Sustainability Overview

Message from CEO David Grzebinski

It has been an eventful year in the sustainability space for Kirby Corporation since our last report. Kirby has continued to walk down many meaningful paths in its continued pursuit of a sustainable future. These paths included increased disclosures, emissions projects, ESG related acquisitions, and collaborations and partnerships. Our team, from the Board of Directors down to employees, has cast a wide net in terms of creating a sustainable footprint. This sustainability report will be our third in the last few years and reflects much of the work that has been accomplished. I’m extremely proud that Kirby’s sustainable model is effectively addressing the concerns of our stakeholders and communities, while also upholding our fiduciary responsibility to our shareholders.

Kirby has been committed to a culture of ‘No Harm to People, Equipment, and the Environment’ for many decades. This commitment has been put into practice in many ways. Creating a culture where safety is paramount is exemplified in all our business practices and day to day operations. I am delighted to share that even in a year filled with many distractions, our marine transportation group had its lowest lost-time injury rate in its history. I’m grateful that their focus remained strong despite a challenging year. It is also important to recognize the significant volume of products we transport and our commitment to minimize potential impacts on the environment. In 2021, Kirby moved approximately 410.6 million barrels of cargo which represents approximately 17.2 billion gallons of product. We only saw minor spills which were quickly remediated. We are steadfastly committed to taking ownership of even the smallest spill as this is essential to our progress and continuous improvement. Transporting petroleum and petrochemicals are vital for both our domestic and global economies and Kirby has the expertise to do so in a safe, efficient and environmentally friendly manner. Research clearly shows that barges have a significantly smaller impact on the environment when compared to railroad and trucking (as noted in this report on page 18). We are proud to be a leader in our industry, delivering critical products safely, efficiently and reliably every day.

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We have made strides in other key areas to further benefit the environment. For many years, Kirby has been a leader in the development of modern electric frac equipment, and just last year, we purchased an energy storage solutions business which will help reduce emissions in oilfield and industrial applications. In addition, Kirby is also building a first of its kind diesel electric hybrid towboat for our inland business, and we are partnering with Maersk to provide transportation services for offshore wind projects under a 20-year agreement.

These new offshore wind vessels will utilize diesel electric hybrid technology. We are also collaborating with Maersk to identify alternative and cleaner fuel sources that could displace diesel consumption in the future. We are proud of these technological advancements and will continue to be involved in cutting edge environmentally focused projects that add value and create healthy returns. Kirby is also actively involved in the Blue Sky Maritime partnership which strives to accelerate energy transition in the marine transportation industry. As part of our commitment, several members of Kirby’s team, including myself, serve in key leadership roles, as we strongly believe a collaborative approach is needed in order to progress towards a low carbon future.

While we are proud of the industry working together to address global issues, it is also important to recognize how Kirby addresses issues closer to home. In 2021, Kirby’s Disaster Relief Fund (“KDRF”), which is our in-house charitable organization that provides support to Kirby employees and families impacted by natural disasters and significant losses, raised a record number of dollars. Weather events including Winter Storm Uri and Hurricane Ida greatly impacted our employees with incredible loss, property destruction and distress. Kirby matches all employee contributions towards KDRF at 100% and was able to donate over $750,000 in assistance to our impacted employees as well as their communities. We are committed to our core value of “No Harm to People” – it applies to all facets of our employees lives from work on the waterways, in our manufacturing facilities, and the home.

Our sustainability efforts and goals would not be possible without strong leadership and oversight. Kirby’s Board of Directors oversees Kirby’s performance and management of various ESG issues, including strategy, climate risks, human capital management, and cybersecurity. This past year, Kirby went a step further to reconstitute our Governance Committee as the ESG & Nominating Committee to better reflect its oversight and commitment to ESG issues. In its new form, the committee oversees the Company’s sustainability report, climate change issues and disclosures including TCFD, board nominations, and diversity initiatives.

Overall, while it has been a year filled with unprecedented events, I’m proud of the resilience and achievements that Kirby’s employees have accomplished in the ESG space. This report will do a much better job of highlighting and showcasing our accomplishments and our path to a sustainable future.

