067HN_AAP-ESG-2021-Report-M

APPENDIX

APPENDIX B – GOVERNANCE DEFINITIONS

Board Composition and Structure

The structure, composition, diversity and expertise of the Board with respect to risk oversight and strategic development, including with respect to ESG matters.

ESG Oversight

The governance structure and depth and breadth of ESG experience among those with oversight responsibility for ESG strategy, including senior executive leaders and directors.

Shareholder Rights

The ability of shareholders to engage with the company, including structures that facilitate shareholder feedback such as Board accessibility, proxy access rights and the like.

Stakeholder Engagement

The extent of company engagement with various stakeholders such as customers, suppliers, shareholders, industry organizations and the like.

Disclosure Transparency and Reporting

The extent to which the company maintains effective disclosure controls and procedures, and the extent to which the company provides transparent and comparable qualitative and quantitative disclosures regarding ESG topics, including adoption and alignment with recognized frameworks.

Internal Audits and Assessments

The sophistication and maturation of the company’s internal audit function to periodically assess risks associated with the company’s operations, including with respect to environmental practices, labor practices and human rights.

Crisis Preparedness and Operational Resiliency

The company’s business continuity planning and preparedness to respond to critical incidents that threaten business disruption.

Compliant and Ethical Business Conduct

The compliance with applicable laws and regulations and presence and enforcement of a robust code of conduct and ethics (e.g. corruption, bribery, anti-competitive behavior) applicable to the company’s operations, employees and those with which the company does business.

Data Privacy

The security and protection of personal information collected or stored during company operations and compliance with applicable data privacy and information security laws.

Cyber Security

The sophistication and maturation of information technology infrastructure, including policies and processes to prevent and respond to cyber threat actors.

Product Quality Management

The management of product safety, compliance, standard conformance, and testing and assessment of products for health and environmental impacts.

Responsible Sourcing and Supplier Practices

The accountability for social, environmental and ethical standards and practices of suppliers and third party contractors, including robustness of supplier audit program.

ABOUT

PEOPLE

PLANET

COMMUNITY

GOVERNANCE

2021 ADVANCE AUTO PARTS CORPORATE SUSTAINABILITY AND SOCIAL REPORT | 64

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