements of Profit or Loss 18
Statements of Comprehensive Income 19
Statements of Changes in Equity 20
Statements of Cash Flows 21
Notes to the Consolidated Financial Statements 22

II APPROVAL BY THE BOARD OF DIRECTORS 97

Resolutions submitted by the Board of Directors
for approval by the Shareholders' meeting 98
Proposed distribution of income 99
Board of Directors 99
SUPPLEMENTARY INFORMATION 100
Consolidated Statements of Financial Position 100
Consolidated Statements of Profit or Loss 102
 ANNUAL REPORT 2022

The following English translation is provided by the Company for information purposes only and is
based on the original official document in Spanish available on the Company's website (www.caf.net).
In the event of any discrepancy between the English version and the original document in Spanish, the latter will prevail.
This publication, which is also published in Basque and Spanish, includes the legal documentation relating to CAF and Subsidiaries.
More information on CAF and its products, together with the information required by law for shareholders
and investors, can be obtained on the website www.caf.net
LETTER FROM THE CHAIRMAN

Dear Shareholder, While the numerical value of this order intake is

important, their composition by nature is no less so.
2022 was by no means any old year. Quite to the Indeed, we have had the satisfaction of achieving
contrary, as a variety of unique elements and factors significant volumes of fund raising in target countries
affected, sometimes positively, others not so much, and in key areas of our value proposition, such as
our activities for the remainder of the year. I would like double-decker trains, integral systems or zero-emission
to take this opportunity to provide a summary of all urban buses, which accounted for 76% of the Solaris
this, as reflected in the results obtained by the CAF backlog at year-end, in turn reinforcing our positioning
Group. for the years to come.

Starting with the most positive aspects of last year, Another relevant aspect of the past year has been the
without a shadow of a doubt, I would emphasise the completion of the process to acquire several assets
impressive demand in the CAF Group's two activity from Alstom, such as the Talent 3 and Coradia Polyvalent
segments: railway and urban bus. Undoubtedly fuelled regional train platforms, both engineering teams in
by the different investment plans oriented towards the Germany and France, as well as the Reichshoffen plant
energy transformation of the society in which we live in Alsace (France) and the corresponding backlog. All
and its development towards more sustainable mobility this has unequivocally reinforced the CAF Group's
solutions. As a result of this, fund gathering over the presence in both markets, which we consider as being
past financial year exceeded all our previous records, core to our future.
thus raising our backlog to a new all-time high of 13.25
billion at year-end, four times the sales figure for the Furthermore, over the past year, we have published
year ended. our new 2026 Strategic Plan, which sets out our

I
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roadmap and objectives for the next four years. This base year, 2019, accompanied by a 15% reduction in
Plan is structured around a series of basic pillars of scope 3 emissions. Furthermore, we have seen a
action, such as the focus on core geographies as a general improvement in the ratings awarded by the
basis for our growth, operational efficiency, not only different agencies with which the CAF Group
through continuous actions to improve operating compares its sustainability practices, which are
costs, such as process improvement dynamics and consistently above the average ratings of comparable
the digitisation of our activities, but also by enhancing firms. These are all figures that we aspire to improving
our industrial operations in nearby geographies to our upon in the coming years and that are to be expected
core markets, reinforcing our innovation activities, and from a Company like ours, whose eligibility index
sustainability, through the achievement of the according to the European taxonomy stood at a
ambitious objectives set for ourselves and to which remarkable 97% last year.
we have committed.
This pays testament to the commitment and
With all of this in mind, we aspire to sales volumes contribution of everybody who makes up the CAF
growth above the market average, accompanied by an Group as part of its everyday activities, as well as
increase in profitability, while keeping leverage when it comes to dealing with the difficulties caused
contained and adequately remunerating our by the variety of unique external factors that have
shareholders. affected our normal business operations over the past
year, for which I would like to express my most
However, the year has not been without its sincere thanks. This has all naturally been supported
complications. Some of these, such as the increase in by the proven technological, commercial and industrial
the cost of energy, particularly high inflation in most capacity of the CAF Group and the high degree of
geographies in which the Group is present or the sustainability of its activities.
instability that has plagued material supply chains, can
be attributable to the complications arising from the Similarly, I would like to thank all our shareholders once
COVID-19 pandemic and which were first seen during again for the continued support for our project. Your
previous years. However, all of these have been contribution and support, together with that of our
exacerbated by the new scenario resulting from the professionals, customers and suppliers, is essential
outbreak of the conflict in Ukraine and, therefore, have when it comes to building an increasingly robust,
had a special impact on the performance of our competitive and sustainable CAF Group.
manufacturing activities and on the cost of our
operations during the year. With my warmest regards,

Despite this backdrop, CAF recorded more than 3 billion

euros in sales for the first time in its history, achieving a
consolidated EBIT of 139 million euros, although the
increase in financial costs associated with the increase
in nominal interest rates by different central banks has
adversely affected our attributable net profit, which
ultimately came in at 52 million euros.
Andrés Arizkorreta García
All of this while having maintained our net financial Chairman
position at year-end at 278 million euros, 1.2 times the
EBITDA, while maintaining a stable level of liquidity of
around 1 billion euros, despite the existing financial
turmoil we are seeing worldwide.

The objectives achieved in terms of sustainability were

also a great source of satisfaction at year-end. Thus,
the scope 1 and 2 emissions generated by CAF Group
activities as a whole dropped by 30% compared to the

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 RAILWAY PROJECTS
The CAF Group is an international LOCAL AND REGIONAL TRAINS
benchmark when it comes to supplying
comprehensive mobility systems, • AB Transitio (Sweden)
offering end-to-end project and • Auckland (New Zealand)
engineering management, including • Caminhos de Ferro Portugueses (Portugal)
system design, civil works, signalling, • Companhia Brasileira de Trens Urbanos (Brazil)
electrification and other • Companhia Paulista de Trenes Metropolitanos (Brazil)
electromechanical systems, the supply of • Ethiad Rail (United Arab Emirates)
rolling stock, as well as systems • Eusko Trenbideak-Ferrocarriles Vascos (ET/FV)
operation and maintenance. • Ferrocarriles Españoles de Vía Estrecha (FEVE)
• Ferrocarrils de la Generalitat de Catalunya (FGC)
• Finnish Railways (VR Ltd)
• Heathrow Airport Express (UK)
• Hong-Kong Airport Express
• Irish Rail (Ireland)
• Izban (Turkey)
• Montenegro
• Myanmar Railways (Myanmar)
• Nederlandse Spoorwegen (NS)
• Northern-Arriva (UK)
• Northern Ireland Railways (North Ireland)
• Northern Spirit (UK)
• Red Nacional de Ferrocarriles Españoles (RENFE)
• Régie autonome des transports parisiens (France)
• Regione Autonoma Friuli Venezia Giulia (Italy)
• Secretaría de Comunicaciones y Transportes (Mexico)
• Serveis Ferroviaris de Mallorca (SFM)
• SJ AB (Sweden)
• Société Nationale de Chemins de Fer Français (France)
• TransPennine-First Group (UK)
• Transport for New South Wales (Australia)
• West Midlands - Abellio, JRE, Mitsui & Co (UK)
• Wales & Borders - KeolisAmey
• Zweckverband Nahverkehr Westfalen-Lippe (Germany)
• Zweckverband Schönbuchbahn (Germany)
• Zweckverband Verkehrsverbund Rhein-Ruhr (Germany)
 MAIN LINES CITY

INTERCITY TRAINS STREETCARS • Kaohsiung SUBWAY TRAINS • New Delhi

• Tilting trains S/598 (RENFE) • Amsterdam • Lieja • Amsterdam • Palma (Mallorca)
• Antalya • Lisbon • Algiers • Quito
• Diesel trains S/599 (RENFE)
• Belgrade • Lund • Barcelona • Rome
• Electric trains S/449 (RENFE)
• Besançon • Luxembourg • Bilbao • Santiago de Chile
• Diesel trains for Algeria
• Bilbao • Manila • Bucharest • São Paulo
• Intercity Push-Pull Service Ireland • Marsella • Seville
• Birmingham • Brussels
• Diesel trains - Corsica • Maryland • Washington
• Bonn • Caracas
• Diesel trains - Tunisia • Mauricio
• Boston • Istanbul
• Diesel trains - France • Budapest • Montpellier • Helsinki ARTICULATED LIGHT
• Trains for Saudi Arabia • Calgary • Nantes • Hong Kong RAILWAY
• Sardinia diesel trains • Canberra • Oslo • London
• Seville • Amsterdam
• Northern Ireland trains • Cádiz-Chiclana • Madrid
• Sidney • Buenos Aires
• US trains • Cincinnati • Malaga
• St. Etienne • Monterrey
• Caledonian Sleeper Escocia • Cuiabá • Medellin
• Tallinn • Pittsburgh
• Debrecen • Mexico
• Tel Aviv • Sacramento
HIGH SPEED TRAINS • De Lijn • Nápoles
• Utrecht • Valencia
• Edinburgh
• High Speed Trains and Variable • Valencia
• Essen
Gauge Trains S-120 and S-121 (RENFE) • Stockholm • Vélez-Málaga
• High Speed Trains for the • Freiburg • Vitoria
Madrid-Seville Line • Granada • Zaragoza
• Shuttle Trains S-104 (RENFE) • Hannover
• High Speed Trains for Turkey • Houston
• High Speed Trains for Norwa • Jerusalem

BUSES
Solaris, a subsidiary of the CAF Group, is one of the main bus
manufacturers in Europe. Having supplied more than 23,000 vehicles during
its more than 25 years of experience, Solaris has become the European
leader in the electric bus market based on market share, as well as boasting
a wide range of products with the most advanced solutions when it comes
to zero-emission public transport.
 CAF GROUP BUSINESS MODEL AND OUTLOOK 8
BUSINESS PERFORMANCE AND RESULTS 14
RAILWAY SEGMENT 22
BUS SEGMENT - SOLARIS 30
INVESTMENTS 36
MAIN RISKS AND UNCERTAINTIES 38
2022 DIRECTORS' REPORT
OF THE CONSOLIDATED GROUP I.1 STOCK MARKET INFORMATION
OTHER INFORMATION
44
46
Events after the reporting period
Acquisition and disposal of treasury shares
Payments to suppliers
Alternative performance measures
ANNUAL CORPORATE GOVERNANCE REPORT 51
ANNUAL REPORT ON DIRECTORS’ REMUNERATION 51

NON-FINANCIAL INFORMATION STATEMENT

SUSTAINABILITY REPORT
How we understand sustainability 5
Good corporate governance 26

I.2 Responsible business and innovation

The excellence of our team
Contributing to the care and decarbonisation
57
86

of the environment 117

The social value of our activity 144
Additional information 159
CAF GROUP BUSINESS
MODEL AND OUTLOOK
The Group begins 2023 facing important
short-term challenges, but also with a solid
foundation on which to establish future
achievements supported by its new 2026
Strategic Plan, the aim of which is to continue
to ensure profitable growth and develop CAF's
Vision: grow as a provider of comprehensive
rail and bus mobility solutions, maximising its
digital proposal.

2022 ended with the launch of CAF's 2026 Strategic largest accessible market in the world, ii) the
Plan, which focuses its ambition on growing as a strengthening of the railway value proposition through a
provider of comprehensive rail and bus mobility significant capture of comprehensive projects and the
solutions, while maximising its digital proposal. development and growing contribution of the businesses
associated with the supply of components and systems,
CAF ended its previous 2016-2021 cycle with important iii) the diversification of the offer beyond rail, an area in
achievements that have transformed the Group in three which the acquisition of Solaris stands out, dedicated to
main ways: the supply of buses, in 2018, and iv) the technological
development of innovative solutions, such as zero
• Growth and strengthening of the value proposition, emission vehicles, digital solutions, big data, energy
leading to i) a greater presence of CAF in Europe, the management and ecodesign, signage, traction or the
autonomous vehicle.

• Systematic development of profitability optimisation

levers, through i) the MOVE transformation programme,
which pivoted on the standardisation of platforms and the
implementation of Lean Manufacturing and Digital
Factory 4.0 throughout the railway industrial footprint, ii)
various efficiency improvement plans in the rail services
segment, iii) the progressive implementation of the
digital train, with significant improvements of the product
and of the maintenance activity based on the real data
captured in operation, and iv) the optimisation plan of the
currency, resulting in a highly considerable decrease
during the period.

• Improvement of the sustainability assessment, an area in

which various initiatives stand out, such as the publication
of the ESG Equity Story, the progressive improvement of
CAF's ESG rating until it exceeds the sector average,
adherence to SBTi and the Net Zero Initiative, the
implementation of a share liquidity program in April 2022
and the reduction of scope 1 and 2 emissions of 10%
between 2019 and 2021.

I.1
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All of the above has allowed the CAF Group to undertake a unique position in electromobility due to its leadership
solid growth, reinforce its capabilities in key geographies position in zero emission buses, its unique real
and position itself in a prominent way in products and the experience in electromobility, the strong proposal of
market to address future growth. zero emission technologies (electric and hydrogen) and
for having all the advantages of conventional
Thus, CAF is today a multinational group with more than technologies but without business or industrial activity
100 years' experience characterised by: in the production of internal combustion engines. All in
all, Solaris, and thus CAF, is ahead of its European
• It is one of the international leaders in the competitors in terms of portfolio, actual experience and
implementation of integrated rail and bus mobility market share.
solutions, with extensive experience tackling projects
throughout the entire project life cycle (analysis and In both cases CAF serves the most diverse range of
feasibility studies, system design and engineering, customers worldwide: from municipalities and regional
system construction and manufacturing, installation and or national public or private administrations, to other
commissioning, operation and maintenance, and even railway manufacturers and private companies operating
financing) in a multitude of geographies. or maintaining systems, or even consortium structures
accompanied by financially oriented entities.
– In the railway sector, the Group offers its customers
one of the broadest and most flexible product ranges • CAF is the number one in sustainable urban mobility,
on the market, from complete transport systems to with a value proposition that no other company can
rolling stock (components, infrastructure, signalling and match (underground trains, trams and LRVs, low and
services (maintenance, rehabilitation and financing). zero-emission buses), with high technological synergies
These capabilities and the CAF Group's current range and cross-selling opportunities between the rail and bus
of solutions place it on a par with the leading players in worlds, in a context in which urban public transport will
the sector. Within this area, the rail vehicle business be a key pillar in any future mobility scenario.
generates and anchors other activities and rail services
provide profitability, complemented by integrated • Being at the technological forefront, investing in key
solutions and systems, which are expected to make an innovation areas for mobility (decarbonization,
increasing contribution to the Group. automation, digitalization and competitiveness) in order to
build sustainable, interconnected, multimodal and safe
– In the field of buses, CAF, through Solaris, has been a mobility.
pioneer in the development of new products and
currently has the most complete range of low and zero • Being global, with a prominent positioning in Europe. CAF
emission solutions, while at the same time presenting is present in more than 50 countries in the world and has,

I.1
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CAF GROUP BUSINESS
MODEL AND OUTLOOK
in the railway block, an industrial establishment in Spain, • All this, in a context of a high level of satisfaction and
France, the United Kingdom, the United States, Brazil and repeatability of its customers, which demonstrates the
Mexico, with more than 100 maintenance centres in the high level of trust of the authorities and administrations
world, more than 130 projects executed for a value of from all over the world in CAF, and which gives CAF high
27,000 million euros, and with more than 4,800 trains visibility of the business for the coming years on having a
delivered and over 1,000 rehabilitated cars to its name. In portfolio worth more than 13,000 million euros.
the bus section, CAF has an industrial establishment in
Poland, with buses sold to more than 750 cities in 32 In 2022, CAF reached significant milestones that
countries and over 20,000 buses in operation. strengthen the foundations of its future strategy, the
following of which stand out:
In recent years, the Group has focused commercially on
Europe, where it has also aligned itself industrially • New commercial success in key geographies (Spain,
(expansion of capacity in France, new production base in Germany, France, Sweden and the USA) and in
Newport-United Kingdom, industrial establishment in maintenance services.
Poland through the acquisition of Solaris and the
incorporation of maintenance workshops in the Nordic • The renewed trust of the Dutch operator NS, with the
region by EuroMaint). award of a contract to supply 60 double-decker trains.

• Have a highly-qualified human team, aligned with the • The award of the Purple Line project for the Tel Aviv Light
project and with a shared culture, highlighting that of the Rail train, which covers the design, construction,
nearly 4,500 university graduates, more than 2,000 are financing and maintenance of the line over 25 years,
engineering professionals in innovation, product illustrating the CAF Group’s ongoing success in the
development and project activities. integral transport projects segment, called to continue
growing in the future.
• Be sustainable, presenting sustainability ratios above the
sector average, with a "low risk" rating according to the • The incorporation into the Group of significant assets in
Sustainalytics agency or the "Platinum" medal awarded by France and Germany (Reichshoffen factory and Coradia
Ecovadis. Polyvalent and Talent 3 platforms), after closing the
acquisition from Alstom on 1 August 2022, thus
• Be solvent and have a proven financial capacity, with a reinforcing CAF's positioning and capabilities in two of
controlled net debt / EBITDA ratio. the world's largest rail markets.

I.1
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• The improvement of the Group's positioning to address • CRS Silver Leaf distinction awarded to Solaris by
the decarbonisation of rail mobility, through: "Polityka" for its support in achieving the Sustainable
Development Goals.
– Battery-powered trains: the German operator NWL
executes the option to expand the supply of battery- • Busplanner Innovation Award 2022 for Solaris, for its
powered trains. Urbino 9 LE bus.

– Hydrogen train prototype: start of factory tests in May • Maintenance of the “BBB” rating in the MSCI valuation
2022 and start of track tests in July 2022. update for the CAF Group.

Meanwhile, the main sustainability milestones in the • Entering into a liquidity contract, the sole purpose of
period, as described in the Non-Financial Statement which is to promote liquidity and regularity in the listing
contained in this report, are as follows: of the Group's parent company's shares on the stock
exchange.
• Certification of the model of excellence in environmental
management based on the European EMAS Regulation • Verification of the carbon footprint (scopes 1 and 2) for
for CAF S.A. (Eco-Management and Audit Scheme). 2019, 2020 and 2021 by the external accredited entity
LRQA, and definition of the GHG emission reduction
• Obtaining the "Silver" level under the IRIS international targets based on the SBTi methodology; targets that
quality standard for the Signalling activity, in addition to have been integrated and communicated in the 2026
those obtained in 2021 by Rail Vehicles and Maintenance. Strategic Plan.

• KOMP SARIAK distinction awarded to the CAF Group by • Solaris obtained certification under ISO 45001
the Basque Competition Authority for its Corporate "Occupational Health and Safety Management Systems".
Competition Compliance System.
• Obtainment of the prestigious platinum medal in the
• First EDP declaration (Environmental Product sustainability management evaluation carried out by
Declaration) for Solaris: Urbino 18 electric and Urbino Ecovadis, placing the CAF Group among the companies
12 hybrid buses. with the best performance in the sector.

I.1
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CAF GROUP BUSINESS
MODEL AND OUTLOOK
• Score B in the first report of the CDP (Carbon Disclosure In Buses, Solaris aspires to maintain European leadership
Project) climate change index carried out by the CAF in zero-emission mobility in the urban segment, and to
Group throughout 2022, a score that is above the average expand its current portfolio to the interurban segment in
for the railway sector. Europe, and to enter North America with an exclusive
zero-emissions value proposition.
In 2022, CAF was not immune to the hardening of the
environmental conditions that began in the second part of • Operational efficiency, to guarantee profitability and
2021. A context that, far from attenuating, has been competitiveness. CAF will improve efficiency in
aggravated after the invasion of Ukraine by Russia, with production, engineering and purchasing, and will
negative effects on the situation of the supply chain of complement the current footprint with new industrial
components, in the cost of energy and in future inflation capacities that accompany the commercial focus, while
scenarios, affecting the execution and results of the Group capturing cost efficiencies.
throughout 2022, despite the fact that CAF does not have
any exposure to the area of conflict (Russia-Ukraine). Hence, it aspires to establish new operations in Eastern
Europe and Asia Pacific for the rail division, and in North
The Group thus begins 2023 with significant short-term America in the bus segment.
challenges, but also with a solid foundation on which to
establish future achievements hand in hand with its new Likewise, CAF will apply efficiency programmes in all
2026 Strategic Plan. activities to strengthen its competitiveness, with a
recurring annual impact.
A new Strategic Plan that aspires to continue a history of
profitable growth that aims to develop CAF's Vision: grow • Innovation, ensuring that it is at the technological
as a provider of comprehensive rail and bus mobility forefront. CAF will establish an innovative mobility
solutions, maximising its digital proposal. Four strategic strategy by incorporating smart mobility solutions into the
axes will enable the achievement of the Vision, all of them portfolio, aimed at optimising urban mobility
aimed at increasing the total return for shareholders: infrastructures such as, among others, fleet
management, traffic optimisation or intermodal operation,
• Commercial focus, which will bring recurrence and in addition to strengthening main businesses and
scalability to the Group. More specifically, CAF will focus comprehensive projects.
its commercial strategy in Europe, North America and
Asia Pacific, attractive markets with large volumes and At the same time, it will progress in its decarbonisation
recurring activity, in which CAF has a strong position proposal by expanding the range of trains and buses with
and/or a good strategic fit in its offer of solutions, and alternative propulsion (electric and hydrogen), the
which will be the source of 70% of Group sales. automation of urban transport systems (subways, trams

I.1
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 and buses) and the digitization of its processes (validation Likewise, in order to complement organic development,
environments and virtual homologation, cybersecurity, reduce risks and capital employed, CAF considers a base
etc.). case of corporate operations with an investment of
approximately 550 million euros for the period. These
• Sustainability, leading the transition of mobility acquisitions will contribute to the expansion of the
solutions towards the goal of reaching zero net Group's portfolio of products and services,
emissions in 2045, and continuing the strategy defined complementing the current industrial and technological
in CAF's ESG Equity Story in July 2021, through which capabilities, both in railways and buses, in line with its
priority material issues identified by stakeholders will international expansion.
be dealt with, and it aspires to continue above the
average of comparable companies in the assessments The full document of the Strategic Plan is available on
of ESG rating agencies. CAF's corporate website (www.caf.net).

As a result of the foregoing, the new Strategic Plan sets

the following top-level objectives for 2026:

• Grow above the market and reach total sales close to

4,800 million euros.

• To place the Operating Result in 2026 at around 300

million euros.

• Distribute dividends in progression with the results.

• Have a Net Financial Debt / EBITDA ratio of around 2.2x

after the corporate operations envisaged in the Plan's
base case.

• Reduce scope 1 and 2 emissions by up to 30%, and up

to 40% in scope 3 (referring to the use of the product, in
terms of emissions per passenger and km), with respect
to 2019, with the ultimate goal of becoming a net zero-
emissions company in 2045.

In order to comply with said Plan, an investment level for

the period of around 550-650 million euros is expected.

I.1
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BUSINESS PERFORMANCE
AND RESULTS

Main indicators (*)

Figures in millions of euros 2022 2021 Change (%)

Order Intake
Order Intake 6,205 3,776 64%
Book-to-bill ratio 2.0 1.3 53%
Backlog 13,250 9,640 37%
Order backlog / Revenue ratio 4.0 3.3 22%

Profit and Cash flow

Revenue 3,165 2,943 8%
EBITDA 232 255 -9%
Consolidated profit/(loss) for the period attributable to the Parent 52 86 -39%
Investment in working capital (195) (4) 4377%
CAPEX 72 46 57%
Cash-Flow 36 62 -41%

Capital management and liquidity

Net Financial Debt 278 278 0%
Net Financial Debt / EBITDA ratio 1.2 1.1 10%
Available liquidity 978 1,091 -10%
Equity attributable to the Parent 776 727 7%

Proposed dividend per share 0.86 1.00 -14%

(*) Definitions of the indicators are provided in the “Alternative Performance Measures” section.

ORDER INTAKE

In 2022, CAF obtained contracts worth over six billion euros (+64% year-on-year growth), which is a record high, bringing
the backlog to 13 billion euros, 37% higher than the previous year. The Book-to-Bill ratio is 2.

I.1
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In 2022, CAF secured contracts worth more than six billion euros, resulting in an increase in the
backlog of 37% year on year, taking it to a record 13,250 million euros. This favourable evolution
continues the positive trajectory of recent years, which confirms the good moment the sector is
experiencing and the Group's sound positioning.

These high order intake figures are the result of the positive trend in order intake across all segments and by
geographical area, especially in the European and US markets. The breakdown of order intake by line of activity and
geographical area is as follows:

1. The backlog related to the acquisition perimeter is not included.

2. Adding to this figure the acquisiton of low-emission or hybrid buses (13%), the order intake for sustainable buses or emobility buses account for 76% of the total in 2022.

I.1
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BUSINESS PERFORMANCE
AND RESULTS
BACKLOG

This has allowed the backlog to increase by 37% compared

to the previous year, reaching a record level of 13,250
million euros. This favourable evolution continues the
positive trajectory of recent years, which confirms the
good moment the sector is experiencing and the Group's
sound positioning.

The backlog at year-end represents 4 times turnover,

providing a high visibility for future sales. Likewise, it is
characterised by its broad diversification, both
geographically and by business.

1. It includes revenue for the entire 2022 financial year of the acquired scope (€216M).

I.1
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RESULTS

Revenues

The Group's revenue is at its highest level, reflecting the Group's desire to outgrow market expectations, especially in the
railway segment:

1. This figure includes €78M from the new scope acquired in the year. Not considering this effect, consolidated and railway revenue would have grown by 5% and 8%, respectively.
2. Solaris revenue is recognised on the basis of buses delivered and not on the basis of the grade of completion.
3. Sales forecast 2022 and predicted year-on-year growth at the beginning of FY 2022, before the outbreak of the Russia-Ukraine war and the subsequent deterioration of the macro
environment.

I.1
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BUSINESS PERFORMANCE
AND RESULTS

Railway segment sales

Integrated Projects boost sales in the Railway segment.

1. This figure includes €78M from the new scope acquired in the year. Not considering this effect, organic revenue would have grown by 3%.

Bus Segment Sales

Solaris has managed to deliver 1,492 buses in the year despite the material impact that the crisis in the supply chain and
the strike have had on the performance of its activities.

1. This figure includes low-emission or hybrid buses, which represent 6% and 21% of the vehicles delivered in 2022 and 2021, respectively.

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Solaris continues to be the historical leader in the zero-emissions bus market.

1. Urban buses registered, MAM > 8t. Includes EU27 (without the United Kingdom and Ireland, countries in which Solaris does not operate), Norway and Switzerland.
Excluding trolleybuses
2. This figure includes low-emission or hybrid buses, which represent 10% of the vehicles in the backlog at the end of 2022.

EBITDA and EBIT

The Group's EDITDA stood at 232 million euros, down 9% on the previous year, mainly due to the effects of inflation
(energy, labour and materials) and instability in the supply chain in the bus segment.

1. The Bus EBIT absorbs the amortisation of the acquisition of Solaris by the CAF Group (app. €6M/year).

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BUSINESS PERFORMANCE
AND RESULTS
BALANCE SHEET AND CASH FLOWS

The level of EBITDA and the containment of the investment in property, plant and equipment and R+D+i generated
Cash-Flow for the year, prior to the payment of dividends, of 36 million euros. Thus, in a complex macroeconomic
context, Net Financial Debt remains at 278 million euros and the Net Financial Debt/EBITDA ratio is 1.2 times, below
the level prior to the acquisitions made by the Group in the last five years (Solaris, EuroMaint, among others).

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20
The balance is kept under control:

1. In 2022 the parameters used to calculate these indicators were modified to improve
comparability with competitors. In the specific case of net working capital, this modification
resulted in a €222M and €144M reduction in investment in working capital at 31/12/2022 and
31/12/2021, respectively. See MARs in the Consolidated Management Report for 2022.

The financial strength of the Group allows it to maintain its commitments with shareholders. The proposed allocation of
results consists of allocating 29 million euros to the distribution of dividends, a figure that represents an amount of 0.86
euros per share.

1 Calculated as: Dividend per share / Mean share price for the year.
2 Dividend per share against FY 2022 subject to approval by the General Shareholders’ Meeting of 2023.

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RAILWAY SEGMENT

COMMERCIAL ACTIVITY Worth particular mention is the commercial

During 2022, CAF reached a level of contracting in the rail
successes achieved in the main European
segment of over five billion euros (+77% year-on-year markets, as well as in the USA and the
growth), which is a record high, enabling the size of the Middle East.
order book to rise by over twelve billion euros. The Book-to-
Bill ratio is greater than 2. The commercial successes
obtained in the main European markets, as well as in the
USA and the Middle East, should be highlighted.

Europe des Rhein-Sieg-Kreises GmbH (SSB), both operators of

transport services in Bonn and cities on its outskirts, have
• The Dutch national operator NS - Nederlandse purchased 32 articulated units. These are very similar to
Spoorwegen - has formalised an order for 60 those 51 contracted last year by Ruhrbahn GmbH for the
compositions that combine simple and double deck nearby city of Essen. In the North Rhine-Westphalia
carriages, to comprise 4 or 6 carriages. Thus, Civity state, Nahverkehr Westfalen-Lippe (NWL) expanded as
platform developed by CAF for Commuter and Regional well its dual operation capacity fleet - battery or overhead
services, incorporates double deckers as an available catenary -, up to 76 for the Rhineland region. All of these
standard. Civity units are running on tracks over several are going to be maintained by CAF during its lifetime. The
European countries such as the Netherlands, the acquisition of the intellectual property of the Talent 3 train
United Kingdom, Sweden and Italy. NS has already platform, jointly with the Reichshoffen production plant in
placed orders in excess of 1,500 million euros in recent the French Alsace region, aimed at the German market
years and they are going to operate a Civity fleet of and Central European markets, together with key German
over 250 trains. engineering personnel linked to it, which will boost CAF's
capabilities for those markets.
• The public transport operator of the capital of the federal
state of Lower Saxony in Germany, known as the largest • In France, Transports de l’Agglomération de Montpellier
accessible rail market in the world, signed a contract to - TaM - signed an order for 60 trams. TaM is the
acquire up to 233 articulated units to be used at transport service operator for Montpellier Méditerranée
Hannover city. Also in Germany, but in the North Rhine- Métropole, a French metropolitan area located in the
Westphalia state, the Stadtwerke Bonn Verkehrs GmbH Occitania region, around the city of Montpellier, which
(SWBV) and the Elektrische Bahnen der Stadt Bonn und covers 31 municipalities in the area and has a

I.1
22
 population of close to half a million people. In addition which provides the surface tram service, signed an
to the tram service, it is also responsible for public bus agreement which allows it it to double the fleet and
services and the metropolis' shared bicycle system. maintenance work to be performed by CAF for the
Also in France, and for the second city in terms of whole fleet.
population, the company Régie des Transports
Métropolitains - RTM - which manages the entire public • The operator Statheres Sygkoinonies A.E., in charge of
transport network in Marseille, commissioned CAF to transport management in the city of Athens, selected the
acquire 15 new tram units that may operate on any of CAF Group to refurbish 14 underground trains that
the three tram lines run by RTM, which also manages currently operate on line 1 of the Greek capital's
underground, bus and ferry lines. underground system. This project represents the first
significant contract for the company in the Hellenic
• In Sweden, the public operator SJ AB, purchased 25 new country.
units of the Nordic variant of the Civity platform, adapted
to operate in extreme climates. • EuroMaint also made a significant contribution to the
order book, highlighting mainly the renewal of major
• Regarding the national market, RENFE has contracts.
commissioned CAF to renew the medium-distance
service fleet. Both companies signed a contract to supply • The company responsible for public transport in the
up to 70 units; the contract also includes a 15-year Hungarian capital, Budapesti Közlekedési Központ - BKK ,
maintenance agreement for several units. signed a contract that will increase the number of CAF
trams serving its extensive network, with nearly 40 lines,
Serveis Ferroviaris de Mallorca - SFM -, making use of up to 93 units.
the extraordinary Recovery Assistance for Cohesion and
the Territories of Europe (REACT-EU Plan), acquired five Other markets
new units to improve its service capacity in Palma de
Mallorca. Under the same REACT-EU Plan, the Agencia • In Boston, the Massachusetts Bay Transportation
de Obra Pública de la Junta de Andalucía, in charge of Authority - MBTA -, operator of one of the oldest public
public transport for Andalusian region, contracted the transportation systems in the United States, and the
supply of eight new units to provide a service in the largest one in the state of Massachusetts, contracted 102
Granada metropolitan area. units with CAF to provide a service on its Green Line,
which is one of the oldest underground lines in the
For the city of Saragossa, financed by European Funds, United States with sections built at the end of the 19th
the company that operates the tramway service Los century, on which 24 CAF units already operate.
Tranvías de Zaragoza, increased its tram fleet by up to
23 units. In Seville, the company Transportes Urbanos • The Missouri state signed the fleet extension for Kansas
de Sevilla Sociedad Anónima Municipal - TUSSAM - City, its most populated city, up to 14 tram units. These

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RAILWAY SEGMENT

trams will provide service in the current network, and in train digitalisation hot spot, through the development of
its future extension to link the South with the Country digital systems and tools in which CAF and SAR have
Club Plaza and the North with Berkley Riverfront Park. In already been working for several years - the LeadMind
Maryland state, the maintenance division signed two digital train platform -.
warranty extensions that affect the 26 articulated units
that provide a service on the Purple Line connecting • In Auckland, a fleet expansion up to 95 units was signed,
Bethesda in Montgomery County with New Carrollton in demonstrating the proper performance of the units in this
Prince George's County. This service provides a direct New Zealand city.
connection with the Red, Green and Orange Lines of the
Washington underground, as well as with commuter and • In Australia, the Australian Capital Territory, through the
bus interchanges. company Canberra Metro Operations, which operates the
Canberra Tram Line, once again awarded CAF the supply
• In the Middle East, NTA - Metropolitan Mass Transit of five tram units suitable to operate on sections without
Systems -, the company in charge of developing mobility catenary, including maintenance. Additionally, it has
solutions for the Tel Aviv metropolitan area, has awarded contracted the adaptation of the currently operating fleet
the Purple Line light rail project to the public-private to incorporate the on-board energy storage system that
consortium comprising CAF. Under this project, CAF will allows circulation in areas on the non-electrified route.
handle the design and manufacture of the 98 tram units, The service connects the centre of the capital with
and the supply of signalling, energy and communications Gungahlin and will be fit to circulate on the future
systems and the overall integration of the project. On top extension of the line, thus responding to the expected
of this, CAF holds a 50% stake in the company, which demand increase.
will manage the line’s maintenance activity over the 25-
year term of the concession. Regarding the use of hydrogen in the railway sector, last
May CAF commenced a CIVIA demonstrator train static
• Etihad Rail - State Company of the United Arab test at the Zaragoza plant. RENFE’s CIVIA demonstrator
Emirates - in charge of not only the administration and train is powered by hydrogen from the FCH2Rail projects
development of country's railway network, but also of and developed by the consortium comprised by CAF, DLR,
the network management and operation, signed a Toyota, RENFE, ADIF, CNH2, IP and Faiveley Stemmann
contract for the manufacture, supply and maintenance Technik.
of 9 trains.
Once these static tests were satisfactorily completed, the
• SAR - Saudi Arabia Railways - signed a five-year dynamic tests began on the external track, having
maintenance contract extension for its trains, as well as successfully completed the circulation in electric mode and
an agreement was reached to set up a joint engineering in hydrogen mode.
department, known as the “Engineering Excellence
Centre”, where SAR staff obtain knowledge to carry out To ensure the decarbonisation of the planet, through the
maintenance work by themselves, while also adapting promotion of clean energy, CAF and Iberdrola signed an
the Saudi company's facilities for main systems agreement whose main objective is the global promotion
refurbishment. The contract also includes the of rail transport with emission-free green hydrogen, and its
implementation of SAR’s “DIGITAL HUB CENTRE”, which first success was the recharging of the unit at a station to
is meant to become a benchmark in the Gulf region as a complement the circulation carried out.

I.1
24
INDUSTRIAL ACTIVITY contracts throughout the world, those who have occupied
the industrial activity in the railway field of the CAF Group.
Throughout 2022, over 30 different projects were carried
out in the manufacturing chains, generating a total of 989 Advancing in line with project life cycles, first were those
finished cars, as well as more than 60,000 wheels and that were completed in 2022, as is the case of the projects
other components, manufactured and distributed in various for the Naples and Volturno underground systems, with the

I.1
25
RAILWAY SEGMENT

manufacture of the last 4 trains of each project, the Throughout 2022, over 30 different projects
contract signed for 30 trains with the city of Manila with
the completion of the last 10 units, 5 trams for the Dutch
were carried out in the manufacturing chains,
city of Amsterdam that complete the 72 contracted units, generating a total of 989 finished cars, as well
as well as a total of 4 trains for the Istanbul underground as more than 60,000 wheels and other
project, the last of the 48 trams for the Dutch railway components, manufactured and distributed in
operator De Lijn, the contract for 20 trams signed with the
city of Liège, completed with the manufacture of the last 5
various contracts throughout the world.
units, as well as the 3 additional cars for the last unit of the
project contracted by the Northern Ireland operator NIR, a
total of the 5 underground units for Helsinki, the 10 trams
of the contract signed with the city of Stockholm, as well
as the 12 trams that complete the 13 contracted by the of 2 and 3 cars for the British operator Wales & Borders,
Australian city of Parramatta, together with the last of the the first 6 underground units of the 43 contracted by the
trams that complete the project for 5 additional units for operator Docklands Light Railway in the city of London, the
the city of Utrecht and the last tram of the 33 contracted, first 2 trains of the 4 contracted by Euskotren, 1 of the 12
in various batches, by the city of Luxembourg. trains for the German city of Schönbuchbahn, the first 22
trams of the order of 87 for the city of Oslo, 20 trams for
Regarding the projects under way, which will continue to Antwerp from the 40-unit contract signed with the local
be active in the coming years, there are the projects for 26 operator, 3 trams for Birmingham that complete 11 of the
trams for the North American state of Maryland, of which 21 contracted trains, the first 20 trams for Jerusalem, the
17 were completed during 2022, as well as 6 trains for the first tram of the four contracted for Sydney and the first 2
Brussels underground system for the contract initially contracted trams for Malaga.
signed for 22 units, 1 train with 4 cars for the British
project in the West Midlands, 4 underground units of the As for the rest of the projects, already in the initial
30 contracted for the city of Amsterdam, the 24 trains in manufacturing phases, of note are the contracts with the
compositions of 3 and 4 cars for the Dutch operator Australian operator New South Wales, the train project for
Nederlandse Spoowegen of the extension contract for 88 the French operator SNCF, the Bi-modal locomotives for the
trains, 11 DMU (Diesel Multiple Unit) trains in compositions French operator RATP, and the trams for Lisbon.

I.1
26
The most significant products manufactured in 2022 were as follows:

NO. CARS
Additional medium-distance cars – NIR 3
Medium-distance DMU West Midlands (four-car unit) 4
Medium-distance DMU Wales and Borders (2-car unit) 20
Medium-distance DMU Wales and Borders (3-car unit) 3
Commuter trains for NS (3-car unit) 48
Commuter trains for NS (4-car unit) 32
Commuter trains for Euskotren 8
Metro for Brussels 36
Metro for Napoles 24
Metro for Volturno 24
Metro for Amsterdam 12
Metro for Docklands 30
Metro for Istanbul 24
Metro for Helsinki 20
LRV for Maryland 85
LRV for Schönbuchbahn 3
LRV for Manila 80
Trams for Luxembourg 7
Trams for Amsterdam 25
Trams for Utrecht (Extension) 7
Trams for Parramatta 84
Trams for Liège 35
Trams for Lijn 5
Trams for Antwerp 100
Trams for Birmingham 15
Trams for Oslo 110
Trams for Jerusalem 100
Trams for Stockholm 30
Trams for Sydney 5
Trams for Malaga 10
TOTAL 989

BOGIES
With mechanic-welded chassis 1,051

WHEEL SETS AND COMPONENT UNIT - MiiRA

Wheelset (power car + push-pull car) 3,077
Axle bodies 8,044
Monoblock wheels 64,454
Elastic wheels 2,407
Gear units 2,693
Wheel tyres 1,419

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27
RAILWAY SEGMENT

• Portfolio extension
– Both in transport systems, rail vehicles and buses,
components and services

All of the above combined the execution of projects aimed

at assimilating technologies with the development of
products based on such technologies and strategic
projects.

To finance these projects, the Group has relied on various

types of R&D subsidies, most notably the aid obtained
from:

• Provincial Government of Guipúzcoa

• Basque Autonomous Community Government
• Spanish Ministry of Economic Affairs and Digital
Transformation
• European Commission

In addition, we have continued to collaborate very intensively

with different technology centres and universities.

R&D+i ACTIVITY The CAF Group participates in joint projects at state level
and also as part of the European Framework Programme
In the last months of the 2021 financial year, the new CAF H2020 and HE. Noteworthy projects included:
Group Innovation Plan for the 2022 period was defined,
aligned with the Strategic Plan. • SHIFT2RAIL, as a founding member of the Shift2Rail JU
(Joint Undertaking), set up to promote railway R&D under
The Innovation Plan, defined according to the Innovation the Horizon 2020 programme, CAF is participating in
Process, includes the innovation projects of the following various technology development projects that will run
businesses: CAF Rolling Stock, CAF I+D, Rail Services, until 2023.
MiiRA, CAF Power & Automation, CAF Signalling, CAF
Turnkey & Engineering and Cetest. • CLUG, a project driven by the main European
infrastructure managers, aims to demonstrate an
The Innovation Plan envisages a total of 144 projects, autonomous train localisation system featuring SIL4 level
grouped into the following Innovation Programmes: of safety that does away with the need for signalling
infrastructure.
• Zero emissions
– Alternative propulsion systems such as those based on • iRel40, a project championed by the European electronics
energy storage in batteries or the use of Hydrogen as fuel industry with the general aim of making reliability a
– Reduction of energy consumption through propulsion differentiating factor for electronic components and
based on Silicon Carbide and on-board systems for systems manufactured in Europe, with CAF’s particular
energy optimisation and management objective being to apply it to its electronic systems
– Reduction of other emissions such as EMC and Noise developed in-house.

• Autonomous and automatic vehicle • REALTRAIN, part of CAF’s strategic digitisation initiative,
– Remote driving on trams and ADAS for buses is aimed at developing a new generation of more
– Development of CBTC for automatic underground competitive trains and services through the digitally-
systems secure capture, storage, processing and advanced
– Automation of mainline systems and ERTMS evolution analysis of all train operating data.
– Enabling technologies such as 5G and secure positioning
• 5GRAIL, a communications project that aims to verify the
• Digitisation and competitiveness first set of FRMCS (Future Railway Mobile Communication
– Projects aimed at reducing costs or deadlines System) specifications and standards, which will ultimately
– Implementation of cybersecurity and Digital Platform become the global 5G standard for railway operational
– Digital Twin Technologies and Artificial Intelligence communications both in Europe and for the obligations of
– Open innovation projects through CAF StartupStation railway organisations outside Europe.

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28
The Innovation Plan encompasses a total
of 144 projects grouped into the following
Innovation Programmes: Zero Emissions,
Autonomous and Automatic Vehicle,
Digitisation and competitiveness and
Portfolio Extension.

• 5GEuskadi, a project formed by a total of 19 agents,

technology centres, universities and companies from the
Basque industrial fabric that have come together to
experiment with 5G network deployments, provide
network management techniques that enable 5G
technology and develop use cases.

• FCHRAIL, a project within the framework of FCH JU

(Fuel Cells and Hydrogen Joint Undertaking), involving the Additionally, in the engineering area it is immersed in more
design and manufacture of a prototype based on an than 60 vehicle manufacturing and rehabilitation projects.
existing RENFE three-car commuter units. Under this Among the projects contracted in 2022, the following
project, a new electric generation system will be installed engineering projects stand out:
based on the hybridisation of energy from hydrogen cells
and LTO batteries. This system will then be integrated • Projects based on consolidated platforms: Tel Aviv tram,
with the vehicle's existing traction system, making it one regional trains for VRR (Germany) and units for SJ
of the first railway demonstrators of a bimode vehicle (Sweden), mainly.
with a hydrogen cell. This prototype is being tested on
• Double deck train units for NS (the Netherlands)
the road since mid-2022.
• LRVs for Germany (Hanover and Bonn)
• EURAIL, in 2022 CAF signed its participation as a • LRVs for Boston (United States)
founding member in the EU RAIL initiative. This • Units for RENFE medium distance
programme promotes R&D in the railway sector in
• Trams for France (Montpellier)
Europe with the dedication of more than 1,200 million
euros. In this regard, it participates in five major projects • Trains for Etihad (United Arab Emirates)
that have been signed this year, whose operations will • Athens Underground Refurbishment and Canberra Tram
begin in January 2023. System

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29
BUS SEGMENT - SOLARIS

Solaris maintains the position as European e-mobility Another factor affecting the market environment was last
leader year’s unprecedented high inflation, which in Poland
reached an average level of 14.4%(3) in 2022.
• Solaris sold a total of 1,492 vehicles in 2022
Despite these challenges, Solaris has proved with its
• The company’s revenues stood at EUR 696 million production and sales results that it is an organization well
prepared for the dynamically changing market environment
• The manufacturer maintained its no. 1 position in the and is a company that is resilient to market turbulence. In
e-bus aggregated market shares in years 2012-2022 this period, the company sold 1,492 vehicles and
with 14.1%(1). generated revenues of EUR 696 million.
• The company had position no. 2 in the zero emission
bus market in 2022 with 11.2%(2) market share. SALES OF SOLARIS VEHICLES
in 2017-2022, in units
• Battery vehicles, hydrogen vehicles, trolleybuses and
hybrid buses, for the first time in the company's
history, exceeded more than half of the share in the
sales mix and amounting 55%.

In 2022, just as in 2020-2021, most of the world’s economies

faced unprecedented challenges. The past few months have
been difficult for the European public transport sector and
companies that manufacture vehicles. Firstly, Solaris followed
procedures, which were established to ensure business
continuity due to the Covid-19 pandemic and related Consolidated sales of Solaris; source: Solaris

restrictions. Secondly, the global electronic components

crisis caused a major disruption in supply chains.

In addition to the above, in 2022 global economy and the

company also had to face a new situation caused by the
1. Based on battery/electric and hydrogen buses registrations in 2022, in EU27
war in Ukraine. While Solaris itself and most of its suppliers (excluding U.K. and Ireland), Norway and Switzerland, source: Chatrou/CME
were not involved in business in Ukraine or Russia, some Solutions
indirect suppliers were already affected by the impact of 2. Based on battery/electric and hydrogen buses registrations in 2022, in EU27
(excluding U.K. and Ireland), Norway and Switzerland, source: Chatrou/CME
this conflict, which required special adaptation to the new Solutions
conditions. 3. https://stat.gov.pl

I.1
30
For the first time in the company's history, electric buses, hydrogen buses, trolleybuses and
hybrid buses accounted for more than half of the share in the sales mix, coming to 55%.

SHARE OF ALTERNATIVE DRIVES IN THE SALES STRUCTURE

ALTERNATIVE DRIVES

electric

hydrogen

trolley

hybrid

COMBUSTION DRIVES

CNG

diesel
Source: Solaris

It is worth emphasizing that the vast majority of contracts segment in the years 2012-2022 at the end of 2022 with a
executed in 2022 were for the supply of vehicles with cumulative share of 14.1%.
completely zero-emission or low-emission drives. Battery
vehicles, hydrogen vehicles, trolleybuses and hybrid buses, Based on registrations of vehicles in 2022, Solaris had
for the first time in the company's history, exceeded more position no. 2 in the zero emission bus market with 11.2%
than half of the share in the sales mix and amounted to market share.
exactly 55%.
In the reported period, Solaris delivered its products to
The growing share of low- and zero-emission vehicles in customers from 18 countries. Major recipients of Solaris
Solaris' sales mix, shows good recognition of the market vehicles included, among other carriers, operators from
and the companies’ adjustment to market expectations. In Spain, Poland, Italy, Belgium, Germany, Romania,
most EU countries, the share of e-mobility vehicles in the Estonia, and Latvia as well as Austria and Czech
transport mix has been growing dynamically in the last few Republic.
years. Solaris, building its portfolio in this segment for
many years, is very well prepared for the changing In the reported period Solaris delivered in total 401 units of
expectations of end users. battery electric buses. Also worthy of note is the fact that
Solaris sold 42 hydrogen buses in 2022. The Solaris Urbino
This is confirmed by the company's maintenance of the 12 hydrogen bus was launched in 2019. Since then, interest
position of the European leader in zero emission bus in this technology has soared, which is reflected in the

I.1
31
BUS SEGMENT - SOLARIS

Despite these challenges, Solaris has

demonstrated through its production and
sales results that it is an organisation that is
well placed to face continually changing
market environments and is resilient to
market turmoil. During this period, the
company sold 1,492 vehicles and generated
sales of 696 million euros.

number of orders for this type of vehicle in 2022 and units Arnhem in the first half of 2024 and they will be the first
commissioned for 2023 and later. Solaris trolleybuses driving in the Netherlands.

Solaris´ most relevant contracts in 2022 stand out: • City of Poznań’s investments in green public transport are
gathering pace. The city’s public transport operator MPK
• 2022 started for Solaris by signing a contract for the Poznań has purchased 25 innovative hydrogen-fuelled
delivery of 183 battery buses. Unibuss AS, one of the buses that will be supplied by Solaris Bus & Coach. The
biggest Norwegian carriers, has again opted for Solaris’ tender was for 15 vehicles, but the carrier exercised its
quality and contracted delivery of 183 Urbino 18 electric option of extending the order by another 10 buses. These
buses to the Norwegian capital. Such a large one-time cutting-edge, zero-emission hydrogen units will join the
order for electric buses was a breakthrough in the fleet of MPK in the second half of 2023. This is the
company's history. The largest contract for Solaris for largest order for hydrogen Urbino hydrogen buses
battery articulated vehicles completed so far was the obtained to date. MPK Poznań already boasts 58 electric
contract with MZA Warsaw for the supply of 130 Solaris buses, which account for nearly 20% of its fleet.
vehicles. The zero-emission Urbino 18 electric buses will
replace the older Solaris Urbino model that is used in the • Another contract for the delivery of hydrogen buses was
city traffic in Oslo. The new buses will be in operation in signed by Solaris in Italy. Solaris will deliver four Urbino
April 2023. The partnership between Solaris and Unibuss 12 hydrogen buses to Venice. The 12-metre hydrogen-
AS dates back to 2006. Since then, the Norwegian carrier fuelled buses will arrive in Italy in mid-2023, and the total
has ordered almost 300 vehicles from the manufacturer. value of the contracts exceeds EUR 2.5 million. The
All in all, there are over 500 Solaris Urbino units driving Urbino 12 hydrogen buses will serve the residents of
around Norway. Venice and its surroundings thanks to contracts signed
with carriers AVM Venezia and ACTV SPA Venezia, which
• In 2022 the Italian operator ATM Milano has again placed provide public transport services in Venice as well as
an order for electric buses made by Solaris, going for within the communes of Venice and Chioggia.
another batch envisaged in the framework agreement for
250 vehicles. The first two batches, 140 electric Urbino • In 2022 Solaris has won a tender for the delivery of five
buses in total, have already been delivered to the client. hydrogen-powered Urbino 12 hydrogen buses to Palma
This time the operator has ordered another 78 units of de Mallorca, the capital of the island of Mallorca. This
Urbino 12 electric buses. investment is part of the “Green Hyslan” project,
financed with EU funds. The project objective seeks to
• In 2022 Solaris has signed its first contract for the promote the development of clean energy as part of
delivery of trolleybuses to the Dutch market. Dutch initiatives aimed at combating climate change by 2050.
operator Hermes, part of Transdev/Connexxion, has As a result of the planned activities, the Spanish island is
signed a contract for the delivery of 10 Trollino 18 to become a European benchmark in terms of using zero-
trolleybuses featuring our unique MetroStyle design. emission energy.
These emission-free trolleybuses will significantly
contribute to boosting innovative public transport in the • In the reported period, Solaris Bus & Coach sp. z o.o.
Arnhem Nijmegen region as well as in the entire province signed a contract with Latvian operator Rīgas Satiksme to
of Gelderland. The vehicles will make their way to deliver 35 Solaris Urbino 12 electric buses. In addition, the

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32
 regular use. Six battery electric Solaris buses already
operate in Jūrmala and in Jelgava.

• On the very last days of 2022, Solaris Bus & Coach sp. z
o.o. and the Romanian Municipality of Bucharest
(Municipiul Bucuresti) signed a contract for the supply of
trolleybuses. The order is for 100 Solaris Trollino 12
trolleybuses. The purchased zero-emission vehicles
represent yet another investment by Bucharest in
improving the quality of life in the city. The trolleybuses
will be handed over by the city to the transport company
STB SA (Societatea de Transport Bucuresti), which will
perform transport services for the city and its residents.
Bucharest is one of 8 cities in Romania with Solaris' zero-
emission vehicles - trolleybuses and electric buses. Since
2002, the manufacturer has already delivered almost 500
buses to the local transport operators, including more
than 180 vehicles of the Trollino series and more than 100
contract can be extended via the supply of another 17 e- battery-powered Urbino electric.
vehicles. The vehicles will arrive in Riga at the end of 2023.
This is yet another investment by Riga in zero-emission • In 2022 city of Tallinn extends its order by another 50 Urbino
public transport. Latvia is naturally a major export market CNG buses. Estonia’s largest public transport operator,
for the manufacturer. Over 20 years ago, Riga’s fleet was Aktsiaselts Tallinna Linnatransport (TLT), which provides
expanded by the first Solaris trolleybuses. Since then 560 transport services in the Estonian capital, has ordered 20
Solaris vehicles, including over 160 Trollinos, with 10 units Urbino 12 and 30 Urbino 18 CNG buses from Solaris. Tallinn
featuring a technologically-advanced hydrogen range has thus decided to exercise the option provided in the
extender, have been delivered to the country’s capital. Riga contract concluded in July 2021, under which 100 Solaris
will be the third city in Latvia to boast Solaris e-buses in gas vehicles had already been purchased. Ince the order will

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33
BUS SEGMENT - SOLARIS

be completed a total of 350 gas-powered Solaris buses will Another important achievement in 2022 in the area of ESG
be running along the streets of Tallinn. was to obtain the Environmental Product Declarations
(EPD) for two bus models, the Solaris Urbino 18 electric
• Moreover, it is worth mentioning that in 2022 a and the Solaris Urbino 12 hybrid. EPDs are a recognised
consortium comprised of Solaris Bus & Coach, Solaris and reliable source of information on the environmental
Czech and Škoda Electric submitted a winning bid in a profile of products. An Environmental Product Declaration
tender concerning the delivery of 20 bi-articulated Trollino is an international eco-label that provides clients with solid
24 trolleybuses, held by the Prague public transport data on the whole life-cycle environmental impact of a
operator. This is the first such large order for vehicles of given product. Solaris has obtained its first EPDs for the
this type. The deliveries shall be carried out within 24 Solaris Urbino 18 electric and Solaris Urbino 12 hybrid
months of the signing of the contract. vehicles and will apply for further declarations for other
products from its offering, one by one. To obtain an EPD, it
Just as they are for the whole CAF Group, sustainable is necessary to go through a very extensive verification
development and ESG issues are also for Solaris extremely process, performed by an independent expert. This
important components of its development strategy. In 2022 assessment process is based on verifying whether the
Solaris published Sustainability Report which has been drawn LCA analysis, which is the starting point for the preparation
up by the GRI Standards guidelines, which are an of the EPD certificate, has been carried out in compliance
international standard for reporting on both responsible with the PCR (Product Category Rules UN CPC 49112 and
business and sustainable development issues. The report is 49113), the GPI (General Programme Instructions) and the
the publication to present the full range of data and ISO 14025, ISO 14040, ISO 14044 standards.
information on the company’s ESG-related initiatives in a
comprehensive manner. It is an extensive description of the Hydrogen technology has played a substantial role in the
company’s impact on the economy, environment and society. company’s development and sales strategy. In 2022 Solaris
Its three main chapters correspond to the pillars of the unveiled its Urbino 18 hydrogen bus. The Urbino 18
company’s activities: “Responsibility along the value chain”, hydrogen bus is now Solaris’s second hydrogen bus in its
“People – the greatest value”, and a “Zero-emission future”. zero-emission offer. As with the shorter version, the main
The topics addressed in the document were selected during energy source in this vehicle is hydrogen. With this 18-
internal workshops as well as suggested by stakeholders. metre model, the manufacturer is responding to the
The report is available on the company’s website. growing market for vehicles of this type. This also reflects

I.1
34
the commitment of Solaris when it comes to the be they battery buses, trolleybuses, or hydrogen-fuelled
development of zero-emission solutions and its desire to vehicles, should proceed in synergy and that this process is
provide its clients with the widest possible range of part and parcel of ensuring sustainable transport for the
environmentally friendly vehicles. The first deliveries of the future. Currently, Solaris offers its clients a comprehensive
18-metre articulated vehicle will be possible as early as the emission-free bus portfolio thanks to which Solaris is ready
second quarter of 2023. Clients will be offered the to meet not only today’s challenges of ensuring sustainable
possibility of customising the bus to cater to their individual public transport but also the diverse needs of carriers,
preferences. The 12-metre version of the Solaris Urbino passengers and drivers.
hydrogen bus was launched in 2019. Since then, nearly 100
hydrogen buses have already been delivered to customers As for the future, the company has a healthy order book. At
in Italy, Germany, the Netherlands, Sweden and Poland. the end of 2022, it contained 1,419 buses.
New deliveries to clients in Spain, France, and Slovakia,
amongst other countries, will start soon.

