Risk Management C - Organizational Integration of Risk Management Practices

In 2024, Milliken engaged an external consultant to assess potential climate-related risks and opportunities. This is the fourth annual evaluation of climate-related risks and opportunities. The assessment included short- (0-3 years), medium- (3-10 years), and long-term (more than 10 years) time horizons along the Company's value chain for both transition and physical risks. Indicators for financial impact, time horizon and probability aligned with those used in the Company's Enterprise Risk Management (ERM) process. This allowed results to be put into the context of what the Company has traditionally evaluated in its ERM process. Both transition risks, such as reputational risks associated with customer expectations and regulations, and physical risks, such as disruptions in the supply chain and potential flood damage at facilities, are evaluated. Through an iterative process, these risks and opportunities are presented throughout the year to the Company's risk leadership steering committee (including the Chief Legal Officer, Chief Strategy Officer and Chief Financial Officer), the broader risk management team, senior leadership, including the Company's President and CEO, and the Board. Refinement occurs at each level of review. Ultimately, the strategic discussions at each level of the risk management and oversight process serve as the decision-making mechanism to decide whether to mitigate, transfer, accept, or control the identified climate-related risks and to capitalize on opportunities. The identified climate-related risks are integrated into the Company's established risk register and are monitored and reported on throughout the year. A full climate-related risk reassessment, which is aligned with the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD), occurs on an annual basis.

Identification: Milliken's annual climate risk assessment process begins with an analysis of materials, documents, and data availability. This occurs through collaboration between business leaders, the Company's legal department, VP-level leadership, and climate consultants. This is done through the completion of a climate risk materiality tool and an identification of the most material climate risk categories. From this, Milliken provides data to inform key risk categories, including real estate asset locations, supplier raw material spend and location, key customer accounts, key competitors, RECs and carbon offset purchases, production numbers, energy consumption, and embodied carbon information on key products. Data for the year under study is provided across Milliken's key businesses, including Textile, Flooring, Chemical, and Healthcare.

Assessment: Data is evaluated based on climate science using proprietary tools aligned with IPCC-published climate records, as well as desk-based market trends research. Additionally, scenario analysis is performed using the IPCC's RCP (Representative Concentration Pathway) 8.5 and 2.6 scenarios. Scenario analysis is primarily focused on the medium- and long-term time horizons. Milliken analyzes and presents results in a format that aligns with the Company's current ERM process, which includes assigning financial (impact) values to each risk. The process used to determine which risks and opportunities could have a substantive financial impact is aligned with the ERM definitions. Priority risks were identified based on the financial severity of the risk and the likelihood of it occurring within the identified time horizon (short-, medium-, or long-term). These risks are presented and reviewed by Company leadership, including the Company's President and CEO and Board of Directors. Where data gaps persist, Milliken implements data improvement plans in order to improve risk reporting in subsequent years.

Response: Climate-related risks and opportunities are presented annually to the C-Level executive team, as well as to each key business leadership team. For each risk identified, risk owners from the relevant business units are assigned based on input from a range of stakeholders. The intent is to provide each key business with information and mitigation strategies to identify, assess, and act on pertinent risks. Additionally, the corporate sustainability and government relations teams meet regularly to address climate-related risks and opportunities (short- and medium-term time horizon). Climate and sustainability-related risks are also embedded in Milliken's compliance mapping process, which includes a review of regulations that may impact Milliken (short-term time horizon)