Environmental, Social Responsibility and Corporate Governance

The company is a dedicated, responsible corporate citizen and an environmental leader, with policies focused to better manage resources, enhance operating efficiencies, and promote conservation.

Motorcar Parts of America’s mission is to be The Global Leader for Parts and Solutions that Move Our World Today and Tomorrow — driven by an EPICQ set of core values embraced by our employees and directors:

E – Excellence

P – Passion / Productivity

I – Integrity / Innovation

C – Community

Q – Quality

Highlights of Motorcar Parts of America’s ESG Commitments include:

• The ability to leverage the company’s leadership and a more than 50-year history in remanufacturing to further improve its global environmental footprint through:

• The company’s state-of-the-art remanufacturing facilities in Torrance, California and Tijuana, Mexico, with a focus on recycling most materials -- including copper, components, scrap and water.

• A new state-of-the art distribution center at the company’s Tijuana, Mexico facility utilizing high-tech, energy efficient forklift machinery and a centralized recharging operation.

• Opportunities to consolidate product shipments to customers — reducing fuel consumption with related air quality improvements. In fiscal 2022, the company reduced 250 long-haul truck trips by utilizing the full-capacity of each trailer, and another 1,800 loads by utilizing intermodal transportation, which is more efficient, safer and secure.

• An ethnically diverse board comprised of eight independent directors -- including three African Americans and three women. Additional information is available in this year’s proxy statement.

• A continued focus on increasing employee diversity, and increasing the percentage of females in our workforce, which has increased to 39 percent from 34% on a global basis.

• Promoting a respectful workplace environment, contributing to an employee retention rate of more than 87% in Fiscal 2022

• Honoring traditions and customs of the domestic and global communities where the company has a presence.

• Offering health and wellness programs -- including medical staff located at the company’s manufacturing facilities; training; union benefits; athletic facilities; and employee sports league sponsorship. In fiscal 2022, the company provided 650,000 free or reduced-cost meals and 117,000 free transportation to and from work. Such programs improve the lives of our workers, increase productivity and loyalty, while reducing pollution from individual vehicles and food waste and packaging.

• Becoming a founding member of PAS (“Parque Agroforestal Sestentable” or Sustainable Agroforestry Park), for a sustainable planet, to promote, fundraise and build a green initiative located in a disadvantaged area of Tijuana, MX to bring a large farming area to allow for sustainable agriculture, park space, and free vegetables. This organization has secured a twenty-year land lease, with drawings, design and land studies completed.

• Implementation of SMART (specific, measurable, attainable, realistic, and time-bound) performance metrics tied to incentive/bonus policies.

• Strong culture of quality and innovation.

Our Environmental Commitment in Practice

Since the company’s establishment in 1968, environmental and sustainable processes have been fundamental to its operations.

With the potential to reduce material and energy consumption by up to 95 percent, industry sources believe that remanufacturing is the most efficient and sustainable process for producing aftermarket replacement parts, making MPA’s business practices green by nature and supported by the processes noted below.

Eco-friendly remanufacturing processes and the company’s industry leadership, include:

• Sorting the broken-down automotive parts returned by customers and utilizing an innovative and efficient core-sorting process.

• Reconditioning and re-utilizing durable components after passing rigorous testing processes.

• Savings of approximately 56,658 tons of raw materials in fiscal 2022, due to a reduction in the required materials in the remanufacturing production process compared with new product processes.

• Recycling of approximately 4,000 tons of water per year.

• Recycling of approximately 5,000 tons of cardboard and 16,000 tons of metal and other raw materials in fiscal 2022.

How Remanufacturing Can Address Climate Change

The remanufacturing process preserves the energy required in forging and forming durable components, an advantage to recycling alone; and it allows for recycling of metal scrap, such as copper, aluminium, and steel. Equally important, by reclaiming and reconditioning components, the remanufacturing process also conserves the energy and materials that would be required to create new parts. Manufacturing one new starter for instance requires more than 10 times the amount of energy and nine times the number of materials compared with producing remanufactured parts. Manufacturing a new alternator requires approximately seven times the amount of energy and eight times the amount of raw material necessary to produce a remanufactured part. One recent study found that a remanufactured brake caliper saves 95% of the raw materials by weight of new manufacturing and can be completed at least twice with the same core, leading to additional life cycle savings. As highlighted above, the Company reduced raw material usage in manufacturing by approximately 72,000 tons in fiscal 2022 through its remanufacturing process. The energy savings translates into lower carbon dioxide output and overall lower consumption. In fact, industry sources estimate, remanufactured products conserve the equivalent of 400 trillion BTUs of energy per year. The remanufacturing process and recycling employed by MPA takes real steps to mitigate the effects of climate change -- drastically reducing the greenhouse gas emissions that are normally generated by producing new parts.

Committed to Social Responsibility in Action

Motorcar Parts of America is firmly committed to social responsibility. While safety, respect and inclusion have always been fundamental to the company, these qualities are more important than ever given the global pandemic and its impact on employees, family members, and the community at large. Medical professionals are located onsite or within proximity to the company’s operations, and management continues to proactively address the extraordinary global challenges, including the benefits of onsite vaccination programs. In addition, socially responsible initiatives include subsidized food programs for certain employees and donations to community organizations, sponsorship of sport teams and weekend family events.

Human Rights Policy

As part of our Supplier Code of Conduct, suppliers are required to acknowledge compliance with MPA’s polices, and state, federal and international law, as applicable. MPA expects its suppliers to comply with all applicable laws, rules, and regulations, including, without limitation, the specific laws, rules, and regulations referenced below, and to refrain from any illegal conduct, including, without limitation, conduct that is illegal under the U.S. Foreign Corrupt Practices Act and applicable foreign anti-bribery laws. The Company expects its domestic and international suppliers to abide by the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) – Sanctions Programs.

Health and Safety

The company’s operations in Torrance, California complies with all local, state, and federal laws, rules, regulations and ordinances. Accordingly, management conducts ongoing audits, evaluations and reports for each of our subsidiaries. Our wholly owned Mexican subsidiaries’ health and safety policies meet and/or exceed applicable local and federal regulations and laws. Reports are also shared with, reviewed annually, and supported by the union, Sindicato Mexico Moderno. Motorcar Parts of America’s wholly owned Canadian subsidiaries’ health and safety policies are reviewed and approved annually by management teams, as per the ESA and the Ontario Occupational Health & Safety Act. Monthly and quarterly meetings and inspections are conducted with the Company's safety committees. Management reviews all health and safety issues monthly and creates a report. The company’s operations in Malaysia follow similar procedures and comply with local laws and regulations -- including health and safety requirements.

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