In 2022, Solaris after almost two years of slowdown

caused by the coronavirus pandemic – resumed its market
activity in terms of trade fairs and exhibitions. The most
important fairs in which Solaris has participated this last
year and in which it has presented the hydrogen bus have
been: the European Mobility Expo 2022 held in Paris, the
Electric Bus Conference held in Berlin, Innotrans in Berlin
and "Next Mobility” in Milan.

Solaris has been strengthening its position as Europe’s e-

mobility leader not only through the development of
electric battery vehicles but also by investing consistently
and in the long term in the perfection of solutions
implemented in hydrogen buses. The manufacturer
believes that the development of all e-mobility branches,

I.1
35
INVESTMENTS

In the Digital area, investments were made in IT

infrastructure to ensure the highest levels of availability,
through the expansion and upgrading of hardware to
enable the Group to adapt to the new needs of the
organisation. Alongside this, the technology that offers the
highest levels of security and availability in the performance
of the Company's activity is being incorporated. One year
more, the Company is focusing heavily on cybersecurity,
mainly by improving the technical safeguards deployed and
extending them to international head offices and
subsidiaries.

In relation to the national subsidiaries, highlighting the work

carried out in Trenasa to extend robotic facilities for the
production of boxes, which will increase the percentage of
production automation and increase the plan's capacity. As
well as the expansion of facilities and offices of
subsidiaries such as CAF Signalling and CAF Turnkey
Engineering, due to the growth of the signalling business
and integral projects respectively, to accommodate the
inclusion of new recruits this year.

Abroad, the Huehuetoca plant in Mexico began the

necessary investments to expand its production capacity
through the integration of new assets and improvements
in current resources and facilities, as well as the
The CAF Group's investments in property, plant and adaptation of the plant to manufacture new vehicle
equipment in 2022 amounted to 36 million euros. The most platforms, with these investments mainly focusing on
salient investments in 2022 are as follows: painting and testing. Also, mention should be made of
the investments at the French Bagnères-de-Bigorre plant,
In the MiiRA filming activity, it is worth highlighting the to modernise its production lines and to ensure adequate
development of the engineering phase and the preparation production facilities to deal with the factory's different
of the infrastructure for the implementation of a new wheel projects. In another order of things, mention should also
heat treatment facility. The facility will be equipped with be made of the investment that began last year at the
state-of-the-art technology for the wheel manufacturing Newport plant in the United Kingdom to install the new
process, and will feature automated handling along the warehouse that will optimise the facility's logistics
entire line, right up to the final output of the wheels after capacity.
the hardening process. This investment will yield various
benefits, both from a technical standpoint thanks to greater Lastly, in relation to the bus business, Solaris, in its
homogeneity in the heating and temperature control of the commitment to remain a benchmark company and at the
treatment, and in terms of greater cost efficiency of the forefront of the transition towards a more sustainable
process itself. Likewise, of note was the improvement public transport system, of the many initiatives that it has
carried out at the test facilities for reducers, which will implemented in recent months, two deserve special
make it possible to carry out tests with greater demands in attention: a new warehouse space, equipped with state-of-
terms of temperature and tightness, thus complying with the-art logistics systems and solutions, and the new
the highest market requirements. charging park for electric vehicles.

In terms of train manufacturing, within the processing of Both Solaris investments commenced in 2022, and both
the production model, among the main investments, it is the warehouse and the charging park have been built on
worth highlighting the automation of the aluminium box the factory premises in Bolechowo, near Poznań, at
welding process, which will bring greater performance in which the Company's headquarters are located. The new
the execution cycles, and the acquisition of a new tube warehouse has a surface area of 10,000 m2 and plays a
bending machine necessary to meet the requirements in fundamental role in the supply chain of the parts and
terms of the cost and quality of the projects to be components necessary to manufacture Solaris buses and
developed. Mention should also be made of the expansion trolleybuses. The ship is equipped with a modern fully
and fitting out of the kitting area in the Beasain vehicle automated multi-level storage platform, with almost 25%
finishing division, which provides assembly kits for the of the total space allocated to offices and common
areas for the manufacture of structures, piping, painting spaces. It has the most advanced smoke detection
and finishing. systems and is equipped with special acoustic panels to

I.1
36
Solaris, as part of its commitment to remaining a benchmark company and at the forefront of the
transition towards more sustainable public transport, amongst its many initiatives, made a
particularly noteworthy investment in a new warehouse space, equipped with the latest
generation logistics systems and solutions, and the new charging park for electric vehicles.

muffle the noise generated by daily operations. In Furthermore, investments in intangible assets in 2022
addition to this, the new warehouse has a reinforced amounted to 36 million euros.
roof, with 572 photovoltaic cells with a total capacity of
260 installed Kw. The most significant investments correspond to the
implementation process for the new ERP that is being
The charging park is an innovative station with various carried out in the Group's activity, the deployment of the
charging points for battery-powered vehicles: electric measures established in the corporate cybersecurity policy,
buses, hydrogen buses and trolleybuses. This investment as well as the activation of development projects, which
in a unique, proprietary central facility for charging are detailed in Note 7 to the consolidated financial
electric buses marks a natural step in the dynamic statements.
development of Solaris' zero-emissions range. The facility
consists of eight charging points, pantograph
mechanisms, plug-in charging stations, a section for
trolleybuses and a technical room. It is the first charging INVESTMENTS
park in Poland that supports Vehicle-to-Grid (V2G) (Millions of Euros)
functionality, that is, it allows a bidirectional energy flow
between vehicles and the grid. This technology makes it 81
possible to flexibly load and unload buses by allowing 72 72
buses to be unloaded for test purposes and used as
mobile energy storage facilities, resulting in more 46
44
effective cost management.

Likewise, we can also refer to the investments in the

welding area to increase production capacity and process 2018 2019 2020 2021 2022
automation, mainly through the acquisition of robotic
workstations. Likewise, the construction of a new
warehouse for the production of gas-powered vehicles
begun, with the aim of effectively dealing with the increase
in manufacturing needs, as well as the demands of this
type of vehicle with regard to the required safety
conditions.

I.1
37
MAIN RISKS
AND UNCERTAINTIES
The CAF Group is exposed to various risks inherent to the the risks are appropriately managed by means of the
activities it carries on and to the various countries and following system phases and activities, which include:
markets in which it operates, which may prevent it from
meeting its objectives. 1. Establishment of the risk-management context for each
activity, establishing, among others, the level of risk that
With the commitment to address this matter, the CAF the Group considers acceptable.
Group’s Board of Directors establishes the mechanisms
and basic principles to appropriately control and manage 2. Identification of the different types of risks the Group
risks through the General Risk Management and Control faces in line with the main risks detailed in the Policy.
Policy. This policy, which is aligned with the Group’s
mission, vision and values, expresses its commitment to 3. Analysis of the identified risks and involvement in the
providing greater certainty and security in: CAF Group as a whole.

• Achieving the strategic objectives set by the CAF Group – Corporate Risks – Risks that affect the Group as a
with a controlled volatility; whole.
• Providing shareholders with the highest level of – Business Risks – Those that specifically affect each of
assurance; the businesses/projects and that vary according to the
• Protecting results and the reputation of the CAF Group; singularity of each of them.
• Defending the interests of its stakeholders; and
4. Risk assessment based on the level of risk that the
• Guaranteeing sustained corporate stability and financial Group considers acceptable (risk appetite).
strength.
5. The measures planned for the treatment of the identified
To do so, the General Risk Management and Control Policy risks.
is deployed throughout the entire CAF Group by means of
an Integrated Risk Management and Control System. This 6. Regular monitoring and assessment of current and
system constitutes a series of standards, processes, potential risks through the use of internal control and
procedures, controls and information systems, whereby all information systems.

I.1
38
The Integrated Risk Management System adopted by the CAF Group is aligned with
international standards regarding the use of an effective methodology for integrated risk
analysis and management and the Three Lines Model on the assignment of responsibilities in
risk management and control.

The Integrated Risk Management System adopted by the

CAF Group detailed above is aligned with international
standards regarding the use of an effective methodology
for integrated risk analysis and management and the Three
Lines Model on the assignment of responsibilities in risk
management and control.

In this regard, the Board of Directors is ultimately

responsible for the General Risk Management and Control
Policy, and approves the appropriate procedures to identify,
measure, manage and control risks. It is also responsible
for establishing clear lines of authority and responsibility,
and requires the existence of appropriate methodologies to
measure the various types of risks and the effective
internal controls to manage them. It is the body
responsible for establishing and monitoring the Integrated
Risk Management and Control System implemented at the
Group, and verifies whether the significant risks for the
Group are consistent and fall within the defined risk
tolerance level.

The Audit Committee is responsible for the independent

oversight or assessment of the effectiveness of the
Integrated Risk Management and Control System
implemented and of the procedures designed to monitor
it. In doing so, it will be supported by the Risk
Management Department and, additionally, by the
Internal Audit function.
– Risk of variation in raw materials prices: risk derived
The most significant risks facing the Group can be from variations in prices and market variables in relation
categorised as follows: to necessary raw materials in the businesses supply
chain.
Strategic risks: risks derived from the uncertainty of
macroeconomic and geopolitical conditions, in addition to • Credit risk: it is the risk of insolvency, bankruptcy or
the characteristics of the sector and markets in which the possible non-payment of quantifiable monetary obligations
Group operates and the strategic and technological by counterparties to which the Group has effectively
planning decisions adopted. granted net credit and are pending settlement or collection.

Financial risks: from market fluctuations (financial and raw • Liquidity and financing risk: in relation to the liability, it is
materials), contractual relations with third parties the risk linked to the impossibility of carrying out
(customers, debtors) and counterparties related to transactions or to the breach of obligations arising from
investment in financial assets and liabilities (finantial operatinal or financial activities due to lack of funds or
institutions, investors). The subcategories of risks that are access to financial markets, whether derived from a
included are the following: decrease in the credit quality (rating) of the company or for
other reasons. In relation to the asset, it is the risk of not
being able to obtain at any given time purchasers to the
• Market risk, considering the following typologies:
asset, for sale at market price, or the lack of market price.
– Interest rate risk: risk of changes in interest rates that
The Group’s exposure to market risk and credit risk is
may cause variations in both the results and the value
detailed in Note 5 "Management of financial risks" and
of the Group’s assets and liabilities.
the use of derivative financial instruments to hedge the
– Exchange rate risk: risk derived from the variation in the risks to which its activities are exposed is detailed in
exchange rates of one currency with respect to another Note 17 "Derivative financial instruments", to the
with a possible effect on future transactions and the consolidated financial statements. Liquidity risk is
valuation of monetary assets and liabilities. addressed further in the following section.

I.1
39
MAIN RISKS
AND UNCERTAINTIES
Due to its global risk scope, the Integrated Risk
Management and Control System is continuously updated
to include new risks that might affect the Group as a result
of changes in the setting or revised objectives and
strategies, as well as updates that arise from lessons
learned from monitoring and controlling the system.

Wary about the path that COVID-19 will take from here,
and the complex scenario following the outbreak of war in
Ukraine, with direct repercussions on energy prices,
inflation and the supply chain, the Group has deployed a
raft of actions to mitigate the impact of these risks. Firstly,
measures aimed at reducing price increases include: (i)
monitoring of commodity markets; (ii) monitoring of current
orders with suppliers; (iii) indexing of prices in new
contracts; (iv) reviewing current contracts with customers;
and (v) taking out price insurance. Secondly, the actions
undertaken by the Group to reduce the risk of component
stock-outs include: (i) technical modifications; (ii) stockpiling
of electronic components; and (iii) advance deliveries and
safety stock.

The contingencies managed in the realm of Compliance

are part of the overall risks supervised within the system
Legal Risks: risks arising from the elaboration and
and a description of the material topics for 2022 can be
execution of contracts and obligations of different nature
found in Note 26 to the consolidated financial statements
(commercial, administrative, intellectual and industrial
and in the Non-Financial Statement — Sustainability
property, etc.) and the possible contingencies arising from
Report.
them. The risks related to judicial procedures,
administrative procedures and claims are also included.

Operational Risks: are those inherent in all the activities,

products, systems and processes of the Group that cause LIQUIDITY AND CAPITAL RESOURCES
economic and reputational impacts caused by
Availability of short-term liquidity
human/technological errors, internal processes not
sufficiently robust, or the intervention of external agents.
The CAF Group constantly assesses its available liquidity,
including cash balances, short-term liquid investments, the
Corporate Governance Risks: risks arising from the availability of credit lines, access to short-term capital
potential breach of the Group’s Corporate Governance market instruments and the generation of cash flows from
System that regulates the design, integration and operation operating activities, in order to meet the Group’s liquidity
of the Governing Bodies and their relationship with the needs at all times.
company`s stakeholders; and that in turn are based on the
commitment to ethical principles, good practices and
When assessing the CAF Group's short-term liquidity
transparency, articulating around the defense of social
needs, the following factors, among others, are taken into
interest and the creation of sustainable value.
consideration: the historic volatility of the Group’s liquidity
needs, their seasonality, the maturity profile of the
Compliance and Regulatory Risks: risks arising from the liabilities, the needs arising from investment plans, the
violation of national and international regulations and laws expected level of customer advances and the evolution of
that are applicable regardless of the activity itself, included working capital. To define target levels of available liquidity
in the following large blocks: (i) Commercial and worse-than-base-case scenarios are taken into
Competition (market abuse, corporate obligations and consideration.
regulations regulating the stock market, defense of
competition and unfair competition), (ii) Criminal
In December 2017, Construcciones y Auxiliar de
(prevention of crimes, including those arising from
Ferrocarriles, S.A. registered a short-term commercial
corruption), (iii) Labour, (iv) Tax and (v) Administrative
paper issuance programme on the Irish Stock Exchange,
(between others, personal data protection regulations,
renewed for annual periods in December 2018 and
environmental laws, etc).
December 2019. In December 2020, the programme

I.1
40
The stability during 2022 of both the Net source of financing and adding an additional source of
liquidity.
Financial Debt figure and the Net Financial
Debt / EBITDA ratio is noteworthy, in a Sources of short-term available liquidity include liquid
temporary environment in which the effects of assets, current financial assets and undrawn credit lines.
inflation and supply chain problems have had The evolution of the Group's available liquidity in recent
years is as follows:
a negative impact on the global
macroeconomic climate.

AVAILABLE LIQUIDITY (Millions of Euros)

Cash and cash equivalents Undrawn credit lines

1,115 1,091
registered on the Irish Stock Exchange was replaced, as it 944 978
914
was not renewed upon maturity, by a commercial paper 440 411
247
note issuance programme with similar characteristics, 280 393
incorporated on 21 December 2020 in the Alternative Fixed
Income Market ("MARF"), for a maximum volume of 250
million euros, subsequently renewed for annual periods in 697 675
634 680
December 2021 and 23 December 2022. Since 2018, 585
placements have been made within the framework of
these programmes, used by the Group as an alternative
2018 2019 2020 2021 2022
source of financing to existing credit lines, diversifying the

I.1
41
MAIN RISKS
AND UNCERTAINTIES
Capital structure Parent. These acquisitions have had a significant impact on
the Group's gross financial debt figures, both due to the
The Group's capital management is aimed at achieving a increase in debt at the Group's Parent Company used in
financial structure that optimises the cost of capital, the share acquisition, and to the inclusion of the Solaris
ensuring a sound financial position. This policy makes it Group in the Group’s consolidation scope.
possible to make the creation of value for shareholders
compatible with access to financial markets at a competitive The main aggregates of the Group’s liability structure have
cost, in order to meet both debt refinancing needs and the performed as follows in recent years:
investment plan financing requirements not covered by
funds generated by the business cash generation.

The Group sets as an objective maintaining a leverage ratio NET FINANCIAL DEBT (Millions of Euros)
and creditworthiness in line with the profile of its businesses. NFD NFD/adjusted EBITDA
NFD NFD/adjusted EBITDA

The CAF Group regularly assesses the appropriateness of 500 5

its liability structure, and takes into consideration the

400 4
projected cash flows, the maturity profile of its debt, the
foreseeable evolution of its working capital and other future 300 3
liquidity needs.
200 1.8 2
1.6 1.6
In 2018 Construcciones y Auxiliar de Ferrocarriles, S.A.
100 1.1 1.2 1
acquired all the share capital of the Polish bus
manufacturer Solaris. Also, in 2019 it acquired all the shares 324 434 311 278 278
0 0
of EuroMaint, a leading Swedish train maintenance
company. The cost of these acquisitions was financed 2018 2019 2020 2021 2022
(*) Adjusted EBITDA in 2019
primarily with additional long-term debt of the Group’s

Millions € 2018 2019 2020 2021 2022

Gross debt concessions 239 203 142 113 80
Gross debt Solaris 145 168 164 171 197
Gross debt Corporative 650 708 689 682 597
Total 1,034 1,079 995 967 874

I.1
42
The stability during 2022 of both the net financial debt In 2016, Solaris Bus & Coach, sp. z.o.o. (Solaris) arranged
figure and the Net Financial Debt / EBITDA ratio is various financing facilities with a consortium of Polish
noteworthy, in a time frame in which the effects of inflation banks. This financing comprises a loan tranche and a credit
and supply chain disruptions have had a negative impact on facility tranche which, at 31 December 2022, had been
the global macroeconomic framework. drawn down in the amount of 124.5 million euros. The
contracts that cover these debt tranches establish
The CAF Group is constantly renegotiating its financial compliance with certain financial covenants. These
liability structure, in order to minimise borrowing costs and conditions were not met at 31 December 2022, with the
bring maturities into line with its needs, within the exception of positive equity and the maximum amount of
possibilities offered by financial markets. investments made during the year. Therefore, the entire
debt was reclassified to short term, although its maturity
The maturity schedule of the Group’s borrowings at 31 remains at December 2024. The Company is working with
December 2022, compared with 2021 year-end is as the borrowers to obtain the necessary waivers to cure this
follows: default situation.

BANK BORROWINGS BY YEAR OF MATURITY

(Millions of Euros)

12/31/2021 12/31/2022
278
257 260

191
164
130 131

90

35
8
2023 2024 2025 2026 2027
and subsequent years

I.1
43
STOCK MARKET INFORMATION

2022 2021 2020 2019 2018

Market price
Market capitalisation at year-end (millions of euros) 908 1,255 1,346 1,406 1,241
Closing price (euros) 26.50 36.60 39.25 41.00 36.20
Low (euros) 22.30 33.05 25.20 35.30 31.30
High (euros) 38.00 42.10 43.30 44.90 43.60

Data per share (euros)

Earnings per share (EPS) 1.52 2.51 0.26 0.72 1.27
Dividend per share 0.86 1.00 0.00 0.842 0.765

Stock market ratios

PER (average market price/EPS) 18.56 14.88 127.70 56.34 30.14
Average market price/adjusted EBITDA 4.18 5.02 5.71 5.72 6.50
PBV (average market price/BV) 1.25 1.76 1.82 1.90 1.74
Dividend yield 3.04% 2.68% 0.00% 2.07% 2.00%
Pay-out ratio (Dividend/EPS) 56.43% 39.90% 0.00% 116.65% 60.34%

Liquidity ratios
Free-float rotation 83% 51% 70% 47% 65%
Traded volume (millions of shares) 13.4 8.6 11.3 8.4 10.8

I.1
44
 CHANGE IN LISTED SHARE PRICE - CAF GROUP

IBEX BASE 13 CAF BASE 13 CAF (euros)

Base 100 = Jan 13 CAF share price (Euros)

150 80

70
125

60
100

50

75
40

50
30

25 20

0 10

01/13 06/13 12/13 06/14 12/14 06/15 12/15 06/16 12/16 06/17 12/17 06/18 12/18 06/19 12/19 06/20 12/20 06/21 12/21 06/22 12/22

I.1
45
OTHER INFORMATION

EVENTS AFTER THE REPORTING PERIOD ALTERNATIVE PERFORMANCE MEASURES

At 31 December 2022, the Group had a firm backlog of The CAF Group's financial information contains not only
approximately 13,250 million euros (31 December 2021: figures and metrics drawn up in accordance with
9,640 million euros) (Note 12). applicable accounting standards, but also other
indicators known as Alternative Performance Measures
(APMs). APMs are essentially figures adjusted from
those presented in accordance with International
ACQUISITION AND DISPOSAL OF TREASURY Financial Reporting Standards, as adopted by the
European Union (EU-IFRS). They should therefore be
SHARES
read in conjunction with the financial reporting measures
In 2022, various transactions in own shares were carried and not in isolation.
out on the continuous market. The breakdown of own
shares held by Construcciones y Auxiliar de Ferrocarriles, APMs are important to those who rely on the financial
S.A. is as follows: information because they are the measures used by the
CAF Group's management to assess its financial
performance, cash flows or financial position in making
Treasury shares at 31 December 2022
financial, operational or strategic decisions for the Group.
No. of shares 46,947
In 2022, there were changes in the parameters of certain
Nominal value (thousands of euros) 14 APMs that refer to the management balance sheet, to
Average purchase price (euros) 27.53 align these indicators with the Group's management and
Total cost (thousands of euros) 1,292 with the Consolidated Statement of Cash Flows
presented in these Consolidated Financial Statements,
and to ensure a better comparability with competitors.
Note 14.b to the consolidated financial statements The APMs affected by this change were as follows:
provides additional information on the treasury share Investments in working capital, Fixed assets and Other
operations carried out in 2022. assets and liabilities. The detail of each of them indicates
the impact of this modification on the comparative
figures for 2021.

PAYMENTS TO SUPPLIERS The following APMs have been used as part of the financial
information of the CAF Group:
The average period of payment to suppliers 2022 was 85.5
days. In order to reduce this period to the maximum Order intake: includes firm orders received during the
payment period established by Law 11/2013, the Group is period and modifications that may have been made to
making an effort to align events giving rise to payments orders from prior periods. This measure does not include
with those giving rise to collection in order to reduce the the backlog acquired through business combinations in the
payment time without losing the necessary liquidity. year.

Millions of euros 31/12/22 31/12/21

+ Backlog at end of period 13,250 9,640
– Backlog at beginning of period (9,640) (8,807)
+ Revenue 3,165 2,943
– New additions to the consolidation scope (570) -
Order intake 6,205 3,776

Book-to-bill ratio: ratio obtained by dividing “Order intake”

for the year by “Revenue” as shown on the consolidated
statement of profit or loss for the period. This ratio gives an
indication of the volume of future "Revenue".

Millions of euros 31/12/22 31/12/21

Order intake in the year 6,205 3,776
Revenue 3,165 2,943
Book-to-bill ratio 2.0 1.3

I.1
46
Backlog: this represents the volume of firm orders that will Adjusted EBITDA (Earnings Before Interest, Taxes,
be recognised in the future under “Revenue” in the interim Depreciation and Amortisation): the EBITDA indicator is
consolidated statement of profit or loss. An order is calculated by deducting from “EBIT” the amounts
considered firm only when it generates obligations recognised under “Depreciation and amortisation charge”
between the CAF Group and the customer, which, in the and “Impairment and gains or losses on disposals of non-
case of sales of trains, buses and services, is deemed to current assets”. EBITDA is adjusted to reflect significant
occur when the contract between the parties is signed. The non-recurring items or events that are not expected to
outstanding amount includes only the contractual options occur in the coming years, such as litigation arising outside
already executed by the customer, less the best estimation the normal course of business, restructurings or company
of contractual penalties. acquisition costs, etc.

Millions of euros 31/12/22 31/12/21

Order backlog/Revenue ratio: obtained by dividing the Profit/(Loss) from operations 139 165
Backlog for the current period by “Revenue” as stated in Depreciation and amortisation charge 95 87
the consolidated statement of profit or loss for the
Impairment and gains or losses on
previous year. This ratio gives an indication of future
disposals of non-current assets (2) 3
turnover.
EBITDA 232 255
Other adjustments - -
Millions of euros 31/12/22 31/12/21
Adjusted EBITDA 232 255
Backlog – current period 13,250 9,640
Revenue for the period 3,165 2,943
Revenue for the period - New additions (*) 138 - Adjusted EBITDA margin: obtained by dividing “Adjusted
Revenue 3,303 2,943 EBITDA” by “Revenue” as shown on the consolidated
Order backlog / Revenue ratio 4.0 3.3 statement of profit or loss for the period. This indicator
provides useful information about the Group's operating
(*) Corresponds to the revenue for 2022 for the period prior to
profitability.
joining the Group.

Millions of euros 31/12/22 31/12/21

Adjusted EBITDA 232 255
Revenue 3,165 2,943
Adjusted EBITDA Margin 7.3% 8.7%

Net margin: obtained by dividing "Consolidated

profit/(loss) for the year attributable to the Parent" by
"Revenue" in the consolidated statement of profit or loss
for the period.

Millions of euros 31/12/22 31/12/21

Consolidated profit/(loss) for the
period attributable to the Parent 52 86
Revenue 3,165 2,943
Net margin 1.6% 2.9%

Investment in working capital: calculated as the

difference between current assets and current liabilities.
Current assets and liabilities exclude all items that are
classified as Net financial debt, Fixed assets and Other
assets and liabilities. This measure is used by the CAF
Group management when managing and making decisions
related to the cash conversion cycle of the business, as
effective working capital management enables an optimal
level of investment in working capital so as not to
jeopardise the company's solvency and ability to honour its

I.1
47
OTHER INFORMATION

Millions of euros 31/12/22 31/12/21*

Total Non-current assets 1,540 1,353
– Financial assets – Non-current
assets (Notes 9-b.2 and 14) (11) (9)
– Non-current hedging
derivatives – Non-current assets (12) (35)
– Deferred tax assets (151) (145)
– Assets for non-current refund rights (5) (5)
– Right-of-use assets (Note 8) (87) (54)
+ Other receivables – Concessions
(current assets) (Notes 9-b.2 and 12) 126 98
– Payable to non-current asset
suppliers (Note 15) (2) (5)
+ Other current financial assets at
amortised cost (Note 13) 26 3
Fixed assets 1,424 1,200
(*) The modification in the parameters used to calculate this indicator
led to an increase of 58 million euros and 36 million euros in Fixed
assets at 31 December 2022 and 2021, respectively.

short-term payment obligations. The following table

provides a breakdown: Other assets and liabilities: it is obtained from the
consideration of the following non-current assets and
Millions of euros 31/12/22 31/12/21* liabilities and current assets and liabilities:

+ Other non-current assets 5 5 Millions of euros 31/12/22 31/12/21*

+ Inventories 586 487
+ Right-of-use assets (Note 8) 87 54
+ Trade and other receivables 2,135 1,690
+ Non-current hedging
- Other receivables - Concessions
derivatives - Non-current assets 12 35
(current assets) (Notes 9-b.2 and 12) (126) (98)
+ Deferred tax assets 151 145
- Current tax assets (16) (10)
+ Current hedging
+ Other current assets 14 9
derivatives - Current assets 29 48
- Other non-current liabilities (105) (82)
+ Current tax assets 16 10
- Current provisions (326) (286)
– Total non-current liabilities (1,076) (1,103)
- Trade and other payables (2,374) (1,733)
+ Bank borrowings and debt
+ Current tax liabilities 15 20 instruments or other marketable securities 590 676
- Other current liabilities (3) (6) + Non-current interest-bearing
Investment in working capital (195) (4) advances (Notes 14 and 15) 5 6
(*) The change in the parameters used to calculate this indicator + Other non-current liabilities 105 82
led to a reduction of 222 million euros and 144 million euros in – Current financial liabilities - Other
Working Capital Investment at 31 December 2022 and 2021, financial liabilities (36) (49)
respectively.
+ Payable to non-current asset
suppliers (Note 15) 2 5
+ Current interest-bearing
advances (Notes 14 and 15) 1 2
Fixed assets: it is calculated by subtracting from total
non-current assets the fixed asset items that are part of – Current hedging
the calculation of the “Net financial debt” indicator, non- derivatives - Current liabilities (33) (69)
current hedging derivatives of assets, deferred tax – Current tax liabilities (15) (20)
assets, non-current assets for refund rights and assets Total Other assets and liabilities (162) (178)
for rights of use, as well as current liabilities for fixed (*) The modification in the parameters used to calculate this
asset suppliers. It also includes “Other receivables” indicator led to an increase of 190 million euros and 108 million
related to concessions and financial assets at amortised euros in Other assets and liabilities at 31 December 2022 and
cost as part of current assets. 2021, respectively.

I.1
48
 Net Financial Debt/Adjusted EBITDA: “Net Financial
Debt” divided by Adjusted EBITDA. This ratio gives an
indication of the Group's ability to meet its Net Financial
Debt with the cash flows generated by its ordinary
activities.

Millions of euros 31/12/22 31/12/21

Net Financial Debt 278 278
Adjusted EBITDA 232 255
Net Financial Debt/Adjusted EBITDA 1.2 1.1

Gross Financial Debt: the sum of the liability items that

CAPEX: calculated as the sum of additions in the year to make up the calculation of “Net financial debt”.
"Other intangible assets" and "Property, plant and
equipment", excluding rights of use, which are detailed in Millions of euros 31/12/22 31/12/21
Notes 7.b and 8.a to the consolidated financial statements.
Net Financial Debt 278 278
+ Financial assets - Non-current assets 11 9
Millions of euros 31/12/22 31/12/21
+ Current financial assets 112 129
Additions to Other intangible assets 36 24 + Cash and cash equivalents 473 551
Additions to Property, plant and equipment 36 22 Gross Financial Debt 874 967
CAPEX 72 46

Available liquidity: represents the amount of available

Cash flow: calculated as the change in Net Financial Debt Cash and cash equivalents plus the amount of undrawn
between the previous and the current period, excluding the credit facilities. It shows the Group's ability to honour its
effect of dividend payments to shareholders. obligations from the normal course of its business. The
following table provides a breakdown:
Millions of euros 31/12/22 31/12/21
+ Net Financial Debt at the Millions of euros 31/12/22 31/12/21
beginning of the period 278 311 Current financial assets – Current
– Net Financial Debt at the end of the period (278) (278) financial investments (Note 13) 112 129
+ Dividends paid to shareholders in the period 36 29 Cash and cash equivalents 473 551
Cash-Flow 36 62 Credit facilities and other undrawn
financial balances (Note 16) 393 411
Available liquidity 978 1,091
Net Financial Debt: obtained by taking into account the
non-current assets and liabilities and current assets and
liabilities detailed below: Stock market capitalisation: means the total value of the
shares of the Controlling Entity issued on the stock
Millions of euros 31/12/22 31/12/21 exchange at the end of the period, calculated as the result
+ Payment deferrals with of the number of shares issued by their quoted price on
public entities (Note 19) - 1 that date.
+ Interest-bearing refundable
advances (Note 15) 6 8 31/12/22 31/12/21
+ Bank borrowings – Non-current Number of shares issued (in millions
liabilities (Note 16) 590 676 of shares) 34.28 34.28
+ Bank borrowings and debt Quoted price at close 26.50 36.60
instruments – Current liabilities (Note 16) 278 283 Stock market capitalisation
- Financial assets – Non-current (millions of euros) 908 1,255
assets (Note 9-b.2) (11) (9)
- Current financial assets (Note 13) (112) (129)
- Cash and cash equivalents (473) (551)
Net Financial Debt 278 278

I.1
49
OTHER INFORMATION

Dividend per share: obtained by dividing the amount of PBV ratio: obtained by dividing the current period's
dividends paid out in the year by the number of shares of average share price on the stock exchange by the book
the Parent issued on the stock exchange at the end of the value of the shares, where the book value is obtained by
period. dividing “Equity attributable to the Parent” by the number
of shares issued.
31/12/22 31/12/21
Dividend distributed (in million euros) 29.48 34.28 31/12/22 31/12/21
Number of shares issued Average price for the year (in euros) 28.29 37.29
(in millions of shares) 34.28 34.28 Equity attributable to the
Dividend per share (in euros) 0.86 1.00 Parent (in million euros) 776 727
Number of shares issued
(in millions of shares) 34.28 34.28
PER ratio: obtained by dividing the current period's Book value per share (in euros) 22.63 21.21
average share price by “Net earnings per share”. PBV ratio 1.25 1.76

31/12/22 31/12/21
Average price for the year (in euros) 28.29 37.29 Dividend yield: obtained by dividing the Dividend per
share by the current period's average share price on the
Net earnings per share (in euros) 1.52 2.51
stock exchange.
PER 18.56 14.88
31/12/22 31/12/21
Average share price/adjusted EBITDA: obtained by Dividend per share (in euros) 0.86 1.00
dividing the product of the number of shares issued by the Average price for the year (in euros) 28.29 37.29
average share price for the current period by adjusted Dividend yield (%) 3.0% 2.7%
EBITDA for the period.

31/12/22 31/12/21 Pay-out: obtained by dividing Dividend per share by Net

Number of shares issued earnings per share.
(in millions of shares) 34.28 34.28
Average price for the year (in euros) 28.29 37.29 31/12/22 31/12/21
Average capitalisation (in millions of euros) 969.70 1,278.30 Dividend per share (in euros) 0.86 1.00
Adjusted EBITDA (in million euros) 232 255 Net earnings per share (in euros) 1.52 2.51
Market average price/EBITDA adjusted 4.18 5.02 Pay-out (%) 56% 40%

Free-float rotation: ratio that compares the volume of

shares traded with the estimated number of shares
included in the float, excluding those shares held by
significant shareholders, members of the Board of
Directors and treasury shares. The estimated free float %
is disclosed in the Annual Corporate Governance Report
(section A.11).

31/12/22 31/12/21
Volume of securities traded
(in millions of titles) 13.45 8.58
Number of shares issued
(in millions of shares) 34.28 34.28
Free-float (%) 47.55% 48.66%
Number of estimated floating
shares (in millions of shares) 16.30 16.68
Free-float rotation (%) 83% 51%

I.1
50
 The Annual Corporate Governance Report for 2022
ANNUAL CORPORATE forms part of the Directors’ Report and is published
on CAF’s website (www.caf.net), following
GOVERNANCE REPORT notification to the Spanish National Securities
Market Commision.

The Annual Report on Directors’ Remuneration for

ANNUAL REPORT 2022 forms part of the Directors’ Report and is
published on CAF’s website (www.caf.net),
ON DIRECTORS’ REMUNERATION following notification to the Spanish National
Securities Market Commision.

I.1
51
 NON-FINANCIAL INFORMATION STATEMENT
I.2 SUSTAINABILITY REPORT
 1
How we understand sustainability

Page 05

2 Good corporate governance

Page 26

3
Responsible business and
innovation
Page 57

4 The excellence of our team

Page 86

5
Contributing to the care and
decarbonisation of the environment
Page 117

6 The social value of our activity

Page 144

7 Additional information
Page 159

3
4
 1 HOW WE UNDERSTAND
SUSTAINABILITY

"CAF’s main objective in terms of Sustainability is to conciliate the execution of

its mission with the balanced meeting of the needs and expectations of the
Stakeholders for the creation of value in a sustainable and long term manner.
All of this is carried out in compliance not only with legal obligations, but also
with best practices in Good Corporate Governance, Risk Management,
Regulatory Compliance, and Sustainability."
CAF Sustainability Policy
17 December 2020

1.1 CAF's Overall Vision and Sustainability

1.2 Value creation and Stakeholders

1.3 Materiality

1.4 Sustainability Scorecard

1.5 Sustainable Development Goals

1.6 Sustainable Taxonomy of the European Union

1.7 5
External ESG ratings
1.1 CAF's Overall Vision and Sustainability
[2-6, 2-14]

CAF is a multinational group with over 100 years of experience offering integrated transport
systems at the forefront of technology that provide high value-added sustainable mobility for its
customers.

It is one of the international leaders in the implementation of integrated rail and bus mobility
solutions, with extensive experience tackling projects throughout the entire project life cycle
(analysis and feasibility studies, system design and engineering, system construction and
manufacturing, installation and commissioning, operation and maintenance, and even financing) in
a multitude of geographies.

In the railway sector, the Group offers its customers one of the broadest and most flexible product
ranges on the market, from complete transport systems to rolling stock (components,
infrastructure, signalling and services (maintenance, rehabilitation and financing). These
capabilities and the CAF Group's current range of solutions place it on a par with the leading players
in the sector. Within this area, the rail vehicle business generates and anchors other activities and
rail services provide profitability, complemented by integrated solutions and systems, which are
expected to make an increasing contribution to the Group.

In the field of buses, CAF, through Solaris, has been a pioneer in the development of new products
and currently has the most complete range of low and zero emission solutions. It is also well
positioned in electromobility as it is one of the leaders in zero-emission mobility in Europe due to
its unique real experience in electromobility, its strong proposal for zero-emission technologies
(electric and hydrogen) and for having all the advantages of conventional technologies, but without
business or industrial activity in the production of internal combustion engines. All in all, Solaris,
and thus CAF, maintains a good position vis-à-vis its European competitors in terms of portfolio,
actual experience and market share.

In both cases, CAF serves the most diverse range of customers worldwide: from municipalities and
regional or national public or private administrations, to other railway manufacturers and private
companies operating or maintaining systems or even consortium structures accompanied by
financially oriented entities.

CAF is the number one in sustainable urban mobility, with a value proposition that no other player
can match (metros, trams and LRVs, low and zero emission buses) and with high technological
synergies and cross-selling opportunities between the rail and bus worlds, in a context where urban
public transport will be a key pillar in any future mobility scenario.

The Group has a strong presence in the international market, focusing heavily on Europe, with
production plants in countries such as Spain, Poland, the United Kingdom, France, the United
States, Mexico and Brazil. It also has offices and rolling stock fleet maintenance centres in more
than 20 countries on the five continents. All this information can be found on its corporate website.
This close relationship with customers allows the Group to produce more efficiently and provide
an excellent range of assistance and maintenance services. Further information on the Group's
business model and prospects can be found in chapter one of the Management Report.

CAF's Mission reflects the added value in sustainable mobility of the Group's integrated transport
systems and aligned with the Mission; the Vision refers to the Group's comprehensive offer to
respond to the new social needs for sustainable mobility.

6
 We are a multinational group with over 100 years of experience in the supply of comprehensive
transit solutions positioned at the forefront of technology for high value-added sustainable
mobility

MISSION The company is a leader in the railway industry, offering one of the most comprehensive and
flexible arrays of products in railway-related markets, such as rolling stock, components,
infrastructure, signalling and services (maintenance, refurbishing and financial services).
Approved by the
CAF's committed personnel and the cooperation with our business partners enable us to
Executive Committee on
23 December 2016 enhance customer satisfaction and create value for our shareholders.

Thanks to our human and technical potential, we will grow in the railway sector, strengthening
our presence in the largest, most demanding world markets.
VISION
Approved by the We will increase and diversify our all-encompassing transportation range beyond the railway
Executive Committee on sector so as to meet society’s new sustainable mobility needs.
23 December 2016
Thanks to the culture that is shared by all the people that make up CAF, we will meet the needs
of our Stakeholders in a balanced manner.

Similarly, the corporate values applied to all the Group's activities reflect the commitment to the
principles set out in the Sustainability Policy and make them more present in day-to-day business.

Honesty and Integrity Acting in the right way, conforming to the rules.
Responsibility and Commitment Taking charge, honouring commitments.
Providing solutions to the situations that arise and
Results and Perseverance establishing actions to do so. Achieving what you set
out to do by overcoming the difficulties that may arise.
Doing things well, improving the activity and providing
Excellence and Learning new solutions. Being open to learn and undertake new
activities.
Cooperation and Teamwork Working with others brings greater value.
Health and Safety of People and the Working in safe environments by reinforcing the
Environment health and safety of all people

On 10 November 2022, the Board of Directors approved the business vision or ambition, which was
made public on 1 December as part of the Strategic Plan: grow as a provider of comprehensive rail
and bus mobility solutions, maximising its digital proposal. Four strategic pillars will enable the
business vision to be achieved, the commercial focus that will bring recurrence and scalability to
the Group, operational efficiency to guarantee profitability and competitiveness, innovation
ensuring that it is at the forefront of technology and sustainability, leading the transition of mobility
solutions towards the goal of achieving zero net emissions by 2045.

During 2023, the Mission, Vision and Values will be updated and the Company's Purpose will be
defined in coherence with the new 2026 Strategic Plan.

As a result of its commitment to sustainability and the environment in which it carries out its
activities, the CAF Group (hereinafter CAF) has an updated Sustainability Policy approved on 17
December 2020 by the Board of Directors of Construcciones y Auxiliar de Ferrocarriles, S.A.
(hereinafter CAF, S.A.). This policy defines the objective, principles and commitments that the
organisation promotes while undertaking its activities and is available on the corporate website.

CAF's main objective in terms of Sustainability is to reconcile undertaking its mission with the
balanced satisfaction of stakeholder needs and expectations for creating value in a sustainable and
long-term manner. CAF undertakes this task, complying not only with its legal obligations but also
with best practices in the areas of Corporate Governance, Risk Management, Regulatory
Compliance and Sustainability.

To achieve its stated objective, CAF follows the following principles of action when carrying on its
activities:

7
 1 Legal compliance and prevention of corruption and other illegal conduct,
2 Respect for Human and Basic Rights
Compliance with best practices in Good Corporate Governance, Risk Management,
3
Regulatory Compliance and Sustainability
4 Transparency and Confidentiality
5 Responsible Communication
6 Fiscal responsibility
7 Innovation and Sustainability
8 Environment
CAF continues to take steps to reinforce and consolidate the work carried out to meet the
objectives set out in the Sustainability Policy, which are promoted through the Sustainability
Committee. This forum is made up of a multidisciplinary team representing the areas with the
greatest impact on sustainability, who are responsible for ensuring compliance with the
commitments, as well as monitoring activities in this area, under the coordination of the Human
Resources Department. The main responsibility of each member of the Committee is to ensure the
deployment of Sustainability activities with a corporate scope in their respective areas of expertise.
In this regard, he or she is the point of reference and interlocutor in this field in the areas he or she
represents and the voice of these areas within the Committee. In addition, the members are
responsible for communicating relevant aspects in this area to the Committee that require a shared
vision to be established and for bringing relevant aspects to the executive and/or decision-making
bodies in their area. In this regard, the Committee evaluates the matters submitted to it and may
issue recommendations on the substance and on the most appropriate channel for processing
them.

The Nomination and Remuneration Committee has been assigned the functions of evaluating and
supervising the policy and practices in environmental and social matters so that it fulfils its mission
of promoting the social interest and also the processes of relations with the different Stakeholders,
taking into account the legitimate interests of the latter. In compliance with the above, it is
responsible for monitoring and controlling the Sustainability Policy. The Board of Directors is
regularly informed of activities in the area of sustainability and stakeholder relations in accordance
with the provisions of this policy.
The preparation of this report was led and coordinated by the Human Resources Department and
reviewed by the Nomination and Remuneration Committee for subsequent approval by the Board
of Directors.

During 2022, CAF has continued to improve its process management in line with its growing
sensitivity to ESG issues, as well as the increasing requirements of Stakeholders in the different
activities. In this period, it is worth highlighting the work carried out in the following areas of action:

− Incorporation of Sustainability in the 2026 Strategic Plan among the four pillars, together
with a commercial focus, operational efficiency and innovation.
− Drafting the first Sustainability Plan that integrates specific initiatives in this area with
corporate scope and direct impact on ESG.
− Monitoring of the Sustainability Scorecard, which includes the Group's main non-financial
targets and which is published in this report in chapter 1.4 Scorecard.
− Progress in implementing the Corporate Management Model aligned with ISO
26000:2012 with the deployment of corporate policies on ESG matters, verified by the
accredited external entity LRQA.
− Incorporation of relevant aspects of non-financial information in interim earnings
releases alongside financial information.
− Improved perception of the Group's performance by rating agencies in the area of
Sustainability. An example of this has been obtaining the prestigious platinum medal in
the sustainability management assessment carried out by Ecovadis, placing the CAF
Group among the best-performing companies in the sector; the B score in the first CDP
(Carbon Disclosure Project) climate change index report carried out by the CAF Group
throughout 2022, a score that is above the average for the railway sector; as well as the
maintenance of the "BBB" rating in the MSCI valuation update for the CAF Group.
− Continued adherence to the United Nations Global Compact by CAF, S.A., the Group's
main company, confirming its commitment to the Ten Principles contained therein,

8
 which are derived from United Nations declarations on human rights, labour, the
environment and anti-corruption and enjoy universal consensus.
− Verification of the carbon footprint (scopes 1 and 2) for 2019, 2020, 2021 and 2022 by
the external accredited entity LRQA, and definition of the GHG emission reduction targets
based on the SBTi methodology; targets that have been integrated and communicated in
the 2026 Strategic Plan.
− Certification of the model of excellence in environmental management based on the
European EMAS Regulation for CAF S.A. (Eco-Management and Audit Scheme).
− First EDP declaration (Environmental Product Declaration) for Solaris: Urbino 18 electric
and Urbino 12 hybrid buses.
− Busplanner Innovation Award 2022 for Solaris for its Urbino 9 LE bus.
− Obtaining the "Silver" level under the IRIS international quality standard for the Signalling
activity, in addition to those obtained in 2021 by Rail Vehicles and Maintenance.
− KOMP SARIAK distinction awarded to the CAF Group by the Basque Competition
Authority for its Corporate Competition Compliance System.
− CRS Silver Leaf distinction awarded to Solaris by "Polityka" for its support in achieving the
Sustainable Development Goals.
− Entering into a liquidity contract, the sole purpose of which is to promote liquidity and
regularity in the listing of the Group's parent company's shares on the stock exchange.
− Solaris obtained certification under ISO 45001 "Occupational Health and Safety
Management Systems".

The main objective for the next period is to continue to make progress in fulfilling the commitments
included in the Sustainability Policy with the various Stakeholders in the different areas:
environmental, social and governance aspects and work fronts: management, reporting and
results.

9
1.2 Value creation and Stakeholders
[2-29]
CAF's Strategic Framework is based on two pillars. The Business Strategy, which sets out which
products, markets, customers and technologies to address. And the Management Strategy, which
defines how this business strategy will be implemented (Company governance; policies,
procedures, management committees, processes, etc.). The combination of both strategies results
in creating value, in the form of Results. For CAF, creating value means satisfying the needs and
expectations of its Stakeholders.
Specifically, and in the case of Shareholders, CAF seeks to generate value through the positive trend
of Earnings per Share, an adequate distribution of this, and constant communication with the
market that ultimately contributes to shareholder return.

2022 2021 2020 2019 2018

Earnings per share (euros) 1.52 2.51 0.26 0.72 1.27
Dividend per share (euros) 0.86 1.00 0.00 0,842 0,765
Dividend yield 3.0% 2.7% 0.0% 2.1% 2.0%
Pay-out ratio (Dividend/EPS) 56% 40% 0% 117% 60%

The execution of the order backlog and the Group's result in 2022 were impacted by the effects of
the pandemic and the aftermath of Russia's invasion of Ukraine, which aggravated instability in the
component supply chain, higher raw material and energy prices, and historically high inflation, with
a corresponding monetary policy derivative. As a result of the above, CAF's earnings per share
amounted to 1.52 euros, and the dividend per share that the Board proposes to the General
Shareholders' Meeting is 0.86 euros per share. This shows the Company's commitment to distribute
a good part of its profits to its shareholders, despite the complex economic and sector scenario.
CAF maintains fluid and continuous communication with the market through numerous channels
and makes available to shareholders general information regarding share and dividend
performance, communications of relevant events for the business (contract awards, corporate
operations, strategic milestones), economic-financial information, documentation related to the
Shareholders' Meeting, as well as diverse documentation on corporate governance.
In addition to the above, at the end of 2022, 15 financial analysts maintain active coverage on CAF.
Financial analysts issue independent reports on the value of CAF on a recurring basis based on close
monitoring of business performance and published results. 90% of analysts recommend to
buy/overweight CAF shares, with a potential of around 30% 1.

Stakeholders, whose first formal identification was carried out in the definition of the Code of
Conduct in 2011, are therefore at the centre of CAF's strategy, and the Sustainability Policy confirms
their validity and defines the commitments made to each of them, namely shareholders,
customers, people, suppliers and society.

1 Data source: FactSet, 21 February 2023.

10
These commitments are applied in the ordinary course of business in accordance with the
corporate social responsibility guidelines included in the ISO 26000:2012 standard through CAF's
Management Model, which establishes the policies, initiatives and objectives specific to each type
of stakeholder. This model contains the CAF Group's Management Strategy, which, together with
the business strategy, forms part of the Group's global strategic framework.

The Management Model, personalised attention and ongoing improvement guide the Group to
meet its customers' needs and expectations, and make each delivery into a recommendation for
future business; this was evidenced by the more than 200 projects and orders awarded in over 50
countries in recent years, which have translated into a record backlog and repeat business from
our customers.

CAF Group has a Policy on Communication of Economic-Financial, Non-Financial and Corporate

Information, and Contacts with Shareholders, Institutional Investors and Voting Advisors (in
compliance with the principles of good corporate governance set out in the Good Governance Code
for listed companies, approved by the National Securities Market Commission in February 2015 and
revised in June 2020 and applicable legislation). This Policy, initially approved by CAF’s Board of
Directors on 28 October 2015 as the Policy on Communication and Contact with Shareholders,
Institutional Investors and Voting Advisers, and last amended on 17 December 2020, sets out CAF's
commitment to the participation of, and dialogue with, stakeholders, and specifies the responsible
communication practices that constitute a principle of the Sustainability Policy.

Likewise, the Manual that sets out this Policy aims to implement the basic corporate principles and
criteria indicated in the General Communication Policy.

CAF aims to build a relationship of trust with the stakeholders. It, therefore, promotes continuous
and effective communication with its Stakeholders through the following communication channels,
with the aim of encouraging their participation and involvement in corporate objectives and in
those areas in which their activities are affected.

Stakeholders Communication channels

- Shareholders and Investors Services Office
- Spanish National Securities Market Commission (CNMV) communications
- Annual General Meeting
Shareholders 2 - Regular informative meetings
- CAF Website (www.caf.net)
- Whistleblowing channel
- Shareholders and investors Survey
- Meetings with potential customers
- Customer meetings on projects
Customers - Customer audits
- Quality and Safety Management System Audits
- CAF Website (www.caf.net)

2
The information on shareholders is included in CAF's Annual Corporate Governance report, available on the
corporate website. Communication channel for both the institutional investor and the minority shareholder.

11
 - Whistleblowing channel
- Customer Satisfaction Surveys
- Online platforms

- CAF Portal
- Internal communication channels - Direct communication
- Union representation
Individuals - Corporate magazine
- Whistleblowing channel
- CAF Website (www.caf.net)
- Organisation Health Survey
- Supplier portal
- CAF Website (www.caf.net)
Suppliers - Supplier audits
- Whistleblowing channel
- Supplier Satisfaction Surveys
- CAF Website (www.caf.net)
- Direct relationship with public authorities
- Participation at forums and in associations
Company
- Whistleblowing channel
- Statement of Non-Financial Information - Sustainability Report
- Society communication assessment survey

In addition to helping maximise the dissemination and quality of the information available to the
market and the CAF Group's stakeholders, these channels are central to ascertaining the latter's
concerns and interests in relation to Sustainability and are key to defining CAF’s strategy and action
in this area.

For that purpose, CAF has a systematise communication process which defines the relevant
indicators for each type of stakeholder and establishes the related action plans for subsequent
communication through the above channels. To ascertain stakeholders’ perceptions, their
satisfaction is measured and monitored, and the communication with stakeholders is assessed. The
following table shows both the trend and the scope of the measurement:

Satisfaction of all stakeholders

Stakeholder
Measure Scope Change Outlook
type
% of affirmative votes in the approval of the
≥ 75% of subscribed share Positive
Shareholders financial statements and the directors’ Unchanged
capital with voting rights Above target
report (Annual General Meeting)
Annual Railway Satisfaction Survey Positive Increase of scope
Customers ≥ 82% sales
Biennial Bus Satisfaction Survey In line with the target Stable result
Range stability
Individuals Organisational Health Index ≥ 90% workforce Positive.
Improved result
Scope extension
Suppliers Annual Satisfaction Survey ≥ 72% purchases Positive
Stable result
Scope extension
Company 3 Satisfaction Survey ≥ 69% workforce Positive
Stable result

3 The Society Interest Group for CAF Group is identified with the communities in which it operates with presence
of industrial and service activities, as well as the geographies where it delivers its products and services,
considering both the economic and environmental impact. In addition, CAF Group promotes a positive impact
with activities in collaboration with agents that contribute to economic development (public administrations,
business associations, clusters, groups of companies, etc.), knowledge generation (innovation-oriented
associations, knowledge centres, research and/or technological centres, etc.), promotion of education
(educational entities or entities for the promotion of employment) and social and cultural promotion (public
and/or private entities supporting social and/or cultural projects), in the regions in which it operates.

12
 Assessment of communication with stakeholders

Stakeholder
Measure Scope Change Outlook
type
≥ 75% of shareholders and
investors with recent No variation Scope extension
Shareholders Communication Assessment Survey contact Below target Improved result
Positive
Customers Communication Assessment Survey ≥ 83% sales Extended scope Stable result
Positive. Maintain scope
Individuals Communication Assessment Survey ≥ 90% workforce Extended scope Improved result
Scope extension
Suppliers Communication Assessment Survey ≥ 72% purchases Positive Stable result
Positive. Scope extension
Company Communication Assessment Survey ≥ 69% workforce Extended scope Stable result
In addition to improving the performance of the indicator, we are also working to increase the scope
of the measurement to the entire Group and all Stakeholders. To this end, there is a communication
process in which measurement indicators have been defined for each Stakeholder group, which have
become second-level objectives and have been included in the Sustainability Scorecard.

These are monitored through the Sustainability Committee, and appropriate actions for improvement
are established.

13
1.3. Materiality
[3-1, 3-2]

In the context of CAF and its sectors of activity, multiple economic, environmental and social factors
intervene and define the Group's sustainability strategy and commitments. CAF's Sustainability
Policy defines the Company's actions with respect to these factors under a sustainable
development approach.

This Sustainability Report has been prepared on the basis of the expectations and requirements of
the Stakeholders identified in this Policy, with special attention to those issues that are most
relevant to them and have the greatest impact on the Group's strategy.

CAF updated the materiality analysis in 2021 following the guidelines defined by the Global
Reporting Initiative (GRI) standard, as well as Law 11/20184 and the Reports on the supervision by
the CNMV of the annual financial reports and main areas of review for the following year. The result
of this analysis was published in July 2021 in the ESG Equity Story.

In this materiality analysis, an initial list of potentially material ESG issues for CAF and its
stakeholders was identified from different sources of information and taking into account the long
term as a time horizon. These issues were subsequently prioritised according to the degree of
relevance to CAF's stakeholders and to the business. When defining the degree of relevance of
each subject in the interviews carried out in the prioritisation phase, the concept of double
materiality was considered, taking into account both the relevance due to its impact from the
outside-in and the relevance due to its impact from the inside-out. This resulted in a prioritised list
of material issues for CAF, as well as a materiality matrix, which were validated by CAF's
Sustainability Committee and Management Model Committee.

As a result of the materiality analysis, we set out below the 18 aspects that are relevant to CAF and
its Stakeholders in the area of sustainability. Throughout this report, the significant risks and
impacts in relation to each of them are exhaustively described.

4
Spanish Non-Financial Information and Diversity Law 11/2018, of 28 December, amending the Spanish Commercial Code, the
Consolidated Spanish Limited Liability Companies Law approved by Legislative Royal Decree 1/2010, of 2 July, and Spanish Audit Law
22/2015, of 20 July.

14
 Priority
1 Quality and safety of products and services
2 Climate strategy
3 Sustainable and efficient mobility
4 Respect for Human Rights
5 Occupational health and safety
6 Responsible and sustainable supply chain
7 Compliance and business ethics
8 Good corporate governance
9 Excellence in the relationship with stakeholders
10 Environmental management

Relevant
11 Circular economy and sustainable use of resources
12 Talent development
13 Diversity and equal opportunities
14 Fiscal responsibility and transparency
15 Risk and opportunity management
16 Innovation and technology
17 Information security
18 Contribution and social development

The various sections of this report respond to the issues identified, as set out in the table below.
Likewise, chapter "7. Additional information" contains the table of contents of the Statement of
Non-Financial Information, the GRI content index and the content index in relation to the Global
Compact Principles.

