SUSTAINABILITY REPORT 2 0 2 3

Table of Contents

About AAON

1

AAON Products - BASX Brand

52

AAON Locations

2

Product Safety and Serviceability

56

Mission

3

Sales and Marketing

58

Report Highlights

4

2023 Net Sales and Product Mix

63

About This Report

5

AAON Electronic Catalog

64

From the CEO

6

Sales Representative Training

65

Timeline

9

AAON Quality Management System

68

Business

11

AAON Technical Academy

73

Properties

13

Customer Satisfaction

75

Risk Factors

20

Environmental Responsibility

76

Materiality

27

Climate Change

79

Stakeholder Engagement

28

Air Quality Products

81

Supply Chain

31

AAON Product Solutions

83

Enterprise Resource Planning

33

Refrigerant Transition

85

Research and Development

34

Energy

86

Patents, Trademarks, Licenses,

Water

89

and Concessions

39

Waste

90

AAON Products

40

Recycle

93

Featured Components

46

People and Culture

94

Controls

48

Human Rights Policy

95

Wiring

51

Workplace Safety

97

Cybersecurity

101

Team Member Demographics

103

Employee Training

104

Career Development

105

Team Member Benefits

106

AAON Aim High

and Team Member Spotlight

109

Human Capital Resources

110

Culture and Engagement Survey

111

Inclusion and Diversity

112

AAON Employee Resource Groups

115

AAON Affinity Groups

118

Awards and Recognitions

121

Corporate Social Responsibility

122

Workforce Readiness

125

Strong Families and Communities

127

Environmental Stewardship

129

Governance

131

AAON Executive Leadership

and Officers

140

Conduct and Ethics

141

Disclosure Index

142

About AAON

Products

Sales & Marketing

Environment

People & Culture

Social Responsibility

About AAON

We lead the charge in advancing HVAC innovation our world depends on.

AAON, founded in 1988, is a leader in HVAC (heating, ventilation, and air conditioning) solutions for commercial and industrial indoor environments. AAON builds highly configurable HVAC equipment that answers customer-specific needs in any commercial or industrial environment.

We are committed to driving the industry forward for a cleaner and more sustainable future.

Our industry-leading approach to designing and manufacturing highly configurable equipment to meet exact needs creates a premier ownership experience with greater efficiency, performance, and long-term value.

AAON is headquartered in Tulsa, Oklahoma, where its world- class innovation center and testing lab allow AAON engineers to continually push boundaries and advance the industry.

About AAON | 1

About AAON

Products

Sales & Marketing

Environment

People & Culture

Social Responsibility

AAON Locations

REDMOND, OR

KANSAS CITY, MO

TULSA, OK

LONGVIEW, TX

AAON LOCATIONS | 2

About AAON

Products

Sales & Marketing

Environment

People & Culture

Social Responsibility

Mission

AAON provides premier HVAC solutions that bring long-term value to customers and owners. By leading the HVAC industry in innovation, we create tomorrow's solutions today.

MISSION | 3

About AAON

Products

Sales & Marketing

Environment

People & Culture

Social Responsibility

Report Highlights

ENVIRONMENTAL

54% Non-Fossil Fuel

Consuming Units

$43.7 Million in Sustainable

Research and Design

Lower Global Warming

Potential (GWP) Refrigerant

Transition to R454B

SOCIAL

30% Officer

Team Diversity

3,856 Team Members

66% Overall

Workforce Diversity

BOARD OF DIRECTORS

50% Diversity

25% Female

62 Years Average Age

$1.2 MILLION IN CONTRIBUTIONS TO NONPROFIT PARTNERS

OVER 100 NONPROFITS SERVED

$1,168.5 MILLION IN NET SALES

3.4% IN FOREIGN NET SALES

REPORT HIGHLIGHTS | 4

About AAON

Products

Sales & Marketing

Environment

People & Culture

Social Responsibility

About This Report

The 2023 AAON Sustainability/Environmental, Social, and Governance Report (ESG) Report is AAON's sixth sustainability report and covers performance for 2023. The information and data in this report are shared based on the best available information and data at publication and are subject to change. In some cases, information and data are estimated. This report was created in accordance with Sustainability Accounting Standards Board (SASB) standards with reference to Global Reporting Initiative (GRI) standards. The UN Sustainable Development Goals are also referenced.

FORWARD-LOOKING STATEMENTS

This document includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties.

For all of these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "confident," "outlook," "project," "should," "will," and variations of such words and other words of similar meaning or similar expressions are intended to identify such forward-looking statements.

These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Important factors that could cause results to differ materially from those in the forward-looking statements include, among others:

  • market conditions and customer demand for our products;
  • the timing and extent of changes in raw material and component prices;
  • naturally occurring events, pandemics, and other disasters causing disruption to our manufacturing operations, product deliveries, and production capacity;
  • the impact caused by inflationary cost pressures, national, or global health issues, such as the coronavirus pandemic ("COVID-19"), any variants or similar outbreaks (including the response thereto) and their effects on, among other things, demand for our products, supply chain disruptions, our liquidity and financial position, results of operations, stock price, payment of dividends, our ability to secure new orders, our ability to convert backlog to revenue, and impacts to the operations status of our facilities;
  • natural disasters and extreme weather conditions, including, without limitation, their effects on locations where our products are manufactured;
  • the effects of fluctuations in the commercial/industrial new construction market;
  • the timing of introduction and market acceptance of new products;
  • the timing and extent of changes in interest rates, as well as other competitive factors during the year;
  • general economic, market, or business conditions;
  • credit worthiness of our customers and their access to capital;
  • changing technologies;
  • the material failure, interruption of service, compromised data or information technology security, phishing emails, cybersecurity breaches or other impacts to our information technology and related systems and networks (including any of the foregoing of third-party vendors and other contractors who provide information technology or other services);
  • costs and results of litigation, including trial and appellate costs;
  • economic, market, or business conditions in the specific industry and market in which our businesses operate;
  • future levels of capital expenditures, R&D, and indebtedness, including, without limitation, our ability to reduce indebtedness and risks associated with the same;
  • legal, regulatory, and environmental issues, including, without limitation, compliance of our products with mandated standards and specifications; and
  • integration of acquired businesses and our ability to realize synergies and cost savings.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Except as required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events, occurrences, or developments after the date on which such statement is made. For a discussion of risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, please see Item 1A "Risk Factors" included in this Annual Report on Form 10-K, and as otherwise disclosed from time to time in our other filings with the SEC.

ABOUT THIS REPORT | 5

About AAON

Products

Sales & Marketing

Environment

People & Culture

Social Responsibility

From the CEO

To all our stakeholders, including our employees, customers, sales channel partners, supplier vendors, and stockholders:

I am pleased to report that AAON is committed more than ever to our Environmental, Social, and Governance principles. Our journey toward sustainability and resilience has been steady since the Company began. We continue to evolve our approach to address critical challenges and persist in improving the transparency of our sustainability strategy.

Leading the industry with superior energy-efficient equipment has always been at the forefront of the Company. Just as important, is reducing our scope 1 and 2 emissions, advancing our inclusion and diversity efforts, and improving our corporate governance.

At AAON, we strive to be the best stewards of society and we made another leap in our objective in 2023.

As the environment becomes more of a focus in global society due to climate change, the commercial HVAC industry is responsible for developing more sustainable, energy-efficient products. In the U.S., commercial buildings consumed approximately 17% of total energy consumption in 2022 and made up about 16% of carbon emissions, per the Energy Information Administration. Advancing technologies enable the industry to improve building operations and reduce energy consumption and carbon emissions. AAON has been a leader in the decarbonization objectives by producing the most energy-efficient equipment in the North American packaged rooftop market.

Most of our direct competitors in this market manufacture basic equipment that is much less energy efficient.

FROM THE CEO | 6

About AAON

Products

Sales & Marketing

Environment

People & Culture

Social Responsibility

Leading up to January 1, 2023, at which time the Department of Energy required all HVAC equipment to meet a higher minimum energy efficiency standard, AAON was not required to alter any of its designs because all its equipment had met the standards for several years. On the contrary, the regulation forced much of the rest of the industry to make significant upgrades to their equipment as a significant percentage had not met the new standards.

In 2023, AAON went further by making significant investments and advancements with its heat pump technology. In our view, heat pumps are the likely solution to further progression in decarbonizing buildings as they are fully electric and very energy efficient. Currently, no federal incentives or regulations are driving the transition to this technology in the commercial HVAC industry; however, AAON believes it is responsible for leading in this effort. Until recently, all heat pumps on the market were designed to operate down to only 25 to 30 degrees Fahrenheit, excluding the technology as a solution for most of North America. AAON released its newly branded heat pump called the Alpha Class, which is now the only heat pump on the market today that is operable down to zero degrees Fahrenheit. Furthermore, the Company is in the middle of developing a heat pump capable of operating at much colder temperatures than zero degrees. Most HVAC equipment designed for heating today, which makes up approximately 63% of AAON's sales and a similar percentage of the market's sales, is currently fueled with natural gas. Therefore, this progress is pivotal in significantly decreasing the environmental impact of our customers' buildings and achieving our 2030 objective of deriving 80% of our revenue from HVAC equipment powered by non-fossil fuels.

In addition to the achievements we have made with product development, we have made great strides in reducing our carbon footprint. In 2023, we announced a milestone in our sustainability journey, activating more than 400 solar panels on the roof of The Exploration Center, a net-zero facility using advanced building systems, including photovoltaic (solar) electricity generation, geothermal fields, and AAON high-efficiency heat pumps, while providing a world-class experience for visitors and customers. It is one of the most sustainable, energy-efficient buildings in Tulsa, Oklahoma.

FROM THE CEO | 7

About AAON

Products

Sales & Marketing

Environment

People & Culture

Social Responsibility

We also continue to focus on advancing our social and governance principles. Our operations at every one of our facilities are part of a community where team members live and work. We are honored to in turn apply our talents and resources, giving back to the vitality of our communities. In 2023, our AAON Serves program saw the highest level of team member engagement through AAON Giving Campaigns, volunteer hours, and other contributions to more than 100 nonprofit partners.

I want to emphasize our work toward our unified AAON culture. Teamwork and collaboration are the heartbeat of great companies, and we must continue to focus on these principles in the ongoing effort to improve how we do business every day. Creating the best employee experience and aligning our leaders to support our global operations will lead us to long-term sustainability. As we manage AAON's rapid growth, we remain committed to ensuring all aspects of the business are harmonized and working cohesively towards a bright future for everyone.

I am proud of the progress we are making in positioning the Company for long-term sustainability. We will continue to lead the industry in developing the most energy-efficient HVAC equipment in the world for an economical cost. In doing so, AAON is making a positive impact on the environment and people, and we are leveraging our resources and abilities to make the world a better place.

Chief Executive Officer, AAON

FROM THE CEO | 8

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Disclaimer

AAON Inc. published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 21:20:40 UTC.