As highlighted in our 2024 Report, ESG evaluations have become an important consideration when identifying and appointing strategic business partners. These assessments are integrated into our vendor selection process to help ensure that prospective partners meet our expectations for environmental responsibility, social practices, and regulatory compliance.

The evaluation process starts with a detailed questionnaire that all prospective vendors must complete. The information collected enables us to assess potential partners more effectively and determine whether their practices are consistent with our ESG expectations. Key areas covered by the assessment include:

Enhancing ESG Performance Among Strategic Business Partners
We maintain close relationships with our supply chain partners to help ensure that they meet our required standards while encouraging continuous improvement in their ESG performance. Several measures have been established to support this objective:

Applying the Global SMETA Standard
During 2024, social and environmental audits were conducted across all strategic business partners using the globally recognized SMETA standard. These assessments provided an additional means of evaluating partners' sustainability practices and identifying opportunities for improvement.

The results of the SMETA audits were systematically reviewed, with any identified non-compliance incorporated into corrective action plans for the relevant strategic business partners. Particular attention is given to issues involving forced labor and child labor, as Caesarstone maintains a zero-tolerance approach toward such violations.

Monitoring ESG Performance Across the Supply Chain
During the year, we strengthened our focus on monitoring ESG performance across our broader value chain. These efforts are creating a foundation for deeper engagement with strategic partners and for establishing more effective ways of measuring and improving ESG performance as part of our wider sustainability strategy.

We have established processes and systems for tracking environmental indicators including electricity, fuel, and water consumption, along with waste management and raw material utilization. By extending these expectations to our strategic business partners, we aim to promote the same high environmental standards throughout the supply chain that we apply within our own operations and that our stakeholders expect from us.

As our ESG management framework continues to develop and we work toward our sustainability objectives, we recognize that managing an extended supply chain also carries a responsibility to promote strong environmental performance, protect worker health and safety, and strengthen governance through effective monitoring and continuous improvement.

CDP, the international environmental disclosure platform, has announced plans to separate into two independent but closely aligned entities. The first, CDP, will operate as a commercial organisation supported by global investment firm Permira and will continue providing environmental disclosure, data, and reporting services to businesses worldwide. The second, CDP Foundation, will function as a charitable organisation responsible for guiding disclosure principles based on the latest environmental science.

Although operating independently, both organisations will share a common objective: generating critical environmental information that supports decisions benefiting the planet and future generations.

Over the past 25 years, CDP has played a significant role in advancing environmental disclosure from a niche practice to a key component of corporate and investment decision-making. In response to growing environmental challenges and increasing market expectations, the new structure is designed to strengthen science-based disclosure while enabling greater investment in technology, data capabilities, and user experience.

For companies, investors, and other stakeholders that rely on CDP data, the change is expected to enhance access to tools, analytics, and insights that support risk assessment, resilience planning, and sustainability strategies.

Under the new arrangement, the CDP Foundation will retain a shareholding in CDP and representation on its board. The Foundation will focus on translating emerging scientific research into practical disclosure frameworks and will help shape the future development of CDP's questionnaires. Meanwhile, CDP will concentrate on operating and expanding the world's most comprehensive environmental disclosure system, generating information that supports sustainable economic development.

The Foundation will also work to incorporate cutting-edge environmental indicators aligned with planetary health, ensuring that disclosure practices remain ambitious and impactful. This approach will allow the Foundation to focus on environmental priorities while leveraging CDP's extensive disclosure infrastructure to drive change.

By establishing two complementary organisations, CDP aims to preserve its mission-driven and innovative approach while enabling each entity to pursue its distinct role more effectively. Both organisations will continue to use environmental data to support informed decision-making, while the Foundation advances its charitable objectives.

CDP confirmed that its existing products, services, and the 2026 disclosure cycle will continue without disruption throughout the transition period.

Sherry Madera, Chief Executive Officer of CDP, described the move as a significant milestone in the organisation's evolution. She stated that the new structure would strengthen science-based disclosure efforts and enable greater use of technology to improve the reporting experience for participants. Madera emphasised that CDP and the CDP Foundation would remain united in their mission to generate meaningful insights that support an Earth-positive economy, while the partnership with Permira would help expand the value delivered to companies, financial institutions, and other data users.

Katherine Garrett-Cox, Chair of the CDP Board of Trustees, highlighted that innovation and science have always been central to CDP's work. She noted that the new model would strengthen the role of CDP's data in promoting sustainable markets, driving positive environmental outcomes, and safeguarding future generations.

Permira brings extensive experience in supporting data-driven organisations through growth and transformation. The investment firm intends to support CDP through increased investment in talent, technology, and product development.

The partnership will allow the CDP Foundation to remain a shareholder in CDP while helping the commercial organisation enhance its services for corporate and financial-sector users worldwide. The goal is to improve both the disclosure process and the quality of environmental insights available to decision-makers.

Sustainability has long been a focus area for Permira, which has established a dedicated Energy Transition investment strategy aimed at supporting businesses that contribute to the transition toward a more sustainable economy through technology, data, and service platforms.

Anish Patel, Partner and Co-Head of Energy Transition, and Gabriel Andrews, Managing Director – Energy Transition at Permira, noted that as environmental risks increasingly influence supply chains and investment decisions, reliable environmental data has become essential. They described CDP as a critical provider of such information and stated that the partnership would strengthen CDP's ability to support informed environmental decision-making on a global scale while also supporting the Foundation's ongoing mission. They further highlighted Permira's experience in helping organisations expand their reach and impact and expressed enthusiasm about supporting CDP's next phase of development.

Legal advice for the transaction was provided by Bates Wells and Baker & McKenzie LLP on behalf of CDP, CDP North America, and CDP Japan. Financial advisory services were provided by Rothschild & Co and Alvarez & Marsal.

The transaction remains subject to regulatory approvals, including approval from the Charity Commission, as well as the fulfilment of customary closing conditions. Completion is expected within the next six months.