MATERIAL ISSUES CHAPTERS

1 Quality and safety of products and services 3.1 Quality and safety of products and services
2 Climate strategy 5.2 Climate strategy
3 Sustainable and efficient mobility 5.3 Sustainable and efficient mobility
4 Respect for Human Rights 4.3 Respect for Human Rights
5 Occupational health and safety 4.4 Occupational risk prevention
6 Responsible and sustainable supply chain 3.4 Responsible and sustainable supply chain
7 Compliance and business ethics 2.3 Regulatory Compliance System: Business ethics,
prevention of fraud and corruption, and respect for
competition law
Good corporate governance 2.1 Good Governance System
9 Excellence in the relationship with stakeholders 1.2 Value creation and our stakeholders
10 Environmental management 5.1 Environmental management
11 Circular economy and sustainable use of resources 5.4 Circular economy and sustainable use of resources
12 Talent development 4.1. Talent development
13 Diversity and equal opportunities 4.2 Diversity and equal opportunities
14 Fiscal responsibility and transparency 2.4 Fiscal responsibility
15 Risk and opportunity management 2.2 Risk management
16 Innovation and technology 3.3 Innovation and technology
17 Information security 3.2 Information security
18 Contribution and social development 6. The social value of our activity

15
 1.4 Sustainability Scorecard
Real Target

Indicator Unit FY20 FY21 FY22 FY22

E. CO2 emissions intensity kg Co2 eq./HHT - 2.2 1.59 ● <2

E. Energy consumption per hour worked kwh/hour 3.5 3.5 2.9 ● < 3.3

E. ISO 14001 Coverage % of the workforce 65 70 80 ● > 70

E. Sustainable solutions order book % electric, hybrid, hydrogen 72 79 87 ● > 76

S. Number of accidents with personal injuries in

number 0 0 0 ● 0
passengers

S. Number of Human Rights non-compliance cases number 0 0 0 ● 0

S. Preventive culture index 1–4 2.8 −5 2.96 ● > 2.9

No. of accidents with sick leave per

S. Frequency rate 18.0 17.3 15.2 ● < 17
million hours worked

S. ISO 45001 coverage % of the workforce 47 52 68 ● > 60

S. Suppliers assessed out of the total Risk Mapping

% Suppliers 89.6 84.8 77.7 ● >90
to be assessed

S. Purchases from high/medium-risk suppliers % Purchases 2.2 3.9 2.0 ● < 1.8

S. Customer satisfaction rating survey 0 – 10 7.5 7.7 7.8 ● > 7.6

S. Net Promoter Score Index (loyalty) survey 0 – 10 8.1 8.0 8.0 ● > 8.0

% favourable vote management

S. Shareholder satisfaction rating 99.9 99.0 99.9 ● > 98.0
report at AGM

S. Supplier satisfaction rating survey 0 – 10 8.1 7.9 8.3 ● > 8.0

S. Organisational health index (persons employed) survey 0 – 10 6.3 6.4 6.6 ● > 6.5

G. Administrative penalties arising from actions in

the securities markets and related to Competition Millions € 0 1.7 6 0 ● 0
Law

G. Sustainalytics sustainability assessment Risk level Medium Low Low ● Low

G. MSCI Sustainability Rating Level BBB BBB BBB ● AA

G. S&P Sustainability Rating 0 – 100 23 56 7 > 60

G. Ecovadis Sustainability Assessment Level Bronze Silver Platinum ● Silver

G. ISO 9001 certification coverage % of the workforce 89 92 93 ● > 90

G. ISO TS 22163 (IRIS) certification coverage % applicable railway workforce 82 86 91 ● > 85

5 Not evaluated in 2021.

6 Amounts appealed in court.
7 The 2022 rating will be received during Q1'23

16
1.5 Sustainable Development Goals
On 25 September 2015, the United Nations General Assembly unanimously adopted the 2030
Agenda for Sustainable Development, which contains the 17 Sustainable Development Goals
(hereinafter SDGs). These goals are a universal call to action to end poverty, protect the planet and
improve the lives and prospects of people everywhere.

Below are the SDGs to which CAF contributes most through its activity, aligned with the
Railsponsible proposal.

Following the preparation of the 2026 Strategic Plan this year and the materiality analysis, this
reflection exercise will be reviewed next year.

17
1.6 Sustainable Taxonomy of the European Union
Introduction
In its Communication of 8 March 2018, the European Commission published its "Action Plan:
Financing sustainable growth", with which it launches an ambitious and comprehensive strategy to
make finance a key driver in moving towards an economy that ensures compliance with the
objectives of the Paris Agreement and the European Union's (EU) 2030 Agenda for Sustainable
Development.

In this context, the package of measures presented defines ten concrete actions that have as one
of their main objectives to redirect capital flows towards sustainable investments. As a
consequence of the first of these actions, the Taxonomy Regulation, Regulation (EU) 2020/852, was
published, which aims to establish a classification system that, based on objective criteria,
determines which economic activities are sustainable.

As indicated in article 8 of the Taxonomy of Sustainable Finance Regulation, for reports published
from 1 January 2022 onwards on information for the 2021 financial year, non-financial companies
that are public interest entities and have a number of employees exceeding 500 (as is the case of
CAF Group), must disclose the proportion of eligible and non-eligible economic activities according
to the Taxonomy in their total turnover, their investments in fixed assets (CapEx) and their
operating expenses (OpEx), hereinafter KPIs (article 10.2 of the delegated act supplementing article
8 of the Taxonomy Regulation).

In accordance with the provisions of the Sustainable Finance Taxonomy Regulation, in 2021, CAF
published the degree of eligibility and non-eligibility of its activities for "Climate Change Mitigation"
and/or "Climate Change Adaptation" objectives, which were the Delegated Acts published so far.

This year, however, the disclosure requirements for the 2022 financial year are increased, not only
for reporting on Climate Change eligibility but also for reporting on alignment.
− An activity is eligible if it is included among the activities listed in those Delegated Acts
− An activity is considered aligned if it is eligible, and:
− meets the criteria for substantial contribution to climate criteria
− does not cause a significant harm on the other objectives
− meets minimum social safeguards

Scope of the report

All the companies that make up CAF Group's consolidation scope have been considered in the
analysis carried out to establish the eligible activities under the European Commission's Taxonomy
criteria.

Results
Below, we detail the eligibility and non-eligibility of our activities, as well as an explanation of our
results in terms of the contribution of CAF's activity to the "Climate Change Mitigation" objective.

The Turnover indicator shows 97% eligibility and 76% alignment, the Opex indicator amounts to
97% eligibility, and 82% alignment and the Capex indicator amounts to 99% eligibility and 87%
alignment. This demonstrates the high degree of eligible activities that CAF Group has and,
consequently, that CAF Group is a key player in driving the transition to a decarbonised economy.

In the preparation process, the absence of any double counting has been ensured by obtaining
Turnover, CapEx and OpEx (excluding intra-group movements) from the consolidation tool, a single
and complete source which is subject to continuous internal control reviews established by the
Group.

18
 Turnover:

DNSH criteria
Substantial contribution
("Does Not Significantly
criteria
Harm")

Taxonomy-aligned proportion of

Taxonomy-aligned proportion of
Water and marine resources (%)

Biodiversity and ecosystems (%)

Climate change adaptation (%)

Category (transitional activity)

Climate change mitigation (%)

Water and marine resources

Biodiversity and ecosystems

Category (enabling activity)

Climate change adaptation
Proportion of turnover (%)

Climate change mitigation

Economic activities

Minimum guarantee

turnover, year N -1
Absolute turnover

turnover, year N
(thousands of €)

Pollution (%)

Pollution
Code(s)
A. Taxonomy eligible activities
A.1 Environmentally sustainable activities (Taxonomy-aligned)
3.3 Manufacture of low-carbon technologies for transport 3.3 2,044,375 € 65% 100% - - - - - S S S S S 65% - E
6.14 Infrastructure for rail transport 6.14 355,173 € 11% 100% - - - - - S S S S S 11% - E
Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 2,399,547 € 76% 100% 76%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
3.3 Manufacture of low-carbon technologies for transport 3.3 653,122 € 21%
6.14 Infrastructure for rail transport 6.14 4,304 € 0.1%
8.2 Data-driven solutions for GHG emissions reductions 8.2 1,804 € 0.1%
Turnover of Taxonomy-eligible but not environmentally sustainble activities (not Taxonomy-aligned
activities) (A.2) 659,230 € 21%
TOTAL (A.1. + A.2) 3,058,778 € 97% 76% -
B. Taxonomy-Non-Eligible activities
Turnover of Taxonomy-non-eligible activities (B) 106,692 € 3%
TOTAL (A + B) 3,165,470 € 100%

OpEx:

DNSH criteria
Substantial contribution
("Does Not Significantly
criteria
Harm")

Taxonomy-aligned proportion of

Taxonomy-aligned proportion of
Water and marine resources (%)

Biodiversity and ecosystems (%)

Absolute OpEx (thousands of €)

Climate change adaptation (%)

Category (transitional activity)

Climate change mitigation (%)

Adaptation to climate change

Water and marine resources

Biodiversity and ecosystems

Category (enabling activity)

Climate change mitigation
Proportion of OpEx (%)

Minimum guarantee

Economic activities

OpEx, year N-1

OpEx, year N
Pollution (%)

Pollution
Code(s)

A. Taxonomy eligible activities

A.1 Environmentally sustainable activities (Taxonomy-aligned)
3.3 Manufacture of low-carbon technologies for transport 3.3 30,626 € 65% 100% - - - - - S S S S S 65% E
6.14 Infrastructure for rail transport 6.14 7,640 € 16% 100% - - - - - S S S S S 16% E
OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 38,267 € 82% 100% 82%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
3.3 Manufacture of low-carbon technologies for transport 3.3 6,412 € 14%
6.14 Infrastructure for rail transport 6.14 98 € 0%
8.2 Data-driven solutions for GHG emissions reductions 8.2 816 € 2%
OpEx of Taxonomy-eligible but not environmentally sustainble activities (not Taxonomy-aligned activities)
(A.2) 7,326 € 16%
TOTAL (A.1. + A.2) 45,592 € 97% 82% -
B. Taxonomy-Non-Eligible activities
OpEx of Taxonomy-non-eligible activities (B) 1,180 € 3%
TOTAL (A + B) 46,773 € 100%

19
 CapEx:

DNSH criteria
Substantial contribution
("Does Not Significantly
criteria
Harm")

Taxonomy-aligned proportion of

Taxonomy-aligned proportion of
Water and marine resources (%)
Absolute CapEx (thousands of €)

Biodiversity and ecosystems (%)

Climate change adaptation (%)

Category (transitional activity)

Climate change mitigation (%)

Water and marine resources

Biodiversity and ecosystems

Category (enabling activity)

Climate change adaptation
Climate change mitigation
Proportion of CapEx (%)
Economic activities

Minimum guarantee

CapEx, year N-1

CapEx, year N
Pollution (%)

Pollution
Code(s)
A. Taxonomy eligible activities
A.1 Environmentally sustainable activities (Taxonomy-aligned)
3.3 Manufacture of low-carbon technologies for transport 3.3 272,973 € 84% 100% - - - - - S S S S S 84% E
6.14 Infrastructure for rail transport 6.14 9,934 € 3% 100% - - - - - S S S S S 3% E
CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 282,907 € 87% 100% 87%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
3.3 Manufacture of low-carbon technologies for transport 3.3 38,965 € 12%
6.14 Infrastructure for rail transport 6.14 14 € 0%
8.2 Data-driven solutions for GHG emissions reductions 8.2 210 € 0%
CapEx of Taxonomy-eligible but not environmentally sustainble activities (not Taxonomy-aligned activities)
(A.2) 39,189 € 12%
TOTAL (A.1. + A.2) 322,096 € 99% 87% -
B. Taxonomy-Non-Eligible activities
CapEx of Taxonomy-non-eligible activities (B) 3,165 € 1%
TOTAL (A + B) 325,261 € 100%

20
Description of activities
From the analysis carried out, it is established that according to the Delegated Regulation (EU)
2020/852, the eligible activities 8 within CAF Group are the following:

CAF Group Activity Climate Change Mitigation

Manufacture, repair, maintenance, 3.3 Manufacture of low-carbon technologies for
renewal, conversion and modernisation of transport
vehicles and rolling stock.
Construction and modernisation of rail
transport infrastructure, as well as 6.14 Infrastructure for rail transport
engineering and associated services
(signalling, testing, etc.).
Data-driven digital solutions for efficient
8.2 Data-driven solutions for GHG emissions
performance and sustainable mobility
reductions

Description of eligibility and alignment indicators

Turnover: The turnover ratio referred to in Article 8(2)(a) of Regulation (EU) 2020/852 shall be
calculated as the share of net turnover derived from products or services, including intangibles,
associated with economic activities that comply with the taxonomy (numerator), divided by net
turnover (denominator) as defined in Article 2(5) of Directive 2013/34/EU.

Specifically, in the case of the CAF Group, the denominator corresponds to the net turnover of the
Consolidated Financial Statements for 2022.

For the eligibility calculation, the numerator corresponds to the net turnover of the Consolidated
Annual Accounts of the activities considered eligible in the Taxonomy. For the Climate Change
Mitigation objective, the table below shows the activities that CAF carries out and the activities
included in the taxonomy that have been considered eligible.

CAF Group Activity Mitigation

of Climate Change

Manufacture, repair, maintenance, 3.3 Manufacture of low-carbon technologies for transport

renewal, conversion and
modernisation of vehicles and rolling As explained in the description of this activity in Annex 1 of the Climate Delegated Act,
stock. this includes manufacturing, repair, maintenance, refurbishment and modernisation.

The CAF Group has analysed the activity or activities carried out by each Group
company, identifying the aforementioned activities.

Construction and modernisation of 6.14 Infrastructure for rail transport

rail transport infrastructure, as well
as engineering and associated As explained in the description of this activity in Annex 1 and Annex 2 of the Climate
services (signalling, testing, etc.). Delegated Act, it is defined as the construction, upgrading, operation and
maintenance of surface and underground railways, bridges and tunnels, stations,
terminals, railway service facilities, safety and traffic management systems, including
the provision of architectural, engineering, draughting, building inspection, surveying
and mapping services, as well as services performing physical, chemical and other
analytical testing of all types of materials and products.

8 This year's review has concluded that activity 6.1. Passenger interurban rail transport is not among the Group's

eligible activities.

21
 The CAF Group has carried out an analysis of the activity or activities carried out by
each Group company, identifying some of the aforementioned activities.
Data-driven digital solutions for 8.2 Data-driven solutions for GHG emissions reductions
efficient performance and
sustainable mobility As explained in the description of this activity in Annex 1 of the Delegated Climate Act,
it is defined as the development or use of ICT solutions for the collection, transmission,
storage, modelling and use of data, where these activities are primarily aimed at
providing data and analysis to reduce GHG emissions.

The CAF Group has carried out an analysis of the activity or activities carried out by each
Group company, identifying the aforementioned activities.

For the calculation of alignment or fit with the Taxonomy, the numerator meets, in addition to the
above, the criteria of substantial contribution to the climate change mitigation objective, does not
cause significant bias to the other objectives (climate change adaptation, water protection, circular
economy, pollution prevention and biodiversity) and meets the minimum social safeguards.

OPEX: The OpEx ratio referred to in Article 8(2)(b) of Regulation (EU) 2020/852 shall be calculated
as the numerator divided by the denominator; the latter includes non-capitalised direct costs that
relate to research and development, building renovation measures, short-term leases,
maintenance and repairs, as well as other direct costs related to the day-to-day maintenance of
tangible fixed assets, by the company or a third party to whom activities are outsourced, and which
are necessary to ensure the continuous and efficient operation of those assets.

Specifically, for the CAF Group, the denominator corresponds to the 2022 consolidated operating
expense accounts associated with R&D, short-term leases, and maintenance and repairs.
For the calculation of eligibility, the numerator corresponds to R&D expenditure, and the amount
of expenditure accounts for short-term leases and maintenance and repairs associated with the
activities that have been considered as eligible in the Taxonomy.

For the calculation of alignment or fit with the Taxonomy, the numerator meets, in addition to the
above, the criteria of substantial contribution to the climate change mitigation objective, does not
cause significant bias to the other objectives (climate change adaptation, water protection, circular
economy, pollution prevention and biodiversity) and meets the minimum social safeguards.

CAPEX: The CapEx ratio referred to in Article 8(2)(b) of Regulation (EU) 2020/852 shall be calculated
as the numerator divided by the denominator; the denominator is the additions to tangible and
intangible assets during the relevant financial year before depreciation, amortisation and any
revaluations, including those resulting from revaluations and impairments, for the relevant financial
year, excluding changes in fair value. The denominator shall also include additions to tangible and
intangible assets resulting from business combinations.

Specifically, in the case of CAF Group, the denominator corresponds to the total additions to cost
in 2022 of tangible fixed assets and intangible fixed assets reflected in the movement of fixed assets
in the Consolidated Financial Statements.

For the calculation of eligibility, the numerator corresponds to the amount of additions in cost to
tangible fixed assets and intangible fixed assets of the activities that have been considered eligible
in the Taxonomy.

For the calculation of alignment or fit with the Taxonomy, the numerator meets, in addition to the
above, the criteria of substantial contribution to the climate change mitigation objective, does not
cause significant bias to the other objectives (climate change adaptation, water protection, circular
economy, pollution prevention and biodiversity) and meets the minimum social safeguards.

22
Finally, it should be noted that, given the evolving nature of the EU regulatory framework and the
level of complexity of the legislation, CAF expects the reports to evolve over time. The methodology
will therefore be regularly reviewed on the basis of updates to the guidance received from the
European Commission.

23
1.7 External ESG ratings
As mentioned above, sustainability is one of the four strategic axes of the 2026 Strategic Plan, and
one of the defined objectives is to significantly improve the rating of ESG rating agencies for
investors. To this end, it has resources earmarked for this purpose and is making steady progress
towards meeting the requirements of these agencies, improving its performance year by year.

The main external evaluations of CAF Group in this area in force at the end of 2022 are set out
below.

Agency Scope Qualification Change

Ecovadis CAF, S.A. Gold Improved
Ecovadis CAF Group Platinum Improved
Unchanged
Sustainalytics CAF Group Low risk The agency has not updated the
assessment of CAF in 2022.
Unchanged
MSCI CAF Group BBB The agency has not updated the
assessment of CAF in 2022.
The 2022 rating will be received
S&Ps CAF Group - during Q1'23
First evaluation, meeting the
CDP CAF Group B
defined objective (B)

S&P Global Corporate Sustainability Assessment (CSA and Dow Jones

Sustainability Index)
S&P Global CSA (November 2021): Rating 54/100 (23 in 2020) and 94th percentile, belonging to the
IEQ Machinery and Electrical Equipment sector. CAF obtained a score of 53/100 in the Environment
dimension (compared to the sector average of 24) and a Governance score of 55 (compared to the
sector average of 27) and a score in the Social area of 60 (compared to the sector average of 22).

CAF scored particularly well in the following areas: Environmental Reporting, Innovation
Management, Information Security/Cybersecurity and System Availability, Social Reporting,
Materiality, Risk Management, Environmental Policy and Management Systems, Labour Practices
Indicators and Human Rights.

During the 2022 financial year, CAF has made a special effort to improve the S&P's rating by
dedicating special resources to this end.

Sustainalytics
CAF received an ESG rating of 18.6 from Sustainalytics in 2021 and was assessed as "Low Risk" when
it comes to experiencing financial impacts from ESG aspects. The spread between manageable and
managed risk is therefore considered to be minimal. That is why CAF ranks 2/122 in the "Heavy
machinery and lorries" industry compared to companies in its sector.

During 2022 the agency has not upgraded CAF's rating.

MSCI ESG
CAF received an ESG rating of BBB (on a scale of AAA-CCC) in the MSCI ESG assessment in February
2021.

During 2022 the agency has not upgraded CAF's rating.

CDP

24
During 2022, the CAF Group prepared its first report on the CDP (Carbon Disclosure Project) climate
change index, achieving a B score on its scale. This was the score that was set as a target for this
first report. The score obtained is above the average for the railway sector and at the same level as
the results obtained by our benchmark competitors.

CDP is regarded as the world's most prestigious climate change index, which, through a ranking,
assesses the completeness of disclosure, awareness and management of environmental risks and
best practices associated with the environment, as well as the setting of ambitious and meaningful
targets in the fight against climate change.

This milestone reinforces the company's commitment to the challenge of decarbonisation, which
has been included in the new Strategic Plan as one of the main objectives.

ECOVADIS
In 2022, the CAF Group obtained the platinum medal in the sustainability management assessment
carried out by the Ecovadis entity, positioning itself among the best-performing companies in the
sector.

The Group's performance in recent years has been on the rise, confirming its firm commitment to
sustainability as one of its strategic pillars. The company has been assessed on policies, activities
and performance in environmental issues, labour practices and human rights, ethics and
sustainable procurement.

25
 2 GOOD CORPORATE GOVERNANCE

"Follow the best and most recognised practices of Good Corporate

Governance, Risk Management, Regulatory Compliance and Sustainability in
general and in particular the practices described in the CAF Group Code of
Conduct, as well as in the Code of Good Governance of the Spanish National
Securities Market Commission (CNMV), in the Guidelines of the Organisation
for Economic Cooperation and Development (OECD), in the United Nations
Global Compact, and others."
CAF Sustainability Policy
17 December 2020

2.1 Good Governance System

2.2 Risk management

Regulatory Compliance System: Business ethics,

2.3 prevention of fraud and corruption, and respect for
competition law

2.4 Fiscal responsibility

26
2.1 Good Governance System
[2-9, 2-10, 2-11, 2-12, 2-13, 2-14, 2-16, 2-18, 2-19, 2-20, 2-23, 2-26, MA 405, 405-1]

The CAF Group carries on its activity mindful of the importance of appropriate and transparent
management as an essential factor for generating value, enhancing economic efficiency and
strengthening the trust of its shareholders and investors, which is implemented through a
Corporate Governance System based on the principle of “Good Corporate Governance”.

This Group's Corporate Governance System is based on the commitment to ethical principles, best
practices and transparency, built around the protection of corporate interests and the creation of
sustainable value for CAF stakeholders. At the same time, the system provides for the
implementation of these principles and best practices across the CAF Group's entire internal
regulatory system, as described elsewhere in this report.

The CAF Group's Corporate Governance System comprises a set of principles and rules that regulate
the design, integration and operation of the governing bodies and their relationship with the
company's stakeholders.

In relation to the governing bodies, their definition and composition in light of this regulatory
framework makes the following distinctions: (i) the corporate governance bodies (Annual General
Meeting and Board of Directors of the CAF Group parent company) that adopt the decisions
incumbent on the highest level of governance and decision-making bodies; and (ii) the
management bodies (the Management Team as a whole) that are entrusted with the ordinary
management of the Company, which, in any case, must abide by the general policies and strategies
established by the Board of Directors.

This provides for the adoption and maintenance of an internal regulatory system in which ethics
and sustainability govern and underpin all Group activity, aimed at achieving business objectives
and complying with legal obligations as well as the implementation of widely recognised best
practices.

To this end, CAF takes into account the relevant national and international benchmark principles
and best practices, integrating them into its activities, at the internal regulatory level through its
regulatory framework, at the organic level through the composition and distribution of functions
of the governing bodies, and at the operational level through their integration into systems and
processes.

As an example of CAF's commitment to the best and most widely recognised corporate governance
practices, we highlight the degree of compliance of CAF S.A., in its capacity as the listed parent
company, with the recommendations of the CNMV Good Governance Code for listed companies
("GGC"), revised in June 2020.

Recommendation Complies Complies Explanation Not

partially applicable
1 – Statutory limitations
2 – Listing of companies integrated in groups
3 – Information to the board on the most relevant aspects of
corporate governance
4 – Policy on communication and contacts
5 – No issues with exclusion of pre-emptive subscription
rights for an amount greater than 20% of share capital
6 – Publication on the website of reports for the board
7 – Live webcast of AGMs
8 – Annual accounts without limitations or caveats
9 – Publication on the website of requirements and
procedures to attend AGMs and exercise voting rights
10 – Shareholder proposals to complete the agenda or new
proposals

27
11 – Policy on attendance premium payments
12 – Social interest
13 – Appropriate size
14 – Selection policy
15 - Majority of proprietary and independent directors and
percentage of female directors
16 – Proportion between proprietary and non-executive
directors
17 – Half independent directors
18 – Information about directors on the website
19 – Explanations about proprietary appointments by
shareholders < 3%
20 – Resignation of proprietary directors on disposal of
ownership interest
21 – Non-dismissal of independent directors before the end
of the mandate
22 – Information on indictments and trials
23 – Opposition to proposals contrary to the corporate
interest
24 – Explanation of the reasons for dismissal before the end
of the mandate
25 – Sufficient availability and max. no. of directors
26 – At least 8 meetings a year
27 - Absences
28 – Record of unresolved issues in the minutes
29 – Advice to directors
30 – Knowledge refresher programmes
31 – Clear agenda on points for decision
32 – Information on changes in shareholding and opinions of
shareholders and others
33 – Chairman's duties
34 – Additional powers of coordinating director
35 – Secretary applies good governance recommendations
36 – Board evaluation
37 – Executive committee structure similar to the board and
has the same secretary
38 – The board is aware of matters dealt with and decisions
adopted by the executive committee
39 – Audit committee members with expertise in the matter
and majority independent
40 – Existence of internal audit
41 – Audit committee is aware of the work plan and
incidents detected by the internal audit
42 – Additional audit committee functions
43 – Audit committee can summon any employee or
manager
44 – Audit committee has information on structural or
corporate changes
45 – Content of risk control and management policy
46 – Existence of risk control and management function
47 – Members of the Nomination and Remuneration
Committee with expertise in the matter and majority
independent
48 – Separate nominations and remuneration committees

28
 49 – Nominations committee consults the chairman on
matters related to executive directors
50 – Additional functions of the remuneration committee
51 – Remuneration committee consults the chairman on
matters related to executive directors and senior managers
52 – Supervision and control committees have rules
consistent with all other mandatory committees
53 – Supervision of compliance with corporate governance
rules, internal codes of conduct and Sustainability policy
54 – Minimum Sustainability policy content
55 – Information on Sustainability in the management report
or special report
56 – Adequate remuneration that does not compromise the
independence of non-executives
57 – Variable remuneration only for executives
58 – Remuneration policy ensures that variable
remuneration is linked to professional performance and not
to general market trends
59 – Deferral of variable remuneration
60 – Results-based remuneration takes into account the
auditor's caveats
61 - % Significant variable remuneration of executives in
shares or financial instruments
62 – Limits to the transfer of shares or exercise of options
linked to remuneration
63 – Existence of clawback clauses
64 – Payment for termination of contract not exceeding 2
years of total remuneration and deferred payment

As can be seen from the above table, CAF maintains a very high level of compliance with the Good
Governance Recommendations.

In accordance with the provisions of Article 540 of the Capital Companies Act, the Company
publishes an annual corporate governance report which, approved by its Board of Directors,
provides information about its ownership structure, organisation structure, related-party
transactions, risk control systems, internal control and risk management systems in relation to the
financial reporting process (ICFR), degree of compliance with corporate governance
recommendations, and other information of interest.

The CAF Annual Corporate Governance Report forms part of the Management Report and is
available on the CNMV website and the Company's own website from the date on which the latest
consolidated financial statements are published.

Regulatory Framework for Corporate Governance

General regulatory framework

The general regulatory framework for corporate governance comprises the Internal Regulatory
System, divided into four hierarchical levels of standards: (i) those that regulate the composition
and operation of the corporate governance bodies, i.e. the Annual General Meeting and the Board
of Directors of the parent company (Level 1), (ii) the general policies and specific standards that
apply to the entire CAF Group, which are approved by the Board of Directors of the parent company
(Level 2; these first two levels make up the "Corporate Governance System"); and (iii) the
implementation standards which, at the ordinary management level and in accordance with the
previous standards, may, in turn, be approved by the Management Team to ensure the
effectiveness and integration of the good governance standards into the Group's systems and
processes, and which may have a corporate scope (Level 3) and also be implemented by different
activities or subsidiaries (Level 4).

29
At both at the strategic and ordinary management levels, the CAF governing bodies apply and,
where appropriate, develop the standards of the Internal Regulatory System at their respective
levels, informing and raising awareness among the Group's various stakeholders through
communication initiatives and regular training.

They also strive to adapt and update the corporate governance system as soon as possible to new
legislation and the good practice codes and guidelines for listed companies, which
regulatory and supervisory bodies periodically publish.

The standards that regulate CAF corporate governance bodies and general policies are available to
the general public on the corporate website, where they are regularly updated in line with the
applicable regulations.

Effectiveness and application of the Corporate Governance System

The Code of Conduct and the Sustainability Policy approved at Group level define objectives,
principles of action and commitments which, ultimately, crystallise in tangible and verifiable
compliance with Good Corporate Governance standards.

CAF's Board of Directors is highly committed to maintaining a Corporate Governance System that
is fully updated and aligned with the legitimate expectations of the different stakeholders. As
evidence of this, internal rules are regularly reviewed in order to improve or update their content.

In this context, Law 5/2021 of 12 April, which amended the Consolidated Text of the Capital
Companies Act, introduced a series of amendments, among other aspects, to the minimum content
of the remuneration policy, requiring listed companies to adapt their policy to the new wording of

30
article 529r and submit it for approval at the first General Meeting held after the entry into force
of this amendment.

In view of the foregoing, the Company's Board of Directors, at the proposal of the Nomination and
Remuneration Committee, resolved to submit to the Ordinary General Meeting of Shareholders in
2022 the approval of a new Remuneration Policy, to be applied from the date of its approval and
during the following three financial years, i.e. during the remainder of 2022 and 2023, 2024 and
2025.

The Nomination and Remuneration Committee issued the mandatory report justifying the
proposal, in which it concluded that its content was in line with current legislation and good practice
in this area, and was in line with the interests of the shareholders.

Both the proposal and the supporting report were made available to shareholders on the
Company's website, together with the rest of the documents relating to the General Meeting, from
the date the meeting was convened.

The current Directors' Remuneration Policy was approved by resolution of the Ordinary General
Meeting of Shareholders on 11 June 2022 and incorporates the amendments indicated in
subsequent sections of this report.

Beyond this update, it has not been deemed necessary to amend any regulations, policies or
internal rules of the Company's Corporate Governance System during the year under review, as it
is considered that they are in accordance with legal and good governance requirements and serve
the Company's corporate purpose.

It should be noted that, in accordance with the provisions of its Regulations, the Nomination and
Remuneration Committee is entrusted with supervising compliance with the Company's corporate
governance rules, as well as the evaluation and periodic review of its Corporate Governance
System. In compliance with this function, after the appropriate analysis, the Committee has
submitted to the Board of Directors, at the end of the 2022 financial year, the corresponding report
confirming the alignment of the System with the corporate interest and the legitimate interests of
the stakeholders, in accordance with the strategy set, as well as the effective compliance with the
rules of corporate governance, during the financial year reported.

Equally noteworthy is the progress made in 2022 in relation to the deployment of the rules of the
Code of Conduct, through the development and strengthening of the Criminal Compliance and
Business Ethics and Competition Systems, respectively, which are also referred to in the section
2.3. of this report.

Government Structure
The governance and administration of the Group and the parent company are entrusted to the
Annual General Meeting and the Board of Directors.

The Company also has two committees of the Board of Directors: The Audit Committee and the
Nomination and Remuneration Committee.

The Annual General Meeting

The Annual General Meeting (AGM) represents all the Company's shareholders and is the highest
decision-making body for the matters that fall within its scope.

These include the approval of the Statement of Non-Financial Information - Group Sustainability
Report, as a separate agenda item.

The rules governing the organisation and operation of AGMs are contained in the Bylaws and the
Annual General Meeting Regulations, which are available at all times on the corporate website.

In 2022, the Company held the General Shareholders' Meeting, enabling both physical and
telematic attendance. The following main indicators are highlighted:

31
 Main indicators (2022 AGM)
Share capital 10,318,505.75 €
Shares 34,280,750
Voting rights 34,280,750
Minimum number of shares to attend
1,000
the AGM
Attendance quorum 75.87 %
Average percentage of votes in favour in
83.73 %
the approval of resolutions
Percentage approval of the Statement of
Non-Financial Information - 100%
Sustainability Report.

The Board of Directors and its Committees

The Board of Directors

Except for business that falls within the scope of the Annual General Meeting, the Board of
Directors is the competent body for adopting resolutions on all kinds of matters pertaining to the
corporate purpose. The Board acts as the Company's decision-making centre at a strategic level
and therefore focuses its activity on providing general guidance and supervision, establishing
general strategies and controlling the ordinary management delegated to the Management Team,
notwithstanding the powers attributed to it by Law which cannot be delegated.

As specified below, the Committees not only exercise the powers legally entrusted to them but
have other functions assigned in accordance with best corporate governance practices and
recommendations.

CAF's Board of Directors is currently composed of ten members, with one vacancy to be filled, as
described below. This number of directors is considered adequate to ensure the due representation
and the efficient operation of the Board, within the range provided for in the internal regulations.

CAF has a specific and verifiable Diversity and Director Selection Policy, the purpose of which is to
ensure that any proposals for the appointment and re-election of directors are based on a prior
needs assessment of the Board of Directors, as well as to enrich the diversity of knowledge,
experience, age and gender of the Board members by following criteria that ensures adequate
diversity among the members and the absence of any implicit biases that may lead to discrimination
based on age, gender, disability or any other personal circumstance or situation. Specifically, the
Nominations and Remuneration Committee is responsible for verifying compliance with this Policy
on an annual basis, through a specific report submitted to the Board, which is additionally reported
on in the Annual Corporate Governance Report, as provided for in Recommendation 14 of the GGC.

The Policy promotes a balanced composition of the Board of Directors and its Committees that
enriches decision-making and provides a diversity of viewpoints, in full compliance with the
conditions of suitability, both individually and as a whole of the Board and its Committees. For this
purpose, the selection processes are based on the Board's competency matrix, which the
Nominations and Remuneration Committee keeps permanently updated.

Accordingly, the professional expertise of a candidate, based on their academic background or

professional experience, or a combination of both, is taken into account to guarantee the presence
of a diversity of specialist profiles on the Board of Directors who can offer contrasting perspectives
and encourage multidisciplinary and constructive discussions regarding the decisions to adopt, and
ultimately to enhance the performance of the Board as a whole.

The Board members have up-to-date knowledge of the Company at all times. Directors are also
invited to follow knowledge refresher programmes when considered appropriate.

The members of the Committees are appointed from among the directors, taking into account the
profiles best suited to the each Committee.
In particular, wherever possible the directors who form part of the Audit Committee all have the
requisite knowledge of accounting, auditing and the management of financial, non-financial and

32
business risks. Likewise, the designation of members of the Nominations and Remuneration
Committee takes into account their knowledge and experience in areas such as corporate
governance, human resources, the selection of directors and executives, and the design of policies
and remuneration plans, in line with the provisions of the Regulations of each Committee.

With regard to gender diversity, the Company has for years been directly committed to the under-
represented gender on the Board, which has resulted in significant progress in the appointment of
female directors. Thus, from 2017 to 2022, CAF has continuously met the target set for 2020 in
Recommendation 14 of the GGC, to reach at least 30% of women on the Board, standing at that
percentage at the date of issue of this report. In any event, CAF's Diversity and Director Selection
Policy expressly promotes as an objective that the number of female directors should represent at
least the percentage of the total established in the good governance recommendations or, where
applicable, in the applicable legislation.
It should also be noted that, in line with best practice in corporate governance, the positions of
Chief Executive Officer and Chairman of the Board of Directors are separated.

The main actions with an impact on the composition of the Board during 2022 have been the
following (as a consequence of the resolutions adopted by the General Meeting of Shareholders on
11 June 2022):

− Re-election of Mr Andrés Arizkorreta García as Director, with the category of Other

External, for the statutory term of four years.

− Re-election of Mr Luis Miguel Arconada Echarri as Director, with the category of Other
External, for the statutory term of four years.

− Re-election of Mr Juan José Arrieta Sudupe as Director, with the category of Other
External, for the statutory term of four years, and;

− Fixing the number of Directors at eleven.

On 11 June, the Board resolved to appoint Mr Ignacio Camarero García as a new member of the
Nomination and Remuneration Committee and to designate Mr Julián Gracia Palacín as Chairman
of the same.

Following the resolutions adopted at the 2022 Annual General Meeting, a vacancy was created on
the Board of Directors.
As regards the current composition of the Board of Directors from the perspective of the categories
of Directors, of the ten members, two are classified as executive, two as proprietary, three as
independent, and three as other external.
The Company aims to maintain an appropriate balance in the management body as a whole and to
restore the previous situation as soon as possible.

Accordingly, the composition of the Board of Directors of CAF, S.A. at the end of 2022 was as
follows:

33
 Name Gender Category Position on the Years on Board Positions in Board
Board Committees
Andrés Arizkorreta García M Other External Chairman Over 8 years -

Javier Martínez Ojinaga M Executive Executive Director 4-8 years -

Director – Secretary
Marta Baztarrica Lizarbe W Executive 4-8 years -
of the Board
Chairwoman of the
Carmen Allo Pérez W Independent Director 4-8 years
Audit Committee
Chairman of the
Nomination and
Julián Gracia Palacín M Independent Director 4-8 years
Remuneration
Committee
Member of the Audit
Committee, and of the
Ignacio Camarero García M Independent Director Less than 4 years Nomination and
Remuneration
Committee
Member of the
Luis Miguel Arconada Nomination and
M Other External Director Over 8 years
Echarri Remuneration
Committee
Member of the Audit
Juan José Arrieta Sudupe M Other External Director Over 8 years
Committee
Ms. Idoia Zenarrutzabeitia Proprietary
W Director Less than 4 years -
Beldarrain Director
Manuel Domínguez de la Proprietary
M Director Less than 4 years -
Maza Director

In accordance with Recommendation 18 of the GGC, the Public Information on Directors, which
contains further details, in particular about their training and experience and their positions in
other listed or unlisted entities, is permanently updated and available to the general public on the
corporate website.

CAF's Annual Corporate Governance Report available on the corporate website contains this
information in greater detail, as well as other relevant information about the Company.

Remuneration of Directors

For the definition of the items and amounts that make up the remuneration system, CAF takes into
account at all times the long-term interests of the Company and, in particular, guarantees a
correspondence with the trend of the Company's results and an adequate distribution of profits to
shareholders.

As indicated above, the Board of Directors of the Company, at the proposal of the Nomination and
Remuneration Committee, resolved to submit to the Company's Ordinary General Shareholders'
Meeting a new Directors' Remuneration Policy, in accordance with the new wording of article 529r
of the LSC, to be applied from the date of its approval and for the following three financial years.

The Directors' Remuneration Policy, applicable for the financial years 2022 (from its approval in
June 2022 until the end of the year), 2023, 2024 and 2025, was approved by a majority of 60.30 %
at the Ordinary General Shareholders' Meeting held on 11 June 2022.

This Policy incorporates the following main modifications:

− The inclusion of life insurance among the remuneration items for directors in their
capacity as such, in view of the amendment of article 39 of the Articles of Association
approved by the General Meeting held on 5 June 2021.

− The introduction of a long-term savings scheme for all executive directors.

34
 − Extending the non-financial parameters to which the accrual of variable remuneration is
linked, including other ESG indicators that contribute to the long-term sustainability of
the Company.

− The inclusion of a more specific mention of the possibility to apply the "malus" clause
before paying variable remuneration to executive directors.

− The updating of the annual fixed remuneration of the chief executive officer.

Furthermore, the current Remuneration Policy, which is of a continuous nature, takes into
consideration the remuneration applied by comparable companies, using them as a reference
when setting the remuneration of its directors, while at the same time taking into account the
commitment acquired with its stakeholders.

The remuneration of non-executive directors is set at a level that in no case compromises their
independence of judgement.

In relation to executive directors, and as set out in the Directors' Remuneration Policy in greater
detail, the parameters chosen to determine, where appropriate, their variable remuneration must
be of both an economic-financial and non-financial nature that promote sustainability and the
creation of long-term value for the Company.

These parameters are predetermined and defined in advance, and their level of fulfilment is verified
by the Board of Directors once the definitive figures obtained at year-end are known. Every attempt
is also made to ensure an adequate balance between variable remuneration and fixed components,
therefore offering an appropriate incentive without distorting its complementary nature with
respect to the fixed amounts. The maximum amount of variable remuneration is set by the Board
at the beginning of the financial year.

The payment of such variable remuneration shall be deferred in time as from two months after the
end of the financial year, so that the Board of Directors has sufficient time to verify the degree of
compliance with the objectives and can assess whether any circumstances arise that make it
advisable to reduce the variable remuneration to be received by the executive directors, such as
serious breaches of their obligations, the introduction of qualifications in the audit report or the
need to restate the Company's financial statements.

In the event that, after payment, any error is identified in the calculation of the variable
remuneration or in the measurement of the degree of achievement of the objectives, the
beneficiaries of such remuneration shall be obliged to reimburse the excess that they have
received.

CAF considers that this procedure reduces exposure to excessive risks and that the remuneration
mix represents a balance between fixed and variable items and meets the Company's long-term
objectives, values and interests.

The Annual Report on Remuneration of CAF Directors available on the corporate website includes
this information in greater detail, as well as other relevant information about the Company.

The Annual Report on Remuneration of Directors for 2021, put to a consultative vote at the
Ordinary Annual General Meeting held on 11 June 2022, was approved by a majority of 60.16% of
the votes of the shareholders present or represented.

Performance assessment of the Board of Directors and its Committees

In accordance with its Regulations, the Board of Directors must perform an annual assessment of
its own operation and that of its Committees, and on the basis of its findings it must propose an
action plan to correct any deficiencies found. To this end, the Board uses the reports prepared by
the Committees relating to their own assessment and, in the case of the Nomination and
Remuneration Committee, the report relating to the Board assessment. In line with the mandate
contained in GGC Recommendation 36, every three years this process must be carried out by an
external consultant, whose independence is verified by the Nomination and Remuneration
Committee.

35
The assessment process is designed to annually determine the degree of compliance with legal
requirements, Corporate Governance guidelines and best practices, and the Internal Regulatory
System related to the operation of the bodies examined, and to monitor the action plans drawn up
each financial year. The results of these assessments lead to the definition of new improvement
initiatives to help the Board and its Committees design and comply with the Corporate Governance
System.

The Board of Directors has positively evaluated its work and that of its members and Committees
during 2022, and has noted that action plans set for the year under review have been satisfactorily
fulfilled, approving the corresponding reports.

Supervision of the Board of Directors in matters of Sustainability/ESG

As the Sustainability Policy sets out, the main objective of the CAF Group is to reconcile the
development of its mission with the balanced satisfaction of stakeholders' needs and expectations
for the creation of value in a sustainable and long-term manner.

This has been formalised through public agreements and adherence to external initiatives,
gradually leading to better results and increasing transparency.

The Sustainability Function consists of a Sustainability Committee made up of a multidisciplinary

team that is representative of the material issues in this area and is responsible for ensuring
compliance with, deployment and/or monitoring of the commitments set out in the Sustainability
Policy.

In accordance with the provisions of the GGC, through its Committees the Board supervises all
material aspects related to sustainability/ESG, drawing up specific reports requested during the
year and an annual report for the year, as described below.

In any case, the Internal Audit, Compliance, Risk, Sustainability and Corporate Governance
functions are able to inform the highest governance body of any concerns within the framework of
their individual reports. In the respective report of each Function, the most relevant aspects have
been prioritised and no critical concerns have been communicated to the highest governance body.

Committees of the Board of Directors

Audit Committee

The Audit Committee is made up of three non-executive directors, two of whom are independent,
including the committee chairwoman who was appointed on the basis of her knowledge and
experience in accounting and auditing. For more details about the composition of the Audit
Committee, see the section on the composition of the Board of Directors.

The Audit Committee is basically regulated in article 37 bis of CAF's Articles of Association. These
regulations are set out in the Regulations of the Board of Directors and, in particular, in its own
Regulations, which determine in detail the most relevant aspects of the same, such as, among
others: its nature, composition, functions and scope, operating rules, powers and relations with
third parties. Both standards are published on the corporate website and have remained
unchanged during the year under review.
Specifically, in relation to the Internal Control Systems, the following functions of the Audit
Committee may be highlighted, among others:

− Supervise and evaluate the preparation, presentation and completeness of the financial
and non-financial information on the Company and, where appropriate, the Group,
checking compliance with legal provisions, the appropriate definition of the scope of
consolidation and the correct application of accounting standards, and submit
recommendations or proposals to the Board of Directors aimed at safeguarding its
integrity;

− Supervise the effectiveness of the Company’s internal control and in particular of the
internal control of financial reporting (ICFR);

36
 − Supervise and evaluate the financial and non-financial risk management and control
systems related to the Company and, where appropriate, the Group, including
operational, technological, legal, social, environmental, political and reputational risks or
those related to corruption;

− Supervise the Company’s internal risk control and risk management function;

− In general, ensure that the policies and systems established in matters of internal control
are effectively applied in practice;

− Supervise compliance with the internal codes of conduct of the Company; and

− Establish and supervise a mechanism whereby staff and other people related to the
Company and its Group, such as directors, shareholders, suppliers, contractors or
subcontractors, can report irregularities of potential importance, including financial and
accounting matters, or matters of any other nature related to the Company that may
come to their attention within the Company or its Group.

− Supervise application of the general policy relating to communication of economic and

financial, non-financial and corporate information, and to communication with
shareholders and investors, voting advisers and other stakeholders. The way in which the
Company communicates and interacts with small and medium shareholders shall also be
monitored; and,

− Check that the financial information published on the Company's corporate website is
permanently updated and that it coincides with that which has been approved or
formulated by the Board of Directors and published on the website of the National
Securities Market Commission (CNMV). If, following the review, the Committee is not
satisfied in relation to any issue, it shall notify the Board of its opinion.

For the Committee to be able to carry out its functions of supervising compliance with the internal
codes of conduct and the whistle-blower channel, as well as the associated internal control
systems, the Compliance Function reports annually to the Audit Committee about these matters.

In the same way, the Risk Function reports to the Audit Committee every six months on the
Financial and Non-Financial Risk Control and Management System and the situation of the risk map
and the main risks of projects underway.

In line with the above, the Committee periodically requires information on the management of
Sustainability risks and receives an annual report on the application of the General Policy regarding
the communication of economic-financial, non-financial and corporate information, as well as the
communication with shareholders and investors, proxy advisors and other stakeholders.

The annual performance assessment of the Audit Committee carried out in 2022 yielded a positive
result, confirming that it had discharged its functions properly.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee (hereinafter N&RC) is composed of three non-
executive directors, two of whom are independent, including the Chairman of the Nomination and
Remuneration Committee. For more details about the composition of the Appointments and
Remuneration Committee, see the section on the composition of the Board of Directors.

As in the case of the Audit Committee, the legal regime of the N&RC is contained in the Articles of
Association, in the Regulations of the Board of Directors and in its specific Regulations.

Specifically, Article 37 ter of the Articles of Association refers to the composition and functions of
the Committee. The Regulations of the Board also lay down certain rules on its composition and
functioning. Finally, the Committee's Regulations regulate in greater detail critical aspects of this
body, such as its powers, operating rules and relations with other bodies of the Company in
Chapters II, V and VI, respectively.

37
Among the functions of this Committee in the area of appointments and remuneration, the
following may be highlighted:

− Evaluate the skills, knowledge and experience required of the Board of Directors. For this
purpose, it will draw up a matrix with the powers of the Board that defines the functions,
knowledge and skills required for candidates to cover each vacancy, periodically updated
and shall evaluate the time and dedication required to perform their duties effectively.

− Submit to the Board of Directors the proposals for the appointment of independent
directors by co-option or, if applicable, for the Annual General Meeting's consideration,
as well as the proposals made by the General Meeting for such directors' re-election or
removal.

− Report the proposals for appointment of the other directors by co-option or submission
to the decision of the Annual General Meeting, and propose the re-election or removal
of these directors by the Annual General Meeting.

− Draw up a report for the Board of Directors recommending the set individual
remuneration for each Director, in their capacity as such within the statutory framework
and the remuneration policy and in accordance with their individual functions and
responsibilities; and

− Draw up a report for the Board of Directors recommending the individual remuneration
of each Director based on their performance of the executive functions assigned to them
within the framework of the remuneration policy and in accordance with the provisions
of their contract.

In relation to the Corporate Governance System and Sustainability, the following stand out:

− Supervise compliance with the Company’s corporate governance rules and ensure that
the corporate culture is aligned with the Company’s purpose and values;

− Verify compliance with the Director Selection and Diversity Policy on an annual basis and
report on it in the Annual Corporate Governance Report;

− Regularly evaluate and review the Company’s corporate governance system and
Sustainability Policy to ensure that they fulfil the mission to promote the corporate
interest and take into account, as applicable, the legitimate interests of the other
stakeholders;

− Supervise the Company's environmental and social practices to ensure alignment with
the established strategy and policy; and

− Supervise and evaluate the way in which relations with the various stakeholders are
handled.

For the purposes of exercising its functions in relation to the Sustainability Policy and practices, this
Committee receives an annual report on the matter from the Sustainability Function and analyses
the contents. Based on the report for 2022, the Committee concluded that both the activities and
the results indicate significant degrees of progress and positive levels of achievement in relation to
sustainability, confirming that the Sustainability Policy is being properly deployed.

Likewise, in relation to the supervision and evaluation of the CAF Corporate Governance system
and rules, the Committee receives an annual report from the Corporate Governance Function.

Based on the report for 2022, the Committee concluded that the evaluation of the Corporate
Governance System must be considered favourable and positive and in accordance with the highest
standards of corporate governance, therefore benefiting the corporate interest and stakeholder
expectations, in line with the Company's strategy in this area.

The Reports on the Functioning of the Committees, which are published annually in compliance
with Recommendation 6 of the GGC, give an account, among other aspects, of the activities carried

38
out by each Committee during the year, the agenda of the meetings held during that period and
the attendees at those meetings. The latest versions of both reports are available on the Company's
website.

39
2.2 Risk management
[2-12, 2-13]

CAF's Board of Directors approved and updated the General Risk Control and Management policies
on 20 December 2016 and 12 November 2019, respectively, to create a comprehensive risk control
and management system and ensure that the risks of all the Group's activities are managed
effectively.

The implementation of the General Risk Control and Management Policy sets out the basic
mechanisms and principles for adequate management with a level of risk that makes it possible to:
− Achieve the strategic objectives set by the CAF Group with a controlled volatility;
− Provide the utmost level of guarantees to shareholders;
− Protect the CAF Group’s results and reputation;
− Defend the interests of its stakeholders; and
− Ensure business stability and financial strength in a sustained way over time.
The risk management system adopted by CAF is aligned with international standards, ISO 31000
and COSO ERM (Committee of Sponsoring Organisations of the Treadway Commission – Enterprise
Risk Management) regarding the use of an effective methodology for integrated risk analysis and
management and the Three Lines of Defence model for assigning responsibilities in the risk
management and control area.

The functions and powers of the Board of Directors, the determination of the General Risk Control
and Management Policy, as well as the supervision of internal information and control systems, are
matters of exclusive competence of the full Board. The Audit Committee is also the body
responsible for supervising and evaluating the group's risk management and control systems, as
well as supervising the internal risk management and control function of the company.

The Risk Management Function under the direct supervision of the Audit Committee is responsible
for the following tasks:

− To ensure the proper functioning of the comprehensive risk control and management
system and, in particular, that all major risks affecting the Company are adequately
identified, managed and quantified,
− Actively participating in drawing up the risk strategy and in important decisions regarding
risk management and
− Ensure that the comprehensive risk management and control system adequately
mitigates risks within the framework of the policy defined by the Board of Directors..

A uniform risk management model is applied across the entire company and all for all risk types. It
consists of the following activities:
Establishment of the risk management context for each activity by setting, inter alia,
1
the level of risk the Group considers to be acceptable
Identification of the various risk types to which the Group is exposed, in line with the
2
main risks detailed in the Policy
Analysis of the risks identified and their impact on the CAF Group as a whole:
− Corporate Risks – Risks affecting the Group as a whole
3
− Business Risks – Risks specifically affecting each activity/project, which vary
in accordance with the particularities in each case
Risk assessment based on the level of risk that the Group considers acceptable (risk
4
appetite)
5 The measures envisaged to address the risks
Regular monitoring and control of current and potential risks through the use of
6
information and internal control systems
Additionally, there is a single catalogue of risks for the whole Group. This catalogue defines a first
hierarchical level consisting of strategic, financial, legal, operational, corporate governance and
compliance risks. These are subdivided into more specific risks within each of the categories. Each

40
category or subcategory of risk clearly defines the level of risk, type of management (corporate or
business) and the management measures envisaged.

The main risks related to sustainability, due to their intrinsic nature, are operational, corporate
governance and compliance with Human Rights, people, the environment and the commission of
crimes. For these risks, all actions must be lawful and adhere to the values and standards of conduct
contained in the Code of Conduct and the principles and best practices contained in corporate
policies, with a "zero tolerance" approach to the commission of unlawful acts and fraud.

Regarding the Code of Good Governance for Listed Companies, CAF complies with all the
recommendations concerned with the "risk control and management function".

During the 2022 financial year, the focus is on further advancing the risk methodology in the area
of occupational health and safety (OSH) and unifying the dynamics of risk management in the
Human Resources area of work.

In addition, in-depth work has been done on the preparation of the Climate Change Risks and
Opportunities Methodology. This methodology is integrated into the CAF Group's Integrated Risk
Control and Management System and has a consolidated scope for the organisation. The details of
this new methodology are specified in section 5.1 Climate Strategy of this document.

Furthermore, in the area of Occupational Risk Management, the unification of criteria of the single
methodology for the entire Group has begun.

41
2.3 Regulatory Compliance System: Business ethics,
prevention of fraud and corruption, and respect for
Competition Law
[2-13, 2-15, 2-23, 2-24, 2-26, 2-27, MA 205, 205-2, 205-3, MA 206, 206-1, MA 415, 415-1]

Regulatory Compliance or Corporate Compliance System

The ethical principles that govern CAF's actions in the market are consistent with international
standards, which is especially important in companies like CAF with global operations. The
Regulatory Compliance or Corporate Compliance System comprises all the rules of the Internal
Regulatory System, formal procedures and material actions that are intended to guarantee the CAF
Group's actions in accordance with ethical principles and applicable legislation, and to prevent
unethical or unlawful conduct, or conduct that contravenes the Internal Regulatory System,
committed by the professionals within the organisation. The Code of Conduct is the essential rule
and it is implemented through a specific system for each area managed directly by the Compliance
Function (i.e. Business Ethics and Human Rights, Criminal Compliance System and Competition Law
Compliance System, which are referred to in later sections of this report) and through the
supervision of other areas managed by other officers.

For all these reasons, it may be concluded that CAF carries out its activities in accordance with
ethical principles, with special emphasis on the prevention of fraud and corruption, scrupulous
respect for the law, Human Rights, public freedoms and Fundamental Rights, the principles of equal
treatment and non-discrimination, protection from the exploitation of child labour, and other
principles contained in the Universal Declaration of Human Rights, in the OECD Guidelines for
Multinational Companies and in the United Nations Global Compact on Human Rights, which CAF,
S.A. has joined, and with full respect for the principles and laws on competition.

These are priorities for CAF and therefore a fundamental aspect of its good governance and
Sustainability practices.

42
Code of Conduct
A good reputation is an essential intangible resource that favours a relationship of trust and value, CAF Code of Conduct
both internally and externally, with all the agents with whom CAF interacts. This can only be
achieved by fostering ethical conduct that promotes the relationship between the Group and the
agents involved.

Drawn up in 2011, the CAF Code of Conduct sets out the general rules and principles of corporate
governance and professional conduct applicable to all the Group’s professionals and any other
entity or party that collaborates or has a relationship with the Group. Furthermore, it serves as the
basis for all other codes of conduct on specific matters that may be drawn up to supplement the
Group code.

The Code of Conduct is built around three pillars (ethical structural principles, behavioural criteria
for CAF professionals, and implementation mechanisms), which in turn translate into a set of
specific mandatory regulations.

The contents of the Code of Conduct are as follows:

Ethical structural principles Behavioural criteria Implementation mechanisms

- Scrupulous compliance with the - Relations with shareholders, seeking to - Compliance function as a
law and Human Rights maximise the creation of value and the delegated body responsible
transmission of accurate, complete, current for advising on the adoption
- Involvement of shareholders and homogenous information and updating of policies that
promote ethical behaviour
- Quality and excellence as our - Relations with customers based on honesty and and compliance with the
core pillar professional responsibility, respecting Code of Conduct
confidentiality and privacy and avoiding
- The reputation and prestige of conflicts of interest - Training related to the Code
CAF as calling card of Conduct in the annual
- Relations with suppliers and other partners, training plan
- Protection and development of considering the value of competitiveness and
our human resources quality in the choice of these, subject to - Whistleblowing channel
rigorous quality, compliance and excellence
- Respect and commitment of CAF control - Measures to be taken in case
to the community and the of violation of the Code of
environment - Human resources that recruit and manage staff Conduct
according to criteria of equality and integrity,
- Confidentiality and transparency encourage training and promote health and
in all CAF's relationships safety

- Relations with public bodies, with strict respect

for legality and integrity, as well as compliance
with all regulations on Political Party Financing
and Competition Law

- Relations with the community and the

environment, whose bases have been defined
in the environmental policy and with a
commitment to improve the quality of life of
the people in the communities

- Operations in organised markets, underpinned

by information transparency and control

The Code of Conduct is available on the CAF corporate website and has been disseminated to all
employees through the Portal and internal corporate communication application. It is also made
available to new recruits to the Group on a systematic basis through the Onboarding Plan as
compulsory training.

43
Business Ethics and Criminal Compliance System

Internal regulations
In the further development of the Code of Conduct, a crime prevention programme was established CAF Crime Prevention
in the CAF Group's Crime Prevention Manual, which was approved by the Board of Directors of CAF, Manual
S.A. on 29 April 2015 (in its initial version), in line with the new provisions of the Criminal Code.

Both documents are adapted to the local legislation of each country in which CAF has subsidiaries,
depending on the requirements, as detailed below.

The Crime Prevention Manual has been developed to include the Due Diligence Manual for
Contracting with Third Parties, which defines the minimum due diligence mechanisms that CAF
Group professionals must apply in advance and systematically to assess the Compliance aptitude
of Third Parties (i.e. Business Partners, Commercial Consultants and Suppliers) who contract with a
CAF Group company, and which must be interpreted in conjunction with the CAF Group's
Competition Law Compliance Manual and any implementing regulations.

In order to facilitate the implementation of the basic controls foreseen in the Manual, a new quick
guide for commercial departments (including Human Rights, Competition Due Diligence and
Business Ethics and Criminal Compliance) was approved in 2022.

International adaptation of the Criminal Compliance and Business Ethics

System
The Code of Conduct and the Crime Prevention Manual, in their successive updates, represent a
common framework of good practices and basic action policies that must be systematically
observed as a minimum established at corporate level, without prejudice to the specifics approved
for each case derived from the requirements of the applicable legal system to international
subsidiaries, and which will prevail where applicable.

The international rightsizing of the CAF Group on 31 December 2022 resulted in 78 foreign
subsidiaries in 40 countries across the five continents.

The basic adaptation of the Crime Prevention Manual in the different activities and subsidiaries of
the CAF Group is carried out systematically whenever a new subsidiary is created and within the
integration plan framework when an existing company joins the CAF Group.

At the international level, crime prevention materials can be adapted for a specific country – and
in certain cases for a specific subsidiary – by adapting the general corporate guidelines contained
in the Crime Prevention Manual and by developing a Compliance sub-programme to set more
specific guidelines, all of which will depend to a large extent on the existing legislation in the country
in question and on the degree of flexibility provided by those regulations to maintain the common
corporate model or not.

Internationally, in 2022, CAF continued to develop the Compliance sub-programmes that feed the
Criminal Compliance System, especially in Poland, Mexico and Italy, and a new Compliance System
for France was addressed:

44
Revision of the Crime Prevention Manual
It should be also highlighted that the Crime Prevention Manual is regularly revised and updated.
More specifically, the Manual was revised in 2016 and 2018. Likewise, it was revised in 2021 to
adapt it to the last legal developments in the criminal law since the previous version, as well as to
make minor adjustments that allowed better reception of the Manual from a corporate point of
view. They also incorporated new developments in the structure of the Compliance Function in line
with best practice in this area. When any new version or development of the manual is approved,
the appropriate dissemination and training measures are adopted.

Without limiting the foregoing, the Crime Prevention Manual establishes that, as long as
circumstances require, the risks of committing the crimes laid down in the Manual should be
reassessed, with the consequent risk map updating, , and, in any case, the aforementioned
reassessment should be carried out at least every four years.

Successive improvements and extensions have enabled the development of the Group's current
highly robust Corporate Criminal Compliance System.

Business Ethics Compliance Culture and Criminal Compliance System

The CAF Group’s corporate internal communication application, which can be accessed from any
device at any time, has a specific section on Compliance that gives all CAF Group employees access,
in a single common place, to the most important rules and working documents on Criminal
Compliance and Business Ethics, Competition Law Compliance and Market Abuse, distinguishing
between the corporate area and specific sub-programmes by countries.

The Compliance documents are translated systematically into the languages in use at corporate
level and, on occasion, to other additional languages of companies in which the CAF Group
operates, including, inter alia: Spanish, Basque, English, Polish, French, Brazilian Portuguese,
Swedish, Italian and German, among others.

Meanwhile, lifelong learning actions continued throughout 2022 in a bid to raise awareness and
disseminate and implement the Code of Conduct and Crime Prevention Manual among CAF Group
personnel.

At year-end, training on the Code of Conduct and the Crime Prevention Manual had been launched
throughout the entire Group's consolidation perimeter. 90% of the employees included in the
training plan in this connection completed it. Since the start of the programme, more than 7,000
people have received training (more than 6,300 people in 2021). More than 623 people received
training in 2022. Similarly, there is a system in place for training new employees, and the
aforementioned programme is included in the new employee onboarding plans. Training materials
are constantly revised and updated.

45
Furthermore, during 2022, a new additional e-learning module was launched to homogenise
internal training on Due Diligence for contracting with Third Parties, obtaining a better
understanding for the application of the procedures approved by the Compliance Committee in
this area. As of the date of this report, 70% of the people included in the training plan have
completed the training, which is equivalent to more than 283 people trained in this area.

In addition to the above, numerous meetings have been held with different areas, departments
and divisions to resolve practical doubts arising from the application and integration of the
aforementioned controls, which is indicative of the high level of acceptance, awareness and
effective execution of the different Due Diligence procedures of the CAF Group. Likewise, the
treatment of these controls has been expressly addressed in the meetings held with the
Compliance Officers, for their proper integration into the enterprise processes of the various
businesses.

In addition, 100% of the CAF Group's activity partners, in all the regions in which the Group
operates, are informed of the existence and mandatory nature of their compliance with the General
Principles of the CAF Code of Conduct.

Furthermore, CAF Group employees have at their disposal the Corporate Compliance Department
as well as Compliance Officers responsible for providing support to the various business units,
subsidiaries or geographical areas, as the case may be, to resolve any queries regarding the
application of internal regulations on Compliance matters.

In this sense, the CAF Group's compliance culture has evolved favourably and with significant
backing, as shown for example by the annual figures for internal enquiries about Business Ethics
and Criminal Compliance:

2022 2021 2020

Number of enquiries 135 107 80
As regards the number of consultations on Competition Law, see the corresponding section of this
report.

Risk management
CAF carries out regular analysis of the different activities in the exercise of which risk situations may
arise that may lead to the commission of any of the offences that have been classified as "Relevant
Offences", generating a Criminal Compliance risk matrix. This matrix allows the identification of
actions that merit further attention from the perspective of crime prevention and the development
of the inventory of controls and other risk management measures.

From the list of Relevant Offences, the following are specifically related to the fight against
corruption and bribery: (i) corruption between individuals; (ii) bribery; (iii) corruption in
international transactions; and (iv) influence peddling. Money laundering is also included in the
catalogue of significant offences for the CAF Group.

The CAF Group's activities that deserve particular attention for the aforementioned purposes can
be summarised as follows: (i) public calls for tender; (ii) performance of public and private
contracts; and (iii) integrated projects.

The risks identified in the risk map are specifically managed: (i) through the implementation of the
guidance policies and the introduction of controls and risk mitigation measures; (ii) by raising the
awareness of all the individuals in the CAF Group to which the Criminal Compliance System applies
through training and dissemination activities; (iii) by managing a whistleblowing channel that
enables detection of behaviours that breach the Code of Conduct or the Crime Prevention Manual;
and (iv) by adapting the corporate Criminal Compliance System to the CAF Group subsidiaries to
ensure the implementation of the general guidelines across all the Group companies as well as
compliance with local regulations in countries that require the establishment of specific guidelines
in accordance with their own legislation.

46
The impacts arising from such risks are economic penalties and other more serious penalties in
relation to the offences described above, in addition to damaging CAF's brand image or reputation.
These impacts have a direct effect on corporate activities in the medium- to long term.

In 2022, the review of the criminal risk map for the railway segment has been carried out for
updating simultaneously with the review of the bus segment processes and their comparison with
the relevant offences in order to homogenise both systems.

Progress has also been made in a second phase of a complete reassessment of the criminal risk
maps for each activity in the railway segment, consisting of a review of the preventive controls and
their possible future integration into an IT tool.

The third phase will address the technological deployment to manage these matters in line with
the CAF Group's IT strategy.

There were no confirmed cases of corruption in 2022.

With regard to the management of significant contingencies during 2022, as described in note 26
to the consolidated financial statements, the following should be noted:

CAF Brasil is part of a consortium in Brazil, the purpose of which is the performance of a
construction contract for a new tramway and the supply of rolling stock for the tramway. CAF's
scope in the consortium basically entails the supply of the rolling stock and the signalling.

Different administrative and judicial procedures have been generated in relation to this project
where, among other issues, the potential termination of the contract, alleged irregular practices,
the imposition of damages, fines and penalties are being analysed. The CAF Group's subsidiary in
Brazil is a defendant in these proceedings. In one of these proceedings, the competent judge
granted an interim injunction against the subsidiary in Brazil in the form of a prohibition to dispose
of real estate and vehicles as security for possible liabilities that may result from an eventual court
ruling against the subsidiary. The subsidiary company is appealing the imposition of this
precautionary measure while continuing its defence in the proceedings.

In addition, in another administrative procedure initiated by the authorities of the State of Mato
Grosso in relation to this project, in the second half of 2021, the administrative body fined the
Consortium and its members R$ 96,170,604.55 (the subsidiary holds a 36.8% stake in the
Consortium), and banned them from contracting with public entities for five years in the State of
Mato Grosso and for two years in Brazil. The Consortium and the subsidiary have appealed this
administrative sanction, which is in the initial stages of processing, and have obtained from the
judicial authorities a precautionary suspension of the effectiveness of the fine imposed and of the
prohibition on arranging public contracts in Brazil. Also in relation to this project, the subsidiary
continues to challenge in court the termination of the contract requested by the State of Mato
Grosso and the consequences arising from this decision, in relation to which the competent courts
have been asked to suspend the effectiveness of this decision as a precautionary measure. The
subsidiary is also monitoring the potential involvement of any of the subsidiary's employees in
alleged corrupt practices.

Meanwhile, in a lawsuit into the validity of a contractual extension for the supply of several
additional units, CAF and its subsidiary in Brazil, together with other railway material manufacturing
companies, have been ordered in first instance to pay a fine of BRL 10,000,000 (plus its update)
each, and have been banned from taking part in public tenders in Brazil and from claiming tax
incentives or borrowing relief for five years. According to the external legal advisors, the sanctions
imposed are not considered to be effective until the judgement becomes final (i.e. no longer
appealable). Both CAF and its subsidiary in Brazil have since lodged an appeal against the court’s
findings in relation to the facts of the case and the grounds for the conviction.

Finally, the management of contingencies during 2022 regarding competition law is described
below.

47
Due diligence with third parties
As mentioned above, the General Principles of the CAF Code of Conduct are mandatory rules of
conduct and ethical standards based on a scrupulous respect for the law, Human Rights, public
freedoms and Fundamental Rights, the principles of equal treatment and non-discrimination,
protection from the exploitation of child labour, and any other principles contained in the Universal
Declaration of Human Rights and in the United Nations Global Compact on Human Rights, labour
and environmental rights, and fighting corruption.

The Code of Conduct establishes the obligation for both the legal and professional representatives
of the CAF Group, as well as third parties contracting with CAF Group companies, to respect these
General Principles.

In this regard, the CAF Group's Due Diligence Manual for contracting with third parties formalises
and standardises the due diligence measures that allow the verification of the degree of compliance
with the General Principles of the Code of Conduct prior to establishing a contractual relationship
with a third party.

The basic controls included in the CAF Group's Due Diligence procedure are, in summary:

In this respect, 100% of the third parties with which the CAF Group contracts are previously
evaluated in accordance with the procedure described, since the CAF Group can only contract with
third parties that obtain a favourable evaluation as "suitable" from a Compliance perspective.

As regards the monitoring and development of the usual due diligence controls in this respect, the
following actions were carried out during the year:

− The Corporate Compliance Department has gathered the evidence that accredits the
control carried out in the bids and pre-qualifications on the effective application of the
different internal Due Diligence procedures in matters of contracting with third parties,
which has been supervised by the Compliance Committee.

− In addition, as part of the supplier management tool deployment project, a

complementary IT tool has been contracted to check the possible inclusion in

48
 international sanctions lists of third parties with which CAF has relations as business
partners, agents and suppliers.

− At the same time, automatic Compliance controls have been generated for the
registration process of suppliers in the supplier management tool, in accordance with the
provisions of the CAF Group Manual for Contracting with Third Parties, for the proper
execution of the basic Due Diligence controls.

With reference to Human Rights Due Diligence, see the relevant section of this report.

Competition Law Compliance System

Internal regulations
The CAF Group Code of Conduct establishes the Company's commitment to comply with any local, Competition Law Manual
national or international regulations on Competition Law.

To honour this commitment and effectively prevent the risks of regulatory non-compliance in
matters of Competition Law, the Group has implemented a corporate Competition Law Compliance
System.

The design and implementation of the Competition Law Compliance System took into account the
criteria of the corporate risk control and management methodology and the existing harmonised
regulations, resulting in the creation of a model similar to the one related to Crime Prevention and
Business Ethics.

In 2019 the Board of Directors of CAF, S.A. approved the CAF Group Competition Law Compliance
Manual, which establishes the premises of the Competition Law Compliance System and which
scope is defined at corporate level.

Specifically, the Manual responds to the need to draw up an initial content (which may be
subsequently developed and expanded) in accordance with the commitment established in the CAF
Group's Code of Conduct to comply with any local, national or international regulations on
Competition Law and to collaborate with the authorities that regulate the market. To this end,
European regulations have been taken as a reference, without prejudice to the peculiarities and
requirements of local legislation that may be applicable.

Within the framework of this Competition Law Compliance System, in 2020 the CAF Compliance
Function approved a corporate model procedure for competition inspections (known as dawn
raids) to supplement the system, all of which represented significant progress in Compliance
matters at the corporate level. The Competition Manual was also supplemented with an evaluation
procedure for consortiums with competitors, to be applied systematically if any business partners
with which the CAF Group plans to contract are also competitors.

In connection with the latter, it should be noted that on 13 June 2022, the CAF Group received the
KOMP SARIAK distinction from the Basque Competition Authority (BCA), in recognition of its
Competition Law Compliance System.

Competition law compliance culture

Training related to the Competition Law Compliance Manual was carried out through the usual
channels, starting with Senior Management and working down through all the other levels.

Specifically, there are three thematic e-learning modules corresponding to the three
aforementioned corporate-level Competition Compliance internal regulations.

At the date of this report, 92% of the employees included in the Competition Compliance training
plan had completed it. Since the start of the programme, more than 930 people have received
training (more than 880 people in 2021). More than 45 people received training in 2022.

49
With regard to awareness-raising measures, the CAF Group corporate communication app has a
specific compliance section with a competition sub-section that provides all employees with access,
in a single common place, to the most relevant standards and models. The app also contains the
forms and other work tools for employees to help them carry out the mandatory competition
controls properly.

The CAF Group's culture of compliance in competition matters has been manifested by the
awareness shown internally by professionals who face this problem, most notably in the way they
assess potential consortiums with competitors and any interaction with them.

The internal enquires regarding Competition are shown below:

2022 2021 2020

Number of enquiries 9 10 13 17

Risk management
Regarding risk management in this field, during 2022, the Competition risk maps for each activity
in the railway segment, remained in force. These maps were updated in the previous year in the
first phase of complete reassessment. The start of the second phase, which will consist in revising
the preventive controls, will depend on the evolution and approach adopted for the Business Ethics
and Criminal Compliance systems.

As far as due diligence measures in the field of competition law are concerned, as mentioned above,
once a business opportunity with a third party that is a competitor is identified, the professional
must comply with the provisions of the evaluation procedure for consortiums with competitors.

In this regard, it should be noted that 100% of the consortiums entered into with competitors are
previously analysed and evaluated in accordance with the provisions of the aforementioned
procedure.

The main topics or specific contingencies in this area that were managed in 2022 are explained
below:

As described in note 26 to the consolidated financial statements, in March 2014, following the
completion of an administrative investigation process initiated in May 2013 into the participation
of several rolling stock manufacturers, one of which is a subsidiary of the CAF Group in Brazil, in
public tenders, the Brazilian Administrative Council for Economic Defence (CADE) initiated
administrative proceedings arising from possible anti-competitive practices.

In July 2019 the CADE tribunal issued an administrative decision ordering the subsidiary to pay a
fine of BRL 167,057,982.53 and advised the competent authorities not to grant the subsidiary
certain tax benefits for a period of five years. The subsidiary has appealed CADE's decision in court,
following the completion of CADE's administrative process. Also, as a result of the investigations
carried out by CADE, other authorities, including the State Public Prosecutor's Office of Sao Paulo-
MP/SP, initiated legal proceedings, either against CAF Brasil, CAF S.A. or any of its employees.

With regard to the penalty proceedings initiated in December 2017 by the Spanish National
Markets and Competition Commission (CNMC), as of the date of this report the case concluded
with notification of the resolution on 30 September 2021, bringing to a close the administrative
route that has been the subject of a contentious-administrative appeal before the National High
Court. The main aspects of the case and the resolution, which affect CAF Signalling, S.L.U., are that
in 2015 this CAF subsidiary allegedly joined the cartel initiated in 2002 by other entities, consisting
of distribution agreements between the various companies involved. The subsidiary company was
charged with exercising this conduct for a shorter duration than all the other sanctioned companies
(from April 2015 to December 2017) and received a fine of 1.7 million euros. CAF, S.A. is jointly and
severally liable for payment of the fine based on the economic unit that makes up the parent
company and subsidiary for the purposes of competition regulations. As part of this same case, two

9 Only includes consultations not linked to or embedded in other Business Ethics and Criminal Compliance consultations.

50
former directors of CAF Signalling were also fined. At the time of this report, CAF, S.A. and CAF
Signalling have filed a contentious-administrative appeal against the CNMC resolution, having
accepted the precautionary suspension of payment of the fine until the National High Court rules
on the merits of the matter. The proceedings relating to the prohibition on public tendering is also
suspended.

Compliance Function
The Compliance Function is the CAF Group's body, with autonomous powers of supervision and
control, which is responsible for the supervision and operation of the Corporate Compliance System
as a whole, the direct management of some areas (i.e. Business Ethics and Human Rights, Criminal
Compliance System and Competition Law Compliance System) and the supervision of other areas
managed by other heads.

The members of the Compliance Function are appointed, replaced and dismissed by the Board of
Directors or by the Chief Executive Officer, and they report their activity to the CAF Board of
Directors, either directly or through a report to the relevant Board Committee, depending on the
nature, scope and content of the report.

In any case, the Compliance Function approves at least one activity report for the year as an annual
report.

The members of the Compliance Function must have integrity, autonomy and independence to be
able to exercise their Compliance Function powers and avoid possible conflicts of interest (the Rules
of Procedure of the Compliance Function describe various safeguard mechanisms for such
situations), and no member may remain in the position if any convictions for unethical or illegal
behaviour are directly attributable to them. The operating rules contained in the Crime Prevention
Manual constitute in themselves the basic Rules of Procedure of the Compliance Function.
Notwithstanding the fact that it has the power to approve separate Rules of Procedure within the
framework of the functions and powers conferred upon it by the Board of Directors of CAF, which
must be reviewed whenever circumstances so require.

The Compliance Function may also appoint Compliance Officers in CAF Group subsidiaries or
branches located in jurisdictions where demanded by the local legislation, or where recommended
due to the size or characteristics of the subsidiary or branch.

Whistleblowing channel
The Code of Conduct and the CAF Group's Crime Prevention Manual establish a general
whistleblowing channel for reporting complaints, which is managed by the Compliance Function.
This body periodically analyses the complaints received and, if appropriate, adopts the relevant
actions related to the specific circumstances of each complaint. If the complaint merits more
attention, the documentation may be sent to the relevant department for the purpose of
conducting a joint assessment of the facts and determining the measures to be taken. The CAF
Group internal regulations establish the possibility of setting up other channels to receive
complaints in jurisdictions where demanded by the local legislation.

The Audit Committee is responsible for supervising the functioning of the whistleblowing channel.

The general whistleblowing channel is available to all of the Company’s stakeholders and any third
party, allowing employees and others related to the Company, such as directors, shareholders,
suppliers, contractors and subcontractors, to report potentially significant irregularities, whether
financial or accounting irregularities, or irregularities of any other type related to the Company,
which they may detect in any Group company.

The rules for the functioning of the aforementioned whistleblowing channel and the procedure for
managing the offences or suspected offences that may have been disclosed are permanently
available on the corporate website and encompass the verification of possible breaches of the CAF
Group’s Corporate Governance System in general and, in particular, (i) the CAF Group’s Code of
Conduct and any other breaches of internal rules or legislation regarding (ii) Crime Prevention, (iii)
Competition Law, or (iv) Market Abuse and the handling of Insider Information.

51
The general whistleblowing channel accepts communications of all types and is always accessible
through the Group’s website in the main languages used at corporate level. The channel guarantees
confidentiality and the aforementioned procedure envisages cases in which communications can
be made anonymously, respecting the rights of the complainant and the respondent. In particular,
the aforementioned procedure reflects the CAF Group’s commitment not to take any direct or
indirect retaliatory measures against the professionals who have reported an irregular action that
might be investigated, unless they have acted in bad faith. The Compliance Function also
coordinates with the person responsible for receiving complaints through other special channels
which affect CAF employees, such as those related to situations concerning discrimination,
harassment, bullying or safety at work and which are mentioned in the relevant section of this
report.

In the event that any of the queries received on Compliance matters were of a whistleblowing
nature, they would be handled as such, regardless of whether or not they were received through
the general whistleblowing channel.

Throughout 2022, the complaints mailbox was permanently monitored and a periodic check of its
proper functioning was carried out, with 7 formal complaints registered in CAF's general
whistleblowing channel. For its part, the Compliance Committee has received details of the 2
complaints received through the special whistleblowing channels in the labour scope. All the
complaints received have been subject of internal investigation, with the following actions being
highlighted:

In addition, an internal investigation has been carried out without previous complaint:
− Data and evidence have been collected in relation to two managers, for their alleged link
to criminal acts committed (completely unrelated to CAF's activity due to a possible
match in a database). After analysis, it was concluded that both cases were false positives
attributable to the similarity in the names of these persons and those who actually had
some involvement in the events.

52
Issues from previous years were also monitored.

The breakdown and trends in complaints and internal investigations carried out in the CAF Group
in recent years are shown below:

2022 2021 2020

Complaints general channel and relevant in the
7 0 0
subsidiaries
Internal investigations without prior complaint 1 3 2
Complaints in special whistleblowing channels (HR) 2 5 1

Contributions to foundations and non-profit organisations and

contributions to political parties and/or political representatives
In relation to the legal obligation to report on contributions to foundations and non-profit entities,
in 2022, as in the previous period, the CAF Group did not make any significant contribution to such
organisations 10.

Furthermore, no political contributions of a direct or indirect nature with significant scope were
made during the reporting period. CAF is a party-neutral company.

10 Contributions to foundations, non-profit organisations and political parties are less than 0,05% of CAF

Group sales.

53
2.4 Fiscal responsibility
[MA 207, 207-1, 207-2, 207-3]

Mission and Commitment in tax matters

The approval by the Board of Directors of a Corporate Tax Policy in 2017 enabled, inter alia, the
principles that were already applicable internally to be expressly embodied and crystallised in the
drawing up of CAF’s tax objective and commitments; all of this was made accessible to all
stakeholders through the publication of the aforementioned Policy on the corporate website,
together with the other Corporate Policies.

A second element, designed to supplement the previous one, was the Tax Policy Implementation
Handbook, approved on 4 December 2018 and updated in May 2022, which is published on the
CAF Group’s corporate website and is applicable to all the Group companies in all the countries in
which the Group operates.

CAF’s tax objective consists essentially of ensuring compliance with the tax legislation in force in
each territory in which it operates, thus avoiding tax contingencies and fostering cooperation with
the tax authorities.

CAF’s ultimate objective is to build trust and distribute value in the domestic and international
market through responsible action, particularly with regard to taxes; this objective also makes it
possible to design a corporate strategy and ensure consistent tax behaviour throughout the
organisation, which ultimately makes it possible to: (i) satisfy the stakeholders; (ii) maintain a
relationship based on mutual trust with the tax authorities; and (iii) contribute to improving
communities by paying taxes.

Principles of action in tax matters

The following principles for CAF's actions in tax matters are a development of the fundamentals of
the Code of Conduct, the Sustainability Policy and the General Risk Control and Management Policy,

1/
and should guide the actions of all those persons and entities to which they are applicable:

1. Comply at all times with its tax obligations, always endeavouring to comply with the
deadlines set out by tax regulations, both for the payment of taxes and for other tax
obligations. To this end, CAF will ensure the quality, veracity and security of the information

2/
and data, as well as the accuracy of its tax returns.

2. To collaborate at all times with the Tax Authorities, providing the information and
documentation of tax importance requested by the competent tax authorities and other
regulatory bodies, in a complete and truthful manner, and in the shortest possible time.

3. Avoid the use of opaque structures, processes or systems designed exclusively for tax
purposes, or for the purpose of preventing the Tax Administrations from knowing who is
ultimately responsible for the activities or the ultimate owner of the assets and rights.
3/
4/
4. Avoid investments or transactions in or through territories classified as tax havens under
Spanish law, or territories with low or zero taxation, for the sole purpose of reducing the
tax burden. Investments or operations in these territories will only be permitted when they
respond to business reasons and are aimed at undertaking the activity included in CAF's
corporate purpose, subject to prior approval by the Board of Directors in the cases provided

5/
for by law and regulations.

5. Commit to ensure that there is always a valid economic rationale for tax actions.

6. Prevent and reduce, as far as possible, tax risks in the course of its activities, while
maintaining a prudent risk profile. In this framework, investments and operations that may
represent a particular tax risk will be carefully assessed.

7. Ensure compliance at all times with the obligations relating to related party transactions,
6/
7/
maintaining a responsible transfer pricing policy in accordance with the arm's length
principle, thus avoiding the erosion of tax bases through non-arm's length pricing.

54
 8. Manage its intangible assets responsibly, avoiding the use and generation of intangible
assets for purely tax purposes.

CAF’s Tax Policy specifies that all the principles mentioned above will be implemented in
accordance with CAF’s general principles, specifically those relating to good faith and integrity vis-
à-vis all stakeholders.
8/
Monitoring and control
It generally lies with the Audit Committee and, ultimately, the Board of Directors, to ensure that
the whole of the CAF Group complies with the Tax Policy, to which end internal control mechanisms
have been expressly established within the latter, in addition to flows of information from the
Economic and Financial Department to the Audit Committee, and subsequently to the Board.

Tax risk is managed within the Comprehensive Risk Management and Control System and it is
headed by the Corporate Tax Function, which controls and monitors the main corporate tax risks
affecting all the activities and geographical areas.

The Corporate Tax Function reports the Group’s tax performance to the Audit Committee on a
regular basis and at least once a year.

In addition, the Audit Committee and the Board of Directors must approve any investment
transaction of the Group in non-cooperative jurisdictions to ensure that the CAF Group's activity in
these countries is strictly business driven.

Stakeholder engagement and concerns management in

tax matters

The Sustainability Policy approved by CAF’s Board of Directors defines the Sustainability objective,
principles and commitments to stakeholders that CAF adopts in the course of its activities. These
principles specifically include tax responsibility.

The CAF Group has a cooperative relationship with the various tax authorities with which it has
dealings as a result of its activity, based on the principles of transparency and good faith.

It thus promotes transparent, clear and responsible reporting of its main tax aggregates. The CAF
Group is committed to preparing and filing the Country-by-Country Report in due time and form.
This annual report discloses key aspects of the financial statements for each of the jurisdictions in
which the Group is present, and they provide the local tax authorities with visibility as to the
earnings, tax paid, employees and other significant information regarding the business activities.

The tax commitments undertaken by the CAF Group in its Corporate Tax Policy with respect to
compliance with its tax obligations in all the territories and jurisdictions in which it operates, where
a prudent tax policy is always observed, also applies to its relationship with external tax policy
advisers.

55
Country-by-country reporting

Below follows significant information regarding the earnings obtained on a country-by-country

basis, and the corporation tax paid in the main locations in which the CAF Group operates:

2022 (thousands of euros) 2021 (thousands of euros)

Profit (Loss) Income tax paid Profit (Loss) Income tax paid
before tax 11 (recovered)12 before tax (recovered)

Germany 2,723 1,253 2,822 430

Saudi Arabia 2,577 5,480 17,422 1,718
Australia 1,204 537 1,112 508
Brazil 43,126 8,940 25,632 6,703
Chile 2,476 492 2,401 (25)
Colombia (264) 704 339 598
Spain (1,924) 6,104 7,826 987
Israel 1,567 119 1,301 653
NAFTA 13 35,199 12,414 38,594 10,212
Poland (21,663) 15,961 24,485 12,318
United Kingdom 5,800 927 5,031 86
Sweden (10,905) 311 (7,312) 899
France 3,762 - 102 (85)
Italy 1,250 319 287 385
Norway (8,215) 34 (1,609) 27
Other 1,492 1,013 3,347 1,312
Adjustments 14 32,910 8,052
91,115 54,609 129,832 36,726

Of note regarding the government grants received is the support of the public authorities for the
Group’s activity, particularly in terms of research, development and innovation activities, as
indicated in the relevant section of the Directors’ Report. The amount of the grants related to
income recognised in the accompanying consolidated statement of profit or loss totalled EUR 6,686
thousand in 2022 (2021: EUR 5,238 thousand).

11 Profit or loss before tax in each country, including additional consolidation adjustments to
eliminate dividends
and internal margins, among others.
12 Tax payments in 2022 obtained from the consolidated statement of cash flows of the consolidated financial

statements. These tax payments include payments on account of tax accrued in the year, as well as the
settlement and adjustment of taxes accrued in previous years. Note 18 of the consolidated annual report details
the significant tax adjustments that determine the tax bases of each country, being mainly the tax credits held
by the Group in Spain and the temporary adjustments to the tax base in Brazil and NAFTA due to accelerated
depreciation.
13 This group includes countries in respect of which the related disclosures would involve revealing information

that is protected by means of confidentiality clauses. With the current breakdown and that included in the
individual and consolidated financial statements, investors and other stakeholders receive sufficient
information to understand the Group's performance, results and situation and the impact of its activities.
14 Profit or loss of entities accounted for using the equity method with elimination of the provision of investees

on consolidation.

56
 3 RESPONSIBLE BUSINESS AND
INNOVATION

“Maintain and increase both its internal technological capacity and the quality
and safety of the projects, products, and services it provides to its clients,
ensuring that these guarantee the Sustainability of the company.”
CAF Sustainability Policy
17 December 2020

3.1 Quality and safety of products and services

3.2 Information security

3.3 Innovation and technology

3.4 Responsible and sustainable supply chain

57
3.1 Quality and safety of products and services
[MA 416, 416-1, 416-2]

At CAF we believe that in order to provide safe products and services to our customers and achieve
maximum customer loyalty, we must involve all stakeholders of our operating processes (design,
supply, manufacturing, validation, delivery, warranty and maintenance).

Thanks to its extensive experience in the development and implementation of the Management
System, CAF collaborates with other stakeholders (operators, maintainers, suppliers, integrators,
etc.) in working groups led by UNIFE with the aim of evolving and improving international
regulations on quality and safety.

Product and service quality

In accordance with the provisions of CAF’s Sustainability Policy and Vision, the Group defined the
Excellence in Quality Policy at corporate level to establish the basic principles that will enable us to
meet the needs and expectations of customers by offering products and services of high quality,
safety, reliability and availability. It is the responsibility of the Economic and Financial and Strategy
Department (CFSO) to ensure compliance with this Policy, which is monitored and controlled every
month by the Corporate Management Model Committee with the participation of the Group’s
Executive Committee, all of whom are responsible for the materialisation of this policy.

The main risks CAF faces should it not be able to fulfil the commitments acquired in this area are:
(i) difficulty in establishing a trust-based relationship with its customers, (ii) breach of contract and
possible customer claims, and (iii) customer dissatisfaction with both the product/service and with
the development process thereof with CAF.

The impacts of these risks would ultimately lead to claims related to projects committed to
customers, reputational damage to CAF’s image and a fall in the number of orders in the future.
These impacts will have a direct short-, medium- and long-term effect, respectively. The
management of these risks is integrated into the corporate risk control and management system
described in the chapter "2.2 Risk management".

Process quality management systems

CAF management also undertook to implement process quality management systems in our
organisations to ensure complete customer orientation and maximise customer satisfaction and
loyalty, balanced with the results obtained by other stakeholders. This management system is
certified or accredited under various standards, including the quality standards listed below.

Certificate Field Scope Outlook

ISO 9001 Quality Management 93% of Group Unchanged
workforce
certifiable
ISO TS 22163 Railway applications — 91% staff of the Unchanged
(IRIS) Quality management railway activity
system (design and
manufacturing)
The Management Model was rolled across the entire Group and the actual scope of the system in
each field therefore exceeds the scope of the certificates. The Model is adapted to local legislation,
customer requirements or the specific nature of the activity.

In addition to the project audits carried out by the customer to guarantee that CAF complies with
contractual requirements, every year CAF conducts internal audits in order to continuously improve
the Management System and guarantee fulfilment of the requirements of the standards under
which CAF is certified or accredited.

It should also be noted that CAF is a founding member of the International Rail Quality Board (IRQB),
a global consortium that brings together leading companies in the railway sector: operators

58
(customers), system integrators (competitors) and equipment manufacturers (suppliers).
Established in September 2018, the IRQB aims to foster a global culture of quality throughout the
rail sector, especially by promoting the use of the IRIS Certification® system worldwide, to ensure
high product quality. We believe that better quality will ultimately improve daily mobility in
sustainable and collective transport, rail and bus.

Communication with customers and guarantee of supply

In the market prospecting phase and before a project or order is awarded, the main channels of
communication with potential customers are the website, trade fairs, magazines, social media,
meetings, etc., usually included in the Marketing Plan.

CAF's contracts include numerous requirements related to meeting delivery deadlines, approval
needs, manufacturing sourcing requirements, and other operational risks. Accordingly, once the
project is awarded a multidisciplinary project team is formed, led by a manager, to execute the
contract in line with the agreed quality, safety, cost and deadline, and also to maintain constant
communication with the customer. This relationship makes it possible to anticipate the resolution
of possible unforeseen events in an effective and coordinated manner.

The documentation provided to the customer in the project phase usually includes product safety
manuals and documentation accompanied by specific training on the correct use of the product.

The specific communication channels with each customer are usually agreed at the beginning of
the project or order. They typically include monthly reports, manager-level project follow-up
meetings, and quarterly high-level project follow-up meetings. Additionally, the document
management tool to be used for official project communications is agreed with the customer, as
well as the approval flows and valid interlocutors (for example: Minutes of official meetings with
the customer, project management plan, scorecard, project indicators, etc.).

In recent years, the use of online platforms has spread as a useful and effective tool for customer
communication. The railway sector makes use of the Aconex platform, an online customer
collaboration system, where the information created on each project and by all parties is managed
within the system. It includes the management and distribution of all controlled documents and all
formal correspondence. It ensures consistency and traceability for all parties and improves the flow
of communication.

In the Bus segment, the following online platforms are offered to customers:

Magbus. Web platform https://www.magbus.global/ used by 100% of customers, with full

documentation, instructions and full access to the parts catalogue and spare parts, with an online
shop where the customer can place orders in a quick, easy and intuitive way.

eSNOTE. Platform created to facilitate daily cooperation with customers. It allows monitoring of
the bus status, as well as reporting and visualisation of faults. It also informs about the necessary
maintenance services and allows you to see the status of the requested repairs. It is used by
customers, their external administrations and a large part of the component suppliers, to whom
requests are redirected.

eSCONNECT Online platform for bus fleet management and telediagnosis.

In addition, CAF continues to promote its presence at the main sector trade fairs, both rail and bus,
where it promotes and communicates the Company's image and its range of products and services,
being an important channel for contact with customers, suppliers and other actors related to the
sector, as well as the ideal framework for carrying out important commercial work. The main fairs
in which CAF has participated during 2022 have been:

Rolling stock segment:

− AUSRAIL PLUS, SYDNEY. Australia's most important rail fair (Feb22)
− GO MOBILITY BY MUBIL, IRUN. Fair on electromobility in collaboration with the Provincial
Council of Guipuzcoa, the Basque Government and the Basque Energy Agency (April 22)
− MIDDLE EAST RAIL, ABU DABI. Fair focused on Middle East rail projects with Etihad Rail
as a partner (May 22)

59
 − EUROPEAN LIGHT RAIL CONGRESS, ZARAGOZA. Congress on urban transport in Spain
(May 22)
− EUROPEAN MOBILITY EXPO, PARIS. Main public transport congress in France (June 22)
− INNOTRANS, BERLIN. Leading international trade fair for the railway industry (Sept 22)
− SITCE, SINGAPORE. Congress jointly organised by UITP and LTA (Land Transport
Authority) (Nov 22)
− RAIL LIVE, MALAGA. Congress with institutional support from ADIF, RENFE, Junta de
Andalucía, Malaga City Council and Malaga Metro (Nov 22)

Bus Segment:
− EUROPEAN MOBILITY EXPOSURE, PARIS: Fair focusing on public transport and sustainable
mobility (Jun 22)
− NEXT MOBILITY EXHIBITION, MILAN: Exhibition focusing on public and collective
transport, and in particular on low- and zero-emission solutions (Oct 22)
− FIAA, MADRID: One of Europe's largest trade fairs for the wide range of products,
technologies and services available in the public transport market (Oct 22)
− PERSONTRAFIK, STOCKHOLM: Event for the public transport industry in Europe (Nov 22)

In accordance with the "General policy for communication of economic-financial, non-financial and
corporate information, and contacts with shareholders, institutional investors and proxy advisors",
CAF uses annual satisfaction surveys with its customers to assess the efficiency of its
communication channels, as indicated in the section "1.2 Value creation and Stakeholders". In 2022,
as well as expanding the coverage of the survey, the result was positive and sustained over time.
The objective is to consolidate this position and further expand the coverage of the survey.

Customer complaint management

To meet customer expectations throughout the entire life cycle and ensure compliance with the
applicable legal requirements, a proprietary quality and safety management system has been
implemented, which includes the assessment of all of the Group’s significant product and service
categories. This system defines the customer claim and complaint procedures, which describe the
mechanisms for following up on and resolving such claims and complaints, and for monitoring
specific indicators.
CAF understands a customer complaint to be any formal complaint received from the customer
about contractual aspects that cannot be classified as any of the following: (i) deviation report, (ii)
pending points or customer cautions, (iii) deviations from customer audits, or (iv) quality lists
shared with customers, with open points derived from product or process quality inspections.
Once the complaint is received, CAF follows the procedure for managing customer complaints,
which comprises the following phases:

Registration Final report

Diagnosis and
and and feedback Follow up and Follow up and
corrective
Preliminary to the close close
actions
Analysis customer

− Preliminary analysis or pre-diagnosis: A preliminary analysis of the complaint is carried

out, initiating the complaint process and recording the initial information.
− Diagnosis and corrective actions: The complaint is shared with the technical team, who
analyse and discuss the information received and then prepare the diagnosis, jointly
defining the following aspects:
− The need or not for immediate or remedial action. If needed,
immediate/remedial actions are established with those responsible and
deadlines.
− The root-cause analysis of the complaint, using different problem-solving
techniques such as the "5 Whys", "Ishikawa", 4D, 8D, etc.
− The definition of corrective actions, establishing those responsible and
deadlines.

60
 − Final report and feedback to the customer: Once the analysis has been carried out, the
complaint report is drawn up and sent with initial feedback to the customer by the agreed
deadline.
− Follow-up and closure of the complaint: Active customer complaints (pending closure)
are regularly monitored, as well as the status of immediate/remedial actions and
corrective actions derived from them. Once all the actions of a complaint have been
carried out, the complaint is formally closed and the Non-Conformity Report (NCR) is
prepared.

To evaluate the correct implementation of this process, in addition to the previously mentioned
customer satisfaction indicator, CAF also has a Non Quality Costs indicator. Customer complaints
form part of the Non Quality Costs, among other aspects.

Indicator Measure Scope Change Outlook

Non- Scope
Positive.
Quality Internal >74% sales extension.
Above target
Costs Stable result

Product and service safety

In accordance with the provisions of the Sustainability Policy, in 2020 the Group defined the Safety
Policy, which is corporate in scope, with the aim of establishing the basic principles that enable us
to offer safe products and services for users, customers and other stakeholders.

For these purposes, product and service safety is considered to be everything that relates to the
physical safety of individuals using our products and services, as well as the IT security of our
products, services and facilities. The scope therefore excludes everything related to occupational
health and safety, for which there is a separate policy.

As this policy addresses two distinct areas (Security and Cybersecurity), two corporate manuals
have been deployed in 2022, (i) the first to deploy the principles of user security and (ii) the second
to deploy the principles of Cybersecurity.

Health and physical safety

During the current 2022 financial year, the newly defined Security Policy Development Manual was
applied for the first time, thus beginning the practical deployment of the principles of user safety.
In addition, continuity has been given to the Corporate Security Committee established to oversee
(among other things) the deployment of the Policy.

The Technology Department is responsible for ensuring compliance with the Safety Policy. Failure
to comply with the commitments regarding safety in the area in which CAF carries out its activities
can have a direct impact on the health and physical safety of people. The risks that CAF faces in this
area are, among others, and ordered by the time horizon of the impact: (i) stoppage of operations
if a safety problem arises or is suspected, (ii) return of products and services suspected of not being
safe, (iii) fines and/or lawsuits initiated by customers or other affected parties, and (iv) reputational
damage impacting the Company's relationship with all the stakeholders. The management of these
risks is integrated into the corporate risk control and management system described in the chapter
"2.2 Risk management".

As stated in the Safety Policy, CAF's objective is to continuously promote and improve safety
management to ensure compliance with legal and contractual obligations and to satisfy the needs
and expectations of customers and other stakeholders.

The Group's Businesses each have their own safety management system, although these are
integrated into the Group's management system. All systems have undergone mandatory (and,
more usually, voluntary) certification process that certify their solvency and compliance with the

61
basic regulatory and legislative benchmarks on which they are based. The Corporate Security
Committee, for its part, ensures that synergies are established to align these systems.

In general, therefore, the activities associated with the railway sector verify the conformity of their
safety management systems with the EU 402/2013 and/or 779/2020 Regulations (and subsequent
amendments), which refer respectively to the adoption of a common safety method for risk
assessment and the mandatory certification of entities in charge of vehicle maintenance. Most of
them comply with the provisions of the European reference standard on rail safety: EN 50126: 1999
(or its most recent version of 2017) "Railway Applications - Specification and Demonstration of
Reliability, Availability, Maintainability and Safety (RAMS)".

In the current 2022 financial year, all existing mandatory certifications have been maintained, while
voluntary certifications have been increased (and in some cases renewed).

Certificate Field Scope Outlook

EU 779/2020 Maintenance Safety Management 100% on certifiable activity Unchanged
(Rail Europe)

EU 402/2013 - Operational Safety Management 97% on certifiable activity Unchanged

EN 50126 (Rail)

It should be noted that it is also common for customers and/or relevant authorities to require the
assessment of all projects prepared for the railway sector according to processes regulated either
legally or in accordance with the relevant prescribed regulations. These project conformity
assessments require the additional participation of independent bodies to judge the degree to
which the safety management systems apply specifically to the development of each product (or
provision of each service).

In the bus sector, products are subject to international legally established approval processes which
on their own guarantee safety. Even so, these are supplemented by the Group's commitment to
establish its own safety management system (currently in the process of development), which is
also based on compliance with the ISO 26262 standard "Road Vehicles – Functional Safety".

The CAF policy also establishes a commitment to protect people from both physical and IT accidents
and incidents originating with or relating to our products and services.

As can be seen in the following indicators, the early identification of safety incidents is evidence
that the safety system in place aims to achieve the objective of 0 accidents. The safety incident
indicator shows a stable trend over time.

Any safety incident or accident requires immediate remedial actions, a root-cause analysis and
definitive corrective actions.

Health and physical

Measure Scope Change Outlook
safety indicators
Safety incidents without
personal injury per year
Security incidents Group Unchanged. Unchanged
caused by our
products/services
Accidents per year caused
Accidents by our products/services, Group 0 accidents Unchanged
with bodily injuries

Lastly, it should be noted that CAF is a member of UNIFE's "Safety Assurance Mirror Group". This
group monitors the activities of the ERA, maintaining continuous contact with the ERA, in relation
to the Railway Safety Directive (EU) 2016/798, which lays down provisions to ensure the
development and improvement of the safety of the Union's rail system. It contributes to the
development and application of the Common Safety Methods (CSM) and Entities in Charge of
Maintenance (ECM) Regulations, as well as the activities of the ERA in Safety Culture and Human
and Organisational Factors.

The Group also shares topics related to standardisation, such as railway safety standards EN50126,
EN50128 and EN50129.

62
Product cybersecurity
Digital transformation is bringing substantial benefits in the efficiency and reliability of operations
in the transport sector, as well as a better experience for passengers, but it is also inevitably
increasing the vulnerability to cyber threats. Systems are increasingly based on networks (signalling,
passenger information, control centre, etc.) that use standard communications (IP-based) and
other digital technologies (sensors, etc.)

Likewise, the standards and regulations regarding cybersecurity, such as the European NIS2
directive and other technical specifications such as TS50701 (IEC62443) for the railway sector, or
the new UNECE R155/R156 regulation for the automotive industry, require compliance with
current legislation as well as the organisation's adaptation to market trends and requirements.

CAF is also a member of the "IEC PT 63452" forum which aims to establish IEC 63452, the Railway
Cybersecurity Standard based on TS50701.

Consequently, and based on the principles set out in the Security Policy, CAF has established a
product cybersecurity management model that is being deployed through a "Master Plan" to
ensure cybersecurity by design. To this end, work is being done on integrating cybersecurity
throughout the life cycle of products and services, from design, manufacturing, testing to operation
and maintenance.

63
3.2. Information security
[MA 418, 418-1]

The information security management model is based on the Security Policy and the international
standard ISO27001. During the year, the "Cybersecurity Policy Development Manual" and the
information security management regulations approved by the Executive Directorate were
deployed.

In addition, the Group's information security governance model has been consolidated, with roles
and responsibilities, and monitoring indicators both at corporate level and at the level of each of
the Group's activities.

The Corporate Cybersecurity Committee, with the presence of executive management, oversees
all cybersecurity activities together with the Corporate Cybersecurity Officer. All of this greatly
reinforces information security management and its continuous improvement, guaranteeing the
deployment an information security culture across the entire organisation and establishing all the
necessary organisational and technical measures to guarantee the confidentiality, completeness
and availability of information.

CAF adopts a zero-tolerance approach to security to guarantee compliance with legal and
contractual obligations, in addition to satisfying the needs and expectations of our customers and
other stakeholders.

CAF has an Information Security Management System based on and certified by the ISO27001
standard. The scope of the certificate and the future outlook are shown below:
Certificate Field Scope Outlook
ISO 27001 Information security 40% on certifiable Unchanged
activity

Together with the Information Security Management System, the management model improves
information security and privacy and establishes controls to identify, prevent, detect and respond
to any information security incidents. All of this addresses the Group's digitisation process, the
greatest existing threats and the increase in cyber attacks from outside the organisation.

Zero risk does not exist, which is why CAF continues to increase the necessary resources to deploy
security measures that mitigate existing risks and reduce the possibility and impact of serious
incidents. CAF does this by carrying out a risk analysis of its most significant assets and establishes
an acceptable level of risk that maintains a balance between functionality and cybersecurity.

Information security breaches

One of the main objectives of the information security management model implemented at CAF is
to reduce the probability and impact of potential security breaches. To meet this objective, the
Group has defined a series of processes and procedures to manage security breaches, from
prevention and detection to mitigation and recovery.

CAF periodically carries out technical audits of systems and applications to detect vulnerabilities,
prevent the generation of security breaches and, consequently, mitigate the risks they generate. In
addition to these technical audits, CAF has established a SOC (Security Operations Centre) to
monitor cybersecurity events generated by systems and applications. This central unit manages
and coordinates the monitoring and detection of possible security incidents, alerting the relevant
managers and reducing response and management times.

CAF understands the need to promote a culture of information security as a key process for
detecting and reducing the impact of security breaches, and it therefore regularly carries out
training actions and awareness plans for employees.

64
In 2022, the serious incident indicator remained positive:

Cybersecurity indicator Measure Scope Change Outlook

Actual serious information 0 actual serious

Serious cybersecurity
security incidents per year CAF incidents Unchanged
incidents
(IT leaks or ransomware) In line with the target.

Any cybersecurity incident or accident requires immediate remedial actions, a root-cause analysis
and definitive corrective actions.

Security of personal data

CAF has created and deployed a personal data protection policy to guarantee compliance with
current legislation in all the territories in which it operates. This policy and the accompanying
manual set out the organisational and technical measures necessary to guarantee the correct
management of personal data processed by CAF staff and third parties that engage with any Group
company.

The organisational measures adopted this year include the creation of a Privacy Compliance
Committee aimed at ensuring the correct management and deployment of the policy and manual
across the CAF Group. A Data Protection Officer (DPO) was also appointed to guide CAF on
compliance with the applicable regulations, supervise general compliance with these regulations,
advise employees, and cooperate with and act as a point of contact for the supervisory authority.

Each CAF company ensures correct compliance with local regulations on the protection of personal
data. In any case, the CAF regulatory framework on data protection places special emphasis on
European privacy regulations, specifically on Regulation (EU) 2016/679 of the European Parliament
and of the Council of 27 April 2016 on the protection of natural persons with regard to the
processing of personal data and on the free movement of such data, repealing Directive 95/46/CE
("GDPR"). In recent years, the GDPR has become a worldwide benchmark for data protection,
setting global standards and serving as the basis for the development of local privacy regulations
worldwide.

In 2022, the indicator for the number of serious data protection incidents was 0:

Cybersecurity indicator Measure Scope Change Outlook

Serious incidents Actual serious security

0 actual serious incidents
related to personal incidents related to the CAF Unchanged
data protection protection of personal data

CAF has established the necessary mechanisms to ensure coordination with the information
security area in the event of information breaches affecting personal data.

65
Security of confidential and sensitive information
The information security management model establishes the guidelines that define the correct
classification of information, as well as the necessary measures for its handling and management.
The Group carries out a risk analysis of the organisation's most important assets, which could lead
to the introduction of new security measures to reduce the probability and impact of a possible
information leak.

As mentioned above, raising awareness and training CAF staff in information security is one of the
commitments made in the policy. As part of this culture, staff are trained in the correct use of
confidential and sensitive information, as well as in the measures to be taken to manage it.

66
3.3 Innovation and technology
In recent decades innovation has become a key process for CAF, enabling the Company to grow
and supply products at the forefront of technology. This growth has occurred both by developing
proprietary components for critical vehicle subsystems such as electric traction, energy storage
systems and an electronic control and diagnostic system for trains, and by developing new products
and services to complete a range of global transport systems that includes feasibility studies, civil
works, electrification, signalling, maintenance and operation.

Aware that the key to innovation lies in knowledge and in the people who develop it, CAF remains
committed to increasing internal technological development capabilities.

Innovation in products and services

CAF attaches great importance to continuous innovation in its product and service offerings to
respond to the global trend of increased mobility, the limitation of fossil fuels and climate change,
which directly influence the sustainability of the transport sector.

This determination is materialised in activities to generate new knowledge and develop new
technologies and products aimed at offering more advanced transport solutions, considering both
the needs currently perceived as well as the global mega-trends and the visions of future passenger
transport that will lead to more efficient, accessible and ecological solutions.

The CAF Group channels and coordinates its product and service innovation activities through its
corporate innovation strategy. The innovation strategy is designed and reviewed annually following
an established process that aligns the technological and product/service development activities
with the Company's main strategic challenges identified by the management, aimed at developing
sustainable solutions for our customers while simultaneously guaranteeing our competitiveness.

The key lines of action in the CAF Group's innovation strategy are:

− Zero emissions: This line of action encompasses activities aimed primarily at the
development of alternative propulsion systems to diesel and the reduction of
consumption and emissions of its products and services.
− Connected and automated mobility: This line of action is focused on the development of
vehicles that operate in an automated manner and increase the safety and efficiency of
transport systems.
− Passengers and operator: The activities of this axis aim to provide the market with better
products and services for both CAF's customers and end users.
− Competitiveness: This axis encompasses several activities aimed at reducing the life cycle
cost of the CAF Group's products and services, as well as their delivery times. In this area,
digitalisation is a major enabler of developments that increase the Group's
competitiveness and that of its customers.

The CAF Group's innovation strategy is materialised in an annual innovation plan.

The CAF Group's Innovation Plan combines activities for the development and advancement of
products and services, as well as activities for the generation of the Group's own knowledge and
technology, which allow it to differentiate itself from its competitors and supply products with high
added value in sustainable mobility.
Within the variety of activities and lines of work included in the Innovation Plan, we highlight the
following that are particularly aligned with the current and future priorities of society.

Zero emissions
Within the framework of a coordinated strategy aimed at reducing environmental impact, the
Group pursues several areas of work:
− Development of new vehicles with propulsion systems based on batteries and hydrogen.
Both solutions have applications in the circulation of vehicles on infrastructures without
continuous electrical power supply, as an alternative to hydrocarbon-based mobility.
These vehicle types reduce direct CO2 emissions to zero on lines currently operated by

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 diesel vehicles. In this area, Solaris has the most complete range of low and zero emission
buses on the market, with more actual experience and market share than its competitors.
As far as rail vehicles are concerned, CAF has been awarded the world's largest contract
for battery-powered vehicles and in mid-2022 it has put on track one of the first
hydrogen-powered trains that can also operate by capturing electricity from the catenary
on electrified sections.
− Optimisation of on-board energy accumulation systems based on batteries.
Approximately every two years a new generation of batteries appears with clearly
superior performance to that of its predecessor. For example, in high-capacity energy
storage batteries, the energy density per kg of battery has increased by 77% between
2014 and 2020. The performance improvement of batteries providing high power is also
significant, with major advances seen in increasing charging power, which allows for
shorter battery charging times and recovering more energy from braking. All these
improvements have a crucial impact on the performance of vehicles and considerably
increase their autonomy.
− Development of specific technologies aimed at reducing the energy consumption of
vehicles by improving the energy efficiency of their components (e.g. power equipment
based on new Silicon Carbide - SiC transistors) or by reducing drag and lightening the
vehicle (e.g. new more aerodynamic geometries, new lighter materials, simplification of
architectures, lighter components, reduction of wiring, etc.). CAF was the first train
manufacturer to put a European metro into commercial service with SiC technology. This
technology allows trains to reduce their consumption by between 8 and 10%. In addition,
in recent years Solaris has achieved fuel consumption reductions of more than 20% in its
12 and 18-metre electric buses.
− Intelligent management of the energy consumed by the vehicle, including driving
assistance systems, efficient automatic driving systems and intelligent systems for
managing the operation and consumption of the different systems that make up the
vehicles. The driving assistance systems developed by CAF provide reductions in
consumption of around 15% and a target has been set to reduce train consumption by
30% through efficient automatic driving systems.
− Reduction of both exterior and interior noise levels and reduction of vibrations
transmitted to the ground, as well as electromagnetic emissions (EMI/EMC). As an
example, Solaris has achieved interior noise reductions of around 5 dB in its 9-metre
electric bus model due to innovations in this field in recent years.
In this area, it is worth highlighting the European collaboration projects FINE, PINTA, X2RAIL, PIVOT,
IN2STEMPO, IN2SMART, FR8RAIL, FCH2RAIL, ASSURED, TRUSTONOMY, VIRTUAL-FCS and STASHH
described in the following section.

Connected and automated mobility

Smart mobility delivers significant benefits to operators and increases safety and comfort for
passengers. The development of automatic and autonomous vehicles is also a key element for
increasing transport capacity, energy efficiency, punctuality and the fluidity of door-to-door travel.
In this field, the CAF Group is carrying out activities in the following work areas:
− Cybersecurity
− 5G communications and the future railway mobile communication system (FRMCS)
− Interior and exterior perception of vehicles through vision and artificial intelligence
developments.
− Safe positioning of vehicles without the need for infrastructure equipment.
− On-board control and diagnostic system capable of performing critical safety functions.
− Automatic train protection systems: ERTMS Baseline 3.
− Automatic train operation systems: ATO on ERTMS and ATO on Class B signalling systems.
− Communications-based train control (CBTC) system.
− Advanced driving assistance systems (ADAS).

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In this area, we should highlight the European and national collaboration projects CONNECTA,
X2RAIL, LINX4RAIL, TAURO, 5GRAIL, UP2DATE, SELENE, CBTC-2020 and ADAS, described in the
following section.

Digitalisation
CAF is aware of the immense importance of the digital transformation process that is currently
taking place in all areas of society, and it, therefore, dedicates a significant part of its R&D efforts
to developing its own vision of digitisation for rail and bus transport, focused on the following work
lines:
− Development of technology to provide an infrastructure for capturing and transmitting
data throughout the entire transport system, including aspects such as sensorisation and
communications between the vehicle and the infrastructure.
− Management and analysis of large amounts of information using big data techniques.
− Application of advanced data analysis techniques (Artificial Intelligence, Machine
Learning, Deep Learning, etc.).
− Use of these technologies for the development of applications in areas of particular
relevance such as diagnostics, maintenance, energy consumption and operation.
− On-board real-time vehicle monitoring systems (LeadMind Platform) and infrastructure-
installed vehicle monitoring systems (Wayside LeadMind).
− Model-based systems engineering (MBSE) to support system requirements, design,
analysis, verification and validation activities, beginning in the conceptual design phase
and continuing through development and later phases of the cycle of life.
− Development of BIM (building information modelling) to centralise all the construction
project data in a digital information model created by all the agents involved.
In this area, we should highlight the European collaboration projects CONNECTA, X2RAIL,
LINX4RAIL, IN2STEMPO and IN2SMART, described in the following section.

Featured innovation projects underway or completed in 2022

The CAF Group participates in the main collaborative R&D initiatives in the sector and is therefore
playing an active role in evolving the entire mobility sector.
Listed below are some of the key projects carried out in 2022 within technology and
product/service innovation activities and that have an impact on all CAF Group's activities.

Of particular importance in this area is the European Shift2Rail initiative, one of the main agents
for change in the railway sector. This is a major European initiative, within the Horizon 2020
Framework Programme, dedicated to collaborative research and innovation between the different
agents in the sector (operators, infrastructure managers, manufacturers, technology centres, etc.)
aimed at accelerating the integration of new technologies in the railway sector. Shift2Rail brings
together the major players in the European railway sector. CAF is playing a key role as one of the
eight founding members of the initiative, and it also responsible for the coordination of the
"Innovation Programme 1: Rolling Stock", which includes all developments related to vehicles. The
key Shift2Rail projects are indicated below:

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European project FINE-2

FINE-2 was launched within the framework of Shift2Rail and aims to develop
improvements in the areas of noise and energy. Specifically, experts will explore
innovative technology solutions to reduce the noise and energy consumption of railway
systems.
CAF is playing a key role in the project.

European Project CONNECTA -3

CONNECTA was launched within the Shift2Rail initiative with the aim of overhauling the
train control, diagnosis and monitoring system (TCMS). It will incorporate advanced
capabilities such as wireless communication in the train network, the ability to execute high
safety functions (SIL4), and the validation of the system's performance before it is
deployed. These developments are in line with the trends towards digitalisation and
automation in the railway sector.
In addition to being one of the main technical contributors, CAF coordinated the
CONNECTA-2 project for the entire consortium. In 2021, the CONNECTA-3 project was
launched aimed at validating the developments of previous projects in an urban
demonstrator vehicle.

European project PINTA-3

The PINTA projects were launched within the framework of Shift2Rail with the aim of
developing the next generation of railway traction systems. Teams of experts are working
on new technologies for power electronics components (Silicon Carbide – SiC) aimed at
reducing their volume and weight while increasing their energy efficiency. Methods are also
being developed to increase the reliability and availability of traction equipment, as well as
to reduce the time and cost of validation and certification processes. The PINTA-3 project
was launched in 2020 and will end in 2023.
CAF Power & Automation is playing a key role in the consortium as one of the members
with the highest volume of activities. Thanks to this project, CAF Power & Automation has
put the first European metro into commercial service with SiC technology.

European Projects X2RAIL-4 and X2RAIL-5

X2RAIL-1, X2RAIL-2, X2RAIL-3, X2RAIL-4 and X2RAIL-5 were launched within the
framework of Shift2Rail with the aim of developing a control, command and
communication system which rather than simply contributing to the control and safe
separation of trains will become a smart and flexible real-time traffic management and
automation system. Work is currently underway to overcome the limitations of existing
communication systems, improve usable track capacity, create innovative signalling
architectures to transition to less centralised and less expensive systems, minimise energy
consumption and develop new cybersecurity systems.
CAF Signalling is playing a key role in the project.

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European project PIVOT-2

The PIVOT projects launched within the framework of Shift2Rail focus on the development
of new technological concepts for the next generation of rolling stock, applied to key sub-
systems such as structure, bogie, brakes, doors, modular interiors and HVAC.

The aim of the PIVOT-2 project is to create lighter and more energy-efficient passenger
trains that are more comfortable and have less impact on the track to reduce the life cycle
cost of the entire railway system.
CAF Signalling is playing a key role in the project.

European project IN2STEMPO

The IN2STEMPO project launched within the framework of Shift2Rail aims to reduce life
cycle costs and improve reliability and punctuality while increasing capacity, improving
interoperability and enhancing the passenger experience.
The activities of IN2STEMPO Smart Power Supply will contribute to the development of a
smart railway network based on a single more efficient rail power grid in an interconnected
system.
CAF Turnkey & Engineering is playing a key role in the project related to energy
measurement and the energy efficiency of railway infrastructure. Infrastructure
monitoring systems and Big Data analysis techniques were developed to improve energy
efficiency and define condition-based maintenance (CBM) criteria.

European project IN2SMART2

The management of rail sector assets needs to improve considerably to ensure their
sustainability, which can be done through innovative technologies, new economic
possibilities and legislative improvements. With this in mind, the EU-funded IN2SMART2
project within the framework of Shift2Rail has developed a multi-action plan called the
Intelligent Asset Maintenance Pillar to deliver innovative asset management. The project
team aims to achieve this by creating new and optimised strategies, tools, products and
systems for holistic, prescriptive and risk-based asset management. By focusing primarily
on the tactical and operational plane, the project will contribute to the increased efficiency
of the railway sector.
CAF Turnkey & Engineering is heavily involved in the project with significant activity
around the development of a sustainable tramway depot in BIM.

European projects FR8RAIL-II, FR8RAIL-III and FR8RAIL-IV

The key aim of the FR8RAIL project proposal, launched within the framework of Shift2Rail,
is to develop the functional requirements for attractive and sustainable European rail
freight transport.

The objectives of FR8RAIL are a 10% reduction in the cost of freight transport measured
in tonnes per km, a 20% reduction in time variations during freight transport, and the
increased attractiveness of logistics chains by making all information on rail freight
transport available to the information systems of the logistics chain.
CAF is playing a key role in the project, for example by developing a thermostable wheel
design that helps to reduce noise in freight transport.

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 European Projects LINX4RAIL and LINX4RAIL2

The LINX4RAIL and LINX4RAIL2 project, launched within the framework of Shift2Rail, is to
develop a common advanced functional rail system architecture for the sector supported
by a conceptual data model (CDM). The project will also create a standard to ensure
sustainable interoperability between systems.
CAF Signalling is playing a key role in the project.

European project TAURO

The TAURO project, launched within the framework of Shift2Rail, will shape the future of
European rail transport by developing the technologies to make autonomous rail transport
a reality. This will be achieved by working on state-of-the-art systems for environmental
perception, remote operation, automatic monitoring and diagnostics, and easing the
transition to these new autonomous control systems.
CAF is playing a key role as coordinator of the project.

In November 2021 the Europe’s Rail EU-Rail Partnership, successor to Shift2Rail, was established
within the Horizon Europe programme (2020-2027). The partnership aims to accelerate the
research and development of innovative technologies and operational solutions to lead the
transformation of the rail sector, working towards the dual green and digital transition of Europe.

As with Shift2Rail, CAF is playing a key role as one of the founding members of the initiative.

Throughout 2022, CAF has outlined its participation in the programme and has submitted 5
collaborative project proposals that have been approved. These projects will start in 2023 and will
run until 2026. The objectives of the projects are briefly described below:

European Project MOTIONAL

Through the development of functional requirements, associated specifications and operational or

technological solutions, and by exploiting the potential of digitalisation, the MOTIONAL project is paving the
way towards the implementation of the future European Rail Traffic Management System to make rail the
backbone of a sustainable multimodal transport system for passengers and freight.
CAF Signalling is playing a key role in the project.

European project R2DATO

The goal of R2DATO is to take advantage of the great opportunity offered by the digitisation and automation of
rail operations and develop the next generation of ATC (Automatic Train Control) and rail operations, up to the
GoA4 target (no personnel on board) by 2030, with the in order to improve infrastructure capacity on existing
rail networks.
CAF Signalling has played an important role in the project by developing, among others, an ATO (Automatic
Train Operation) and ETCS (European Train Control System) Hybrid Level 3 prototype.

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 European project IAM4RAIL

The IAM4RAIL project aims to provide requirements techniques, regulations, methods, solutions and innovative
services based on the latest cutting-edge technologies to minimise life cycle costs of assets and extend their
useful life, while meeting safety requirements and improving the reliability, availability and capacity of the rail
system. Both infrastructure and rolling stock are addressed.
CAF Rail Services, Cetest and CAF Turnkey & Engineering have an important participation in the project.

Rail4EARTH European Project

The scope of the four-year Rail4EARTH project consists of improving the sustainability of railways, creating a
more attractive and resilient mode of transport and contributing to the objectives of a climate neutral Europe
by 2050.
The activities cover complete railway systems, including rolling stock, infrastructure, stations and all related
subsystems (traction, bogies, brakes, energy storage systems, HVAC, etc.).
CAF has a leading role in the project, mainly developing technologies to improve the energy efficiency of trains
and a new generation of trains to replace diesel fleets with battery-electric trains. One of the main objectives
of this project is to increase the catenary-free range of these trains from the current 80 km to 200 km.

European project FutuRe

The FutuRe project aims to provide new technical requirements, regulations, methods, solutions, developments
and innovative services based on the latest cutting-edge technologies to make the regional rail profitable, while
meeting safety standards and improving the reliability, availability and capacity of the rail system.
This provides an opportunity to revitalise regional lines by addressing infrastructure, rolling stock and services.
CAF Signalling is heavily involved in the project focusing on the development of an optimised signalling solution
for regional lines.

CAF is also involved in a number of other innovation projects at European and national level in
collaboration with external business partners:

European project FCH2RAIL

The FCH JU, an agency of the European Commission engaged in promoting the
development of hydrogen and fuel cells, selected the FCH2RAIL project, for which CAF is
the technical lead, to develop a prototype railway powered by hydrogen.

The main objective of the FCH2RAIL project is to design, prototype and standardise the
next generation of hydrogen trains based on a new concept of dual-mode electric-
hydrogen traction. These trains will be able to operate with the electricity provided by the
catenary and, in non-electrified sections, with the energy obtained from the hydrogen
cells and the hydrogen on board. The train also uses batteries, which will significantly
reduce consumption.

Another key objective of the project is to collaborate in the definition of the regulatory
framework to put this type of vehicle into service.

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European project 5GRAIL

The global 5G standard for railway operational communications will be the future railway
mobile communication system (FRMCS). This means that the European Railway Agency will
need to update the interoperability technical specifications of the control-command and
signalling system by the end of 2022. In order to meet this challenge, the EU-funded 5GRAIL
project aims to develop and test prototypes of the FRMCS ecosystem. The project will verify
the first set of FRMCS specifications and standards, as well as potentially updating the FRMCS
V1 specifications and identifying technical limitations related to application issues.
CAF is playing a key role in the project.

European project UP2DATE

The computer systems of cars and trains contain mixed criticality cyber-physical systems
(MCCPS) which, along with the wireless delivery of new software or data for their routine
functions, need constant updates and repairs. Over-the-air software updates (OTASU)
provide improvements in functionality and resolution of bugs and threats; however, update
processes cause security problems for user data, or are impractical. The aim of the EU-funded
UP2DATE project is to develop a new security update model (SASE) for software in MCCPS
systems. The consortium of knowledge generators (IKL, BSC, OFFIS) and technology
integrators (IAV, TTA), as well as end users in the automotive and railway sectors (MM, CAF),
will test two examples of this new architecture.
CAF Signalling is playing a key role in the project.

European project SELENE

High-performance computing using off-the-shelf components offers an alternative path to

increasing the computational capacity of critical security applications. Despite their potential
in various fields, the use of these systems is limited due to the lack of certified and reliable
hardware platforms. The EU-funded SELENE project aims to change this by creating a safety-
critical cognitive computing platform (CCP) with self-aware and self-adaptive capabilities.
SELENE's CCP uses artificial intelligence techniques to maximise the effectiveness of the
critical safety system and adapt its behaviour in different fields such as automotive, space,
avionics, robotics and factory automation.
CAF Signalling is playing a key role in the project.

European Project FRACTAL

The goal of FRACTAL is to create a reliable computing platform node, making the so-called
Cognitive Edge a reality under industrial standards. This computing platform node will be the
building block of a decentralised and scalable Internet of Things (from low-power intelligent
computing systems to high-performance computing edge nodes).
CAF Signalling is one of the project partners.

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European project VALU3S

VALU3S will investigate and refine several state-of-the-art V&V (Verification and Validation)
methods, as well as implement new ones aimed at reducing the time and cost required to
perform V&V of automated systems. The investigated V&V methods will be used to design
improved workflows for the V&V process of automated systems. Several tools will be
implemented to support the improved processes, which will be evaluated through the
qualification and quantification of security, safety and privacy, as well as other evaluation
criteria, using demonstrators. VALU3S will also influence the development of safety, security
and privacy standards through active participation in related standardisation groups. VALU3S
will provide guidance to the testing community, including engineers and researchers, on how
the V&V of automated systems could be improved taking into account the cost, time and
effort involved in testing.
CAF Signalling is one of the project partners.

European Project ASSURED

ASSURED research and innovation project aimed at boosting the electrification

of urban commercial vehicles and their integration with high-power fast-charging
infrastructures, evaluating various infrastructures in different cities throughout Europe. The
key objective of the project is for each of these solutions to be capable of charging different
types of vehicles and supplying power to an entire fleet of buses.
Solaris is involved in the research on the stability, safety, reliability and standardisation of
the electrical grid by contributing vehicle data.

European project TRUSTONOMY

The TRUSTONOMY project was launched under the Horizon 2020 Framework Programme.
Its key objective is to maximise the safety, trust and acceptance of autonomous vehicles.
Trustonomy investigates different relevant technologies and approaches, such as the driver
condition monitoring system, HMI design, risk models and driver training methodologies,
from the perspective of performance, ethics, acceptability and trust.
Solaris is playing a key role in the consortium as the partner responsible for testing the
Trustonomy system on the test track. It is also helping to create test procedures and define
the guides for integrating the system into the vehicle.

European project VIRTUAL-FCS

The general objective of the VIRTUAL‐FCS project is to develop an open-source software-

hardware tool that can be adopted as a global standard for the design of hydrogen fuel cells
for the transport sector. The platform will give the integrator confidence that the system will
meet the required performance, reliability and durability requirements.
Solaris is contributing its experience in the field of hydrogen buses.

European project StasHH

The StasHH project is developing an open standard for hydrogen fuel cell modules in terms of
size, interfaces and control and testing protocols, with the aim of promoting the use of
hydrogen fuel cells in the heavy mobility sector when battery electrification is not feasible.
Solaris is contributing its experience in the field of hydrogen buses.

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Innovative Train Leger project

The ambition of this project is to re-launch low-traffic regional lines by using state-of-the-art
technologies to develop an innovative vehicle to offer a service with a controlled life-cycle
cost. The Train Léger innovant project led by the SNCF has numerous industrial partners,
including CAF.

AVOGRADRO project

In 2022, a research project was launched called AVOGADRO, about hydrogen refuelling
stations. Several partners are carrying out research activities on different components of the
refuelling station. CAF Turnkey & Engineering is developing a model for the thermodynamic
and functional simulation of the operation of a hydrogen refuelling station. This model will
be used to optimise the design of hydrogen refuelling stations: storage capacity, pressure,
refuelling sequence, etc.

Second Life ESS project

The Second Life ESS project in which Solaris is participating aims to create a prototype for an
electrical energy storage system based on used bus batteries. The key goal is to use lithium-
ion cells whose parameters are no longer optimal for powering vehicles but can still serve as
energy storage. The project is co-funded by the NCBiR (Polish National Centre for Research
and Development).

Hybrid Beams project

The Hybrid Beams project focuses on a new concept of bus structure based on the addition
of layers of carbon fibre and foam padding, used as local reinforcement of the entire
structure. This makes the new lightweight structure more useful and effective for buses with
added masses (electric, hydrogen and CNG buses). The key objective of the project, in which
Solaris is participating, is to investigate the suitability of these hybrid joints in the
construction of buses (hybrid beams and structural nodes). The advantages of these
solutions are: - reduce vehicle weight - reduce energy demand - increase the stiffness of the
structure against overturning, and - maintain or increase the fatigue behaviour of the
structural nodes. The project is co-funded by TA ČR Starfos (Czech National Centre for
Research and Development).

ADAS project

Devised jointly by engineers at Solaris and Poznań University of Technology, the system will
not only make it easier to perform simple and complex manoeuvres, such as driving forward,
reversing and parking, but will also be of invaluable support when performing more precise
movements, such as connecting the pantograph at the charging point, which can be
particularly difficult in the case of articulated vehicles. The objective of the ADAS project is
to improve the safety of bus passengers and drivers in urban traffic. It will also help operators
to perform manoeuvres bus depots. The new system will also guarantee optimal energy
consumption by vehicles.

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 CBTC-2020 project

Collaborative consortium of five companies, including CAF Signalling, for the development
of a CBTC GoA2 system aimed at increasing the safety and sustainability of rail transport.
This is a project within the CIEN Strategic Programme funded by the Centre for the
Development of Industrial Technology (CDTI).

Innovation in processes
The CAF Group constantly works to optimise its processes to achieve the excellence required by its
stakeholders. Two key initiatives developed for this purpose are the global transformation
programmes and the lean manufacturing methodologies adopted by several Group companies.

In 2018, CAF launched a global transformation programme called MOVE within the vehicle activity
with the aim of encouraging all areas to think about how to improve their efficiency in terms of
cost, quality and time. This programme has continued in 2022 with a focus on improving
competitiveness, ensuring continuous innovation in business processes. All MOVE initiatives are
grouped along various workflows covering Operations, Quality and Contract Management, from
the bidding phase to guarantees.

The programme has generated more than 1,000 improvement initiatives that have subsequently
been implemented. Within this list of initiatives, many of the organisation's processes have been
innovated, for example:

− Performance management of the engineering area, innovating the task management

system and governance and reaching productivity improvements of up to 5%.
− Development of electronic equipment validation benches for URBOS platforms and other
product lines with an improvement of up to 0.5% in project costs.
− Automation of wiring continuity ("ringing") and vehicle stiffness tests online, obtaining
up to 0.2% cost reduction for a project.
− Standardisation of TCMS variables and alarms with a cost reduction of up to 0.1% in a
project.
− Quality door reinforcement and project rework procedures with up to 0.5% savings for
projects.
− Definition of ideation processes to ensure continuous improvement with a 2% annual
improvement in competitiveness.

Cost reduction was not the only reason for the improvements implemented in the processes during
this period. The following additional factors were also taken into account during the
transformation: product quality, customer satisfaction, digitalisation of processes, improvement of
technical capacity and technical specialisation, increase in both production capacity and
engineering, and improvements in deadlines. The fact of having several workflows covering the
entire activity was what made it possible to include all these factors, which are essential for process
innovation.

Meanwhile, the lean manufacturing concept applied in the CAF Group's production facilities
focused on the layout of those facilities and adaptation of the manufacturing processes to the lean
manufacturing methodology. Lean manufacturing is a management model focused on minimising
losses in manufacturing systems while maximising value creation for the end customer. It therefore
uses the minimum amount of resources, i.e. only the ones strictly necessary for growth. The main
objectives for applying this methodology were to reduce manufacturing costs, improve product
quality, reduce delivery times, increase manufacturing capacity, improve working conditions
(safety and ergonomics), reduce the emission of harmful substances (VOC), and reduce
environmental impact by reducing waste. The use of this methodology has led to changes in
multiple production processes and the introduction of new generation solutions which have made
it possible to improve and reduce the cost of these processes.

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CAF has also automated several activities in its production process in recent years, most notable of
which is the automation carried out in the manufacturing process of railway axles, leading to the
implementation of the following stations:

− Automatic station for axle forging.

− Station for the laser geometric measurement of axle forging performs.
− Cold rolling station for axles.

Digitalisation
The development and growth of CAF Group in recent years has led to a digital transformation in
terms of processes, technology and management aimed at improving efficiency, robustness and
flexibility, therefore laying the foundations for meeting the challenges defined in the strategic plan
for the different areas and activities of the Group.

As part of the digital transformation currently underway in terms of product, production and
management, the adoption of a new ERP is enabling the transformation of all management tools.
The implementation of a new resource planning system or ERP will facilitate global, corporate,
integrated, flexible and evolving management. This digital transformation supports other
transformation initiatives that are being carried out at CAF and is the technological benchmark for
accommodating new needs.

The implementation of the new ERP will be key to the development of existing services, processes
and communications, as well as integrated relationships with digital continuity between the
different functions and activities of the Group. It will also deliver greater agility and flexibility in the
monitoring and management of the CAF Group's end-to-end projects. The implementation of the
new ERP will involve changes from the point of view of the integration and standardisation of many
business processes, improving information management and the centralised real-time control of
the entire budget of an end-to-end project.

This change will also improve the harmonisation, standardisation and visibility of all activities
related to supplier management, for both direct and indirect purchases, with the consequent
optimisation of costs in this area.

Another far-reaching implication, but which due to its complexity will be gradually rolled out over
the course of several years, is the digital continuity between design tools (PLM) and operations
management tools (ERP), with all the processes that carried out in that environment (purchasing,
quality, manufacturing and testing).

The new system should enable us to achieve solid data governance, resulting in both a unified
coding of materials and suppliers (single data) as well as more accurate and reliable analytical
reports in the new business intelligence tool.

The ERP adopted, a leading tool in the market, offers the possibility of incorporating the best
practices of leading companies as well as permitting the development of a global map of
applications with total connectivity and integration.

The project to implement the new ERP called Ziaboga started in 2019 with the selection and signing
of the contract with the ERP supplier. During 2021, the Correction and Exploration phases were
carried out, reviewing and completing the processes and sub-processes to be implemented in the
tool, as well as working on the detailed design of the ERP based on its functional specification,
specifying aspects related to configuration and user experience. During 2022, design aspects were
optimised until the optimal configuration was found and the unit and integrated testing phase was
started, as well as the training of trainers. All of this will come together in a start-up during 2023.

In addition to the adoption of different computer programs to digitalise and automate multiple
Group processes, the CAF Group launched the following digitalisation measures to improve the
Company's processes:
− Virtual validation and approval processes to limit the dependence on physical tests to
test, approve and certify different properties of the products supplied by the Group.
− Automated test and validation environments that drastically reduce the time and
personnel required to test and validate safety-critical software (SIL4).

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 − Systems and tools for digitising logistics, manufacturing, quality and maintenance
documentation.
− Developments aimed at digital continuity between different IT systems.
− Graphical programming languages to simplify code generation activities.

In addition, CAF Rail Services has launched a transformation programme to develop a new
operating model called SOM (Smart Operation Management) that leverages digitalisation. Its main
objective is to improve the profitability of contracts by improving the efficiency of operations.

The SOM project has 6 domain-driven work streams:

1) Integration of LeadMind (Tren Digital Platform) in the execution of maintenance.

2) Optimisation of the Maintenance Plan
3) Boosting Productivity.
4) Efficiency in Purchasing.
5) Centres of Excellence.
6) Data Governance and Reporting.

Open innovation
For more than a decade, CAF has been collaborating with various suppliers, business partners,
technology companies and research centres to accelerate the Group's innovation capabilities.
European and national R&D funding programmes, such as Shift2Rail and EU-Rail mentioned above,
also value and promote this type of collaboration.

As an example of the multiple collaborations with research centres, in recent decades CAF has been
working closely with the Ikerlan Technology Centre. The relationship began in 2006 with the
development of CAF's own traction inverters. Ikerlan's contribution has covered the development
of traction systems for all catenary voltages, different topologies, cooling technologies, control
strategies and semiconductors. Ikerlan has also participated in the development of CAF's onboard
energy storage system (OESS) and its evolution in recent years. However, in addition to the field of
electric traction, the collaboration with Ikerlan has covered activities related to signalling and
railway infrastructure.

CAF has set up several subsidiaries to market the products developed after several years of R&D.
Early examples are Traintic (2002) and Trainelec (2007). Traintic and Trainelec, now CAF Power &
Automation, were created to supply traction equipment and Train Control and Monitoring Systems
(TCMS) developed by CAF's R&D Department. These CAF Group subsidiaries have since improved
and increased their range of products, and today they are benchmarks in their sector, again thanks
to significant investments in innovation.

The most recent example of a subsidiary created by CAF is CAF Digital Services. Founded in 2020,
the company markets LeadMind, CAF's data-based digital platform. This product was the result of
several years of R&D projects for the digitalisation of trains (Digital Train). The Digital Train projects
were focused on data acquisition, data management (big data, data transmission and storage) and
data analysis.

The CAF Group's collaborations also extend to the startup ecosystem. In 2015 CAF launched CAF
Ventures as a corporate investment initiative, and in 2020 it launched the Venture Client CAF
Startup Station .

CAF Startup Station is designed to partner with top-tier startups working on relevant and innovative
solutions for the rail and bus sectors. The key objective is to build and consolidate customer-
supplier relationships between the different startups and the CAF Group.

CAF Startup Station follows the Venture Client model, which focuses on achieving a real impact on
the business. This model allows the Group to acquire and test the startup's solutions through a pilot
project. As a result of the success cases, a long-term customer-supplier relationship is established
with the startups, which could ultimately lead to an eventual purchase. A CAF Startup Station
success story is to implement software for the management and reporting of non-financial
information in an agile and accurate way by collaborating with a local startup.

79
The CAF Group also collaborates through technological licences, both by giving access to
developments carried out by the Company to other companies (e.g. the licensing of interlocking
technology for TEXMACO, India), and by adopting development licences from other companies to
incorporate them into its own processes and products, such as Straton's Graphical Programming
Environment. These collaborations permit faster product development and commercialisation with
proven solutions and proven reliability levels.

80
3.4 Responsible and sustainable supply chain
[2-6, 2-26, MA 204, MA 308, 308-2, MA 414, 414-2]

The sustainable management of CAF Group's supply chain covers environmental, social and
governance aspects. The Group monitors sustainability risks to avoid negative impacts derived from
the supply chain and encourages suppliers to comply with all the legal requirements of the sector
and country in which they operate and to incorporate sustainability into all their operations.

This management approach is based on the Corporate Procurement Policy, the Environmental
Policy, the Safety Policy, the Occupational Health and Safety Policy and the Supplier Code of
Conduct all of which incorporate the principles of the United Nations Global Compact on Human
Rights, the Environment and the Fight Against Corruption and provide guidance for the organisation
and its suppliers.

In 2022 the CAF Group spent approximately 1,829 million euros on nearly 8,000 Tier-1 suppliers
(i.e. suppliers that deal directly with and invoice the CAF Group directly) located in more than 60
countries, although most of the suppliers are located in the European Union.

Most of the products and services provided by CAF's suppliers have a predominantly technological
component, while the labour component is concentrated in subcontractors, maintenance service
providers and civil works.

The following risks relating to social, ethical and environmental matters have been identified in this
area: (i) violation by suppliers of business ethics; (ii) breach by supplier of laws and regulations; (iii)
disregard for the protection of Human Rights; and (iv) involvement in acts of corruption (bribery).

The impacts arising from these risks could result in loss of suppliers and penalties/breaches of
contract with customers and damage to the image or reputation of the CAF brand. These impacts
have a direct short-term effect; however, they may extend to the medium term due to the search
for replacement suppliers.

These risks are covered by the corporate risk control and management system described in Chapter
2 which includes a series of activities aimed exclusively at managing such risks.

Meanwhile, sustainability management in the supply chain has provided the following
opportunities: (i) participation in the Railsponsible sector initiative, where the main operators and
manufacturers in the sector collaborate to develop sustainable practices and share best practices
throughout the value chain of the railway industry; and (ii) continuous improvement of suppliers in
matters of sustainability also improves their resilience and competitiveness.

The CAF Group is aware of the seriousness of the potential economic and reputational impacts of
these risks. To mitigate them, the Sustainability Committee and the Corporate Purchasing
Committee have established the strategy described below.

Supply chain strategy and objectives

The CAF Group is committed to promoting and supervising sustainability in its supply chain. The
Sustainability Committee has established the following objectives for the Responsible Purchasing
Programme in 2022:

− More than 90% of the suppliers identified in the risk map as risk suppliers must have been
evaluated or audited.
− Spending on suppliers assessed as medium or high risk must be less than 1.8% of total
spending.

In 2022 the Corporate Purchasing Committee continued to implement the Purchasing Policy in the
Group's main activities. In 2022, the main activities transferred to their respective processes the
requirements for due diligence and supervision of the sustainability of the supply chain established
by the Purchasing Policy.

81
Within the framework of the Purchasing Committee's Sustainability Plan for 2022, the Responsible
Purchasing Programme has been extended to the Railway Services activity, as well as to the Power
and Automation Equipment activity. The Bus segment has also laid the foundations for its own
programme through 2022 thank to the collaboration within the Purchasing Committee.

Another of the pillars of the Sustainability Plan that has made significant progress during 2022 is
the implementation of a supplier risk qualification and monitoring process that integrates due
diligence requirements in terms of solvency and sustainability and facilitates real-time monitoring
of alerts from different sources of information. It is planned to extend this process to the Bus
segment during 2023.

Communication with suppliers

CAF is aware that good communication and sharing of information between the Company and its
suppliers are key to maintaining efficient processes and long-term business relationships, and it has
opted to ensure this two-way dialogue through supplier satisfaction surveys. The result of this
survey showed a remarkable level of satisfaction (8.3/10) as well as a remarkable (8/10) evaluation
of the communication with CAF Group professionals. However, the identified improvement
opportunities will be analysed and addressed during 2023.

Additionally, all suppliers have a specific separate communication channel for raising any questions
regarding the General Code of Conduct and the Supplier Code of Conduct, [email protected],
as well as another channel to report to the CAF Compliance Committee any current or potential
conflict of interest or breaches of the principles of business ethics by CAF professionals:
[email protected]. In 2022 no conflicts of interest or breaches of the
principles of business ethics were received through this reporting channel.

Supplier Code of Conduct

The CAF Group requires all suppliers to comply with the ethical principles set out in the CAF Code
of Conduct published on the corporate website, including social, ethical and environmental
commitments.

In addition, the commitments to comply with the general principles of the Code of Conduct,
working conditions, health and safety, the environment, commercial ethics and confidentiality are
implemented in the Corporate Supplier Code of Conduct available on the corporate website and
via the usual means of internal communication. The Supplier Code of Conduct, or a supplier code
approved by CAF's Compliance Department, must be subscribed by all Group suppliers without
exception and establishes the requirement that CAF's suppliers transfer the same sustainability
requirements to their own supply chain.

CAF reserves the right to verify compliance by its direct suppliers. This verification may be through
assessments conducted by ESG rating agencies, self-assessment questionnaires or audits at
supplier facilities. If a supplier's behaviour does not comply with the principles of the general Code
of Conduct or the Supplier Code of Conduct, either in its activity with CAF or in the market with
third parties, CAF is entitled to take the appropriate measures and may refuse to collaborate with
the supplier in the future, or even terminate the current relationship depending on the
circumstances.

Sustainability in supplier management

The supplier qualification processes guarantee that our suppliers contractually commit to the
Supplier Code of Conduct and incorporate sustainability checks of the following aspects:
− Sustainability, Environment and Occupational Health and Safety management
certifications, among others 15
− Product Quality Management related to IRIS certification 16
− Compliance with the CAF Code of Conduct

15 SA8000 Social Responsibility Certification, ISO 14001 Environmental Management System Certification,

OSHAS 18001 Occupational Health and Safety Management System Certification, ISO 22301 Business Continuity
Management Systems Certification, etc.
16 Risk analyses, quality certificates and supplier management are evaluated, among others.

82
 − Compliance with the Sustainability Policy
During 2022, it should be noted that in the Rolling Stock activity, the company continued to check
sustainability aspects in 46 on-site approval audits of equipment, material and subcontractor
suppliers. In the Rail Services activity, environmental management assessments were carried out
on 12 suppliers, and in the Bus segment, a life cycle assessment was carried out on suppliers with
the greatest environmental impact, including a Life Cycle Analysis of their products.

Meanwhile, quality inspections at origin make it possible to identify any deviations from the
principles of the Supplier Code of Conduct.

Supply chain monitoring methodology

In the monitoring of sustainability criteria in the supply chain, the evaluation effort prioritises those
that represent the greatest environmental, social and ethical risks, whether due to the potential
environmental, social or gobernance impact of the product/service or because they are located in
countries with a higher level of exposure to such risks.

During 2022, the Rolling Stock business has maintained the focus of its Responsible Procurement
Programme on the supervision of suppliers of railway equipment and material, subcontractors and
suppliers of legal and consultancy services.

Based on these criteria, the evaluation effort focuses on 349 target suppliers out of a total of
approximately 6,000 suppliers. The evaluations are carried out by Ecovadis, the world leader in this
field. Ecovadis adapts the evaluation questionnaire to each supplier based on the locations in which
it operates, its sector and its size to evaluate 21 aspects of sustainability alligned with the most
demanding international norms, regulations and standards, including those of the Global Reporting
Initiative (GRI), the International Labour Organisation (ILO), the UN Global Compact and ISO 26000.
Suppliers' responses are evaluated by specialised analysts who check whether the documentary
evidence is consistent, recent and evidences a dynamic review of the policies, actions and results
in the different subjects. This analysis results in a general rating with a maximum score of 100
points, which represents excellent sustainability management.

If the result of an evaluation does not meet the requirements established by CAF (a general score
of 45 out of 100 in sustainability management), the supplier is required to implement an action
plan to improve the weaknesses identified. If the supplier does not raise its assessment to
acceptable levels or does not show a commitment to improve, it is audited by experts in the field.
In this regard, the first specialised sustainability audit was carried out in 2022, thereby mitigating
the risk detected by the Ecovadis indicators.

83
Results of the responsible purchasing programme
By the end of 2022, the activities of Rolling Stock, Rail Services and Power & Automation Equipment
have assessed in terms of their sustainability management, i.e. their environmental, social and
governance management, 78% of the prioritised suppliers (118 business groups 17) which
represents the 75% of the spend of these activities.
The assessed suppliers have an average overall rating of 58.6 out of 100, representing a medium-
high level of sustainability management, which is 13 percentage points higher than the average of
all suppliers assessed by Ecovadis worldwide (45/100). In addition, 71% of CAF suppliers reassessed
in the last year improved their general rating.

The following graph shows the distribution of the overall rating of the suppliers assessed by the
CAF Group in the columns and the grey line shows the distribution of the overall rating of all
companies assessed by Ecovadis:

2022 2021 2020

Of CAF Group suppliers 58.6/100 58/100 56/100
General Sustainability
Of all suppliers evaluated by
indicator18 45/100 44/100 43/100
Ecovadis at worldwide level

Change in the Improved 71% 61% 65%

Sustainability indicator of
Unchanged 10% 16% 19%
CAF’s suppliers

As a result of these assessments it has also been identified that 2% of the Group's total purchases
are made from suppliers with average or lower sustainability management and an improvement
plan has been agreed with all of them. Furthermore, no relevant negative impacts on the supply
chain have been identified and no sustainability audit has been required during 2022 for this
reason.

17 Comprising a total of 271 companies.

18 Assessment scale: 0 – 25: Low; 25-45: Medium/low; 45-65: Medium/high; 65-100: High

84
The following table summarises the results of the 2022 supplier assessment campaign:

2022 2021 2020

Number of business groups assessed in terms of their
118 67 46
sustainability/ESG management
Coverage of sustainability assessments on the amount of
expenditure covered by the Responsible Purchasing 75% 56% 57%
Programme
Purchases from high or medium risk suppliers:
Total Group volume of expenditure on suppliers with a 2% 4% 2%
medium or lower sustainability management rating
The percentage of suppliers with an average or lower
management evaluation with whom improvements have 100% 100% 100%
been agreed as a result of an evaluation.
Number of suppliers identified as suppliers with significant
0 0 0
negative environmental, social or governance impacts

85
 4 THE EXCELLENCE OF OUR TEAM

"CAF is committed to promoting the professional development of its employees

and using the necessary means to eliminate or reduce occupational risks,
encouraging a preventive culture among all the people who carry out their
professional activities at CAF. Furthermore, CAF is committed to respecting
diversity, the right to equal treatment and opportunities in access, training,
promotion and working conditions, and the inclusion of people with
disabilities."

CAF Sustainability Policy

17 December 2020

4.1 Talent development

4.2 Diversity and equal opportunities

4.3 Respect for Human Rights

l talent
Occupational health and safety
4.4
86
4.1 Talent development
[2-7, 2-30, MA 401, 401-1, 401-2, MA 402, MA 404, 404-1, 404-3]

The people who make up the CAF Group are key to developing a sustainable project, as reflected
in the Sustainability Policy and Code of Conduct.

These commitments are rolled out as part of the Corporate People Management Process, which
defines a proprietary standard common to all the Group companies. The standard’s comprehensive
nature endows it with a broad scope, from ensuring organisational adequacy, through hiring and
internal mobility, and the assessment and qualification of its professionals, to their training and
development. It also includes policies on remuneration and labour relations.

The main activities in 2022 were the definition and deployment of the initiatives included in the
corporate people plan with the aim of improving talent management in all Group activities and on
every work front: Within this framework, actions have been deployed to ensure legal compliance
and corporate policies, the promotion of values within the Group, progress in the measurement of
organisational health, improvements in talent recruitment and development activities and the
deployment of occupational health and safety commitments.

Furthermore, in 2022, special attention continues to be paid to the deployment of organisational

health studies and the monitoring of the organisational health index as one of the key management
elements in the area of people within the Group. Since 2018 and at least every two years, studies
have been systematically launched in all relevant Group activities. In 2022, results accounting for
more than 90% of the scope of consolidation are in force. Based on the results, specific action plans
are defined that promote cultural dimensions and elements that are helpful in the execution of
business activities. The trend of the organisational health index has been positive in the previous
year overall. This measurement makes it possible to evaluate the action plans put in place and
adjust them for further improvement. This area, together with other actions, contributes to the
generation of a shared culture within the Group, which should be one of the cornerstones of these
initiatives.

In this area, the following risks relating to both occupational risk prevention and adequate
professional development of employees have been identified: (i) staff turnover; (ii) insufficient
training and professional development; (iii) lack of diversity and equal opportunities; (iv) accidents
and the effects on health.

The impacts arising from these risks may result in reduced employee productivity, accidents,
impairment of employee health and motivation, and fines relating to employee occupational safety.
Since these risks and their impacts materialise gradually over time, this will occur in the medium
term.

The aforementioned policies, Code of Conduct and procedure constitute the main corporate
principles, procedures and controls required in order to address matters relating to personnel.

The corporate risk control and management system covers the risks described above and provides
a series of activities aimed exclusively at managing them. This process meets the risk and
opportunity analysis of the frame of reference.

87
Talent attraction
In 2022 the Group's average workforce totalled 13,769, and at 31 December 2022, the workforce
was 14,526 people. 19 In this respect, the average workforce of the CAF Group has increased. The
workforce at the end of the period increased by 1,242 people, thus adapting to the Group's needs
in its various activities and geographies. This increase is largely due to the incorporation of Alstom's
Reichshoffen plant into the Group, which had 700 employees at the end of the year.

Provided below there is a breakdown of employees by the following diversity criteria: gender, age,
occupational group, country of enterprise and country of origin of the worker.

CAF Group headcount

(At year-end)
2022 2021 2020
Number % Number % Number %
By gender
Male 12,159 84% 11,235 85% 11,080 85%
Female 2,367 16% 2,049 15% 1,977 15%
By age
Under 30 years of age 1,982 14% 1,746 13% 1,785 14%
Between 30 and 50 9,833 68% 9,219 70% 9,050 69%
years of age
Over 50 years of age 2,711 19% 2,319 17% 2,222 17%
By professional group
Employee 7,958 55% 6,794 51% 6,386 49%
Operators 6,568 45% 6,490 49% 6,671 51%
By company country
Europe 13,033 90% 11,699 88% 11,460 88%
Spain 6,960 48% 6,572 49% 6,483 50%
Poland 2,546 18% 2,641 20% 2,451 19%
Sweden 974 7% 1,015 8% 996 8%
United Kingdom 949 7% 784 6% 672 5%
Rest of Europe 1,604 20 11% 687 5% 858 7%
America 976 7% 1,113 9% 1,157 9%
Mexico 436 3% 504 4% 423 3%
Brazil 209 1% 220 2% 250 2%
US 126 1% 203 2% 301 2%
Rest of America 205 1% 186 1% 183 1%
Rest of the world 517 3% 472 3% 440 3%
By country of origin
Europe 12,940 89%
Spain 7,100 49%
Poland 2,514 17%
France 905 6%
Sweden 852 6%

19 The data were obtained from the information systems of each company, and employees involved in furlough-

type arrangements on a full working day and full year basis were included in the calculation since the impact
thereof was not generally considered to be significant. In order to perform the activities that the company
considers it is necessary for outsourced personnel to carry out at its facilities, CAF enters into service contracts,
which define the type of activity to be performed. CAF monitors outsourcing activities carried out and maintains
statistics on outsourced personnel, where this is considered significant.
20 Among the workforce located in the rest of Europe, France stands out with 865 employees at the end of the

year.

88
 Rest of Europe 1,569 11%
America 1,024 7%
Mexico 441 3%
Brazil 223 2%
Chile 124 1%
Rest of America 236 2%
Rest of the world 562 4%
Total
14,526 13,284 13,057

At CAF, talent management is a key factor in the organisation's success. The attraction,
development and retention of talent are therefore critical phases for the Company. As a global
company, CAF has a specific recruitment activity, included in the people management process,
which defines the common corporate framework for recruitment and internal mobility made up of
a first phase consisting of approval of the appointments plan, a selection process that can be both
internal and external, recruitment and, lastly, the onboarding plan. This process guarantees equal
opportunities as regards access.

CAF is currently carrying out a series of activities to provide adequate resources to the different
activities in the different geographical areas, of which the main ones are: presence at national and
international job fairs, open days, and the publication of vacancies on various employment
platforms, social media and the corporate portal.

During 2022, 2,731 recruitment processes were carried out in the Group's different activities. It is
worth noting that growth has occurred mainly in Europe due to the incorporation of the
Reichshoffen plant, which has led to 700 people being hired. The details of this process are shown
below:

New hires
2022 2021
Number Rate 21 Number Rate
By gender
Male 2,207 18% 1,412 13%
Female 524 22% 289 14%
By age
Under 30 years of age 864 44% 627 36%
Between 30 and 50 years of
1476 15% 934 10%
age
Over 50 years of age 391 14% 140 6%
By company region
Europe 2,383 18% 1,155 10%
America 187 19% 439 39%
Rest of the world 161 31% 107 23%
By region of origin
Europe 2,325 85%
America 226 8%
Rest of the world 180 7%
Total
2,731 19% 1,701 13%

21 New hires/workforce at the end of the period.

89
In terms of turnover, the following is a breakdown between voluntary and non-voluntary turnover.

Turnover %
Voluntary 6%
Non - voluntary 4%
Total
10%

Within non-voluntary turnover, dismissals are the main reason for departures as shown in the table
below. Such non-voluntary departures account for 3% of the workforce (in 2021 they accounted
for 2%). In relative terms, the rate is higher in men than in women, in terms of age, the rate has
increased compared to the previous year in the group up to 50 years of age, but has decreased in
the case of workers over 50 years of age, and in terms of professional group, the rate for employees
has remained the same, while in the case of operators, it has increased by three percentage points.
The matching of capacity to the needs of ongoing projects is the main reason for this type of non-
voluntary disengagement.

2022 2021
Number Rate 22 Number Rate
By gender
Male 396 3% 211 2%
Female 43 2% 41 2%
By age
Under 30 years of age 88 4% 39 2%
Between 30 and 50 years of
262 3% 117 1%
age
Over 50 years of age 89 3% 96 4%
By professional group
Employee 127 2% 132 2%
Operators 312 5% 120 2%
Total
439 3% 252 2%

22 Non-voluntary terminations/employees at the end of the period.

90
Quality employment
CAF is committed to quality, stable employment. Employee experience and knowledge constitute
one of the cornerstones of CAF’s competitive position in all its current activities. The percentage of
permanent employees at the end of the period in the CAF Group stood at 93%, an increase over
the previous year (91%). Looking at the distribution by gender, age, occupational group and region,
the percentage of permanent contracts has increased in all groups 23. In terms of gender, the
increase in the percentage of permanent contracts among men was one percentage point higher
than among women. In terms of age, the group under 30 years of age was the group with the
highest percentage increase in permanent contracts, in terms of occupational group the blue-collar
workers and in terms of region the workers located in the Americas.

Workforce by type of contract

(At year-end)

2022 2021 2020

Permanent Temporary Permanent Temporary Permanent Temporary
No. % No. % No. % No. % No. % No. %
By gender
Male 11,384 94% 775 6% 10,316 92% 919 8% 10,291 93% 789 7%
Female 2,143 91% 224 9% 1,836 90% 213 10% 1,783 90% 194 10%
By age
Under 30 years
1,545 78% 437 22% 1,284 74% 462 26% 1,366 77% 419 23%
of age
Between 30 and
9,365 95% 468 5% 8,631 94% 588 6% 8,560 95% 490 5%
50 years of age
Over 50 years of
2,617 97% 94 3% 2,237 96% 82 4% 2,148 97% 74 3%
age
By professional group
Employee 7,384 93% 574 7% 6,219 92% 575 8% 5,850 92% 536 8%
Operators 6,143 94% 425 6% 5,933 91% 557 9% 6,224 93% 447 7%
By company region
Europe 12,341 95% 691 5% 10,950 94% 749 6% 10,601 93% 859 7%
America 764 78% 213 22% 826 74% 287 26% 1,127 97% 30 3%
Rest of the
422 82% 95 18% 376 80% 96 20% 346 79% 94 21%
world
Total
13,527 93% 999 7% 12,152 91% 1,132 9% 12,074 92% 983 8%

23 The annual average number of part-time contracts is not broken down by gender, age and professional
classification, as they do not represent a significant proportion of the Group's workforce.

91
 Workforce by type of contract
(Average workforce)

2022 2021 2020

Permanent Temporary Permanent Temporary Permanent Temporary
No. % No. % No. % No. % No. % No. %
By gender
Male 10,736 93% 816 7% 10,278 93% 824 7% 10,183 91% 957 9%
Female 1,989 90% 228 10% 1,813 90% 198 10% 1,724 89% 218 11%
By age
Under 30 years 1,277 76% 407 24% 1,187 75% 406 25% 1,272 73% 466 27%
of age
Between 30 and 8,915 94% 537 6% 8,616 94% 534 6% 8,442 93% 634 7%
50 years of age
Over 50 years of 2,533 96% 100 4% 2,288 97% 82 3% 2,193 97% 75 3%
age
By professional group
Employee 6,778 92% 592 8% 6,065 96% 548 4% 5,716 91% 578 9%
Operators 5,947 93% 452 7% 6,026 96% 474 4% 6,191 91% 597 9%
By company region
Europe 11,562 94% 722 6% 10,742 94% 745 6% 10,434 91% 1050 9%
America 761 77% 224 23% 964 84% 181 16% 1,141 97% 35 3%
Rest of the 402 80% 98 20% 385 80% 96 20% 332 79% 90 21%
world
Total
12,725 92% 1,044 8% 12,091 92% 1,022 8% 11,907 91% 1,175 9%

The generation of quality employment also implies the need to organise work in accordance with
the labour legislation of each country and the applicable collective bargaining agreements. Each
Group company therefore determines matters relating among other things to working hours, rest
periods, work calendars, holidays, special leave and leave of absence, as well as social welfare
benefits in accordance with market practices, such as contributions to pension funds and medical
insurance. This is included in the defined labour relations policy applicable to the Group. Also, each
company establishes measures aimed at facilitating the work-life balance, certain of which relate
to the regulation of working hours, which are generally monitored by means of the clock-on/clock-
off register.

The regulation of telecommuting is regulated in some of the most relevant legal entities. This new
regulation allows for certain activities to be carried out from home, on a voluntary basis and to a
greater or lesser degree depending on the situation, mainly related to work-life balance. It also
includes measures concerning the right to digital disconnection.

In this chapter, progress has been significant in recent years. During 2022, practices in this area of
remote working have been consolidated within the Group's activities. As well as consolidating
previous practices, progress has been made in this area. At the moment there are regulations that
facilitate the possibility of carrying out the activity remotely in a percentage that ranges between
20% and 60% of the working calendar. In some cases it links this possibility to the promotion of
conciliation.

The training and evaluation process as a cornerstone of professional

development
The training process is a cornerstone of the training activities and this is evident both in the parent
company and in all the national subsidiaries linked to its main activities.

In order to ensure that the training plan is efficient and effective, three main blocks of activity have
been defined within the process, which are monitored regularly using a series of indicators. The

92
initial phase consists of carrying out a training needs assessment, integrating both the vertical
perspective of each function, as well as the horizontal perspective in cross-cutting training subjects
(for example: occupational health and safety, quality, product safety, regulatory compliance, etc.).
Once this training plan has been approved and announced, it can begin to be implemented and
assessed on three levels (satisfaction, effectiveness and annual review) so that it can be brought
further into line with the activity’s priorities and rendered more effective.

This process has been systematically reviewed over the years under a dynamic of continuous
improvement, integrated into process management in some cases and always in response to the
activity's needs.

In 2022, further progress has been made in the deployment of a more flexible learning model by
combining different formats. The development of content on the "CAF E-learning" platform,
launched in 2020, has been promoted. During 2022, face-to-face training coexisted with virtual
training, complying with the health measures required at any given time as a result of the health
crisis. Asynchronous access to training content has also been made possible.

At Group level, more than 190,000 training hours were received 24, with each person having
received an average of 18 hours of training, which was the same as the previous year. In terms of
gender, women have received on average 2 hours more training than men. The average number of
training hours for employees has been higher on average, receiving 19 hours of training, three
hours more on average than operators.

2022 2021 2020

Total Average hours Average hours per Average hours per
hours per person person person
By gender
Male 159,410 17 17 -
Female 33,313 19 22 -
By age
Under 30 years of age 21,891 18 - -
Between 30 and 50
140,768 18 - -
years of age
Over 50 years of age 30,064 14 - -
By professional group Training Satisfaction
Employee 102,650 19 22 14
Operators 90,073 16 14 12
Total
192,723 18 18 13

Similarly, the results of satisfaction and the effectiveness of all training activities exceed the 8.53
objectives set for in the people process for the 2022 period, standing at 8.53 and 8.49 points,
respectively 25.

Integrated in the same process is the performance evaluation as one of the elements that stimulate
the development of the people in the organisation. Eighty-six percent of people from both the Training
parent company and all national and international companies 26 have received an evaluation, Effectiveness
following the defined systematic approach (85% by 2021). The distribution of assessed workers
according to gender and occupational groups, 78% of women have received an assessment and
87% of men. In addition, 92% of the operators have been assessed by 2022, as well as 80% of the
employees.

The corporate people management process defines a model for assessing both general and 8.49
technical competencies associated with each person's position. In addition, university graduates
and middle management are included in an evaluation system through which individual objectives
are set for them. Throughout 2022, evaluation processes have been launched in all of the Group's

24 Data representative of 80% of the CAF Group workforce.

25 Data relating to those sites where the system of evaluation of the training received is implemented.
26 Data relating to those sites where the performance appraisal system is in place.

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main activities and will continue to be rolled out in the following period. The evaluation processes
launched have been adapted to the needs of the different activities and groups.

It highlights the new evaluation process deployed in the activity linked to railway rolling stock. The
new model aims to align all people with the values by deploying specific behaviours according to
the type of responsibility in the organisation. It also aims to clarify what is expected of people and
what their contribution to the objectives is.

In this chapter and in different activities of the Group, we have continued to develop actions to
promote leadership for those responsible for people and projects or programmes. The programmes
aim to clarify the role as a leader and improve communication or team management, among others.
Linked to these activities is the progress in some of the main activities in the teams' perception of
the type of leadership in CAF. There is a growing need for leadership that focuses on meeting
business challenges while supporting teams. The improvement in the results on the perception of
the communication and information received has also been relevant in the period. Lastly, and in
this chapter, the use of tools to promote the development of people such as coaching and
mentoring has been consolidated.

In addition, as in the previous period, various training actions were carried out this year to align the
people management systems required by the Group's activities in the transformation programmes
being undertaken and in the integration processes underway.

Internal mobility as a development tool

In addition to providing flexibility to respond to the needs of ongoing projects, internal mobility is
regarded as a fundamental tool for the development of employees during their working lives.
Mobility is facilitated through training programmes included in the training plans as well as through
ad-hoc training activities designed to provide people with the skills they need to take on new
responsibilities. All the main activities of the CAF Group include internal mobility processes.

In this area, and with a medium-term vision, the defined development activities derived from the
exercises to identify talent with potential carried out in previous years have been deployed. The
aim of these actions is to have people prepared for the challenges of the different activities. During
2022, the basis for the processes to be implemented in the following periods has been defined.

In 2022, the dynamic started in 2021 has been continued with the publication of internal vacancies
in some of the Group's main activities and the definition of career plans associated with the
evaluation processes. In this chapter, in addition to the deployment of development plans, this
dynamic has been extended within the Group. It is worth remembering that career plans in CAF
allow people to be directed towards one of these pathways: leadership of people and
projects/programmes, functional versatility and technical specialisation.

Social dialogue
With respect to the organisation of social dialogue, we should mention the permanent
communication between employees, their representatives and the Company with a view to
discovering their interests and expectations and reaching agreements that benefit all parties. The
procedures for informing and consulting employees and negotiating vary across the Group, which
provides greater flexibility to use the most appropriate routes based on the traditions and customs
in each region and legal jurisdiction.

All the employees of the Parent Company and the Spanish subsidiaries of all the Group’s business
lines are covered by industry-specific or company-specific collective agreements, which together
are generally applicable to all employees. At the international level, collective bargaining on
different issues (pay, working time and working hours) is also noteworthy in different geographies.
68% of the CAF Group's workforce is subject to a collective bargaining agreement. The breakdown
of this figure by geographical area is shown in the following table.

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 Percentage of employees covered by collective bargaining agreements by country

2022 2021
Europe 72% 73%
Spain 100% 100%
Poland 0% 27 0%
Sweden 100% 100%
United Kingdom 13% 32%
Rest of Europe 43% 19%
America 40% 41%
Mexico 12% 80%
Brazil 100% 100%
Rest of America 37% 29%
Rest of the world 14% 14%

Additionally, various initiatives were carried out in 2022 to promote extended, systematic and agile
internal communication in line with current customs.

In 2022, the manual for the development of the general communication policy has been approved.
The revised internal communication guidelines for all Group activities have been integrated into
this manual. These general internal communication guidelines are intended to ensure consistency
in internal communication, thus ensuring that all people have relevant up-to-date information and
that there are smooth and constant interactions, both face-to-face and indirect, at all levels of the
organisation.

Additionally in 2022, internal communication plans were deployed at different levels in conjunction
with e-learning activities and the implementation of collaborative tools.

Furthermore, with the aim of facilitating channels and ways for fluid interaction to take place and
ensure that each person in the organisation has constantly updated information, in 2022 the Group
continued to make intensive use of the corporate internal communication application available to
all CAF employees, providing remote access to relevant information at all times.

As in 2021, direct communication activities continued to be promoted both in virtual and face-to-
face format. Employees' perceptions of communication matters are systematically collected.

27 Working conditions in Poland are set out in what are called "Work Regulations" which are not considered

collective agreements according to the GRI definition.

95
4.2 Diversity and equal opportunities
[MA 202, 202-1, MA 405, 405-1, MA 406, 406-1]

Equal opportunities
One of the cornerstones of CAF’s commitment to people, as indicated in CAF’s Code of Conduct,
Sustainability Policy and Diversity and Director Selection Policy, is respect for diversity and the right
of men and women to equal treatment and opportunities. To this end, the Group does not tolerate
any kind of harassment and actively rejects any direct or indirect discrimination, especially on the
grounds of gender, and the defence and effective application of the principle of equality between
men and women in the workplace, making progress in the establishment of measures that favour
the reconciliation of work and family life.

The CAF, S.A. collective bargaining agreement (for the Beasain, Irún and Madrid centres) seeks to
promote the access of women to employment and the effective implementation of the principle of
equal treatment and non-discrimination in working conditions between men and women.

Recruitment and selection processes guarantee the same access opportunities, upholding non-
discriminatory principles through recruitment drives open to everyone, the use of objective
selection requirements and without taking into account situations not related to the job. In 2022,
women represented 19% of new hires to the CAF Group, raising the overall presence of women in
the Group's workforce that has increased slightly to 16%.

Likewise, equal access to training is guaranteed for men and women in order to promote career
development and adaptability to job requirements, thus improving internal employability.

The Group is committed to promoting equal opportunities through internal policies and strategies,
and to ensuring that employees have the same opportunities to develop their potential.
Consequently, it adopts the appropriate measures and decisions in response to any action that
might constitute or cause gender discrimination.

In order to maintain comprehensive control of these commitments and their respective initiatives,
at year-end all Group companies comply with the legal regulations regarding the development of
equality plans 28 and they have different management mechanisms such as the action protocol in
case of sexual harassment or gender harassment and equality committees on which the Company
and employees are represented, the aim of which is to prevent and, where applicable, resolve cases
of sexual harassment and gender-based discrimination. Noteworthy due to its size at the Parent
Company 29 is the existence of an equality commission that is responsible for the preparation,
implementation and monitoring of equality plans and analysing possible measures and actions to
contribute to the work-life balance. This commission analyses and monitors equality indicators each
year, analysing issues such as periodic monitoring of selection processes, monitoring of staff who
request and/or avail themselves of the work-life balance measures that apply to the headcount as
a whole, broken down by gender, and monitoring of the promotion system for operators and
employees.

Similarly, in recent years the Company has been taking steps to disseminate the equality plans and
sexual and gender-based harassment protocols internally through the usual means and to promote
the use of egalitarian and inclusive language both in internal and external communications.
The principles of non-discrimination and equal opportunities applied at the CAF Group are included
in the Code of Conduct. Within this framework, in 2022, a gender-based harassment action has
been initiated, which has been investigated internally, dealt with and resolved by applying the
relevant labour measures. In the previous period, five cases were detected in this area.

28 The companies affected have started adapting their equality plans to Royal Decrees 901/2020 and 902/2020.
29 The parent company CAF, S.A. represents 28% of the total workforce at year-end 2022.

96
Remuneration and gender pay gap
Remuneration is set and managed at the CAF Group on the basis of the remuneration management
policy applicable to the Group. The purpose of this corporate regulation is to ensure that
remuneration is addressed appropriately in terms of internal consistency while taking into account
external competitiveness and the alignment of remuneration with the challenges and needs of the
lines of business. The Group usually refers to information prepared by specialist consultants to
establish salary levels on the basis of the market and role.

These general criteria have given risen to appropriate remuneration levels and in 2022 the average
remuneration of employees 30 amounted to €41,127.71.

Average Remuneration (202031 –2022)

2022 2021 2020
Average remuneration 41,127.71 € 38,353.28€ 37,015.01€

The pay gap in all the Group's activities 32 is 1.4%. Changes in the configuration of the workforce
with less male operators have had an impact on the average pay of this gender.

Average remuneration by gender, age and employee category

2022 2021 2020
Average
Gender pay
remuneration Gender pay gap Gender pay gap
gap 33
€
By gender
Female 40,647.41 €
1.4% (0.5%) (0.2%)
Male 41,221.21 €
By age
Under 30 years of
26,917.87 € (7%) (8%) (8%)
age
Between 30 and
41,922.15 € (3%) (5%) (5%)
50 years of age
Over 50 years of
48,634.94 € 9% 7% 4%
age
Professional group
Employee 48,493.71 € 17% 16% 16%
Operators 32,202.82 € 16% 10% 27%

The average remuneration by age at the CAF Group reveals a correlation between age and
remuneration earned, as shown in the table. Likewise, in terms of the gender pay gap, if we analyse
the data by age group it is negative (-7%) in the under 30 years of age segment and the
remuneration of women is higher than the remuneration of men. The gap is also negative in the
30–50 years-of-age segment (-3%). However, in the over 50 years of age segment women's
remuneration is lower, with a positive gap of 9%.

Remuneration in the CAF Group for professional groups is organised into two broad categories:
employees 34 and operators. The average remuneration for employees is €48,493.71 compared
with €32,202.82 for operators. In both cases, the pay gap is positive, as in previous periods. In the
employees' category, the pay gap is 17%, remaining stable compared to previous periods. The pay
gap in the blue-collar sector has increased to 16%. This increase is due to changes in the

30 All annual fixed remunerative items for full-time employees available to all the Group’s employees were used.
Variable concepts were not included since they are treated as non-material due to the amount they represent
over the total. The average exchange rate for the year was used to translate the data to euros.
31 The 2020 and 2021 pay gap data are as published in the Non-Financial Information Statement for 2021.
32 The gender pay gap was calculated on the basis of all employees, including senior management and executive

directors and senior managers.

33 (Average Remuneration of Men by Group – Average Remuneration of Women by Group)/Average

Remuneration of Men by Group.

34 The Professional Group of Employees includes University Graduates, Middle Management and Administrative

Staff.

97
configuration of the workforce due to the adaptation of capacity to ongoing projects and the
acquisition of assets in France and Germany.

If we analyse the data by groups, length of service is a one of the factors affecting the gender pay
gap. On average, men's length of service across all CAF activities is 24% higher among employees
and 31% among operators.

General pay gap by gender, professional group and length of service

2022
Difference in length of
Professional group Gender pay gap 35
service 36
Employee 17% 24%
Operators 16% 31%
The data relating to the pay gap are also influenced by the asymmetrical nature of the gender
distribution of the various socio-demographic groups. Although the average remuneration of
women as a whole is only 1.4% lower than the average total remuneration of men, when comparing
the averages of both groups by professional category, the difference widens. This is because there
are fewer women than men (women account for 16% of the total) and their distribution by
professional group is asymmetrical.

Distribution of the workforce by professional group and gender

(At year-end)
2022
Professional group Female Male
Employee 89% 48%
Operators 11% 52%
Total 100% 100%
This is due to the fact that the majority of women belong to the employees' category (specifically
89%) and the average remuneration for this category is higher than that of the operators' category.
Meanwhile, 52% of the men at CAF belong to the operators' category, the average remuneration
of which is lower than that of the employee's category.

In any case, the collective agreements in force, together with the regulations relating to
remuneration applicable at the CAF Group companies, nevertheless guarantee equal treatment by
setting salary conditions without taking gender into account.

The treatment of remuneration of the Parent’s directors responds to transparency criteria

applicable to a listed company. In this regard, the details and individual breakdown of the
conditions for the group of directors, which includes the only female senior executive, are reflected
in the remuneration report prepared for this purpose and published in accordance with the
regulations in force. In addition, the remuneration of the other members of senior management is
included in the Annual Corporate Governance Report of Listed Companies.

Universal accessibility
With a view to encouraging diversity, CAF respects universal accessibility by taking into account
criteria that enable both its working environment and its manufactured products to respect human
diversity and to be safe, healthy, functional, understandable and aesthetically pleasing.

CAF promotes physical access to its facilities by ensuring that all new investments in industrial
buildings and services, and all refurbishments and fitting out of general service facilities are
conducted pursuant to the accessibility regulations and standards of the location.

35 (Average Remuneration of Men by Group – Average Remuneration of Women by Group)/Average

Remuneration of Men by Group.

36 (Average Length of Service of Men by Group – Average Length of Service of Women by Group) / Average

Length of Service of Men by Group.

98
As regards the accessibility of its products and services, CAF’s priority from the design stage is the
accessibility of its products and services to guarantee universal use for the entire population. The
designs must be usable, without special adaptations or modifications, by disabled and able-bodied
people alike.

All products manufactured by CAF are designed to meet, and in some cases exceed, the accessibility
requirements laid down in the legislation of each country in which tender processes are held, as
well as the requirements of reference EU legislation.

Railway rolling stock manufactured by CAF meet the requirements set out in the 2014 EU technical
specifications for interoperability relating to accessibility for persons with reduced mobility, while
urban buses are built in accordance with the specifications indicated in Annex IV of Directive
2007/46, which creates a framework for the approval of motor vehicles, recently amended by EU
Regulation 2017/2400. These provisions include the requirements of Regulation No. 107 of the
Economic Commission for Europe of the United Nations (UNECE) on uniform provisions concerning
the approval of category M2 or M3 vehicles with regard to their general construction and in
particular their accessibility for passengers with reduced mobility.

CAF’s extensive experience in the implementation of accessibility projects enables the Group to
offer maximum quality in this regard, guaranteeing ease of use, since any passenger can use its
transport without the need for prior experience, usability, as the vehicles’ access points are
perfectly signposted and there are mechanisms that ensure that all types of passengers can use
them, and simplicity, since physical ability or disability does not affect the user experience.

In terms of information accessibility, CAF is firmly committed to the accessibility of its website and
wants its contents to reach as many users as possible, regardless of their disability status. For this
purpose, it uses standard technologies established by W3C and follows the WAI 1.0 Accessibility
Guidelines. The use of web standards established by the W3C, such as XHTML 1.0 Transitional for
valid semantic markup and cascading style sheets (CSS) for design, allows the website to be viewed
on various devices and platforms and also enables its content to be printed properly.

Lastly, it should be noted that the CAF Group meets the requirements of the legislation relating to
the rights of people with disabilities and their social inclusion in each country. This is achieved
through the direct hiring of workers with a certified disability 37 and through the adoption of
alternative measures envisaged in current legislation.

37 The CAF Group employs 149 people with certified disabilities (85 in 2021).

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4.3 Respect for Human Rights
[2-23, 2-24, 2-25, MA 407, MA 408, MA 409, MA 411, MA 412, 412-2]

CAF Group's Human Rights Policy and Commitments

CAF, in addition to its commitment to the strictest respect for the legal system in force in all the
territories in which it carries out its activities, includes in its Code of Conduct, Sustainability Policy
and Crime Prevention Manual its commitment to adopt measures that guarantee scrupulous
respect for fundamental rights, the principles of equal treatment and non-discrimination, as well
as any other principles contained in the Universal Declaration of Human Rights, in the OECD
Guidelines for Multinational Enterprises (whose content on Human Rights is identical to that of the
United Nations Guiding Principles on Business and Human Rights) and in the United Nations Global
Compact, which CAF, S.A. has joined.

Without prejudice to the management of Human Rights matters in every area and in accordance
with the circumstances, CAF has adopted measures that are systematically applied in two ways: (i)
due diligence in the field of business ethics, by implementing due diligence mechanisms that allow
previous and early management of potential impacts linked to Human Rights in the context of each
project or contract in which a CAF Group company participates and also with third parties with
which it is involved; and (ii) people management, which is deployed through the corporate people
management process, which incorporates labour and occupational risk prevention policies to
ensure compliance with the commitments in this area in all the Group's activities.

Internal regulations
The requirement to comply with Human Rights is a priority issue in the CAF Group's activity and as
a development of the CAF Group's Policy and commitments in this area, the CAF Group's Human
Rights Due Diligence Procedure was approved by the Compliance Function, thus ensuring better
management and control of the related risks.

In line with this corporate procedure, all potential projects (defined as any business activity) must
be systematically evaluated in advance so that the CAF Group can ensure that its participation does
not give rise to a breach of Human Rights, either through its own activities or as a direct result of
its operations, or due to the sale of its products or the services provided. At the same time, the
possible existence of international sanctions is checked on a general basis.

During 2022, in order to reinforce the aforementioned Procedure, the Compliance Function has
approved a new Human Rights risk assessment questionnaire that allows identifying the specific

100
circumstances of each project in order to define measures to manage potential Human Rights
impacts and/or to comply with the applicable international sanctions regime in various areas.

Due Diligence on Human Rights

The CAF Group's Human Rights Due Diligence procedure is an example of the CAF Group's priorities
and ethical approach in the way it conducts its business.

In this way, from the very outset of the business opportunity and prior to the presentation of the
initial offer, an analysis of compliance with the United Nations Guiding Principles on Business and
Human Rights is carried out, including the risk matrices that have been adjusted and updated over
the years, ultimately giving rise to the continuous analysis of risks and impacts on Human Rights
that, in summary form, is described below:

At the same time, all third parties that enter into contracts with CAF Group companies are required
to, inter alia, scrupulously respect the law, Human Rights, public freedoms and fundamental rights,
the principles of equal treatment and non-discrimination, protection against child labour and any
other principles included in the Universal Declaration of Human Rights and in the UN Global
Compact in relation to Human Rights.

Training and dissemination

During 2022, the CAF Group continued to undertake training and dissemination activities on Human
Rights Due Diligence commitments among the Group's employees as part of general Compliance
training.

A new additional e-learning module has been launched to specifically train those employees in
charge of carrying out Human Rights Due Diligence. As of the date of this report, 70% of the people
included in the training plan have completed their training, which is equivalent to more than 283
people trained in this area and more than 140 hours of training.

Human Rights risk management

Within the framework of the continuous development of the Corporate Risk Management and
Control and Compliance Systems, the management and control of human rights risks is included
specifically in accordance with the principle of dual materiality.

101
Since its initial approval, the above-mentioned CAF Group's Human Rights Due Diligence procedure
has maintained a key difference in the approach to risk assessment in this area, which means that
the risks analysed must necessarily take into account the interests of the affected parties, i.e. those
of the holders of human rights (and not only those of the company itself).

To this end, the first step is to analyse whether the country, region or city in which the project is
located, or the characteristics of the project, have a level of risk that a priori requires the adoption
of special measures on potential associated impacts. In a second step, a tailor-made study of the
specific circumstances of the case is carried out in order to determine the specific risks and, if
necessary, the preventive risk and impact management measures to be adopted if the project is
classified as admissible.

In terms of respect for human rights, the associated risks can manifest themselves in different
areas, which is why a series of essential aspects have been defined for the initial analysis, such as
the following: (i) the prevention of all forms of slavery or forced labour, (ii) the prevention of
discrimination against women and vulnerable groups, (iii) the prohibition of undue restrictions on
the movement of persons, (iv) the avoidance of forced evictions, (v) aspects of local recruitment,
(vi) the prevention of severe environmental risks and (vii) the prevention of discrimination against
minorities and indigenous peoples.

The impacts of such risks could result in sanctions related to human rights violations and/or
international sanctions in addition to sector-specific regulations and reputational impact.
Regulatory breaches are reflected in the short term, but the reputational impact has an impact in
the medium term due to its more progressive materialisation.

Similarly, in human rights risk management, during the 2022 financial year:

- The country-risk list on human rights and international sanctions has again been updated.

- IT tools have been developed to introduce automatic and semi-automatic controls in Due
Diligence with third parties, including the checking of sanction lists and watchlists for the
detection of possible contingencies, among others, those related to Human Rights
violations.

- In line with the above and in accordance with a criterion of prudence, work has been
carried out to assess the risks arising from the international sanctions imposed against
Russia and certain occupied territories because of the conflict in Ukraine, and the
corresponding instructions have been issued to avoid potential breaches.

In application of the above, 100% of the CAF Group's projects and offers are analysed from a human
rights perspective:

2022 2021 2020 Target

Projects analysed from a Human Rights 100 100 100 100
perspective (%)

Thanks to the application of the internal procedures established, no Human Rights violations arising
from the CAF Group’s involvement in any project were detected in 2022.

Remedial measures for potential impacts

The CAF Group assumes the provisions of the United Nations Guiding Principles and the OECD
Guidelines for Multinational Enterprises regarding measures to remedy potential human rights
impacts.

Therefore, if at any point in a project a human rights impact materialises, appropriate actions will
be analysed and taken to remedy the negative consequences on human rights that have been
caused or contributed to by the direct actions of the CAF Group. Depending on the circumstances,
it may be possible for CAF Group to play a role in the remediation process even if it has not caused
or contributed to the negative consequences of its activity.

102
The management of potential contingencies would be carried out in accordance with the following
scheme:

Handling of human rights complaints

No human rights complaints have been received in 2022.

The following table summarises the monitoring and progress of the complaints received regarding
Human Rights within the CAF Group over the last few years:
2022 2021 2020 Target
Number of complaints received 0 0 1 0
Cases of Human Rights violations detected 0 0 0 0

As a follow-up to what was reported in the Statement of Non-Financial Information - Sustainability

Report in the previous two years, in reference to the complaint received in 2020 regarding a project
developed in Jerusalem to the National Contact Point ("NCP") based on an alleged misapplication
of the OECD Guidelines, in 2022 CAF has received the final report of the NCP.

The NCP report does not identify any regulatory or legal non-compliance with CAF's participation
in the Project, nor any violation of any rights, nor any breach with the UN Guiding Principles on
Business and Human Rights or the OECD Guidelines for Multinational Enterprises.

The NCP concludes its report with three recommendations, two of which have already been fulfilled
by CAF (improvements in internal regulations and in aspects related to the disclosure of
information) without prejudice to the commitment to maintain continuous improvement in all
areas and, in particular, in relation to its Corporate Governance and Compliance Systems.

The third recommendation was related to request asocial impact assessment of the project to an
independent third-party, which was duly commissioned. For the preparation of the report, the
independent consultant carried out an extensive analysis of the systems, processes and internal
controls adopted by the company in relation to the Jerusalem project. It also carried out a first-
hand verification of CAF's activities and the operation of the tramway through an on-site visit to
Jerusalem. After all this, the independent expert has issued his final report with favourable
conclusions, confirming the following:

"CAF's activities in Jerusalem show a high level of compliance with the main international
standards for corporate social responsibility and sustainability in its three dimensions
(governance, social and environmental). All this suggests a positive social impact of CAF's
activities in the city of Jerusalem."

103
This report has been duly forwarded to the NCP, following its recommendation, and the procedure
has been closed.

Human Rights in people

In relation to the human rights aspect of people management, which is deployed through the
aforementioned corporate people management process, and in addition to all that is applicable in
the preceding section on due diligence, the Labour Relations Policy and the Guidelines that develop
it establish minimum requirements that ensure internal coherence in aspects such as labour
regulations, collective bargaining and legal representation of workers, fundamental rights, equality
and non-discrimination and employment contracts and Social Security.

Risk management of Human Rights in people

Risks that could potentially jeopardise the fulfilment of these commitments are identified: (i)
violation of the principles of equality and/or non-discrimination in the workplace; (ii) a lack of
freedom of association or the right to collective bargaining at own and/or third-party workplaces;
(iii) child exploitation at own and/or third-party workplaces; (iv) forced labour at own and/or third-
party workplaces; (v) violation of the rights of indigenous peoples; (vi) psychological harassment;
(vii) insufficient integration of people with disabilities; and (viii) other risks that are analysed on a
case-by-case basis depending on the particular features of the project in question.

The CAF Group adopts the measures it deems necessary to guarantee both in its own operations
and among its suppliers, compliance with the provisions of the fundamental conventions of the
International Labour Organization (ILO) relating to:

− The ability of workers to exercise their rights to freedom of association and collective
bargaining in all the countries in which they carry out their activities;

− Avoidance of child labour, forced or compulsory labour, and the assignment of hazardous
work to young people.

− Equality and non-discrimination in working conditions, prohibiting the adoption of

decisions that may lead to direct or indirect discrimination of workers based on gender,
origin, including racial or ethnic origin, marital status, social status, religion or convictions,
political ideas, sexual orientation, union membership or not, family ties with people
belonging to or related to the company, and language.

− Ensuring a safe and healthy working environment is one where risks are eliminated or
where all reasonable and practicable practical measures are taken to reduce risks to an
acceptable level and where prevention is integrated as part of the organisational culture.

In relation to this, two specific protocols are defined: (i) the Protocol for action in the event of
sexual harassment or gender harassment, and (ii) the Psychological Harassment Prevention
Protocol, included in the Occupational Risk Prevention Management System. Both Protocols
include a statement by management in relation to these areas, are aimed at establishing the
measures required in order to prevent and avoid the aforementioned situations, and establish
procedures so that the Group’s employees will know how to proceed in the event that such
situations arise.

As in the previous section, the impacts of these risks could result in sanctions related to the violation
of human rights and/or international sanctions in addition to sector-specific regulations, especially
those related to occupational safety or social security, and reputational impact. Regulatory
breaches are reflected in the short term, but the reputational impact has an impact in the medium
term due to its more progressive materialisation.

In 2022 no case involving a breach of Human Rights was detected among the workers employed by
the Group directly or through business relationships.

Matters relating to non-discrimination and equal opportunities are detailed in the chapter on the
working environment.

104
Compliance with Modern Slavery Act 2015 (UK) and Modern Slavery Act
2018 (Australia)
For the purposes of the Modern Slavery Act 2015 (UK), CAF is required to publish on its corporate
website a report detailing the Slavery and Human Trafficking Policy, Slavery and Human Trafficking
Due Diligence Processes in Business and Supply Chains and Slavery and Human Trafficking Training
available to staff, together with the other content suggested by the Act and the Secretary of State's
guidance.

In relation to the provisions of the Modern Slavery Act 2018 (Australia), this statement is used by
the Company in its capacity as the parent entity of the CAF Group operating in Australia, although
it covers all the activities carried out by the various companies comprising the CAF Group in
Australia and is therefore in the nature of a Joint Declaration. This is irrespective of whether the
entity is a reporting entity or a voluntary one.

Compliance with the Transparency Act (Norway)

For the purposes of the provisions of Section 5 of Transparency Act (Norway), the content of the
information to be reported on Human Rights and decent working conditions is detailed in this
section 4.3, as well as in section 1.1 of this report.

Human Rights due diligence procedures apply to all CAF Group entities without exception.
However, the entities referred to in Section 2 of Transparency Act will indicate so in their respective
individual management reports.

105
4.4 Occupational Health and Safety
[MA 403, 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8, 403-9]
As a result of the activities carried out by the CAF Group in the field of integrated transport systems,
the Group's own employees, as well as its subcontractors, are exposed to different occupational
health and safety risks.

The activities carried out by the various companies of the Group can be undertaken in own facilities,
in customer facilities, in the testing of supplied transport products (trains and buses), as well as in
infrastructure and signalling projects. In other words, activities are carried out in different
geographical areas and workplaces of different owners, with very different levels of Occupational
Health and Safety culture, as well as on the part of clients, partners, subcontractors or the
destination country itself.

This diversity of activities and locations means that the safety, ergonomic, hygiene and psycho-
sociological risks to which workers and subcontractors are exposed vary in nature.

Given the current context of diversity of activities and locations in which they are carried out, and
the Health and Safety of workers being one of the main challenges of the CAF Group, it has a
corporate Occupational Health and Safety Policy and controls that aim to guarantee compliance
with the applicable legislation in this area in the different geographies where it is present.

Occupational Health and Safety Policy

The CAF Group is aware that its activities can generate risks for the safety and health of people,
and it is therefore developing actions to build safety by promoting measures to protect people from
occupational risks.

During 2022, the Corporate Occupational Health and Safety (OHS) Policy has been updated to
specifically state that this policy applies to all persons, including both employees and
subcontractors. The main objective of the policy is to guarantee the health and safety of people,
highlighting its commitment to use the necessary means to eliminate or reduce occupational risks
by promoting a preventive culture among all the people who carry out their professional duties at
CAF. This Policy applies to all the companies that make up CAF and is applicable to all the Group's
employees, both workers and subcontractors. Likewise, this Policy complies with international
standards and regulations on Health and Safety at Work, taking as a reference international
organisations such as the World Health Organisation and the International Labour Organization,
among others.

Through the deployment of the Corporate Occupational Health and Safety Policy that is being
implemented in the Group, we are responding to the commitments established in the Corporate
Value of Occupational Health and Safety, as well as in the Vision of Occupational Health and Safety.
In order to carry out this deployment, the basic principles of action set out in the Corporate Health
and Safety Policy and developed in the Manual for the Development of the Corporate Health and
Safety Policy are taken as a reference. The basic principles of Occupational Health and Safety
defined in the Corporate Policy are as follows:

− Build a positive preventive culture through the leadership of management and the line of
command, in consultation with and the participation of employees and workers.
− Establish or reinforce the occupational health and safety management systems that are
focused on continuous improvement and that contribute to integrating the preventive
culture into all activities.
− Respect current occupational risk prevention regulations in the countries where the
Group operates and, as far as possible, anticipate the introduction of new regulations
and comply with the occupational health and safety commitments voluntarily acquired
by the Group.
− Continuously identify and evaluate the working conditions of the activities carried out to
generate safe and healthy work environments.

106
 − Report clearly on the results and actions in the area of occupational health and safety,
maintaining the appropriate channels to promote communication with employees and
workers and with stakeholders in general.

Both the Corporate Policy and the Development Manual have been developed within the Corporate
Forum on Occupational Health and Safety, composed of the various people responsible for
occupational health and safety management in the Group's main activities, and have subsequently
been approved by CAF's Management. It is in this same forum that the Group's corporate policy is
being driven.

Throughout 2022, improvement action plans have been implemented to achieve the objectives set
to achieve alignment with the Policy. Through these action plans, significant progress has been
made against the principles defined in the Policy in the Group's businesses. To give continuity to
this process, at the end of the period, and within the framework of the Corporate Forum on
Occupational Health and Safety, a new GAP analysis was carried out with respect to the Corporate
Policy of each of the CAF Group's activities, and the objectives for 2023 were defined. Likewise, in
2023, the Reichshoffen vehicle manufacturing plant will carry out the GAP analysis and will define
the improvement objectives to advance in the alignment of this site with respect to the Corporate
Policy.

In addition, during 2022, the unified occupational health and safety risk management methodology
for the CAF Group was updated and is expected to be deployed during 2023.

OHS management systems

One of the principles of the occupational health and safety policy is to establish or reinforce the
occupational health and safety management systems that are focused on continuous improvement
and that contribute to integrating the preventive culture into all activities. These management
systems identify and evaluate the applicable legal requirements and establish periodic controls to
check compliance. The effectiveness of the measures adopted is also evaluated to ensure
achievement of the stated objectives. Through the occupational health and safety policies defined
in the management systems of the Group's activities, CAF management expressly declares its firm
commitment to maintain and improve the systems in a way that guarantees compliance with
current legislation, assuming the protection of workers against occupational risks. These policies
integrate prevention management into all Group activities and decisions, both in technical
processes and in the organisation of the work and with respect to the conditions in which it is
performed, boosting integration at all hierarchical levels: executive, management, employee and
trade union representative. To this end, the human and material resources necessary to achieve
these objectives are made available.

With the aim of achieving zero accidents and improving occupational health and safety conditions,
and in accordance with the principles of the occupational health and safety policy, CAF has
implemented and promotes the extension of occupational health and safety management systems.

In the field of occupational health and safety, the Group has certifications and assessment and
monitoring mechanisms exceeding the legal requirements in each of the countries in which it is
present. Along these lines, in 2022 the target was achieved, with 68% of the Group's total workforce
covered by an occupational health and safety management system certified under the
requirements of the ISO 45001:2018 standard (in 2021 the workforce covered was 52%). The
achievement of this goal is largely due to the certification obtained at the Solaris Bus & Coach
manufacturing plant in Poland and at a subsidiary in Mexico.

By 2023, the aim is to extend this certification to other subsidiaries with manufacturing activities,
such as CAF Reichshoffen, CAF France and CAF Rolling Stock UK, as well as other international
subsidiaries of the Group.

107
 Scope Scope Scope Scope target Scope target 2023
Certificate Field
2022 2021 2020 2022 38

ISO Occupational 68% of the 52% of the 45% of the >60% of the 75% of the
45001:2018 Health and workforce workforce workforce workforce workforce
Safety
Management

Internal audits are conducted every year at all the plants in order to perform an internal follow-up
of the management system implemented, or in the process of being implemented, pursuant to the
requirements of the ISO 45001:2018 standard, and of the legal requirements applicable according
to the legislation in force in each country. Likewise, the list of qualified internal auditors evaluates
the effectiveness of the management system and, in particular, the correct application of CAF
policies. The results of the internal audits give rise to corrective measures to rectify any non-
conformities that might have been identified and measures to improve the management system.

In addition, beyond the audits of the management systems that are carried out, legal audits are
carried out in those companies in which they are applicable, in compliance with the legal
requirements applicable in those countries.

The occupational health and safety management system is structured to facilitate the
development, implementation and monitoring of a series of activities which, together, constitute a
system for the prevention of occupational accidents, occupational illness and material damage. This
management system establishes the management principles and the system procedures and
processes that implement the prevention activities.

The management system implemented at CAF not only ensures the health and safety of employees
but addresses issues aimed at preventing or mitigating the risks of workers from other companies
who carry out activities at CAF facilities, as well as those who visit these facilities. The management
system, therefore, establishes the measures and means of coordination with these companies as
regards the application of the regulations on the prevention of occupational risks and the
coordination of business activities with them. It also includes procedures for managing visits to CAF
facilities in terms of information on the risks and prevention measures to be adopted.

Preventive activities and prevention plans

Risk assessment
One of the main activities of the management system is risk assessment, a process aimed at
estimating the magnitude of risks that could not be avoided and obtaining the necessary
information to adopt preventive measures. Risks for workplaces, job positions and activities,
whether related to health, safety, ergonomics or psychosociology, are identified and then assessed.
Among others, these risks the ones that can cause a work-related injury with significant
consequences 39. Risk assessment is carried out in all workplaces where activities are carried out,
both in the company's own facilities and in those of third parties, such as activities carried out at
the destination. This process includes the activities carried out by the company's own workers as
well as those of subcontracted companies, the latter being managed through the coordination of
business activities.

If the outcome of an assessment reveals situations of risk, preventive and corrective measures are
proposed. The measures adopted aim to eliminate or reduce the risk through actions at source, at
the organisational level, for collective and/or individual protection, and training and information
for workers, or a combination of all or some of these measures. The hierarchy for proposing control
measures is as follows, in this order: elimination, replacement, engineering controls,
signalling/warning and/or administrative controls and finally the provision of PPE.

38 Thetarget for 2023 is based on the current workforce for 2022.

39Work-related injury with significant consequences: work-related injury resulting in death or injury such that
the worker cannot or does not fully recover their pre-accident health, or the worker is not expected to fully
recover their pre-accident health within six months.

108
Once the risk assessment has been carried out, both employees and workers who are not
employees but whose work or workplace is controlled by CAF are informed of the risks arising from
the risk assessment, as well as of the safety, prevention, protection and emergency measures to
adopt.

The people who carry out the risk assessment process are people all have the necessary training
and skills based on the provisions of the relevant legislation in each case. The procedures related
to this process designate the team entrusted with the task and describe the methodology and
frequency of the process and how to document it.

Occupational health services

CAF has occupational health services in the Group's companies in compliance with the legal
requirements applicable in each of the corresponding countries.

In particular, the parent company has its own prevention service for its Beasain and Irun plants,
offering the specialities of occupational safety, industrial health and health monitoring, as well as
its own prevention service at the Zaragoza plant, where the specialities of occupational safety,
industrial hygiene, ergonomics and applied psychosociology are undertaken, the rest of the
specialities being contracted out to external prevention services. These services have competent
and qualified personnel to carry out the relevant functions, as well as health services authorised by
the competent authority in each case to guarantee the provision of a quality service for workers.

The annual Occupational Risk Prevention Plans of the Group companies set out the guidelines to
be followed with regard to health surveillance, both individual and collective, health promotion, as
well as other activities such as emergency management and the management of training and
information activities. The annual plans include lines of action and specific actions to be carried out
to ensure health surveillance that covers all workers and complies with all applicable legal
requirements.

The occupational health services of each of the Group companies are responsible for the
development of health surveillance of workers, in compliance with the corresponding legislation
applicable in each country. This surveillance is carried out by means of a set of activities whose
objective is the early detection of health alterations, mainly related to work, both at individual and
collective level, derived from exposure to risk factors (physical, chemical, biological, ergophysical
or psychosocial) to which the different groups of professionals are exposed, depending on the
activity they carry out and the place where they work. All identified risk factors can lead to some
health damage, illness or injury that can be detected by different diagnostic methods. For each
professional group exposed to certain risk factors, a periodicity is established for the application of
diagnostic methods, and as a conclusion, the aptitude or non-aptitude of the workers is established.
The basis of these activities is "programmed health screening"; "health consultations on demand"
and "epidemiological studies" among others.

For scheduled health examinations and taking into account the results of the risk assessment
carried out by the competent personnel in each case, protocols are defined to monitor the health
of workers, which are set out in specific procedures or documents. They set out all the details of its
development and cover all the factors involved in the health surveillance of workers. These
documents take into account the legislation in force in each case, as well as the guides and
protocols published by the health authorities of each country, and serve as a reference for carrying
out periodic health check-ups as an essential tool for health monitoring.

These Protocols are reviewed and updated periodically, adapting them to the new working
conditions of the different professional groups.

Likewise, and within the health monitoring activities carried out in the Group companies, as an
example to be highlighted, there are procedures for action in situations of pregnancy and
breastfeeding, which have the general purpose of adopting a set of measures aimed at protecting
women and their children at work during pregnancy and breastfeeding situations. Specifically, the
risk for pregnancy or breastfeeding to which the worker is exposed is determined, a medical
certificate is drawn up stating whether the conditions of the job position have a negative influence
or not on the health of the worker, foetus or infant, and recommendations are established

109
regarding the adaptation, limitation, change of job position or application of the risk allowance
during pregnancy.

There are also procedures for handling situations where workers are especially sensitive to risk
factors in the workplace or have psycho-physical limitations in order to assign them to jobs that are
suitable to preserve their health and/or safety and that of third parties.

Annually, in the Occupational Risk Prevention Plans or planning of the preventive activity of each
head office, the objectives to be met in this area are defined, in the terms considered appropriate,
as well as the specific content and manner of carrying out the examinations to achieve them.

Regarding health promotion activities, the objective is to collaborate with the national health
system in promoting healthy lifestyles that improve the physical and mental well-being of workers.
The parent company includes these activities in the annual occupational risk prevention plan and
reports on them through the meetings of the Occupational Health and Safety Committees. The
activities promoted focus on encouraging a healthy diet and physical exercise, the prevention of
infectious diseases, medical check-up, and training and information in the area of first aid, health
and ergonomics. Of particular note is a new pilot initiative that has been launched in the course of
2022 at the parent company's head office. This is an individualised programme of prevention and
rehabilitation of the musculoskeletal system based on the DAVID methodology, which is
fundamentally aimed at improving mobility and strength, and reducing back pain, specifically in the
cervical and lumbar area. The experience has been very well appreciated by the participants, and
the data extracted from the measurements taken of different factors related to mobility, outside
and pain perception have been very positive. This experience will continue throughout 2023.

With regard to health promotion, the rest of the Group's subsidiaries are also undertaking health
promotion activities with campaigns to promote and provide guidelines for employees to acquire
healthy habits both at work and in their personal lives.

Regarding the management of the pandemic caused by the SARS-CoV-2 coronavirus (COVID-19),
and maintaining the objective of first and foremost protecting workers from the risk of exposure to
this agent, in 2022 the Group monitored the epidemiological situation and the incidence of cases
at each plant and location to adopt and implement the necessary preventive measures at all times,
updating and communicating the action protocols when necessary to reduce the risk of infection
among workers.

Making an assessment of 2022, bearing in mind the effect of COVID-19 on the CAF Group's main
activities, the preventive measures implemented in managing the pandemic could be considered
to have been effective as they have allowed the Group to continue with its activity while ensuring
compliance with the minimum health and safety conditions established in the work places.

OHS Social Dialogue and Communication

In the field of occupational health and safety there is a social dialogue managed through formal
worker/company committees. All Vehicle and Bus manufacturing plants as well as CAF Turnkey &
Engineering, CAF Signalling and CAF Rail Services has an occupational health and safety committee
made up of representatives from management, prevention officers, the prevention service and the
managers of the activity in question. These committees gather information from the various
operating levels and approve the occupational risk prevention plans, with input from workers
regarding the definition of the plans. These committees also adopt the appropriate decisions and
follow up on the proposed actions, pursuing achievement of the objectives set.

In other Group companies, there are defined forums for employee consultation and participation
that serve as a channel of communication with interested parties, through which proposals and
relevant issues of interest are collected.

110
All these mechanisms together make it possible to represent 92%40 of the Group's total employees
in the field of occupational health and safety.

In addition, within the framework of the occupational health and safety management system, there
are tools and communication channels that are used to notify situations of danger and/or incidents,
and to propose measures and actions to reduce risks and prevent incidents or accidents from
occurring and causing damage to people's health. These are specific working and management
forums where issues relating to health and safety at work are discussed, where workers can report
dangerous situations, both directly and through workers' representatives in the various
consultation and participation bodies available. In these same forums and through existing
communication channels, informative campaigns are carried out on the need to report this type of
incident as part of a process of continuous improvement, and to prevent damage to people's
health.

Prevention Plans
Based on collaboration with social agents and social dialogue in matters of health and safety aimed
at reducing accidents and improve working conditions at the different plants, every year different
lines of action are drawn up for inclusion in the occupational risk prevention plan, which constitutes
the planning of the preventive activities to be carried out in each of the Group's companies.

This planning of the preventive activity includes specific objectives, with dates for their
achievement and periodic evaluation of the fulfilment of these objectives. The Annual Occupational
Risk Prevention Plan is presented for consultation in the Occupational Health and Safety
Committees, which is the body that carries out the monitoring and adopts the decisions in each
case, for the best fulfilment of the objectives set. Where there is no Occupational Health and Safety
Committee, it is carried out through the forums defined for the consultation and participation of
workers.

Preventive risk control activities

In addition to risk assessment or health monitoring, there are other preventive risk control activities
such as safety inspections, work observations, safety walks, management of personal protective
equipment, development of safety procedures and instructions, emergency preparedness and
response, and mechanisms to control risks arising from the supply of equipment or materials that
may be integrated into CAF's manufacturing processes, among others. All these activities are
included in the annual Occupational Risk Prevention Plans.

With regard to safety inspections of working conditions or workplaces, this is a tool that allows for
the dynamic and effective evaluation, control and elimination of occupational hazards in the
different work areas. They are carried out periodically, in accordance with the annual plans and the
planning of preventive activities, and subsequently, the corrective measures and anomalies
identified in them are monitored.

As a complement to safety inspections and in order to complete an effective control of the risks
present in the workplaces, work observations are carried out. The objective of this activity is to
observe the performance of tasks for the detection and notification of unsafe situations or
behaviour in the processes, which may result in damage to people or things. Analogous to safety
inspections, task analysis is carried out periodically, with the aim of verifying that the worker's way
of doing things, the safety instructions or any specific instruction received by the workers, is being
carried out correctly.

In addition, in several Group companies, safety walks are being carried out by managers at
workplaces to observe tasks and identify the improvements needed to perform work safely, to
encourage participation and communication with workers, and to demonstrate management's
commitment to prevention and improve its relationship with workers. This type of activity is one of
the levers that favour the generation of a positive preventive culture.

40In92% of the total employees of the Group are included the companies that have productive activities and
the most representative companies of the Group. The companies that are left out have office activities.

111
In addition, and within the framework of the annual prevention plans, personal protective
equipment is managed. Based on the assessment of the risks at the workstations, both from a
hygiene point of view (presence of contaminants) and from a safety point of view (situations that
could lead to an accident), the degree of protection required is defined in order to be able to specify
the necessary equipment. Once defined, the workers are trained and informed about the correct
use and maintenance of these, and through the different preventive activities of the system, the
use of these by the workers is monitored.

In addition, through devising and defining procedures and safety instructions, the preventive
measures to be adopted in the work processes and operations that are considered critical are
established. These specific documents are available together with the rest of the management
system documentation, and the information on the risks and preventive measures contained in
them is transmitted to the workers through the workers' information procedure.

With regard to action in emergency situations, at each of the Group's manufacturing sites and in
the other companies where it is applicable, specific procedures are in place to identify the situations
that could lead to an emergency, as well as the specific points or facilities where they could occur,
and to develop the measures to be adopted in the different emergency situations. In order to train
and inform the organisation's personnel in emergency preparedness and response, in addition to
the emergency drills carried out on the basis of the annual Drill Plan included in the annual
Occupational Risk Prevention Plan at each headquarters, training actions are carried out both in
the environmental awareness talks and in the training given on Health and Safety at Work, fire
extinction and first aid.

Regarding the risks derived from the supply of equipment or materials for integration into CAF
manufacturing processes, CAF's commercial relations with its suppliers include control mechanisms
and procedures to identify and assess these risks and define prevention and protective measures
to reduce or eliminate them. In the specific case in which a chemical product or substance is to be
incorporated into the production process, methodologies are established to control and manage
the purchase and introduction of these, where the criteria for the technical definition and purchase
of chemical products and substances are established. Furthermore, in the case of the incorporation
of new work equipment, machinery or installations subject to industrial regulations, as well as their
subsequent modifications, mechanisms are established to ensure that they comply with the
minimum conditions required to guarantee the health and safety of both operators and other
persons who may be affected by their operation. The development of this activity is defined in the
specific procedures for the control of machinery and installations defined at each site. Similarly,
there are specific procedures for the design of new workplaces which set out the considerations to
be taken into account for the design of workplaces in order to eliminate or reduce occupational
health and safety risks at source.

OHS training
The training of workers in health and safety at work is derived from the risks identified in the risk
assessment of the jobs and activities carried out, and from the corresponding sectoral regulations
in each case. This training is part of CAF's annual training plan. The onboarding programme for new
hires includes a training/information process on the risks, prevention measures, protection and
emergency measures to be adopted in the workplace. In addition, depending on the tasks to be
carried out by the worker and the risks to which he/she is exposed in his/her job, specific training
in occupational risk prevention is given, and is updated in cases where new risks appear or there
are changes that require the training to be updated.

At the same time, awareness-raising actions are carried out through training, awareness-raising
talks, welcoming plans, workers' meetings, etc.

Incident management
Another key activity of the management system is the investigation of any accidents and incidents
that occur, the purpose of which is to adopt the necessary measures to prevent their recurrence
by obtaining data to define the event, identify the hazards, assess the risks and establish the root
causes that generated them. The investigation process is carried out in accordance with the criteria
set out in the specific procedures defined for this process. Accidents and incidents are analysed as
a whole to detect the organisation's critical points and repetitive root causes, and corrective actions
are followed up. Regular statistical analyses of accidents that have occurred in Group companies

112
are carried out. Finally, the same hierarchy as indicated above is used to adopt the relevant
measures and determine the necessary improvements to the occupational health and safety
management system.

With regard to the reporting of incidents and in order to convey the importance of reporting such
situations, information campaigns are carried out on the need to report this type of incident as part
of a process of continuous improvement, and to prevent damage to people's health.

Preventive culture
In line with one of the basic principles of action of the Corporate Occupational Health and Safety
Policy, in relation to building a positive preventive culture, projects to improve the preventive
culture have continued throughout 2022 in several Group companies. In the specific case of the
parent company, and after carrying out a diagnosis and having defined a plan for the improvement
and development of the preventive culture in previous years, in 2022 the implementation of the
plan has continued, giving priority to the definition of the desired and shared model for
Occupational Health and Safety in CAF, having resulted from this exercise, the drafting of a new
version of the Corporate Occupational Health and Safety Policy, and the review of the Prevention
Plan of the parent company, where a review of the functions and responsibilities of the different
levels of the organisation has been carried out. The current systems were also reviewed to ensure
that they are conducive to generating a preventive culture within the organisation. This action plan
will be continued in 2023.

With respect to the rest of the Group's companies, and after having performed the GAP analysis
with respect to the Corporate Occupational Health and Safety Policy, they have defined their
objectives and have started to implement improvement action plans, which included actions aimed
at improving their level of preventive culture, and which have been developed throughout 2022.
To this end, several companies have implemented processes to diagnose the situation of the
preventive culture, using the NOSACQ-50 questionnaire (Nordic Occupational Safety Climate
Questionnaire), which is used to determine the preventive climate of an organisation. Through
these processes, improvement plans are being developed and implemented.

Occupational risk prevention in figures

The occupational risk prevention plans are implemented annually and define the annual
programme of preventive activities and occupational health and safety objectives.

In relation to the accident rate objectives, three main indicators are measured: the frequency index,
the severity index and the absolute frequency index. The table below shows these indicators for
CAF Group employees, the most significant national and international CAF Group operations, and
the number of occupational illness cases identified.

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 CAF Group (CAF workforce) 41

2022 2021 2020

H M T H M T H M T
Frequency rate 42 17.66 2.70 15.16 19.68 2.20 17.28 20.09 4.28 17.98

Severity rate 43 0.41 0.09 0.35 0.46 0.05 0.40 0.50 0.06 0.44
Absolute frequency
60.0 8.91 51.44 68.29 8.43 60.09 72.72 16.71 65.25
rate 44
Occupational illness
18.17 0.00 15.26 10.60 0.00 9.10 10.74 0.00 9.18
rate 45

As can be seen in the table above, if we take into account the tendency over the last few years,
there is a trend towards a reduction in the accident rate among employees at group level, both in
terms of the frequency rate, the severity rate and the absolute frequency rate. In order to reduce
the accident rate in the Group companies, action plans have been established with specific
objectives and actions aimed at reducing risks and, consequently, the accident rate.
As for the rate of occupational diseases, last year there was an increase compared to previous
years, as more cases of occupational diseases were recorded this year. No events or situations have
been identified that have led to this increase, and this indicator is in line with comparative data for
the sector.
The same indicators are also shown for workers not employed by CAF but whose jobs or workplaces
are controlled by the organisation. In this case, there is a significant downward trend in all
indicators, both accident rates and occupational illness rates. Compared to the previous year, the
reduction has been considerable.

Workers who are not direct employees of CAF 46

2022 2021
Male Female Total Male Female Total

Frequency rate 9.53 7.40 9.09 21.74 17.36 20.50

Severity rate 0.20 0.49 0.26 0.47 0.11 0.37

Absolute frequency rate 14.76 12.95 14.39 48.06 26.04 41.82

Occupational illness rate 0 0 0 0 0 0

41 This includes indicators for 95% of the CAF Group's total workforce representing the Group's main activities,

excluding those companies whose activities are mainly branches and generate less risk. For the coming years,
the intention is to continue to broaden the scope of the data reported. In 2021, the reported indicators were
91% of the Group's total workforce, so this scope has increased. The number of hours worked in the indicated
scope amounted to 22,103,717. When segregated data by gender were not available, an estimate was made
based on the distribution of the headcount.
42 IF= Número de accidentes con baja*1.000.000
Horas trabajadas
Número de días de trabajo perdidos*1.000
43 IG=
Horas trabajadas
Número de accidentes totales*1.000.000
44 F2=
Horas trabajadas
Número de enfermedades profesionales*10.000
45 EP=
Número de trabajadores
46 The number of hours worked in the stated perimeter of workers not employed by CAF has risen to 2,640,306.
With regard to external companies, data is available for 2 financial years, with the collection of information
having commenced in 2021. In previous years, relevant incidents/accidents occurring at CAF facilities were
reported and monitored, and it was not considered necessary to keep statistics on this group as there were no
significant accidents in volume.

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The work-related injuries for CAF employees recorded in the last three years are shown below.

CAF Group (CAF workforce)

2022 2021 2020
H M T H M T H M T

Fatalities as a result of a No. 0 0 0 0 0 0 0 0 0

work-related injury 47
Rate 0 0 0 0 0 0 0 0 0
Serious work-related No. 0 0 0 0 0 0 3 0 3
injuries (excluding
fatalities) 48 Rate 0 0 0 0 0 0 0.16 0 0.16

Recordable work-related No. 1,104 33 1,137 1,173 23 1,196 1,216 43 1,259

Injuries 49 Rate 60.0 8.91 51.44 68.29 8.43 60.09 72.72 16.71 65.25

No. 20 0 20 11 0 11 9 0 9
Occupational illnesses 50
Rate 18.17 0.00 15.26 10.60 0 9.10 10.74 0 9.18

With regard to the data reflected in the table above, there is also a trend towards a reduction in
the accident rate among employees at group level, with fewer recordable work-related injuries
recorded, and no serious work-related injuries recorded in 2022. In terms of occupational diseases,
there was an increase in the number and rate compared to the previous year.
The same data are also shown for workers not employed by CAF but whose jobs or workplaces are
controlled by the organisation.

Workers who are not direct employees of CAF

2022 2021
Male Female Total Male Female Total

Fatalities as a result of a work- No. 0 0 0 0 0 0

related injury
Rate 0 0 0 0 0 0
No. 0 0 0 0 0 0
Serious work-related injuries
(excluding fatalities) Rate 0 0 0 0 0 0

No. 31 7 38 42 9 51
Recordable work-related Injuries
Rate 14.76 12.95 14.39 48.06 26.04 41.82 51

Occupational illnesses No. 0 0 0 0 0 0

Rate 0 0 0 0 0 0

Regarding the data reflected in the previous table on CAF's non-employee workers, there is also a
trend towards a reduction in the accident rate among employees at group level, with fewer
recordable work-related injuries recorded, and no serious work-related injuries recorded in 2022.
The reduction in recordable work-related injuries, both in rate and total number, has been very
significant in the last period. As for occupational diseases, just like last year, no occupational
diseases were recorded.

The main types of work-related injuries that occurred in 2022 among CAF workers were due to
overexertion of the musculoskeletal system, falls and trips, blows and cuts with tools, and particle
projections, while the injuries of workers not employed by CAF were due to blows and cuts with

47 Nª de Muertes como resultado de una lesión relacionada con el trabajo*1,000,000

Horas trabajadas
48 Nª de Lesiones graves relacionadas con el trabajo
(excluidas las muertes)*1,000,000
Horas trabajadas
49 Nª de Lesiones relacionadas con el trabajo registrables*1,000,000
Horas trabajadas
50 Nª de Enfermedades profesionales*10,000
Número de trabajadores
51 2021 data is adjusted.

115
tools, and particle projections. No work-related injuries with significant consequences were
recorded in 2022.

Occupational illnesses recorded in 2022 were mainly due to musculoskeletal complaints and some
hearing loss.

A common employee indicator at organisations is the absenteeism rate. This indicator measures
the hours lost in relation to the theoretical hours. In 2022 this rate was 5.9%52 at the corporate
level (in 2021: 6.6%).

52This absenteeism rate corresponds to 88% of the Group's average workforce and takes into account the hours
lost due to accidents and illness, amounting to 1,285,398 hours lost. The 2021 data related to 89% of the
Group’s workforce.

116
 5
CONTRIBUTING TO THE CARE
OF THE ENVIRONMENT

"Define climate change strategies focused on reducing CO2 emissions

and promoting the use of renewable energies, investment in R&D&i for
the development of sustainable products and technologies, and the
implementation of environmental management systems."
CAF Sustainability Policy
17 December 2020

5.1 Environmental management

5.2 Climate strategy

5.3 Sustainable and efficient mobility

5.4 Circular economy and sustainable use of resources

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5.1 Environmental management
CAF management is aware that the Group's industrial activities have an impact on the natural
environment and that it operates in an increasingly challenging environment. In line with the
provisions of the United Nations Global Compact for the 2030 Agenda for Sustainable
Development, the Group has therefore established a commitment to undertake actions to mitigate
the causes of global warming and adapt to climate change by implementing measures that
contribute to environmental sustainability.

To this end, the CAF Group's Corporate Environmental Policy and its Development Manual, which
were defined within the Corporate Environmental Forum and approved by CAF's Management,
have been maintained in 2022. The main objective of the Corporate Policy is to define the general
principles and criteria that should govern CAF at corporate level in environmental matters, and to
project to stakeholders the environmental commitments established within CAF's Sustainability
Policy, considering the environment as a main element of the concept of sustainability and in
particular of the development of integral, more efficient and respectful sustainable mobility
solutions. Accordingly, CAF adopts a transparent communication and information strategy to meet
stakeholder expectations regarding environmental conservation, the increasingly demanding
regulatory requirements and the constant analysis of management by analysts, evaluators and
different agents of civil society. The purpose of the two documents is to unify policies, approaches
and management tools and define and monitor environmental guidelines across the Group’s
various activities.

In addition, the principle of environmental care through the prevention of the environment impact
of all activities is an integral part of the Group's Environmental Policy, and CAF therefore adopts
the necessary and economically viable measures to control and, where applicable, minimise
emissions into the atmosphere, waste generation and energy consumption to preserve natural
resources.

Throughout 2022, improvement action plans have been implemented to achieve the objectives set
to achieve alignment with the Policy. Through these action plans, significant progress has been
made against the principles defined in the Policy in the Group's activities. To give continuity to this
process, at the end of the period, and within the framework of the Corporate Environmental Forum,
a new GAP analysis was carried out with respect to the Corporate Policy of each of the CAF Group's
activities, and the objectives for the year 2023 were defined. Likewise, in 2023, the recently
acquired Reichshoffen vehicle manufacturing plant will carry out the GAP analysis and will define
the improvement objectives to advance in the alignment of this site with respect to the Corporate
Policy.

Likewise, following the deployment of the unified environmental risk management methodology
for the CAF Group, during 2022 progress was made in extending the scope of the organisation's
environmental risks and work was carried out to improve the maturity of existing or new mitigation
measures or controls.

In addition to the Corporate Environmental Forum, CAF has a Corporate Environmental Committee,
made up of the parent company management and environmental managers, which coordinates
and promotes all the actions considered necessary to ensure and improve environmental
performance, as well as coordinating aspects related to the Group's environmental management.

Externally, CAF also maintains environmental communications channels open to the exterior in a
fluid manner, with public authorities, communities and associations, among others.

One of the principles of the environmental policy is the implementation of environmental

management systems the purpose of which is to minimise the environmental impact of operations.
These management systems identify and evaluate the applicable legal requirements and establish
periodic controls to check compliance. The effectiveness of the measures adopted is also evaluated
to ensure achievement of the stated objectives.

In the field of environmental management, the Group has certifications and assessment and
monitoring mechanisms exceeding the legal requirements in each of the countries in which it is
present. Accordingly, in 2022 the Group achieved its target of 80% of the total workforce covered
by an environmental management system certified under the requirements of the ISO 14001:2015

118
standard. The objective for 2023 is to continue to extend this certification to other manufacturing
plants and international subsidiaries of the Group.

In all cases, annual internal audits are carried out through which the CAF Group’s list of qualified
auditors assesses progress in the implementation and certification of the environmental
management system, the efficiency of the environmental management system and, in particular,
the proper application of CAF’s policies, as well as compliance with legal environmental
requirements and the customer’s environmental requirements, among others. The results of the
internal audits give rise to corrective measures to rectify any non-conformities that might have
been identified and measures to improve the management system.

In order to monitor and improve these management systems, environmental programmes are
established with their respective targets, goals and actions. In this way, the centres specifically
control the environmental aspects of their activity and minimise the impacts generated, with the
aim of continuous improvement.

Likewise, continuing with the implementation of effective systems for the management and
continuous improvement of environmental performance, during 2022, the Group's parent
company has implemented and certified the environmental management model of excellence,
based on the European Regulation EMAS "Eco-Management and Audit Scheme", fulfilling the
objective set.
Certificate Field Scope 2021 Scope 2022 2023 target
ISO 14001:2015 Environmental 70% of the workforce 80% of the workforce 81% of the workforce
management
EMAS Environmental - Group's parent Maintain
management company

Likewise, as a result of the implementation of the environmental policy, the environmental risk
management procedure for compliance was created. In the process of identifying environmental
risks, all significant impacts for the Group are considered. As a result of this identification, the
following environmental risks associated with both the products and services offered and the
industrial activities carried out by the Company are identified. That is, environmental risks with an
effect on the environment: (i) use of polluting materials; (ii) non-optimisation of energy
consumption and natural resources (electricity, fuel, water, etc.); (iii) pollution of water and soil;
(iv) impact on biodiversity; (v) air pollution and global warming; (vi) impact on natural resources
due to inadequate waste management; (vii) environmental impact of products and services on
technological development; (viii) noise pollution; (ix) non-compliance with the requirements
established by customer specifications; (x) extreme weather conditions related to climate change;
(xi) other environmental impacts related to incorrect management of waste and products in
production and/or from machinery.

In relation to the environmental risks of climate change that may affect the CAF Group, both
physical and transitional risks, these are analysed in section 5.2 below entitled "Climate strategy".

The impacts arising from such risks can focus on irreversible damage to the ecosystem and its effect
on society, resulting from environmental mismanagement, as well as fines and inspections related
to non-compliance with environmental laws. Although these impacts have a direct short-term
effect, the first impact mentioned may have a medium-term effect since environmental impacts
are lasting. In this regard, it is worth noting that, as in 2021, no provisions or guarantees were
recognised for environmental risks, since there have been no legal proceedings or contingencies
relating to environmental protection or improvement, or environmental pollution incidents.

The corporate risk control and management system covers environmental risks and provides a
series of activities aimed exclusively at managing these risks.

119
5.2 Climate strategy
[201-2, MA 305, 305-1, 305-2, 305-3, 305-4, 305-5]

Risks and opportunities derived from climate change

Context
CAF, aware that it is in an increasingly demanding environment and in accordance with the United
Nations Global Compact for Sustainable Development 2030, is committed through the
Sustainability Policy and the Environmental Policy to develop actions in relation to the mitigation
of the causes of global warming and adaptation to Climate Change, promoting measures that
contribute to environmental sustainability.

During the 2022 and 2021 financial years, and with the aim of responding to the development of
actions to mitigate the risks and opportunities of climate change, work has been carried out to
implement the corporate framework for the Management of Risks and Opportunities derived from
the emerging risk of Climate Change. In doing so, the organisation has drawn on the
recommendations of the Task Force on Climate related Financial Disclosures (TCFD), as well as
other guidelines/supplements related to non-financial reporting of the European Commission.

Climate Change Risks and Opportunities Methodology

The new Climate Change Risks and Opportunities methodology is part of the CAF Group's
Integrated Risk Control and Management System. This system is underpinned by its General Risk
Control and Management Policy and is grounded in the Risk Control and Management Procedure.
If you wish to go more deeply into this system and its principles, these are detailed in section 2.2
of this document.

The main focus of the new methodology has been to make an initial identification of the risks and
opportunities arising from climate change for CAF's areas of activity based on the expected trends,
in order to prevent and reduce the impacts of the risks and take advantage of the opportunities
that this phenomenon will entail, defining how to address them.

For CAF's risk identification and management process, the following categories of risks,
opportunities and their corresponding analysis are considered:

2.1 Physical Hazards

The organisation has identified the following physical hazards:

− Acute threats: whose impact is sudden and rapidly evolving, as is its resolution. It includes:
extreme precipitation and hurricanes/monsoons
− Chronic threats: whose impact grows gradually over time and lasts for several periods. It
includes: rising temperatures, rising sea levels (ANM) and decreasing precipitation.

These risks have been identified on the basis of projections from scientific institutions such as IPCC
reports, environment ministries or national meteorological agencies.

In order to assess the physical risks, the (i) degree of exposure and (ii) degree of vulnerability have
been analysed. Firstly, (i) the degree of exposure identifies the elements of the company exposed
to these climate hazards in each country. Exposure elements should be identified for each region
in which the company operates in order to subsequently relate these elements to the identified
hazards (next step), thereby establishing the associated physical impacts and risks. The selected
items include: (i) offices and headquarters; (ii) railway works and infrastructure and personnel
employed.

Secondly, (ii) the degree of vulnerability includes the sensitivity or susceptibility to harm and the
lack of capacity to cope and adapt to these physical hazards. That is, the conditions in which the
exposed elements are found, and their predisposition to be adversely affected by physical hazards
in each country where they are active, have been taken into account. In addition, aspects related

120
to the state of the country's infrastructure have been taken into account, as well as the vulnerability
of the population or the socio-economic situation of the country in which the exposed element is
located, as these external vulnerabilities could have a direct impact on the organisation.

The combination of the result of the degree of exposure and degree of vulnerability generates an
overall assessment of the degree of threat in each country and for each physical hazard. In
developing the risk treatment, however, the organisation has focused the results by encompassing
the overall impact of the degree of threat by physical hazard.

2.2 Transition risk

The organisation has identified the following transition risks in the following families:

─ Current and emerging regulation: refers to policy or legislative/regulatory actions that

seek to limit actions or activities that contribute to the adverse effects of climate change
or that seek to promote climate adaptation.
─ Technology: refers to the development and use of technologies such as renewable
energy sources, battery storage, energy efficiency, among others, which will affect the
competitiveness of organisations, their production and taxation costs, and even the
demand for their products and services.
─ Market: refers to changes in the supply and demand for certain products and services, as
well as in the availability of sufficient inputs and raw materials.
─ Reputation: these are linked to the perceptions of customers and other stakeholders
about an organisation's contribution to exacerbating climate change through climate
inaction or detracting from the transition to a low or carbon neutral economy.

The assessment of the transition risks detailed above has been carried out using a qualitative
method in which the organisation has used external references such as i) analysis of rail sector
peers and (ii) subject-specific studies.

2.3 Opportunity

Efforts to mitigate and adapt to climate change also create opportunities for organisations, for
example through resource efficiency and cost savings, adoption of low-emission energy sources,
development of new products and services, access to new markets and building resilience along
the supply chain. Climate-related opportunities vary depending on the region, market and sector
in which the organisation operates.

In the case of CAF, climate change opportunities were identified based on the opportunities
described by the TCFD and on the definition of the risks identified for the organisation. In addition,
after analysing the actions of the competition and identifying trends in the sector, those that could
have the greatest impact on the organisation were contextualised.

The most relevant climate opportunities for CAF's areas of activity are presented below:

− Resource efficiency: In the transport sector and its production, where CAF designs,
manufactures and maintains rolling stock and vehicles, there is great potential for
efficiency improvements at both production and consumption levels, favouring greater
efficiency and quality of customer service.
− Power source: There are several opportunities for CAF to increase the sustainability of its
processes and operations mainly by reducing emissions on the production line, and using
its products with renewable electricity generation.
− Products and services: Innovation and the development of new low-carbon products and
services represent opportunities for CAF mainly related to the reduction of its
environmental impact (through the reduction of its carbon footprint), adaptation to new
market needs and its reputation.
− Markets: The new markets arising from the diversification of fossil fuels and the
promotion of sustainable transport represent various opportunities for the business at a
cross-cutting level, such as increasing its production and therefore maintenance
activities, as well as improving its positioning as a company at national and international
level.

121
 − Resilience: adaptive capacity to respond to climate change presents CAF with several
opportunities related to innovation and creation of new products, increasing after-sales
maintenance services, and working more closely with its value chain stakeholders to
reduce vulnerability to climate change.

Impacts and response plans for Climate Change risks and opportunities
Once the analysis of risks and opportunities has been carried out, the most relevant ones for CAF
have been identified, taking into account the time horizon and impact, and specific response plans
have been defined for each of them.

Greenhouse gas (GHG) emissions

Decarbonisation strategy

CAF continues on the path towards the challenge of decarbonisation as one of the main axes of its
strategy, with a commitment to sustainable growth focused on the environment, and leading the
transition towards zero net emissions mobility.

After adhering in 2021 to the alignment initiatives against climate change and with the Paris
Agreement, SBTi (Science Based Targets Initiative) and Race to Zero, in 2022 the company has
ratified this commitment in the new 2026 Strategic Plan it has presented. To this end, firstly, it has
incorporated the decarbonisation of its products within the main milestones of the Innovation
strategic axis and, secondly, it has maintained Sustainability as one of its 4 strategic axes.

During 2022, the CAF Group has defined short and long-term emission reduction targets, taking
into account the SBTi methodology and using the carbon footprint calculations of previous years as
a reference. In this definition, it has stated its commitment to achieve "Net Zero" by 2045. During
2023, these objectives will be rolled out across the Group's activities.

In defining the reduction targets, the company's main sources of Greenhouse Gases (GHG) have
been taken into account, which are included in the emissions generated during the life cycle of the
products, associated with energy consumption in their use phase, as well as emissions from the
energy consumption of the activities carried out in the Group. The Group is therefore concentrating
its efforts on gradually reducing its greenhouse gas (GHG) emissions intensity by the following
means: improving energy efficiency in productive activities and facilities, increasing the
consumption of renewable energies and research and development of sustainable zero-emission
transport solutions.

In this last line, the product life cycle impact analysis is carried out for both bus and train, reflected
in the Environmental Product Declarations (EPD) indicated in section "5.3. Sustainable and efficient
mobility".

The reduction targets indicated above 53 have been included in the CAF Group's 2026 Strategic Plan,
and are presented below:

53 During 2023, these reduction targets will be sent to SBTi for validation.

122
The reduction targets for Scope 1 and 2 are set taking into account the absolute contraction
method, with an absolute emission reduction target derived from the two scopes. In addition, the
reduction targets for scope 3 are set taking into account the physical intensity method, in relation
to the emissions derived from the use of the product during its useful life, due to the relevance that
this chapter has in scope 3. The base year or reference year for the reduction targets is set as 2019.

In response to the reduction targets set and in order to promote strategies against Climate Change
focused on reducing Greenhouse Gas (GHG) emissions and promoting renewable energies, the
Group has carried out various activities during 2022 within the "Zero Net Emissions" Initiative,
within the scope of the Sustainability Committee.
The main activities carried out during 2022 include the following:
− Calculation and external verification of the carbon footprint of the entire CAF Group
Organisation, including Scope 1, 2 and 3, and corresponding to 2021 and 2022. For this
purpose, the guidelines and approach of the GHG Protocol and the IPCC have been followed,
and the requirements developed in the ISO 14064:2018 standard have been met.
− Completion of the CAF Group's first CDP (Carbon Disclosure Project) climate change report,
achieving a B score on the CDP scale, which is the target score for this first report.
− Definition of the CAF Group's short- and long-term reduction targets for the three scopes.

In addition, throughout 2022, the following actions have been carried out with the aim of reducing
GHG emissions in the Group:
− Development of the sustainable mobility plan in the Group's parent company and
implementation of car-sharing schemes.
− Promotion of sustainable mobility (cycling, public transport, walking) through participation in
an inter-company challenge and improvement of bicycle parking facilities.
− Expansion of the scope of sites consuming 100% renewable electricity with guarantee of origin
(e.g. Solaris Bus & Coach and Euromaint Rail AB).
− Development of engineering and construction (EPC) of photovoltaic plants in Chile and Italy,
with 141 MWp of installed solar power capacity and avoiding emissions of around 10,000
tCO2equivalents.
− Start on mitigation of emissions from the business travel chapter in Scope 3, by Sustainable
Aviation Fuel (SAF) reserve, collaboration with airline.

Likewise, during 2023, the activities included in the CAF Group's "Net Zero Emissions" initiative will
continue to be addressed, which will be mainly aimed at the deployment of the business reduction
plans, in order to comply with the reduction targets set. In particular, work will focus on the
following aspects:
− Plans to reduce the energy consumption of production facilities (investment in more efficient
facilities).
− Purchase of electricity with a guarantee of origin, extending the scope of national companies
with guarantees of origin for electricity.
− Product innovation plan - zero emissions.
− Start-up of the installation of charging points for electric vehicles at the headquarters of the
parent company.
− Continue to calculate the CAF Group's carbon footprint and to produce the CDP report.

The resources allocated to achieving the reduction targets will be defined in the relevant
management plans of the Group's activities.

123
Emissions results and trend

The calculation of the carbon footprint has been carried out following the criteria of the ISO
14064:2018 standard and the GHG Protocol, having previously carried out a materiality analysis of
the activities carried out by the Group. As a result of this analysis, the following are taken into
consideration:
− Direct emissions (Scope1): emissions from fuel consumption in stationary and mobile
installations, as well as fugitive emissions from the recharging of fluorinated gases.
− Indirect emissions (Scope 2): derived from electricity consumption and thermal energy
consumption.
− Other indirect emissions (Scope 3): product use, production and transport of materials
to the Group's sites, transport of the product to the customer, waste management and
transport, water consumption, in itinere transport of employees and business trips.

The greenhouse gases (GHG) included in the calculations are expressed in equivalent tonnes of CO2
and refer to emissions of carbon dioxide, methane and nitrous oxide (CO2, CH4 and N2O,
respectively), in addition to the hydrofluorocarbons (HFCs) associated with refrigerant gas leaks.

Below are the results of the calculation of the CAF Group's carbon footprint and its trend, verified
by an external accreditation body and calculated using the methodology defined in the previous
points. As an improvement in the information reported, for the first time information on all
activities carried out by the Group is included.

The data presented are actual emissions data for the CAF Group's scope in each of the periods. In
this regard, it should be noted that 2022 includes data for the Reichshoffen site since its acquisition
in August 2022, which is not included in 2019.

In order to monitor the trend of the reduction targets and due to the modification of the scope
considered in the base year 2019, these targets will be recalculated during 2023 and communicated
to SBTi.

Scope 1 and 2 emissions

t CO2 eq t CO2 eq t CO2 eq

Field Scope
2022 2021 2019
CAF Group 54 Scope 1 28,115 28,665 31,463
Scope 255 7,089 16,407 18,809
Total 1 + 2 35,205 45,072 50,272
% Δ 2019 -30% -10% -

As can be seen in the table above, emissions from Scopes 1 and 2 have generally been decreasing.
Specifically, for the financial year 2022, the expected reduction target for Scopes 1 and 2 was
12.6%, and a reduction of 30% 56 has been achieved compared to the base year 2019, which is a
much higher result than expected for the financial year. As for the 2021 financial year, the emissions
reduction result obtained was also higher than the expected target for that period, for Scopes 1
and 2, which was 8.4%, with the result obtained being 10% 57.

54 Consolidation method: operational control. Data for 2020 is not included as it is not considered a

representative year in terms of emissions for the company's actual activity.

55 The calculation method used to calculate the carbon footprint has been a market approach, with the

exception of foreign countries where no guarantees of origin are available, where a national/local approach has
been used.
56 Reduction obtained without taking into account the recalculation of the base year, resulting from the

acquisition of Reichshoffen.
57 Calculated without taking into account the recalculation of the base year due to the acquisition of Reichshoffen.

124
With the aim of reducing GHG emissions and specifically indirect emissions (Scope 2) derived from
electricity consumption, the main companies of the Vehicles, Bus and Services activities consume
100% renewable electricity with a guarantee of origin, thus achieving a 61% reduction in Scope 2
emissions in 2022 compared to the base year (2019).

In this regard, it should be noted that 72% of the Group's electricity consumption currently comes
from renewable sources, with guaranteed origin. This indicator has increased by 41% in 2022
compared to the previous year and is expected to continue to increase in the coming years, as the
company has established an action plan aimed at increasing the percentage of companies that
consume electricity from renewable sources, with the objective for 2023 being that 78% of the
electricity consumed by the Group should come from renewable sources, with a guarantee of
origin.

Emission Intensity Scope 1 and 2

In addition, in relative terms, the following table shows the emissions intensity ratio, which includes
the Scope 1 and 2 emissions of all the activities carried out by the Group:

Emission intensity (kg CO2 eq. /MHW) 2022 2021 2019

Emissions intensity of the CAF Group 1.59 2.2 2.69

As can be seen in the table above, the trend of the emissions intensity ratio, taking into account
the emissions derived from Scope 1 and 2, has been favourable, as there has been a considerable
reduction in this ratio over the last 3 years, especially during the 2022 financial year. This is mainly
due to the reduction in Scope 2 emissions that has taken place in the last year derived from the
increase in renewable sources in the Group's electricity consumption, as well as the extension of
the scope of the data provided in the hours worked, which currently accounts for 95% of the Group.
The target for 2023 is set at 1.66 kgCO2eq/HHT because a relative increase in production activity is
expected, which will lead to an increase in emissions.

Scope 3 emissions
In relation to Scope 3, the trend of the ratio (g eq CO2 2/passenger-km) of emissions generated in
the product use phase of the vehicles delivered during 2022 (both Rail and Bus) is shown, taking
the base year of 2019 as a reference.
The reduction of the ratio in 2022, compared to 2019, is presented.

Field Scope Real % Δ 2019-2022 2022 target

CAF Group Scope 3, product use -14.8%58 -19.6%

As can be seen in the table above, the ratio of emissions from product use in Scope 3 in 2022 has
been reduced compared to 2019 by 14.8%, with an expected reduction target of 19.6%. This is due
to the fact that more fossil-fuelled vehicles have been delivered during 2022 than projected in the
reduction targets. For the coming years, a reduction in the delivery of fossil fuel vehicles is
expected, accompanied by the zero emission initiatives of the Innovation Plan, which will result in
a reduction of emissions to this extent.

Moreover, with regard to the emission of Volatile Organic Compounds (hereinafter VOCs), the CAF
Group, in addition to complying with the regulations on the limitation of emissions of volatile
organic compounds due to the use of solvents in certain activities 59, has reduced its emissions by
30% in the last 10 years, which is equivalent to a reduction of 75 grams of Volatile Organic
Compounds per square metre of surface area and in the bus painting activity it has reduced its

58Calculated without taking into account the recalculation of the base year due to the acquisition of Reichshoffen.
59 CouncilDirective 1999/13/EC, of 11 March, the purpose of which is to prevent or reduce the harmful effects
on human health and the environment arising from certain activities that use significant amounts of organic
solvents in their manufacturing or working processes, and its transposition into Spanish legislation by means of
Royal Decree 117/2003, of 31 January, on the limitation of emissions of volatile organic compounds due to the
use of solvents in certain activities.

125
emissions by 25% in the last 2 years 60. These results were achieved as a result of the replacement
or reduction of the solvents used in the production process. Certain examples of this are the use of
water-based paints for painting the trains, which do not contain solvent, and the replacement of
glue by self-adhesive in the carpet gluing process.

60Data relating to the report made on this matter to the administration up to the date of publication of this
report.

126
5.3 Sustainable mobility and eco-efficient products
Between 1990 and 2017, greenhouse gas emissions from transport increased by around 28% in the
European Union. Today, transport accounts for nearly 25% of global CO2 emissions, with rail
transport contributing a mere 0.5%.61
At the same time, due to current urban population growth trends, the collapse of mobility
infrastructure has become even more of a problem and the quality of the air in cities has worsened
significantly. In order to avoid these problems, the authorities are often taking measures to restrict
the circulation of private vehicles.

Faced with this reality, the European Green Deal of the European Commission sets a target of 90%
fewer CO2 emissions from transport by 2050, which will require exceptional efforts in the coming
years.

In this context, rail and bus transport, as environmentally friendly and high-capacity means of
transport, offer tremendous potential for contributing significantly to this fight against climate
change and city congestion, thereby reducing the environmental impact, improving citizens’ quality
of life and contributing actively to the protection of the ecosystem.

CAF prioritises activities aimed at replacing fossil fuels and reducing the energy costs of transport
by providing highly efficient mobility alternatives to point the way to a sustainable, clean, ecological
and emissions-free future.

In this regard, as mentioned in section 5.2 Climate strategy, CAF has achieved a 14.8% reduction in
the g eqCO2/km-passenger ratio of emissions generated in the product use phase (Scope 3) of the
vehicles delivered (both Rail and Bus) during 2022 compared to the base year of 2019. A significant
decrease in this ratio is expected in the coming years due to the reduction in sales of fossil fuel
vehicles accompanied by the zero-emission initiatives of the Innovation Plan.

In addition, emissions from electric passenger transport solutions (buses, trolleybuses and rail
vehicles) delivered in 2022 are equivalent to an average of 2.8 g eqCO2/passenger-km62, which
confirms that CAF's solutions are among the most efficient in the transport sector for mobility.

Sustainable solutions
The CAF Group offers fully customised vehicles to transport operators keen to transition to zero-
and low-emission mobility. There is no single answer to the challenges of public transport in the
future. The zero-emission portfolio includes electric vehicles and vehicles powered by hydrogen.
These vehicles successfully meet the diverse needs of transport operators, passengers and drivers.

In this area, Solaris has the most complete range of low and zero emission buses on the market,
with more actual experience and market share than its competitors. As far as rail vehicles are
concerned, CAF has been awarded the world's largest contract for battery-powered vehicles and in
mid-2022 it has put on track one of the first hydrogen-powered trains that can also operate by
capturing electricity from the catenary on electrified sections.

The key solutions in the CAF Group's sustainable product portfolio are described below:

61 European Environment Agency. Communication from the Commission to the European Parliament, the

European Council, the Council, the European Economic and Social Committee and the Committee of the
Regions - the European Green Deal - Brussels, 11.12.2019 COM (2019) 640 final.
62 For the calculation of this ratio, in the absence of specific sector regulations, CAF has established its own

calculation methodology which has been validated by audit. This new methodology varies from the criteria used
in 2018 to provide a more uniform and representative calculation in line with industry recommendations.

127
ZERO EMISSIONS
Urbos tram: CAF's Urbos trams are electric propulsion vehicles that can be fitted with an EVODRIVE
or FREEDRIVE accumulation system (ultracapacitors and/or batteries) to operate without external

Urbos
power supply (catenary) and/or recover braking energy. CAF is a pioneer in this type of solution
with trams operating on non-electrified sections in passenger service since 2010 and the first
tramway system in the world without any catenary sections (full catenary-less) operating since
2018.

Inneo metro: CAF's metros are electric and have been adopted in Europe's main cities (London,
Amsterdam, Brussels, Rome, Madrid, Barcelona, etc.) due to their competitive values in terms of

Inneo
capacity, consumption and reliability.

Civity regional trains: Civity mainline trains are among the most efficient on the market. As with the
other platforms, CAF has reduced the weight of these trains, optimised the efficiency of their
equipment and simplified the architecture to minimise consumption. The more sustainable (zero-

Civity
emission) Civity trains include electric, battery electric, and hydrogen powertrains (currently
undergoing on-track testing).

In June 2021, CAF was awarded the world's largest contract for the supply of battery-powered
electric trains for the delivery of 63 units for the German transport authorities ZV VRR
(Zweckverband Verkehrsverbund Rhein-Ruhr) and NWL (Zweckverband Nahverkehr Westfalen-
Lippe). These units are joined by another 10 units ordered by NWL in June 2022 and a further 28
battery-equipped electric trains awarded by Renfe in October 2022.

Moreover, CAF has started on-track testing of the hydrogen train prototype in mid-2022. CAF's
hydrogen vehicles (both train and bus) use hydrogen fuel cells. The hydrogen is stored in gaseous
form in several state-of-the-art tanks. This hydrogen is converted into electricity which, in turn,
directly powers the powertrain consisting of inverters and electric motors. These vehicles are also
equipped with batteries that act as an additional electrical energy storage facility. The only by-
products generated during the operation of CAF hydrogen vehicles are heat and steam. These
vehicles therefore do not generate any type of harmful substance.

Urbino Electric: Exceptionally quiet and emission-free bus distinguished by its modern design and
low operating costs. Thanks to their innovative technical solutions, these electric buses can run for
U Electric

an unlimited time (up to 24 hours a day). Furthermore, their low noise and vibration levels make
battery-powered buses particularly suitable for use in city centres. The vehicle is available in low-
floor and low-entry versions.

A wide range of possibilities in terms of vehicle length (9, 12, 15, 18 and 24 metres), engine, battery
type, as well as battery charging methods, make Solaris electric buses perfectly suited to the
specificities of different cities: climate, urban traffic characteristics, line occupancy and even
orography. More than 1,300 such vehicles are currently in operation in more than 100 European
cities.

Urbino Hydrogen: The hydrogen technology used for power generation allows hydrogen buses to
U. Hydrogen

travel even longer distances without emissions than electric models. Hydrogen-fuelled buses form
a complementary zero-emission family of buses that enable Solaris to meet contemporary
challenges and diverse customer needs regarding vehicle range, flexibility and operability.
Currently, the Urbino family of hydrogen buses includes 2 models: 12 and 18 metres.

Hydrogen buses have all the advantages of an electric bus - i.e. emission-free, silent and vibration-
free driving - with an even longer range and extremely fast refuelling. These vehicles are particularly
useful in areas of transport where a high degree of autonomy and flexibility of operation is required.

It should be stressed that hydrogen fuel cells complement electric vehicles, not compete with them.
The synergy of the development of all pillars of electromobility will accelerate the transformation
of public transport to zero emissions and ensure the effective decarbonisation of transport. This is
the key to ensuring a favourable and safe urban space in the future.

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Trollino: These low-floor vehicles are characterised by their quiet and emission-free operation. In
addition to trolleybuses that work exclusively with an external power supply, Solaris also offers

Trollino
hybrid trolleybuses equipped with storage equipment and hydrogen fuel cells that operate without
the need for traction lines (external power supply) for distances of up to 100 km.

Solaris trolleybuses are perfectly adapted to the specificities of different cities: climate, urban traffic
characteristics, occupation of lines and even land, thanks to a wide range of possibilities in terms
of vehicle length (12, 18 and 24 metres), engine, battery/hydrogen fuel cell capacity or type of
catenary connection. The low environmental impact, proven technology, low infrastructure
development costs, as well as quiet and comfortable driving, offered by the versatile usage
possibilities of trolleybuses make them an important element in making urban transport more
environmentally and resident-friendly.

LOW EMISSIONS
Urbino Hybrid: Solaris Urbino hybrids are equipped with a driveline consisting of one or more
electric motors and a conventional transmission system. The energy storage unit in Urbino hybrids

U Hybrid
can be either through batteries or supercapacitors. This solution reduces fuel consumption by
between 20% and 30% on average, compared to a vehicle that runs on diesel. Solaris hybrid buses
can also be adapted to cover a certain distance completely emission-free. The Solaris hybrid bus
portfolio includes 12- and 18-metre models.

Mild-Hybrid solutions are also available to recover braking energy and reduce emissions beyond
the strict EURO 6 emission standards for diesel engines.

Urbino CNG: Urbino low-floor urban buses are also supplied in the form of vehicles with
compressed natural gas (CNG) propulsion. This solution has made it possible to significantly reduce

U. CNG
the emission of harmful substances and provide more eco-friendly transport.

An internationally recognised product portfolio

Solaris's portfolio of emissions-free products have effectively contributed to changing the image of
public transport worldwide and in the last three years have received the following international
awards:

- 2022 - Busplaner Innovation Award (International): The Solaris Urbino 9 LE electric won
in the category "Electric bus: Interurbano" the award from one of the most influential
industry magazines in Europe.
- 2022 - Kielce Trade Fair Medal (Poland): Award for the Solaris Urbino 18.75 electric bus.
- 2022 - Solaris has been awarded the Green Eagles of the "Rzeczpospolita" newspaper
(Poland) in the Company category for its innovative green solutions on an industrial scale,
in particular for its electric and hydrogen buses.
- 2022 – Polityka weekly (Poland): CSR Silver Leaf awarded to Solaris and Urbino 9 LE
electric bus award for actions supporting the achievement of the Sustainable
Development Goals by 2021.
- 2021 - Sustainable Bus Award (International): The Solaris Urbino 15 LE electric bus
received the Sustainable Bus Award (International) in the Urban category. The main
motivation of the Sustainable Bus Award is to popularise the idea of sustainability in
public transport and build a positive image of public transport as an area that plays a key
role in climate change action.
- 2021 - Busplaner Sustainability Award (Germany): Award for the Solaris Urbino 15 LE
electric bus in the Electric Bus category.

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 - 2021 – Kielce Trade Fair Medal (Poland): Award for the Solaris Urbino 12 Hydrogen bus
as the best product in the bus category.
- 2020 - E-mobility Leader (Poland): Award for its contribution to the development of zero-
emissions transport worldwide.
- 2020 - Top Design Award (Poland): Award for the unique and innovative design of the
Trollino 24 bi-articulated electric trolleybus.
In terms of rail vehicles, in 2020, CAF received a Highly Commended mention from the Global Light
Rail Awards to recognise and reward the outstanding commitment of the workforce in a project
related to sustainable mobility: renovation of the Birmingham tramway to incorporate an on-board
energy storage solution. Moreover, in 2019 CAF won the Manufacturer of the Year and Project of
the Year (in the under-50 million euros category under) prizes for the supply of six state-of-the-art
vehicles for the first catenary-free light rail system in passenger operation in Oceania (Newcastle
Light Rail in New South Wales, Australia).

Meanwhile, CAF Power & Automation won Supplier of the Year at the 2018 Global Light Rail
Awards, thanks to its modular and flexible traction systems that can be integrated into both new
trains and trams as well as vehicles already in service. In addition, CAF Power won The Technical
Innovation of the Year (Rolling Stock) award for its ambitious Greentech on-board power initiative.
Greentech products (EVODRIVE and FREEDRIVE) are the most efficient and environmentally
friendly products optimising energy consumption and reducing the visual impact of trams in urban
centres thanks to catenary-free propulsion technology.

Main innovations adopted to improve the sustainability of products

At the design and development stage, CAF pays particular attention to innovative solutions to
ensure that its products are environmentally friendly. CAF continuously implements modern
solutions and expands its knowledge and competence, among other things by cooperating with
research centres and educational institutions.

The main innovations aimed at improving the sustainability of CAF's products revolve around the
following areas which are applicable, to a greater or lesser extent, to all its products (vehicles and
their components, signalling systems, infrastructure, etc.) and services: 1) Eco-design methodology,
2) Improvements in energy efficiency, 3) Deployment of sustainable alternative fuels, 4) Increased
useful life and recyclability, and 5) Reduction of noise and vibrations.

Eco-design methodologies
CAF has played an active role in the development and implementation of methodologies aimed at
transforming the sector from an ecological standpoint. For example, through its participation in the
"Life Cycle Assessment Topical Group" of the rail industry association UNIFE, aimed at defining
optimal ways to implement the legislative and regulatory aspects related to ecology in the various
processes that define product life.

With the aim of offering more efficient and environmentally friendly means of transport, CAF is
immersed in the implementation of the Product Sustainability Function, introducing eco-design
methodologies in engineering processes to optimise and control the environmental impact of
products throughout their life cycle from their conception: - energy efficiency; - use of
environmentally friendly, recycled, recyclable or natural materials and minimise their use; -
reduction of noise and vibrations; - reduction of atmospheric emissions and - circular economy.

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Making the ecological footprint visible

CAF determines the environmental footprint of its products using life cycle analyses
(LCAs). Based on this information, CAF generates environmental product declarations
(EPD) for its customers.

In 2011 CAF developed the world's first verified environmental product declaration List of EPDs obtained by CAF's rolling stock
(EPD) for a tram, according to the ISO 14025 standard, for the Urbos Tram in the city and bus unit:
of Zaragoza. This environmental impact study was quantified by means of a life cycle
analysis (LCA) in accordance with ISO 14040 and ISO 14044 standards. From this point − URBOS 100 tram for the city of
onwards, CAF has continued to certify representative trains from practically its entire Zaragoza
product portfolio (tram, metro and regional train), being one of the rolling stock − URBOS AXL for Stockholm Lokaltrafik
manufacturers with the highest number of EPDs registered at present. A35 Tram Units
− CIVITY EMU regional electric train for
During 2022, CAF has systematised the life cycle analysis of new products developed the Friuli-Venezia Giulia region
in accordance with the principles and procedures of the ISO 14025:2006 standard to − URBOS AXL for Stockholm Lokaltrafik
assess their environmental performance. It has also published the environmental A36 Tram Units
product declaration (EPD) for the Oslo tramway and, in addition, has set a target of − Metro Units M300 for Helsinki Metro
publishing at least one EPD for each of the vehicle families (tram, metro and regional Transport
train) by 2023. Also in 2022, Solaris has published its first EPDs for Urbino 18m Electric − URBOS 100 tram for the city of
and Urbino 12m Hybrid buses. Kaohsiung
− URBOS 100 tram for Oslo
As a responsible company, CAF is aware of its impact on the environment and − Urbino 18m Electric
complies with the European Regulation EC 1907/2006 concerning the Registration, − Urbino 12m Hybrid
Evaluation, Authorisation and Restriction of Chemicals (REACH).

Improvements in energy efficiency

Improving the energy efficiency of products and services is a priority challenge for CAF. Some of
the measures adopted in its vehicles for this purpose are:

REDUCTION OF TRACTION ENERGY CONSUMPTION

Energy recovery in braking High-efficiency traction equipment

Energy recovery during braking is an essential component CAF trains, electric buses and trolleybuses incorporate
in the operation of railway and trolleybus networks because systems to obtain maximum performance from the energy
it helps to reduce consumption and achieve high rates of consumed during operation, both in acceleration and
energy efficiency. CAF trains and trolleybuses are braking. The use of highly efficient traction equipment
specifically designed so that regenerative braking has makes it possible to minimise energy loss and optimise
priority over rheostatic and friction braking. In this way, the energy use.
energy recovered in the braking process, not used by the
CAF has developed advanced control strategies for
vehicle itself, is returned to the catenary so that it can be
variable flux in motors to minimise energy losses. These
used by another train/trolleybus.
control strategies actively manage the motor flow
All CAF electric vehicles first use the energy regenerated according to the required operating conditions (torque,
during braking to power their auxiliary equipment or speed, drift, etc.), therefore reducing consumption when
batteries. the flow required is lower.
Silicon carbide (SiC) transistor technology is another
innovative technology to maximise the efficiency of the
traction system and reduce energy losses that CAF is
currently rolling out in both trains and buses. These
transistors allow higher switching speeds, which reduces
power losses. SiC technology can reduce the total energy
consumed by a train by between 8 and 10%.

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 Modular & customisable accumulation systems Smart BTMS in battery systems

CAF accumulation systems make it possible to: 1) operate Operating batteries at temperatures that are either too
vehicles on sections without electricity, and 2) store the high or too low has a critical impact on their capacity, the
energy generated during braking. The equipment is energy available for use and the useful life of the batteries.
modular and customisable so the accumulation and loading CAF uses a battery thermal management system (BTMS)
solution can be optimised according to the needs of each in its vehicles for optimal control of battery temperature,
customer, thus minimising life cycle costs. therefore ensuring that they operate in optimal
conditions and maximising performance and useful life.
CAF Group is a pioneer in energy storage vehicles and is
continuously optimising its equipment by implementing
optimal solutions at the forefront of technology.

Efficient energy management based on journey times Reduction of journey times

The driving mode has a decisive influence on the vehicle's Several CAF technological developments have delivered
energy consumption. The vehicle control system calculates new advantages for the general reduction of energy
in real time the level of performance that minimises the consumption in trains. Systems such as the SIBI smart
vehicle's energy consumption based on the characteristics tilting system allow for higher speed on the bends in a
of the route and the target travel time. This information route without loss of comfort for passengers, reducing
makes it possible to optimise driving from an energy point journey times by 30%. The ability to travel at higher speeds
of view. on bends also reduces the need to modify the speed of the
trains (brake and accelerate), which contributes to greater
In addition, CAF vehicles adopt strategies to optimise energy
energy efficiency.
consumption such as partial shutdown of the powertrain in
situations of low power demand.
The solutions available to the CAF Group in the field of
energy-optimised operations are: the DAS (Driver Advisory
System) solution described in the previous paragraph and
CAF Signalling's AURIGA solution that optimises energy
consumption in automatic train operation (ATO). These
solutions make it possible to reduce the energy consumed
by vehicles by 15% to 30%.

Weight reduction Reduced drag

The design of the vehicles is focused on their weight, which The CAF Group optimises the geometry of its vehicles to
is an effective way of optimising energy demand. This reduce drag by means of CFD (Computational Fluid
objective applies both to the structural elements of the Dynamics) simulations using models that have been
vehicle and to all of the equipment and components, while correlated in tests.
guaranteeing the highest quality and safety standards.
During the vehicle manufacturing process, the mass of the
components and of the vehicle itself is controlled to ensure
that the planned weight is not exceeded.

Maximum reduction of energy consumption can only be achieved through the adoption of global measures that also take
into account the auxiliary equipment of trains and buses, the control of their operation and their state of conservation.

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 REDUCTION OF ENERGY CONSUMPTION OF AUXILIARY EQUIPMENT

Management of energy consumption while Management of energy consumption while in service

stationary

Different operating modes are defined to reduce the energy To reduce energy consumption while in service, CAF has
consumption of the stationary vehicle, cleaning, introduced strategies that combine 1) the best use of
maintenance, parking, etc. These modes establish the internally generated energy flows and 2) the operation of
optimal working conditions for the auxiliary equipment to the different systems at their optimal operating point
reduce energy consumption. For example, carrying out an (eco-mode). For example, these strategies make optimal
individual control per carriage rather than per train means use of the energy regenerated during braking by avoiding
that only the equipment of certain carriages is active at any its dissipation in the form of heat.
given time, according to the needs in case. This measure
achieves significant energy savings.
Likewise, the introduction of the "Start/Stop" system in
buses significantly reduces fuel consumption and therefore
CO2 emissions.

Efficient air conditioning Thermal insulation

Air conditioning equipment is the second largest consumer To increase the thermal insulation of its vehicles, CAF
of energy in vehicles, second only to traction equipment. To installs insulating panels on the entire surface of the
reduce this consumption, CAF uses the high-performance carbody and establishes maximum values for thermal
refrigerants and adopts various measures to improve the transmission in components such as windows, doors and
energy efficiency of the air conditioning system: heat pump, corridors. In some contracts, CAF has achieved very low
external air intake adjustable according to CO2 level, etc. At thermal transmittance values (e.g. 1.1 W/m2K)
the same time, in order to reduce energy losses due to heat substantially below the limits required in these contracts.
transfer between the interior and exterior of the train/bus,
the design of the vehicles aims to maximise their thermal
insulation.

Equipment sizing based on real needs

Each project contains an equipment sizing process

according to the specific project needs, therefore avoiding
the construction of oversized equipment could lead to
greater weight and higher consumption than necessary.

With these measures, the CAF Group has managed to substantially reduce the consumption of its
vehicles. By way of example, between 2018 and 2022, the Urbino 12 Electric bus achieved a 23%
saving in energy consumption, and between 2019 and 2022 the Urbino 18 Electric bus reduced its
consumption by 24%. These values have been validated by testing according to the requirements
of the UITP E-SORT2 standard.

But it is not only CAF vehicles that have evolved in recent years to reduce their consumption. With
regard to buildings designed by CAF Turnkey & Engineering, the key example is the benchmark
design of the tram depot, which includes the following measures to reduce its consumption:

- A green roof to improve the temperature regulation of the building. This improves energy
efficiency due to its high water retention capacity (cooling in summer) and the
contribution of thermal mass (heating in winter).
- A photovoltaic power plant on the roof.
- A sawtooth roof that creates skylights for natural light to enter the building, therefore
reducing electricity consumption and providing a more comfortable and healthy space
for workers.

CAF Signalling and CAF Turnkey & Engineering have also carried out a joint development to power
track elements installed in remote locations via a photovoltaic energy system and controller

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batteries. These systems are remotely monitored to guarantee correct operation and ensure their
availability and safety in accordance with strict sector requirements.

Deployment of sustainable alternative fuels

In recent years, the CAF Group has been working on the development of vehicles that run on
environmentally friendly alternative fuels to diesel for non-electrified journeys. Offering customers
environmentally friendly alternatives to diesel propulsion is a key challenge that the CAF Group has
set itself.

Buses and trains with on-board energy storage systems (batteries) stand out in this respect. At
present, more than 1,300 such Solaris buses are in operation in more than 100 European cities.
Moreover, in 2021, CAF was awarded the world's largest contract for battery electric trains
(BEMUs) for the German transport authorities ZV VRR (Zweckverband Verkehrsverbund Rhein-
Ruhr) and NWL (Zweckverband Nahverkehr Westfalen-Lippe).

In addition, Solaris has put into service buses powered by Hydrogen and Compressed Natural Gas
(CNG) in various European cities. Hydrogen-powered vehicles are considered zero-emission as they
emit only water vapour into the atmosphere and CNG vehicles reduce the emission of harmful
particulate matter.

Solaris has been a pioneer in offering these state-of-the-art solutions to the market and this has
translated into results for the company. In 2020, Solaris became the European leader in the zero-
emission bus segment and today, buses with alternative propulsion account for more than 50% of
the company's deliveries.

As far as trains are concerned, CAF is developing a prototype train powered by hydrogen which is
being tested on track since mid-2022. This project (FCH2RAIL) has been promoted by the FCH JU,
the European Commission agency dedicated to promoting the development of hydrogen and fuel
cells, and has significant funding from European funds (around 10 million euros) through the H2020
programme.

The CAF Group also supplies diesel vehicles equipped with batteries to reduce fuel consumption
(hybrid solutions). This consumption reduction is generally around 20%-30%.

Furthermore, the diesel engines of the bi-mode trains (trains operating in electric mode when
catenary is present and in diesel mode when catenary is not present) supplied for the Nordic market
can operate on paraffinic diesel or B30 biodiesel.

But the development of alternatives to diesel has not been confined to cars alone. CAF Turnkey &
Engineering has carried out several developments aimed at charging infrastructures for both
battery electric and hydrogen vehicles.

During 2020, it developed a tool to simulate the impact of smart management of the charging
process of an e-bus fleet.

During 2021, a tool was developed to simulate hydrogen dynamics during refuelling of heavy
hydrogen-powered vehicles (buses and trains).

A research project (AVOGADRO) on hydrogen refuelling stations (HRS) was launched in 2022. This
project is developing a thermodynamic and functional simulation model of the operation of a
hydrogen refuelling station. This model will be used to define optimal H2 refuelling protocols that
fit the operational needs of some predefined H2 train fleet scenarios. In addition, a generic safety
analysis is being conducted for hydrogen refuelling stations that currently lack specific regulations.

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Increased useful life and recyclability

Useful life

The CAF Group's trains and buses have been designed to meet the market's most demanding useful
life requirements. Trains have a useful life of approximately 35 years compared with 15 years for
buses. These useful lives are achieved through continuous improvement in the durability of the
components since their conception.

The structural components of trains (carbody structure, frame and bogie axles) are designed,
calculated, manufactured and tested to guarantee their useful life. All the other train systems
(couplers, propulsion system, brakes, HVAC, APS, doors, TCMS, etc.) are subjected to shock and
vibration tests based in line with the IEC 61373 standard (Shock and vibration tests) to ensure
adequate durability in service.

As far as buses are concerned, new models or those that have undergone significant modifications
are subjected to a 1 million km test; an endurance test on the road. The test is carried out in
extremely difficult conditions on various road surfaces. Its objective is to perfect the vehicle to
achieve the parameters expected by our engineers and customers and to ensure maximum safety
with optimum energy consumption. The behaviour of the propulsion systems is also observed and
adapted so that the buses can take full advantage of their capabilities.

The CAF Group also works continuously to improve the useful life of elements subject to wear and
tear since these suffer unavoidable degradation during use: batteries, wheels, tyres, brake discs,
brake linings, bearings, shock absorbers, floor coverings, rubber gaskets and elastic elements,
filters, etc.

The useful lives of the vehicles indicated above are achieved by following the assigned maintenance
plan. CAF has a department focused on improving the reliability, availability, maintainability (RAM)
and life cycle costs (LCC) of its vehicles, which has launched more than 70 initiatives. Approximately
half of these initiatives are aimed at extending the useful life of equipment and components in
service: wheels, bearings, motors, brake cylinders, etc. For example, due to the knowledge
acquired, the tools developed and the optimised processes defined within the Wheel Life
Optimisation project of CAF's Innovation Plan, it has been possible to achieve improvements in
wheel life of between 20 and 200% in several projects. The established monitoring system allows
deviations to be identified quickly and effectively at very early stages of the projects in service,
which, together with the knowledge generated through the different analytical studies on the data
collected over the years, allows mitigating actions and optimised maintenance strategies to be
established, resulting in the aforementioned improvements in the life of the wheels.

Recyclability

CAF selects the materials during the design phase in line with ecodesign principles and recyclability
rate while respecting the technical and functional requirements. Products are also designed for
easy dismantling at the end of their useful life. Based on the experience accumulated in the supply
and maintenance of its vehicles, CAF guarantees the optimisation of consumables (lubricants, sand,
brake linings, etc.) and the factors that make it possible to reduce their consumption.

CAF trains have a high rate of recyclability and recoverability. According to the EPDs (Enviromental
Product Declaration) mentioned above, the recyclability rate ranges between 90.8 and 93.6 and
the recoverability rate between 94.66 and 98.7.

The dismantling criteria of the VDI 2243 standard are followed in the design of the trains. Due to
the maintainability criteria established for CAF products, the components of the vehicles are easy
to replace and dismantle, in most cases using screw connections.

CAF also creates recycling/end-of-life manuals for customers on request. The purpose of the
recycling or end-of-life manual is to provide instructions on how to proceed at the end of the
vehicle's life and of the materials used in its operation and maintenance (consumables, spare parts,
etc.). The manual includes instructions for the proper dismantling of every part of each item, in line

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with the steps described in ISO 22628, the dismantling criteria of the VDI 2243 standard, and the
appropriate end-of-life management applicable for the composition.

Each dismantled part that cannot be reused is identified with a waste code in accordance with the
European Directive 2000/532/CE European Waste Catalogue (Order MAM/304/2002), proposing
the appropriate end-of-life management for its disposal according to its composition (in accordance
with European Commission Decision 96/350/CE). In order of preference, this end-of-life
management can take the following form: a particular known and applicable recycling process,
energy recovery, or final disposal in a landfill or with an authorised manager.

In addition, Solaris buses have a high rate of recyclability and recoverability. According to the EPDs
(Enviromental Product Declaration) mentioned above, the recyclability rate ranges between 94.9
and 95.1 and the recoverability rate between 95.9 and 96.1.

Solaris guarantees the recyclability of vehicle components by labelling the parts made of metals,
plastics and elastomers in accordance with applicable legislation. The requirements of these
standards have been transposed into company regulations and suppliers are required to comply
with them. The marking of the materials allows their correct recycling at the end of the vehicle's
life.

In the field of battery recycling, the CAF Group has signed an agreement with a partner that has
the corresponding authorisations and expertise to manage battery and accumulator waste and
carries out the entire recycling process in accordance with ISO 9001 and ISO 14001 (quality and
environmental management standards, respectively) and the Batteries and Accumulators Act of 29
April 2009.

Processing batteries according to applicable standards permits the recover of metals (aluminium,
zinc, cadmium, cobalt, lithium, copper, nickel, lead, manganese, brass, mercury, etc.), plastics and
paper for the production of refuse-derived fuel (RDF). These materials can be reused in many
industrial production processes, saving natural resources, fossil fuels, energy and water.

The second life of batteries used in vehicles is also take into account. For example, Solaris is
currently implementing a second-life project with an energy holding company that will reuse the
batteries previously installed in the Urbino electric buses.

Reduction of noise and vibrations

Apart from the effects on humans, noise can also influence nature, altering the habitat of animals
and ecosystems.

The noise is mainly generated by the equipment, rolling and friction with the wind.

CAF has a noise and vibration unit dedicated to reducing interior and exterior noise levels, as well
as the transmission of vibrations from its vehicles to the ground. This unit is involved in a project
from the outset to achieve an optimal design that complies with regulatory and contractual
requirements while improving the noise and vibration aspects of CAF's product portfolio. The CAF's
technical team has developed the knowledge, tools and methodologies for predicting the noise
levels of the different vehicle solutions.

To reduce both interior and exterior noise levels, CAF's technical team examines the causes
(through preliminary calculations and tests, studies on wheel-rail contact and interaction, etc.) and
adopts the most effective mitigation measures: use of insulating and absorbing materials,
construction solutions for the different train components, optimised rolling profile, optimised
aerodynamic shapes, variable speed fans, etc. Specifically, two tools have been developed to
minimise the rolling noise generated by trains and the vibrations they transmit to their
surroundings: CRoNoS and DARDAR. The CRoNoS tool has become an international benchmark.
CAF makes similar continuous improvements to the other prediction tools and methodologies it
uses, such as the modelling of public address systems to guarantee the effective transmission of
messages, especially for people with hearing impairment. In 2022, the development of the CAF
Virtual Noise Suite, which brings together the various tools developed so far for the simulation of

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exterior and interior noise, rolling noise, vibrations transmitted to the vehicle floor and interior,
and speech intelligibility, has started.

Besides, once the trains have been manufactured they are subjected to noise tests while stationary
and on the track to demonstrate compliance with contractual and regulatory requirements.

Buses undergo a "1 million kilometre test", i.e. the road endurance test that is carried out for each
significant design modification. The test is carried out under extremely harsh conditions on
different types of road surfaces to refine the vehicle design and meet the expectations of both the
Company and its customers. The monitoring and optimisations carried out in these tests also serve
to improve the driving dynamics of the vehicle and minimise the noise and vibrations. The main
measures adopted between 2019 and 2021 to improve the noise levels of electric buses affected
the cooling system and the battery thermal management system.

These tests also revealed that zero-emission buses equipped with an electric motor generate
significantly less noise than their conventional counterparts.

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5.4 Circular economy and sustainable use of resources
[MA 301, 301-1, MA 302, 302-1, 302-3, 302-4, MA 303, 303-1, 303-2, 303-3, MA 306, 306-1, 306-
2, 306-3, 306-4, 306-5]
CAF is aware that its industrial activities have an impact on the natural environment and it therefore
incorporates the life cycle approach into its management as a pillar of sustainability. The phases
that make up this cycle are research and development, design, responsible purchasing,
manufacturing, use and, lastly, recycling of the product. This approach demonstrates CAF's support
for the transition to an efficient economy in the use of resources.

Consumption of natural resources

Environmental criteria are taken into account when purchasing materials for manufacturing
processes, with particular emphasis on the selection of reusable and recyclable materials. Most of
the purchases made are of processed materials, i.e., components, with metal being the most
common component. However, raw materials, all of which are recyclable, for manufacturing
components are also acquired. Among these, metals stand out for their higher consumption,
specifically steel and aluminium profiles and sheets and steel ingots consumed in the manufacture
of rail vehicles and buses. These materials are classified as non-renewable.

Raw materials (t) 2022 2021 2020 2019

Steel and aluminium profiles and sheets 16,249 15,605 14,756 19,211
Steel ingots 54,965 46,014 47,964 57,086
Other63 939 994 1014 960
Apart from the acquisition of these materials, CAF, S.A. includes in its technical processes materials
that contribute to environmental Sustainability. For example, recycled steel is used for
manufacturing wheels and axles.

Likewise, a product recyclability analysis is carried out in accordance with the ISO 22628 standard.
The trains and buses manufactured by the CAF Group have a high rate of recyclability and
recoverability. As mentioned in section, "5.3. Sustainable and efficient mobility" according to the
EPD (Environmental Product Declaration) carried out by the CAF Group, the recyclability rate for

63 Wood consumption for floors and adhesives (Bus).

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trains ranges between 90.8 and 93.6% and the recoverability rate between 94.66 and 98.7% and
for buses the recyclability rate ranges between 94.9 and 95.1% and the recoverability rate between
95.9 and 96.1%.

With respect to the purchase and use of chemical substances, the CAF Group operates under the
scope of the REACH Regulation and, in turn, requires its suppliers to comply therewith. On the one
hand, train equipment suppliers are requested to comply with the requirements of UNIFE's Railway
Industry Substance List (RISL) which lists the materials and substances that are prohibited by
European and international legislation specifically for the railway industry. On the other hand,
information has been transferred throughout the entire supply chain of substances, chemicals and
articles subject to the REACH Regulation.

The main actions performed by the Group for a more sustainable use of raw materials consist of
the reduction in the designed weight of products, the reuse of materials and packaging and the use
of greener materials. Specifically, during 2022, the Group's parent company has managed to
generalise the use of four alternative cleaning and degreasing products and has managed to replace
the use of an anti-corrosive in aerosol format, thereby reducing the hazardous nature of the
product as well as the consumption of raw materials and the generation of waste.

Water and effluents

Most of the water used by CAF is for domestic consumption. As for the use of water in the
manufacturing processes, it is mainly used in the cooling of equipment and in the installation to
ensure the watertightness of the trains. To this end, both mains water and river water (only in the
Group's matrix) are used, in accordance with local limitations and limiting the consumption of the
latter to its use in closed circuits.

The Group is aware that water is a scarce natural resource that should be preserved and it has
therefore carried out a series of actions to encourage a more sustainable use of water. The most
notable of these actions are as follows: implementing and promoting the rational use of water by
installing closed circuits and raising environmental awareness among staff; establishing and
monitoring the consumption of all water resources by implementing procedures defined according
to the particular government authorisations and permits; avoiding the collection of water in areas
with water stress; and, lastly, checking leaks and the airtightness of facilities to reduce consumption
and impact.

Aimed at encouraging the sustainable use of water by suppliers, the ECOVADIS tool evaluates the
Group's key suppliers and the measures they implement in relation to water management. The tool
also analyses the suppliers that have a potentially significant impact on water, such as suppliers of
batteries and tyres.

The water consumption of the CAF Group is shown below, being for the first time information on
all the activities carried out by the Group:

Water
2022 2021 2020 2019
consumption (ML)
Third party consumption 105 64 86.75 76.94 93.17
Surface water consumption 51.89 65 45.58 30.33 66 54.12

All the water used by the Group is water with a concentration of dissolved solids ≤ 1000 mg/l and
99% of the water used is from areas without water stress.
With regard to discharges, CAF has the corresponding authorisations to discharge into sewers or
watercourses (where applicable) and stores chemical products and materials in places fitted out

64 Increased consumption by including the Group's global information. Broader scope than previous years
(previous editions only included information from manufacturing plants).
65 The increase in surface water consumption is due to increased production in the main water consumption

area.
66 The significant reduction in river water consumption is mainly due to the special impact generated by the

COVID-19 pandemic in the production area where the highest consumption of river water takes place.

139
for this purpose in order to prevent pollution of rainwater. Likewise, the cleaning of the train units
carried out during maintenance operations is carried out in appropriate facilities to guarantee the
quality of the water discharged.

It also reviews and monitors the parameters of the discharged water, defining improvement
objectives. The offices have fluid communication with the authorities that manage the discharged
water in each location.

Power systems
Within the Group's Sustainability Policy and the Corporate Environmental Policy that develops it,
the Group is committed to "defining strategies against Climate Change focused on reducing CO2
emissions and promoting renewable energies", the main objectives of this commitment: the
promotion of renewable energies, savings in energy consumption generated by its activity and the
promotion of environmental policies within the Group and at all the sites where it operates and
collaborates.

In 2022, as a result of the action plans for the reduction of energy consumption in the CAF Group,
several measures have been taken, which are developed below.

− In terms of lighting, presence detectors have been installed, natural light has been used as
much as possible, luminaires have been replaced with more efficient ones, and timers and
presence sensors have been installed.
− Environmental awareness days have been held for the rational use of energy in offices.
− New KPIs and energy targets have been defined in order to identify possible energy efficiency
savings.
− Equipment temperatures and the use of heating have been adjusted.
− A new heat treatment line has been designed at the Group's headquarters, with a renovated
layout, which will substantially improve the energy efficiency of the wheel forging workshop
in the coming years.

Likewise, in order to improve the control and optimisation of energy consumption, energy meters
(gas and electricity) have been installed, the operation of air conditioning equipment has been
programmed, key elements in energy efficiency in production processes have been replaced (e.g.
forklift trucks) and leak controls have been carried out in pneumatic installations.

Promotion of renewable energies

During 2022, the CAF Group has maintained its environmental commitment beyond the
manufacture and implementation of sustainable mobility solutions, supplying photovoltaic energy
to cities and industries in different geographies throughout the world, through the Group's
company, CAF Turnkey & Engineering (CAF TE). CAF TE develops engineering and construction (EPC)
solutions for photovoltaic plants and provides operation and maintenance services. Specifically,
during 2022, the company has developed several photovoltaic panel projects in Chile and Italy,
increasing the installed solar power capacity, which now totals more than 200 MWp installed
worldwide.

The CAF Group has also maintained systems for the generation of renewable energies at its
facilities. Accordingly, in 2022, the headquarters of the parent company has enabled the generation
of renewable energy, equivalent to 9% of the factory's annual electricity consumption, from the
solar panels installed on the roof of the workshops and the hydroelectric plant belonging to the
CAF Group. In addition, a photovoltaic installation (340 kWp) has been built at the Group's main
bus manufacturing site and will be commissioned in the first quarter of 2023, which is expected to
provide the equivalent of 2.5% of the site's annual electricity consumption. Similarly, a feasibility
analysis of photovoltaic projects has begun at some of the Group's sites, which will be defined and
consolidated in the coming months.

Below are the tables with the energy consumption of the CAF Group, being for the first time
information on all the activities carried out by the Group:

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Direct and indirect energy consumption
2022 2021 2020 2019
(MWh)
Renewable energy
Electricity 54,090 27,746 - 38,705
Thermal energy 766 67 - - -
Hydrogen 55 83 8 5
Non-renewable energy
Natural gas 68 122,438 122,972 114,390 134,681
Diesel69 8,283 8,168 8,204 10,097
LPG and Petrol 3,342 4,483 3,278 2,737
Electricity 16,851 60,678 87,038 52,082
Thermal energy 16,048 18,901 24,611 24,309
Total electricity 70,941 88,424 87,038 90,787

As mentioned above, 76% of the Group's electricity consumption comes from renewable sources,
with a guarantee of origin. This indicator has increased by 45 percentage points in 2022 compared
to the previous year and is expected to continue to increase in the coming years, with the objective
for 2023 being that 78% of the electricity consumed by the Group will come from renewable
sources, with a guarantee of origin.

Direct and indirect energy consumption

2022 2021 2020 2019
(MWh)
Total electricity 70,941 88,424 87,038 90,787
Rest of energies 150,932 154,606 150,485 171,830
Total energy consumption (MWh) 221,873 242,930 237,523 262,616
Energy intensity (kWH/MHW) 10 11.9 12.3 14.1

The Group's overall electricity consumption, both renewable and non-renewable, has been
reduced by 19% in the last year, as a result of the measures implemented to reduce energy
consumption.

As can be seen in the table above, the trend of the energy intensity ratio, taking into account the
total energy consumption, has decreased over the last 4 years. This is due to a reduction in energy
consumption and a broadening of the scope of the data provided in the hours worked, which now
accounts for 95% of the Group. The Group's energy intensity target for 2023 is established at 12.1
kWh/MHW, as production activity will increase and this will lead to an increase in energy
consumption.

67 Fourteen percent of thermal energy consumption comes from renewable sources, with a guarantee of origin.
68 The consumption of natural gas to heat the facilities represents approximately 18% of the total consumption
This includes CNG consumption.
69 Consumption related to material transport equipment.

141
 Waste
The Group aims to reduce, reuse and recycle the waste produced by the activities carried on, and
to this end it has expressed its commitment to the circular economy by signing up to the Circular
Economy Pact of the Spanish Ministry of Agriculture and Fisheries, Food and Environmental Affairs
(MAPAMA) in 2017.

Waste is managed on the basis of the following premises: 1) Reducing waste generation at source,
e.g. by the use of returnable tools and return of surplus material to the supplier; 2) Maximising the
reuse, recycling and recovery of waste. Along these lines, by 2022, 86% of the total amount of
hazardous and non-hazardous waste generated will have been recovered, with the aim of
improving the amount of waste recovered. 3) Promoting awareness campaigns on waste
segregation and minimisation and 4) Proper waste treatment and management, based on defined
waste management procedures, with managers close to the facilities and evaluating our supply
chain partners in terms of their environmental performance.

During 2022, it is worth highlighting the target for the reduction of expired materials defined and
controlled at several of the Group's railway maintenance sites. Likewise, with the same objective,
at the train manufacturing sites, a 78% reduction has been achieved in the indicator of expired
glues and paints, in the last two years, by changing the adhesive supply method with a local
supplier, in order to reduce stocks and expired adhesives. This indicator is monitored in the
procurement process of the railway activity.

Below are the CAF Group's waste generation data, with information for the first time on all the
activities carried out by the Group and with information on the type of waste generated from 2021
onwards:

Waste for recovery (t) 2022 2021

Reuse 70 Recycling Other TOTAL Reuse Recycling Other TOTAL
operations operations
Non-hazardous waste 22 27,823 1,136 28,981 86 7,643 9,538 17,267
Packaging waste (wood, 22 4,188 133 86 2,478 5,547
paper, cardboard and
plastic)
Metal waste 0 23,207 175 0 4,151 71 3,701
Other 0 427 828 1 219 290
Dangerous residues 0 1,468 427 1,895 32 391 649 1,072
Paint residue 0 10 166 4 0.6 21
Oily residues 0 142 111 21 72 138 -
Packaging waste 0 15 41 1 12 26 -
Batteries and batteries 0 1,114 1.7 0.1 90 3.5 -
Other 0 187 108 6 50 460 -

Waste for recovery (t) 2020 2019

Reuse Recycling Other TOTAL Reuse Recycling Other TOTAL
operations operations
Non-hazardous waste 175 5,702 3,791 9,619 153 6,702 5,234 12,089
Dangerous residues 33 201 2,033 2,266 36 212 1,114 1,362

70 During 2022, the differentiation of waste reused on site from waste recycled by the waste manager has

been improved.
71 During 2021, the control and monitoring of metal waste in the matrix was improved through the

implementation of an integrated scrap control system.

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Waste destined for 2022 2021
disposal (t)
Incineration Landfill Other TOTAL Incineration Landfill Other TOTAL
operations operations
Non-hazardous waste 715 2,504 622 3,840 322 706 3251 4,279
Packaging waste (wood, 198 194 424 287 407 162
paper, cardboard and
plastic)
Metal waste 0 1,929 21 0 0 2,019
Other 518 381 178 34 299 1,070
Dangerous residues 370 244 603 1,216 204 172 1,070 1,445
Paint residue 81 39 109 67 81 106
Oily residues 95 60 234 0.5 0.1 400
Packaging waste 6.4 16 17 5.3 3.3 33
Batteries and batteries 0 0.02 110 0 1.2 0.4
Other 188 128 133 131 86 530

Waste destined for 2020 2019

disposal (t)
Incineration Landfill Other TOTAL Incineration Landfill Other TOTAL
operations operations
Non-hazardous waste 428 608 3,042 4,078 392 1,370 2,378 4,140
Dangerous residues 68 167 914 1,148 69 189 958 1,217

Protection of biodiversity:
With reference to the actions carried out by the CAF Group in relation to the protection of
biodiversity, the Group is aware of its responsibility for biodiversity and the non-deforestation of
the places in which it operates, and therefore controls this impact by carrying out environmental
impact assessments (in the places/projects that require it) and developing products that respect
the environment (for more information, see section "5.3 Sustainable mobility and eco-efficient
products").

At present, the Group's sites are not located in protected areas where there may be a particular
impact on biodiversity.

During 2023, the corporate environmental policy will be updated to include the CAF Group's
commitment to the protection and restoration of biodiversity.

143
 6 THE SOCIAL VALUE OF OUR
ACTIVITY
"CAF is committed to the socially and environmentally sustainable
development of the communities in which it operates, through the reduction
of the environmental impact of its operations and the products/services it
offers, and the promotion of activities that contribute to economic
development, knowledge generation, education and social promotion and
culture"

CAF Sustainability Policy

17 December 2020

6.1 Economic promotion of the environment

6.2 Knowledge generation

6.3 Collaboration in the educational field

6.4 Collaboration with social and/or cultural initiatives

144
CAF is aware that its activities have a direct and indirect impact on the development of the local
communities where it operates and on the well-being of society at large, through sustainable and
environmentally friendly mobility solutions, as indicated throughout the report.

As established in its Sustainability Policy, the CAF Group is committed to the socially and
environmentally sustainable development of the communities in which it operates, through the
reduction of the environmental impact of its operations and products/services and the promotion
of activities that contribute to economic development, the generation of knowledge, the
promotion of education, and social and cultural promotion.

This commitment is articulated through the Manual for the development of social commitments,
which defines the areas of contribution of CAF's social commitments with the Stakeholder
Company, and aims to ensure that CAF's collaboration activities that impact local communities in
the area of social commitments are in accordance with the provisions of the Code of Conduct,
Sustainability Policy, as well as with the measures set out in the Crime Prevention Manual.

In addition to respecting the social, economic, cultural and linguistic environments in which the
Group carries on its activity, the following risks are associated with these commitments: (i) the
adverse impact of its activities on local communities; (ii) lack of alignment between the corporate
objectives of the CAF Group and respect for the various communities; (iii) the difficulty in
establishing sustainable, enduring relationships with local communities; (iv) ineffective cooperation
with the public authorities and local entities; and (v) lack of respect for social, economic, cultural
and linguistic scenarios.

These risks are covered by the corporate risk control and management system described in Chapter
2 which includes a series of activities aimed exclusively at managing such risks. This process meets
the risk and opportunity analysis of the frame of reference.

145
6.1 Economic promotion of the community
[2-28, MA 203, 203-2, MA 413]

There is a commitment to the local economy on three basic levels: the creation and maintenance
of local employment, the contribution to the industrial transformation and competitiveness of the
territory and the promotion of new business models.

Creation and maintenance of local employment

CAF is committed to supporting quality employment wherever it carries on its activities, both in
Spain and abroad. This commitment manifests itself in the creation and conservation of direct
employment, through the encouragement of the recruitment of local staff in the geographical areas
in which the CAF Group carries on its activities, and of indirect employment, through the
contracting of products and services from local suppliers.

Evidence of the former is the fact that over the last five financial years more than 90% of the
workers were local72, working under general conditions aligned with the Remuneration and Labour
Relations Policies applicable at the Group companies. Along these lines, the CAF Group also
guarantees equal conditions in starting salaries for men and women, through the application of the
Remuneration and Labour Relations Policies in the Group's companies. For more details, see
chapter "4. The excellence of our team".
"More than 90% of
Industrial transformation and territorial competitiveness workers are local”

The CAF Group contributes to the promotion of industrial transformation and competitiveness in
the area by collaborating with a different intensity and scope with specific initiatives and actions
that can affect the economy of the localities in which it operates at domestic and international
level.

Among these initiatives, it is worth highlighting the collaboration at regional level that began more
than 10 years ago and which has led to the creation of Goierri Valley and CAF's participation in the
project as a trailblazing company and member of the committee of driving companies. Created in
2017 with the vision of being the driving force behind the industrial transformation of the Goierri
region, its aim is to promote the development of industry in the Goierri region by encouraging
collaboration between companies and other public agents in areas that affect their
competitiveness (diversification of markets and products, innovation and training).

With regard to the activities carried out by CAF in the Association during 2022, the following are
noteworthy:

− Participation in the various forums organised by the Association (Driver Committee,

Driver Forums, Multilevel Forums), sharing experiences and needs, to collaborate in
solving common problems detected.

− Participation in several of the sessions of the Hydrogen Round Table, analysing the
opportunities and possible collaborations that may result in the coming years between
the companies of the Association.

− Participation in the Industry 4.0 project, sharing with the Association the best practices
and technologies implemented in the production centres, so that the Association can
have the support and knowledge of the trends in these technologies.

Furthermore, within the initiative promoted by the Regional Development Agency, GOIEKI, and led
by the Lehendakari Agirre centre on the Future Governance Model for Goierri, CAF has participated
in the working groups on ENERGY.

72 This includes the available data relating to the Group's employees, understood as local when they are located
in a Group company located in the same country of birth.

146
CAF continues to participate in the activities of economic entities with business or sectoral
relevance to a different extent. The following are some of the entities in which it has participated
throughout 2022.

Gipuzkoa Business Association (ADEGI) New Economy Forum

Spanish Confederation of Business
Chamber of Commerce
Organisations
Entrepreneurs' Circle MAFEX Spanish Railway Association
Union Internationale des Transports Publics -
Exporters club
UITP

Asociación Progreso Dirección (APD) European Railway Industry - UNIFE

Alamys (Latin American Association of Metros

Federation of Metal Companies of Zaragoza
and Undergrounds)
UIMM (Union of Metallurgy Industries and
FEMEL (Metal Federation of Lleida)
Trades)
RESILIAN (Réseau d'Industriels Innovants AECIM (Association of Metal Companies of
d'Álsace du Nord) the Community of Madrid)

In these entities, CAF has the vocation both to represent the company's interests and to contribute
from its position and to draw attention to aspects that may be of general interest.

147
6.2 Knowledge generation
[2-28, MA 203, 203-2, MA 413]

In addition to participation in collaborative research and/or transfer projects, as described in

section 3.3. Innovation, as in previous years, CAF continues to collaborate in generating knowledge
in its operating environment through participation in the network of innovation-oriented
associations and standardisation committees, as well as the promotion of knowledge in
collaboration with technology centres and universities. Below is a list of some of the activities in
this area.

Involvement with the network of innovation-oriented partnerships

Europe's Rail Joint Undertaking EU-Rail JU
EU-Rail JU is the new European partnership in rail research and innovation established under the Horizon Europe
programme (2020-2027) and successor to Shift2Rail. This partnership aims to accelerate research and
development of innovative technologies and operational solutions.
CAF is a founding member of EU-Rail and sits on the board of directors.

European Rail Research Advisory Council (ERRAC)

ERRAC is the European technology platform for the rail sector. The European Commission participates in this
platform, along with the Member States, the European Railway Agency (ERA) and all relevant actors in the railway
sector, including industry, operators, infrastructure managers, technology centres and universities. ERRAC's main
objective is to provide the European institutions with a common vision to guide R&D in the railway sector.
CAF actively participates in ERRAC working groups and is also a member of the initiative's steering committee.

KDT JU (formerly ECSEL JU)

KDT brings together stakeholders from the EU public sector, industry and academic institutions. It supports
research, development and innovation in essential applications in electronics.
CAF is a member of this EU Joint Undertaking.

UNIFE
The UNIFE association represents European train manufacturers and railway equipment suppliers. The
association advocates on behalf of more than 100 of Europe's leading rail supply companies, from SMEs to large
enterprises, active in the design, manufacture, maintenance and renewal of rail transport systems, subsystems
and related equipment. UNIFE also brings together national railway industry associations from 11 European
countries.
CAF participates in the association's working groups and committees and is a member of the board of directors.

UNISIG
Under the umbrella of UNIFE, UNISIG actively contributes to the activities of the European Union Railway Agency
in the field of ERTMS/ETCS technical specifications.

UNISIG is composed of nine UNIFE member companies, one of which is CAF Signalling.

148
ERWA
Under the umbrella of UNIFE, ERWA (European Railway Wheels Association) aims to promote the benefits of use,
the reduction of life cycle costs and the standardisation of railway wheels and axles. Its mission includes the
development of standards and the promotion of safety and environmental innovation.

ERWA is composed of four UNIFE member companies, one of which is CAF.

MAFEX
Mafex is the association that represents the Spanish railway industry and serves this industry by helping
companies in their internationalisation processes, as well as by defending the general interests of the associated
companies in order to achieve, in cooperation, the highest possible level of competitiveness for them.
CAF is a member of the General Assembly and the Innovation Committee.

UITP
UITP (Union Internationale des Transports Publics) is the International Association of Public Transport promoting
sustainable urban mobility. Founded in 1885, with more than 135 years of history, it is the only global network
that brings together all public transport actors and all modes of sustainable transport.
CAF is a member of the R&D-oriented Mobility Innovation Committee and the standardisation-oriented Urban
Rail Platform. As part of our activities in UITP, CAF has signed up to the Charter for Sustainable Development.
One of the main areas of activity of the Charter signatories and UITP members is SDG Target 11.2: "by 2030,
provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety, in
particular by expanding public transport, paying special attention to the needs of people in vulnerable situations,
women, children, persons with disabilities and older persons".

VDV
About 600 companies operating public passenger and rail freight transport in Germany are organised in the
"Verband Deutscher Verkehrsunternehmen" (VDV = Association of German Transport Companies). The VDV
advises and supports its member companies and politicians, supports the exchange of experience and knowledge
between members and prepares technical, operational, legal and economic principles.
Solaris is a member of this association.

Information Technology for Public Transport (ITxPT)

The non-profit ITxPT partnership enables open architecture, data accessibility and interoperability between IT
systems. ITxPT members develop together IT architecture for public transport and other mobility services, based on
standards and best practices.
Solaris is a member of the association.

Clean Bus Deployment Initiative

The European Declaration is an initiative based on the following three pillars: (1) the commitment of cities and
manufacturers to pursue a joint mission to advance the emission reduction process, (2) the creation of a platform
for information exchange between municipal authorities, transport operators and financial organisations, and (3)
the creation of a group of experts to provide professional analysis in the fields of technology, economics and
logistics. The document was signed by the European Commission and the industry's largest manufacturers. It is an
expression of support for the large-scale deployment of full zero emission buses with alternative propulsion
systems.
Solaris has been a member since 2017.

Hydrogen Europe (NEW – IG)

Leading association representing European industry, national associations and research centres active in the
hydrogen and fuel cell sector, who work to accelerate the market introduction of this clean technology in the energy
and transport sectors.
Solaris is a member of this association.

149
European Clean Hydrogen Alliance
This alliance aims for an ambitious deployment of hydrogen technologies by 2030, bringing together renewable and
low-carbon hydrogen production, demand in industry, mobility and other sectors, and hydrogen transmission and
distribution. With the partnership, the EU aims to consolidate its global leadership in this area, in support of the
EU's commitment to achieve carbon neutrality by 2050.
CAF Group has joined this alliance.

BH2C: Basque Hydrogen Corridor

Association with the aim of advancing in the decarbonisation of the energy, industrial, residential and mobility
sectors through the generation of a hydrogen ecosystem in the Basque Country based on specific projects and
actions, with a public-private collaboration strategy.
CAF Group is a member of this association.

Masovian Hydrogen Valley

The objective of the Mazovia Hydrogen Valley is to boost the hydrogen-based industry in the region and to establish
a hydrogen centre in Mazovia by fostering cooperation between the participants in the initiative on innovative
technologies enabling the deployment of hydrogen in transport, energy, utilities, agriculture and other sectors of
the economy.

Solaris is a member of this association.

Wielkopolska Hydrogen Valley

An initiative involving the development of the Wielkopolska Hydrogen Valley and the Polish national ecosystem
based on hydrogen technologies. Signatories to the Wielkopolska Hydrogen Valley letter of intent include officials
from the Wielkopolska region, mayors of its largest cities, university rectors and the business community. The
synergy of the activities carried out by the parties involved will enable them to establish a coordinated and
integrated system of relationships to foster the development of technology, expertise, enterprise and education.
The objective of the signatories is to contribute to the decarbonisation of the economy with a view to achieving
climate neutrality. The project also aims to strengthen the competitive position of the Wielkopolska Region.

Solaris is a member of this association.

PTNSS
The main objective of the Polish Combustion Engine Scientific Society (PTNSS) is the promotion and development
of scientific and technical activity in the field of combustion engines.
Solaris is a member of the association.

RIH Railway Innovation Hub

Railway Innovation Centre with the mission of promoting technology and knowledge in the rail sector at an
international level, through generating collaborative R&D projects, commercialising technology and know-how,
promoting entrepreneurship and providing specialised services.
CAF is a member of the association.

Cybersecurity Forums
CAF collaborates in various national and international forums related to cybersecurity. CAF is integrated in CENELEC
WG23 for the creation of TS50701, a specific European standard for cybersecurity in the rail sector. It also
participates in the UNIFE Cybersecurity Subgroup and in the National Rail Sector Cybersecurity Working Group
coordinated by INCIBE, in which RENFE and ADIF also participate.

150
Research and innovation committees
CAF is a member of various research and innovation committees such as, for example, the committee organised by
the Confederation of Employers and Industries of Spain (CEOE) or that promoted by the Chamber of Commerce, in
which discussions are held on the research, development and innovation situation and talks are held with the public
authorities and various bodies and entities in relation to R&D&I activities and policies.

Participation in standardisation committees

AENOR/UNE
The Spanish Association for Standardisation and Certification (AENOR) is an organisation engaged in developing
standardisation and certification in all industrial and service sectors.
CAF is well represented in this key standard-setting body.

CEN/CENELEC/IEC
European (CEN, CENELEC) and International (IEC) Standardisation Organisations.
CAF has representatives in several working groups.

PKN
The Polish Committee for Standardisation (Polski Komitet Normalizacyjny - PKN) is a national body responsible for
the organisation of standardisation activities.
Solaris is a member of Technical Committee 17 on Vehicles and Road Transport.

Promoting knowledge in collaboration with technology centres

BAIC
BAIC is a public-private collaboration space for the promotion of Artificial Intelligence in the Basque Country. CAF is
one of the organisations promoting this centre.

CEIT
CAF collaborates with this technology centre, engaged in research applied to the service of industry. CAF is a
member of CEIT's Board of Trustees and participates in its governing bodies as a member of its Strategic Council.

CiC Nanogune
CAF collaborates with CiC Nanogune, a centre for research excellence in nanoscience and nanotechnology, by
serving as a member of its board of directors.

CITEF
The Centre for Research in Railway Technologies (CITEF) was created for the purposes of research, innovation,
experimentation, study and teaching in the area of railway knowledge. All of this on a non-profit basis and in pursuit
of general interest purposes within any technological area of rail transport. CAF Signalling has collaborated with this
centre in the development of training and simulation systems for the CBTC system.

DLR
DLR is the aeronautics and space research centre of the Federal Republic of Germany. This centre carries out
research and development activities in the fields of aeronautics, space, energy, transport, security and digitalisation.
CAF collaborates with DLR on several projects related to hydrogen-based mobility.

151
Donostia International Physics Center
CAF collaborates with this centre whose objective is scientific research in the field of basic and applied physics in
areas of interest for Basque society and for international scientific development. CAF is a founding member of the
Board of Trustees.

FCITIGG
The Fundación Centro de Investigación en Tecnologías de la Información y las Comunicaciones de Galicia (FCITIGG)
is an own instrumental and technical service means that aims to contribute to the strengthening, empowerment,
growth and improvement of the competitiveness of the ICT sector in Galicia. CAF Signalling collaborates with this
centre in the development of software for LTE communications.

Foundation for the development of new Hydrogen Technologies in Aragon

Foundation promoting the development of new Hydrogen Technologies and as such, organises, manages and
executes all types of actions related to hydrogen as an energy vector, with the aim of generating, storing and
transporting hydrogen for its use in fuel cells, transport applications or distributed energy generation. CAF is a
member of the Board of Trustees.

IIT
The Institute for Research in Technology (IIT) is a University Institute belonging to the Higher Technical School of
Engineering (ICAI) of the Comillas Pontifical University. Its main objective is to promote research and the training of
postgraduates in various technological fields through their participation in specific projects of interest to industry
and government. CAF collaborates with this centre on several projects related to the characterisation and
dimensioning of high-performance railway lines.

Ikerlan
Ikerlan is a centre dedicated to the transfer of knowledge specialising in electronics, information and
communication technologies; energy and power electronics and advanced manufacturing. CAF collaborates with
Ikerlan in R&D projects and in identifying interesting strategic lines of research.

Lortek
Lortek is an innovative research centre with a strong expertise in joining technologies. CAF collaborates with Lortek
as a member of its Board of Trustees and participates in its governing bodies as a member of its Governing Council.

Tecnalia
CAF is a collaborating partner of the Tecnalia Research & Innovation foundation, a technology centre of great
dimension and multidisciplinary orientation, and is also a member of its board of trustees and chairs the board of
the industry and transport unit.

Vicomtech
Vicomtech is a technology centre specialising in Artificial Intelligence and Computer Vision. CAF collaborates with
Vicomtech in the development of interior and exterior perception systems for autonomous vehicles as well as other
solutions based on Artificial Vision aimed at inspection and monitoring.

Other Technology Centres

The list of technology centres with which the CAF Group collaborates is very extensive and some of them are listed
below: Austrian Institute Of Technology (AIT) - Austria, CiCenergiGUNE - Spain, Cidetec - Spain, Consejo Superior de
Investigaciones Científicas (CSIC) - Spain, IDEKO - Spain, IDONIAL - Spain, Institut français des sciences et
technologies des transports (IFSTTAR) - France, Institute of Communication and Computer Systems - Greece,
ITAINNOVA - Spain, Research and Testing Institute Plzen - Czech Republic, SINTEF - Norway, Tekniker - Spain, TNO -
Netherlands, Virtual Vehicle Research GmbH - Austria, VTT - Finland, etc.

152
Promotion of knowledge in collaboration with universities
Tecnun Classroom - CAF
CAF has collaborated with the Tecnun School of Engineering continually for decades. Such collaboration has taken
the form of activities such as undertaking collaborative research projects, the joint organisation of courses and
seminars, and teaching tasks. On this last point, the permanent presence of CAF engineers on the teaching staff of
Tecnun is noteworthy.

CAF Classroom - Mondragon Unibertsitatea (MU)

CAF has had a collaboration agreement with the Higher Polytechnic School of Mondragón for several years, which
takes the form of a Collaborative Research and Transfer Programme.

This framework includes collaboration in the design of teaching programmes (participation in teaching and
evaluation), definition of projects or design of in-company experiences. The aim of this is to ensure that there are
relevant studies aligned with the real needs of society that enhance students' knowledge and professional skills and
ultimately promote knowledge transfer.

The Classroom has adequate space and equipment to carry out these functions.

CAF Classroom - University of the Basque Country (UPV)

This Business Classroom deals with scientific research or technological development programmes and projects in
areas related to the train, with special interest in IT, telecommunications, cybersecurity, electrical engineering, civil
engineering, project management and renewable energies. Through this agreement, various end-of-degree and
master's degree projects have been set up and it is hoped to organise complementary seminars and railway training
days.

CAF – Deusto Classroom

In September 2022, the University of Deusto and CAF signed a collaboration agreement to promote the
development of young engineers in the industrial sector and their incorporation into projects related to the current
challenges of transforming the mobility sector. Thanks to this agreement, engineering students and CAF
professionals will work together on projects related to the new challenges of sustainable mobility. Projects linked
to software development, artificial intelligence and data analytics are currently being developed.

University of Oviedo
CAF Turnkey & Engineering has collaborated with the University of Oviedo over the last few years to develop several
simulation tools that allow the correct dimensioning of the power supply infrastructure for trains and trams.

AGH University of Science and Technology in Krakow

Also, of note in Poland is the doctoral thesis programme implemented by Solaris together with AGH University of
Science and Technology in Krakow. The aim of this programme is to create conditions for cooperation between the
scientific community and the socio-economic environment, thereby enabling various employees to complete their
doctoral thesis under a trilateral agreement between the employees, the university and the company.

Poznań University of Technology (Politechnika Poznańska)

Solaris collaborates with the Poznań University of Technology on key projects such as the ADAS project for the
development of driver assistance systems. This collaboration also extends to student internships at Solaris.

University of Huddersfield - Institute of Railway Research

The Institute of Railway Research (IRR) at the University of Huddersfield's School of Informatics and Engineering is
a world-leading centre in the field of railway engineering and safety. CAF collaborates with this University in
innovation activities related to railway dynamics.

153
University of Melbourne
The CAF Group, through its subsidiary CAF Digital Services, collaborates with the University of Melbourne in
activities related to Data Science.

Other Universities
The list of universities with which the CAF Group collaborates is very extensive and some of them are listed below:
Université Burgundy Franche-Comté (UBFC) - France, University of Patras - Greece, Politecnico di Torino - Italy,
University of Leeds - United Kingdom, Vrije Universiteit Brussel (VUB) - Belgium, University of West Bohemia - Czech
Republic, Universidad pública de Navarra - Spain, etc.

154
6.3 Collaboration in the educational field
[2-28, MA 203, 203-2, MA 413]

CAF remains committed to training future professionals and with this in mind establishes a number
of agreements to collaborate with educational institutions or entities that foster youth employment
in the area in which it operates.

Educational entities or entities for the promotion of employment

State-owned
- Universidad de Deusto
- Novia Salcedo Foundation
- University of Mondragon
- University of Navarra Foundation
- University of Navarra (Tecnun)
- Guipúzcoa Chamber of Commerce
- University of the Basque Country
- Goierri Eskola
- University of Zaragoza
- La Salle FP
- University of Zaragoza Business Foundation
- FP Bidasoa

international
- Corning Community College
- ENIT Tarbes (School Engineer) - University Burgundy Franche-Comté (UBFC), France
- Autonomous Mexico State University - The French Institute of Science and Technology for
- University of the Valley of Mexico Transport, Development and Networks, Ifsttar, France
- Anahuac Technological University of Monterrey - Institute of Communication and Computer Systems,
- Technological Institute of Tlalnepantla Greece
- La salle university - Motor Transport Institute, Poland
- Faculty of Higher Studies of Cuautitlán Izcalli - University of Patras, Greece
- College of Public Accountants of Mexico - Poznan University of Technology, Poland
- University of Science and Technology in Krakow - Polytechnic University of Turin, Italy
(AGH), Poland - University of Leeds, England
- Austrian Institute of Technology (AIT), Austria - Free University of Brussels (VUB), Belgium
- University of Science and Technology in Krakow - University of West Bohemia in Pilsen, Czech Republic
(AGH), Poland

These collaboration agreements can provide access to training programmes for CAF employees,
but their main objective is to offer opportunities for transition between education and the world
"More than
of work through placements at the various CAF Group sites both locally and internationally.
With this objective, the CAF Group encourages managing placements to facilitate completing
600 company
studies through curricular internships, undertaking final projects for university degrees and
master's degrees, as well as scholarships for postgraduates, providing students with their first work
placements"
experience complemented by training. More than 600 placements have been offered this year. To
carry out this activity, both the parent company and some of the Group's subsidiaries collaborate Prácticas
29% Curriculares
with the Novia Salcedo Foundation with the aim of accompanying young people in their
professional integration from a vocation of anticipation and collaboration. 52% Proyecto Fin de
Carrera
19%
Beca

Internationalisation Scholarship Programmes

CAF is clearly committed to internationalisation and is aware of the need for people with an
international profile. It is considered important to promote this profile in society and, to this end,
CAF collaborates annually with the Basque Government in the Global Training scholarships. This
programme provides young people with university degrees and higher vocational training with a
powerful mechanism that allows them to carry out paid internships in companies and organisations
abroad, in activities and projects related to their academic and professional profile for at least six
months.

155
In 2022, the international activity promoting scholarships for graduates at CAF Group headquarters
has been developed in countries such as Sweden, Germany, Chile, Finland, Hungary, the
Netherlands and Belgium.

European initiatives coordinated by UNIFE

During 2022 CAF has continued its participation in the "Staffer" initiative promoted by the European
Commission and coordinated by UNIFE, which brings together 32 partners from across the European
Union and its railway community.

The railway is one of the main engines of the European strategic objective of smart, ecological and
sustainable growth. This has been endorsed when the European Commission defined 2021 as the
European Year of the Railway. The industry is currently suffering from a considerable lack of expertise,
as a large part of its workforce will retire over the next 10 years, just when technological progress will
require greater capability.

The consortium’s aim is to develop a holistic strategy that identifies current and emerging needs
regarding competencies, while at the same time cooperating with the industry and vocational and
educational training institutions to design specific training and education programmes. They will
improve employability and the professional opportunities in the railway industry by establishing
trans-European mobility programmes and creating employment practices for students, apprentices
and staff. "Staffer" expects to offer human capital solutions at all levels of the railway value chain,
covering the needs of both the supply industry and the railway operators community. In 2022, CAF
has continued to work on identifying the professional skills most in demand in the future in the sector,
defining professional profiles and defining training programmes.

156
6.4 Collaboration with social and/or cultural initiatives
[2-28, MA 203, 203-2, MA 413]

In addition to the various initiatives mentioned above, the CAF Group collaborates with public
and/or private entities to support social, knowledge and cultural projects that have a positive
impact on the communities where it is located.

Below are some of the institutions with which CAF has actively collaborated throughout 2022,
contributing to its development.

Collaboration in social activities

SuEskola Foundation

CAF collaborates with this foundation, which is a training centre for fire prevention and
extinguishing, using innovative technology with real fire.

Green Dachshund Foundation

Foundation created in 2012 by Solaris Bus&Coach to help the most vulnerable. It aims to help
people and animals in need close to the company, implementing aid programmes for children and
young people, spreading the culture of animal protection and popularising the volunteer service
by involving employees and external stakeholders.

Promotion of culture and linguistics

Bikain Certification

CAF promotes the use of the Basque language in its work centres, which has made it possible to
obtain the Bikain certification awarded by the Basque Government in the Silver category in the
Beasain and Irun work centres. This recognition is a certificate of quality in the linguistic
management of Basque in the professional environment.

CAF Award - Elhuyar

Every year the Board of Trustees of the Elhuyar Foundation awards the CAF-Elhuyar merit prize.
The aim of this award is to pay tribute to people who have excelled in the normalisation of the
Basque language and the dissemination of science and technology.
This year, coinciding with the 50th anniversary of Elhuyar, the Board of Trustees has awarded this
recognition to the founders of Elhuyar: Iñaki Azkune Mendia, Felix Azpiroz Arrillaga, Juanjo Gabiña
Carrera, Jesus Mari Goñi Zabala, Andoni Sagarna Izagirre, Mikel Zalbide Elustondo, Xabier Larrea,
Luis Mari Bandres Unanue and Kepa Zalbide Elustondo.
The Board of Trustees has praised the contribution of the work started 50 years ago by these
engineering students to the standardisation of the Basque language and the dissemination of
science and technology.

157
Igartza Awards

Founded in 1994 by the city of Beasain, with the support of the CAF company in Beasain and with
the help of the ELKAR publishing house, the aim of this initiative is to expand Basque culture and
support the work of young writers, through the Igartza Literary Creation Grant for new writers.
The prize or scholarship consists of a financial award, together with a commitment to publish the
work.
This year was the 25th edition and to celebrate it, on 8 October at the Igartza palace, an event
was held in which people could enjoy a literary bertso-saio session set to music with texts created
from the passages of the books that have won prizes during all these editions.

Euskaraldia
Euskaraldia is a mass social exercise lasting fifteen days with the aim of changing oral linguistic
habits and making more use of the Basque language. CAF has participated in this initiative since
its launch by promoting spaces to express oneself in Basque, called "Arigunes".

The 2022 edition was held between 18 November and 2 December.

158
 7 ADDITIONAL INFORMATION

"To report information truthfully, honestly, and with absolute respect

for people’s integrity and honour, always ensuring the use of clear,
responsible language that helps Stakeholders make an informed
decision".

CAF Sustainability Policy

17 December 2020

7.1 About this report

7.2 Table of contents of the Non-Financial Information Statement

7.3 GRI content index

7.4 Table of contents in relation to the Global Compact Principles

159
7.1 About this report
[2-2, 2-3, 2-4, 2-26]

CAF's Sustainability Report is one of the main communication tools in this area and in the
relationship with its Stakeholders.

Scope
This report, which covers the period from 1 January to 31 December 2022, is the seventh annual
Sustainability Report published by CAF.

The information provided therein covers CAF's activities at Group level. In cases of limitations in
scope, coverage or other aspects of the information, appropriate specifications have been made in
the chapter itself. The reasons for omission in these cases have been that the content is not
appropriate, as it is not considered material, confidentiality or the data is not currently of sufficient
quality to be included in the report, in which case work is being done to improve it.

This report also draws on other reports to report more specifically on certain matters, such as CAF's
Consolidated Financial Statements for the year ended 31 December 2022, in this case to reinforce
the information in the economic area; or the Annual Corporate Governance Report 2022 to
reinforce those issues related to CAF's Corporate Governance Model.

International standards used in preparing this Report

This report has been prepared with reference to the international standards of the Global Reporting
Initiative (GRI) in the selected GRI option.

Relevant aspects and participation of stakeholders

CAF maintains an active dialogue with all its stakeholders to identify and respond to issues that are
of interest to them. In this regard, the materiality analysis carried out to identify the most relevant
aspects to be addressed has been taken into account in preparing this report.

For any clarification, doubt or suggestion related to the report or the subjects included in it, please
contact:

[email protected]

160
7.2 Table of contents of the Non-Financial Information Statement
TITLE OF CONTENT Reference GRI content PAGE
INTRODUCTION
Consolidated Group
2-1
Management Report "CAF
Description of the Group's business model 2-6
Group business model
2-29
and outlook", 6-13
103 Management Approach
Description of the policies applied by the Group and the outcome of these
("MA") indicated in each See sections I-V
policies
chapter
Consolidated Group
Management Report
"Main risks and
2-12 uncertainties",
Main risks concerning these matters relating to the Group’s activities
2-13 40-41, 46-47, 50-51,
55, 58, 62, 81, 87, 102,
104, 108, 119, 120-122,
146
I. ENVIRONMENTAL ACTIVITY
Current and foreseeable effects of the Group's activities on the environment 201-2 118 – 126
and, where applicable, on health and safety 308-2 80 – 85
Environmental certification or assessment procedures MA of GRI 307 119
Resources used to prevent environmental risks (1) 118-126
Application of the precautionary principle (1) 118
Provisions and guarantees for environmental risks 119
POLLUTION
Measures to prevent, reduce or remedy CO2 emissions which seriously affect the MA of GRI 305 120-143
environment, taking into account any form of activity-specific air pollution
CIRCULAR ECONOMY AND WASTE PREVENTION AND MANAGEMENT
MA of GRI 306
306-1
Measures for prevention, recycling, reuse, other forms of recovery and disposal 306-2 142-143
of waste 306-3
306-4
306-5
Actions to combat food waste 73 -
SUSTAINABLE USE OF RESOURCES
MA of GRI 303
Water consumption and supply according to local constraints 303-2 139 – 140
303-3
Consumption of raw materials 301-1 138 – 139
Measures adopted to improve the efficiency of raw material use MA of GRI 301 138 – 139
302-1
Direct and indirect energy consumption 302-3 140-141
302-4
Measures adopted to improve energy efficiency and use of renewable energies MA of GRI 302 140-141
CLIMA TE CHANGE
MA of GRI 305
305-1
Significant elements of the greenhouse gas emissions resulting from the Group’s 305-2
122-126
business 305-3
305-4
305-5
Measures adopted to adapt to the consequences of climate change MA of GRI 305 120-126
Targets set in the medium and long term to reduce greenhouse gas emissions MA of GRI 305
122-123
and the means implemented for this purpose 201-2
PROTECTION OF BIODIVERSITY
Protection of biodiversity 143
II. HUMAN RESOURCES
EMPLOYMENT
Total number of employees and breakdown by gender, age, country and
2-7 88
professional category.
Total number and types of employment contracts 2-7 91
Annual average number of permanent, temporary and part-time contracts by
2-7 92
gender, age and employee category
Number of terminations by gender, age and employee category (1) 90

73
This content is not material in relation to the CAF Group’s business activity, as concluded from the 2021 materiality analysis.

161
Average remuneration by gender, age and employee category 2-20 97 – 98
Pay gap (1) 97 – 98
Remuneration of identical job positions or average remuneration at the Group (1) 97 – 98
34 – 35, 98 – 99
Annual Report on the
Remuneration of
Directors of Listed
2-19
Average remuneration of directors and executives Companies 2022
2-20
Annual Report on
Corporate Governance
of Listed Companies
2022
Implementation of disconnection from work measures (1) 92
Employees with a disability (1) 99
WORK ORGANISATION
Organisation of working time MA of GRI 401 92-94
Absenteeism figures (1) 116
Measures to facilitate work-life balance and encourage shared parental
MA of GRI 401 92
responsibility
HEALTH AND SAFETY
MA of GRI 403
403-1
403-2
Healthy and safe working conditions. 106 – 116
403-3
403-7
403-8
Occupational accidents, in particular the frequency and severity thereof 403-9 114 – 115
LABOUR RELATIONS
Organisation of labour/management relations MA of GRI 402 94 – 95
Percentage of employees covered by collective bargaining agreements by
2-30 95
country
Assessment of collective agreements, particularly in the field of occupational
403-4 110 – 111
health and safety
Mechanisms and procedures that the company has in place to promote the
involvement of workers in the management of the company, in terms of 2-26 94 – 95
information, consultation and participation.
TRAINING
Training policies implemented MA of GRI 404 92 – 93
Total number of hours of training by employee category 404-1 93
ACCESSIBILITY
Universal accessibility for people with disabilities MA of GRI 405 and 406 98 – 99
EQUALITY
Measures adopted to promote equal treatment and opportunities for men and
MA of GRI 405 96
women
Equality plans MA of GRI 405 and 406 96
Measures adopted to promote employment MA of GRI 401 96
Protocols against sexual and gender-based harassment MA of GRI 405 and 406 96, 105
Integration and universal accessibility for persons with disabilities MA of GRI 405 and 406 98 – 99
MA of GRI 405 and 406
Anti-discrimination policy and, where appropriate, diversity management policy 32, 43, 96, 101 – 105
406-1
III. RESPECT FOR HUMAN RIGHTS
2-23
2-26
Application of Human Rights due diligence procedures 100 – 105
MA of GRI 412
412-2
Prevention of risks of Human Rights violations and, where appropriate, measures MA of GRI 412
100 – 105
to mitigate, manage and redress any abuses committed 2-25
Complaints of violations of Human Rights (1) 103 – 104
MA of GRI 407
Promotion and fulfilment of the provisions of the fundamental conventions of 407-1
the ILO in relation to respect for freedom of association and the right to MA of GRI 408
104 – 105, 169
collective bargaining, elimination of forced or compulsory labour and abolition of 408-1
child labour. MA of GRI 409
409-1
IV. FIGHTING CORRUPTION AND BRIBERY
2-23
42 – 53
2-26
Measures adopted to prevent corruption and bribery
MA of GRI 205
205-2

162
 205-3
2-23, 2-26
42 – 53
Anti-money laundering measures MA of GRI 205
205-2
Contributions to foundations and not-for-profit entities (1) 53
V. SOCIAL MATTERS
THE GROUP’S COMMITMENT TO SUSTAINABLE DEVELOPMENT
MA of GRI 203
Impact of the Group’s activity on employment and local development 203-2 145 – 158
204-1
MA of GRI 203
Impact of the Group's activity on local populations and on the territory 203-2 145 – 158
204-1
10 – 13
Relationships and dialogue with local community players 2-29
145 – 158
Association or sponsorship activities 2-28 145 – 158
OUTSOURCING AND SUPPLIERS
Inclusion of social, gender equality and environmental issues in the procurement
MA of GRI 308 and 414 81 – 85
policy
Consideration in relations with suppliers and subcontractors of their social and
MA of GRI 308 and 414 81 – 85
environmental responsibility
MA of GRI 308 and 414
Supervision and audit systems and results thereof 308-1 83 – 85
414-1
CONSUMERS
MA of GRI 416
Consumer health and safety measures 416-1 61 – 63
MA of GRI 418
MA of GRI 416
416-2 60 – 61
Complaint systems, grievances received and resolution
MA of GRI 418
418-1
TAX INFORMATION
Earnings obtained on a country-by-country basis (1) 56
Income tax paid (1) 56
Government grants received (1) 56
EU TAXONOMY
EU Taxonomy 18 – 22

163
7.3 GRI content index
GRI
TITLE OF CONTENT REFERENCE PAGE
STANDARD
GENERAL CONTENT (2016)
1. THE ORGANISATION AND ITS REPORTING PRACTICES
Construcciones y Auxiliar de Ferrocarriles, S.A. 164
Location of the headquarters: Calle José Miguel Iturrioz,
164
26, 20,200 Beasain (Guipúzcoa), Spain
Business performance
Organisational details
GRI 2-1 and results
Consolidated Group Management Report for 2022
Rolling stock segment
Bus segments – Solaris
7.1 About this report 160
GRI 2-2 Entities covered by
Note 2.f) to the Financial
sustainability reporting Consolidated Group Management Report for 2022
Statements
Reporting period, frequency
GRI 2-3 7.1 About this report 160
and contact point
If any data from previous periods have been revised, an
GRI 2-4 Restatements of information 164
explanatory note is included in the corresponding item.
GRI 2-5 External assurance Consolidated Group Management Report for 2022 Auditor's reports
2. ACTIVITIES AND WORKERS
1.1 CAF's Overall Vision and Sustainability 6
Activities, value chain and
GRI 2-6
other business relationships 3.4 Responsible and sustainable supply chain 81
Rolling stock segment
Consolidated Group Management Report for 2022
Bus segments – Solaris
GRI 2-7 Employees 4.1 Talent development 91 – 92
3. GOVERNANCE
Governance structure and 2.1 Good Governance System 27 – 39
GRI 2-9 composition 2022 Annual Corporate Governance Report Section C
2.1 Good Governance System 27 – 39
Appointment and selection of Sections C.1.5, C.1.6,
GRI 2-10 the highest governance body 2022 Annual Corporate Governance Report C.1.7, C.1.12, C.1.19,
C.1.36, C.2.1
Chair of the highest governing 2.1 Good Governance System 33
GRI 2-11
body Sections C.1.13, C.1.14
2022 Annual Corporate Governance Report
and C.2.1.
Role of the highest 2.1 Good Governance System 32 – 39
governance body in
GRI 2-12
overseeing the management
2.2 Risk management 40 – 41
of impacts

Delegation of responsibility for 2.1 Good Governance System 36 – 39

GRI 2-13
impact management 2.2 Risk management 40
2.3 Regulatory Compliance System: Business ethics,
prevention of fraud and corruption, and respect for 51
competition law
Role of the highest
GRI 2-14
governance body in 1.1 CAF's Overall Vision and Sustainability 6–9
sustainability reporting

2.1 Good Governance System 36

2.3 Regulatory Compliance System: Business ethics,

GRI 2-15 Conflicts of interest
prevention of fraud and corruption, and respect for 43, 51
competition law
Communication of critical
GRI 2-16 2.1 Good Governance System 36
concerns
Performance evaluation of the
GRI 2-18 2.1 Good Governance System 35 – 36
highest governance body
2.1 Good Governance System 34 – 35
GRI 2-19 Remuneration Policy for the Directors of
Link
"Construcciones y Auxiliar De Ferrocarriles, S.A."
Remuneration policies Sections C.1.13, C.1.14,
2022 Annual Corporate Governance Report
C.1.39, C.2.1
Annual Report on the Remuneration of Directors of Listed
Complete
Companies 2022
GRI 2-20 2.1 Good Governance System 34 – 35

164
 Sections C.1.13, C.1.14
2022 Annual Corporate Governance Report
and C.2.1.
Process for determining
Annual Report on Directors' Remuneration of the Board of
remuneration
Directors of Complete
Listed Public Limited Companies 2022
4. STRATEGY, POLICIES AND PRACTICES
Sustainable Development 2021 Annual Report Letter from the Chairman
GRI 2-22
Strategy Statement
Strategic plan 2026 Link
2.1 Good Governance System 30
2.3 Regulatory Compliance System: Business ethics,
Commitments and policies prevention of fraud and corruption, and respect for 42 – 53
GRI 2-23
competition law
4.3 Respect for Human Rights 100 – 105
2.3 Regulatory Compliance System: Business ethics,
Mainstreaming commitments prevention of fraud and corruption, and respect for 42 – 53
GRI 2-24
and policies
competition law
4.3 Respect for Human Rights 100 – 106
Processes to remedy negative
GRI 2-25 4.3 Respect for Human Rights 103
impacts
2.1 Good Governance System 27 – 39
2.3 Regulatory Compliance System: Business ethics,
prevention of fraud and corruption, and respect for 51 – 53
Mechanisms for seeking
GRI 2-26 competition law
advice and raising concerns
3.4 Responsible and sustainable supply chain 82
7.1 About this report 160
2022 Annual Corporate Governance Report Section F.1.2.
2.3 Regulatory Compliance System: Business ethics,
Compliance with legislation
GRI 2-27 prevention of fraud and corruption, and respect for 47 – 48
and regulations
competition law
GRI 2-28 Membership of associations 6. The social value of our activity 147 – 159
5. STAKEHOLDER ENGAGEMENT
Approach to Stakeholder
GRI 2-29 1.2 Value creation and Stakeholders 10 – 13
engagement
Collective bargaining
GRI 2-30 4.1 Talent development 95
agreements
MATERIAL TOPICS
Process for determining
GRI 3-1 1.3 Materiality 14 – 15
material topics
GRI 3-2 List of material topics 1.3 Materiality 14 – 15
SPECIFIC CONTENTS
CATEGORY: ECONOMY
Economic performance (2016)
1.3 Materiality + Consolidated Group Management 15, Business performance and
GRI 3-3 Management Approach
Report 2022 results
Financial implications and
GRI 201-2 other risks and opportunities 5.2 Climate strategy 120 – 122
due to climate change
Defined benefit plan
Note 20 to the Financial
GRI 201-3 obligations and other Consolidated Group Financial Statements for 2022
Statements.
retirement plans
Financial assistance received Note 15, Note 16 and Note 22 d) to
GRI 201-4 Consolidated Group Financial Statements for 2022
from the government the Financial Statements.
Diversity and equal opportunities (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.2 Diversity and equal opportunities 15, 96 – 98
The salaries of all CAF employees are established in
accordance with the collective bargaining agreements in
Ratios of standard entry level force together with the remuneration regulations
GRI 202-1 wage by gender compared to applicable in each of them, always being higher than the 165
local minimum wage minimum established by law and guaranteeing equitable
processing by setting salary conditions regardless of
gender.
Indirect economic impacts (2016)
GRI 3-3 Management Approach 1.3 Materiality + 6. The social value of our activity 15, 147 – 159
Significant indirect economic
GRI 203-2 6. The social value of our activity 147 – 159
impacts
Procurement practices (2016)
1.3 Materiality + 3.4 Responsible and sustainable supply
GRI 3-3 Management Approach 15, 81
chain

165
 Proportion of spending on Local suppliers accounted for 68% of the Group's
GRI 204-1 166
local suppliers spending in countries with significant operations
Anti-corruption (2016)
1.3 Materiality + 2.3 Regulatory Compliance System:
GRI 3-3 Management Approach Business ethics, prevention of fraud and corruption, 15, 42 – 53
and respect for competition law
2.3 Regulatory Compliance System: Business ethics,
Communication and training
prevention of fraud and corruption, and respect for 45 – 46
GRI 205-2 about anti-corruption policies
competition law
and procedures
2022 Annual Corporate Governance Report Section F.1.2.
2.3 Regulatory Compliance System: Business ethics,
prevention of fraud and corruption, and respect for 47
GRI 205-3 Confirmed cases of corruption
competition law
and measures taken
Note 26) to the Financial
Consolidated Group Financial Statements for 2022
Statements
Unfair Competition (2016)
1.3 Materiality + 2.3 Regulatory Compliance System:
GRI 3-3 Management Approach Business ethics, prevention of fraud and corruption, 15, 49 – 51
and respect for competition law
2.3 Regulatory Compliance System: Business ethics,
prevention of fraud and corruption, and respect for 50
Legal actions for anti-
competition law
competitive behaviour, anti-
GRI 206-1 Note 12 a), Note 20 and
trust and monopoly practices
Consolidated Group Financial Statements for 2022 Note 26 a) to the Financial
Statements
Tax (2019)
GRI 3-3 Management Approach 1.3 Materiality + 2.4 Fiscal responsibility 15, 54 – 56
GRI 207-1 Tax approach 2.4 Fiscal responsibility 54 – 56
Tax governance, control and
GRI 207-2 2.4 Fiscal responsibility 55
risk management
Stakeholder engagement and
GRI 207-3 management of concerns 2.4 Fiscal responsibility 55
related to tax
CATEGORY: ENVIRONMENT
Materials (2016)
1.3 Materiality + 5.4 Circular economy and sustainable
GRI 3-3 Management Approach 15, 138
use of resources
Materials used by weight or
GRI 301-1 5.4 Circular economy and sustainable use of resources 138 – 139
volume
Energy (2016)
1.3 Materiality. + 5.4 Circular economy and sustainable
GRI 3-3 Management Approach 15, 140 – 141
use of resources
Energy consumption within
GRI 302-1 5.4 Circular economy and sustainable use of resources 141
the organisation
GRI 302-3 Energy intensity 5.4 Circular economy and sustainable use of resources 141
Reduction of energy
GRI 302-4 5.4 Circular economy and sustainable use of resources 141
consumption
Water and effluents (2018)
1.3 Materiality + 5.4 Circular economy and sustainable
GRI 3-3 Management Approach 15, 139
use of resources
Interactions with water as a
GRI 303-1 5.4 Circular economy and sustainable use of resources 139
shared resource
Management of water
GRI 303-2 5.4 Circular economy and sustainable use of resources 139
discharge-related impacts

GRI 303-3 Water extraction 5.4 Circular economy and sustainable use of resources 139

Emissions (2016)
GRI 3-3 1.3 Materiality + 5.2 Climate strategy 15, 122 – 126
Management Approach
Consolidated Group Financial Statements for 2022 Note 2 g)
Direct (Scope 1) GHG
GRI 305-1 5.2 Climate strategy 124
emissions
Energy indirect (Scope 2) GHG
GRI 305-2 5.2 Climate strategy 124
emissions
Other indirect (Scope 3) GHG
GRI 305-3 5.2 Climate strategy 125 – 126
emissions
GRI 305-4 GEI emissions intensity 5.2 Climate strategy 125
GRI 305-5 Reduction of GHG emissions 5.2 Climate strategy 125
Waste (2020)

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 1.3 Materiality + 5.4 Circular economy and sustainable
GRI 3-3 Management Approach 15, 142 – 143
use of resources
Waste generation and
GRI 306-1 significant waste related 5.4 Circular economy and sustainable use of resources 142 – 143
impacts
Management of significant
GRI 306-2 5.4 Circular economy and sustainable use of resources 142 – 143
waste-related impacts
GRI 306-3 Waste generated 5.4 Circular economy and sustainable use of resources 142 – 143
Wastes not destined for
GRI 306-4 5.4 Circular economy and sustainable use of resources 142 – 143
disposal
GRI 306-5 Waste destined for disposal 5.4 Circular economy and sustainable use of resources 142 – 143
Environmental assessment of suppliers (2016)
Management Approach 1.3 Materiality. + 3.4 Responsible and sustainable
GRI 3-3 15, 81 – 85
supply chain
Negative environmental
GRI 308-2 impacts in the supply chain 3.4 Responsible and sustainable supply chain 81 – 85
and actions taken
CATEGORY: SOCIAL
Employment (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.1 Talent development 15, 88 – 92
New employee hires and
GRI 401-1 4.1 Talent development 89
employee turnover
Benefits provided to full-time
employees that are not
GRI 401-2 4.1 Talent development 92
provided to temporary or
part-time employees
Worker-company relations (2016)
GRI 3-3 Management Approach 1.3 Materiality. + 4.1 Talent development 15, 92
The provisions of the applicable agreement or,
Minimum notice periods
GRI 402-1 subsidiarily, the relevant local legislation are complied 167
regarding operational changes
with in this regard.
Occupational health and safety (2018)
GRI 3-3 Management Approach 1.3 Materiality + 4.4 Occupational health and safety 15, 106 – 116
Occupational health and
GRI 403-1 4.4 Occupational health and safety 107 – 108
safety management system
Hazard identification, risk
GRI 403-2 assessment and incident 4.4 Occupational health and safety 106 – 116
investigation
GRI 403-3 Occupational health services 4.4 Occupational health and safety 109 – 110
Worker participation,
consultation, and
GRI 403-4 4.4 Occupational health and safety 110 – 111
communication on
occupational health and safety
Worker training on
GRI 403-5 4.4 Occupational health and safety 112 – 113
occupational health and safety
GRI 403-6 Promotion of worker health 4.4 Occupational health and safety 109 – 110
Prevention and mitigation of
occupational health and safety
GRI 403-7 4.4 Occupational health and safety 112
impacts directly linked by
business relationships
Coverage of the occupational
health and safety
GRI 403-8 4.4 Occupational health and safety 107 – 108
management
system
GRI 403-9 Work-related injuries 4.4 Occupational health and safety 113 – 116
Training and teaching (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.1 Talent development 13, 92 – 94
Average hours of training per
GRI 404-1 4.1 Talent development 93
year per employee
Percentage of employees
receiving regular performance
GRI 404-3 4.1 Talent development 93
and career development
reviews
Diversity and equal opportunities (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.2 Diversity and equal opportunities 15, 96 – 98
2.1 Good Governance System 32-35
Diversity of governing bodies
GRI 405-1 4.2 Diversity and equal opportunities 98
and employees
2022 Annual Corporate Governance Report Sections C.1.5, C.1.6,

167
 C.1.7, C.2.1
Non-discrimination (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.2 Diversity and equal opportunities 15, 96 – 98
Incidents of discrimination and
GRI 406-1 4.2 Diversity and equal opportunities 96 – 97
corrective actions taken
Freedom of association and collective bargaining (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.3 Respect for Human Rights 15, 100 – 105
Operations and suppliers in
which the right to freedom of No significant affected sites and suppliers have been
GRI 407-1 168
association and collective identified in this regard.
bargaining may be at risk
Child Labour (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.3 Respect for Human Rights 15, 100 – 105
Operations and suppliers with
No significant affected sites and suppliers have been
GRI 408-1 significant risk for incidents of 168
identified in this regard.
child labour
Forced or compulsory labour (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.3 Respect for Human Rights 15, 100 – 105
Operations and suppliers at
No centres or providers have been identified as having
GRI 409-1 significant risk for incidents of 168
a significant risk in this regard.
forced or compulsory labour
Indigenous peoples' rights (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.3 Respect for Human Rights 15, 100 – 105
Incidents of violations
GRI 411-1 involving rights of indigenous No such cases have been detected. 168
peoples
Human rights assessment (2016)
GRI 3-3 Management Approach 1.3 Materiality + 4.3 Respect for Human Rights 15, 100 – 105

Employee training on Human

GRI 412-2 4.3 Respect for Human Rights 101 – 102
Rights policies or procedures

Local communities (2016)

GRI 3-3 Management Approach 1.3 Materiality + 6. The social value of our activity 15, 14 – 159
Operations with significant
No centres have been identified with significant
GRI 413-2 actual and potential negative 168
negative effects in this regard.
impacts on local communities
Social assessment of suppliers (2016)
1.3 Materiality + 3.4 Responsible and sustainable supply
GRI 3-3 Management Approach 15, 81 – 85
chain
Negative social impacts in the
GRI 414-2 3.4 Responsible and sustainable supply chain 81 – 85
supply chain and actions taken
Public Policy (2016)
1.3 Materiality + 2.3 Regulatory Compliance System:
GRI 3-3 Management Approach Business ethics, prevention of fraud and corruption, 13, 42 – 53
and respect for competition law
2.3 Regulatory Compliance System: Business ethics,
Contributions to political
GRI 415-1 prevention of fraud and corruption, and respect for 53
parties and/or representatives
competition law
Customer health and safety (2016)
1.3 Materiality + 3.1 Quality and safety of products and
GRI 3-3 Management Approach 15, 61 – 63
services
Assessment of the health and
GRI 416-1 safety impacts of product or 3.1 Quality and safety of products and services 61 – 62
service categories

Incidents of non-compliance
concerning the health and
GRI 416-2 3.1 Quality and safety of products and services 62
safety impacts of products and
services

Customer privacy (2016)

GRI 3-3 Management Approach 1.3 Materiality + 3.2 Information security 15, 64 – 66
Substantiated complaints
concerning breaches of
GRI 418-1 3.2 Information security 65
customer privacy and losses of
customer data

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7.4 Table of contents in relation to the Global Compact
Principles
As stated throughout the Report, CAF, S.A. maintains its adherence to the Global Compact and as
such complies with the corresponding requirements, i.e. the annual renewal of the CEO's
declaration of commitment where the commitment to the initiative and its Ten Principles is
renewed and the annual publication of the Progress Report.

In this regard, the new updated UN Global Compact Progress Report (COP) comes into force in
2023, replacing the narrative reporting format with a standardised questionnaire. This
questionnaire has a first section on Governance, which provides a cross-cutting view of the
governance structure of corporate sustainability, and four other sections: Human Rights, Labour,
Environment and Anti-Corruption. Within each section, questions are incorporated that address
the process and policies that demonstrate a company's commitment to progress, efforts made to
prevent negative social and environmental impacts, performance and remediation indicators, and
reporting mechanisms to address grievances and reflect on lessons learned. In doing so, the
organisation aims to:

− Measure and demonstrate progress to stakeholders in a coherent and harmonised way

with the rest of the initiative's participants.
− Be mentored, learn and continuously improve performance by identifying challenges and
setting sustainability targets.
− Benchmark progress against other companies by accessing a comprehensive corporate
sustainability database.
− Build credibility and brand value by showing the company's commitment to the Ten
Principles and the Sustainable Development Goals.

CAF will complete the questionnaire by the deadline set by the Global Compact for this launch year
(27 March to 30 June) and it will be publicly accessible through the Global Compact website.
However, additionally and for the purposes of this Report, the following table identifies the
chapters of the Sustainability Report - EINF where the information relating to compliance with the
10 Principles of the Global Compact is included.

THE 10 GLOBAL COMPACT PRINCIPLES REFERENCE

HUMAN RIGHTS
1. CAF's overall Vision and Sustainability
PRINCIPLE 1. Businesses should support and respect the 2.3 Regulatory Compliance System: Business ethics, prevention of
protection of internationally proclaimed Human Rights fraud and corruption, and respect for competition law
4.3 Respect for Human Rights
2.3 Regulatory Compliance System: Business ethics, prevention of
PRINCIPLE 2. Businesses should make sure that they are not fraud and corruption, and respect for competition law
complicit in Human Rights abuses 3.4 Responsible and sustainable supply chain
4.3 Respect for Human Rights
LABOUR STANDARDS
2.3 Regulatory Compliance System: Business ethics, prevention of
PRINCIPLE 3: Businesses should uphold the freedom of fraud and corruption, and respect for competition law
association and the effective recognition of the right to collective 3.4 Responsible and sustainable supply chain
bargaining. 4.1 Talent development
4.3 Respect for Human Rights
2.3 Regulatory Compliance System: Business ethics, prevention of
PRINCIPLE 4: Businesses should support the elimination of all fraud and corruption, and respect for competition law
forms of forced and compulsory labour. 3.4 Responsible and sustainable supply chain
4.3 Respect for Human Rights
2.3 Regulatory Compliance System: Business ethics, prevention of
PRINCIPLE 5: Businesses should support the effective abolition of fraud and corruption, and respect for competition law
child labour 3.4 Responsible and sustainable supply chain
4.3 Respect for Human Rights
2.3 Regulatory Compliance System: Business ethics, prevention of
fraud and corruption, and respect for competition law
PRINCIPLE 6: Businesses should support the elimination of
4.1 Talent development
discrimination in respect of employment and occupation
4.2 Diversity and equal opportunities
4.3 Respect for Human Rights
ENVIRONMENT

169
PRINCIPLE 7: Businesses should support a precautionary 5.1 Environmental management
approach to environmental challenges 5.2 Climate strategy
3.4 Responsible and sustainable supply chain
5.1 Environmental management
PRINCIPLE 8: Businesses should undertake initiatives to promote
5.2 Climate strategy
greater environmental responsibility.
5.3 Sustainable and efficient mobility
5.4 Circular economy and sustainable use of resources
PRINCIPLE 9: Companies should encourage the development and 3.3 Innovation and technology
diffusion of environmentally friendly technologies 5.3 Sustainable and efficient mobility
ANTI-CORRUPTION
1. CAF's overall Vision and Sustainability
PRINCIPLE 10: Businesses should work against corruption in all
2.3 Regulatory Compliance System: Business ethics, prevention of
its forms, including extortion and briber.
fraud and corruption, and respect for competition law

170