At Kirby, we believe a successful business requires an unwavering commitment to a Zero Harm culture, including: No Harm to People, No Harm to Equipment, and No Harm to the Environment. These three tenets are the foundation of our success and underscore our commitment to a sustainable and safe business. Moving liquid products across the waterways and playing a key role in the distribution and services industry is complex and requires significant investments in training, safety protocols, and maintenance to ensure we complete every day without incident and minimize our environmental footprint.

We are proud that our business segments play a critical and positive role in society, supporting industries that ultimately enable a better quality of life for people. For example, petrochemicals, which represent the majority of the cargoes we transport, are used to manufacture everyday consumer products such as cosmetics, electronics, household items, and clothing. Similarly, black oils like asphalt, are critical components for road, infrastructure and housing construction. The demand for these products and many others makes it even more important when we navigate the waterways that our work is done safely and with minimal impact to the environment.

How do we do that? By staying committed to our ‘Zero Harm’ principles, we enable a sustainable business model that reflects good environmental stewardship. Most people are unaware that marine transportation is the cleanest, safest and most efficient mode of surface transportation in the U.S. with far fewer impacts on society as compared to truck or rail. In fact, one barge tow uses significantly less fuel per ton-mile than rail or truck. Marine transportation results in fewer carbon emissions being released into the atmosphere.

In addition to providing a safe and reliable form of transportation, Kirby has taken significant steps over the years to further its commitment to the environment by investing in newer equipment and cleaner technologies. Most notably, since 2000, we have invested more than $500 million in inland boat and engine replacements which significantly improved our efficiencies and greenhouse gas emissions. Additionally, in 2012, Kirby implemented the usage of ultra low sulfur diesel on all vessels, further reducing our emissions profile. We’ve also invested in our barge fleet, including voluntary use of 6 psi pressure relief values on tank barges that effectively reduce cargo vapor emissions as compared to tank barges designed with pressure relief valves with a 1 psi or 3 psi. Further, all of our barges are double hulled to protect cargo tanks. At our barge cleaning facility, residual cargoes are eliminated through use of technology that removes vapors through use of efficient technology that accomplishes 98% reduction by operating beyond regulatory requirements. Distribution & Services is also a key contributor to our sustainability model and is a leader in constructing fracturing equipment that minimizes the impact to the environment, including electric, dual-fuel, and quiet pressure pumping units.

Our commitment to No Harm to People reflects a corporate culture where safety comes first. Our employees are our greatest asset and are key to Kirby’s success. All our employees are empowered with stop work responsibility which gives each of them not only the right but also the responsibility to stop operations on any job where they believe unsafe conditions exist. Kirby is proud to say that our safety statistics, which are monitored by the management team and our Board, have significantly declined over the years despite integrating several significant acquisitions. Beyond safety, Kirby is also committed to creating a workplace environment where all employees are treated with respect and dignity. For example, all employees are required to sign and uphold our Business Ethics Guidelines. For our suppliers, we developed a separate Vendor Code of Conduct that support our core values. Providing a safe and respectful working environment on the boats, in the field, and at the office are fundamental in our business and support our core values of integrity and people.

At Kirby, good governance and board oversight are also critical to our sustainability culture. Our board has broad industry experience ranging from marine transportation and oilfield services to academia. This past year Kirby elected a new member, Tanya Beder, making her the second woman to serve on our board. We believe her vast skill set, including operational and risk management, will add significant value to our company’s success in the future. While the board has always overseen our safety and ethics programs, in 2019, we expanded their responsibilities to formally include oversight of our ESG program. With this change, we believe their broad knowledge and expertise will further help guide Kirby on our sustainability path.

While Kirby has done many great things over the years to ensure a sustainable business model, we recognize that we cannot rest on our past successes. In 2020, Kirby is committed to enhancing the data we gather to better understand our impact on the environment and enable continuous improvement. We believe aligning our ESG disclosures with the SASB (Sustainability Accounting Standards Board) and TCFD (Task Force on Climate-related Financial Disclosures) standards and frameworks will further raise our standard and reinforce our commitment to do the right thing. Through these actions, all our stakeholders, including our employees, customers, vendors, and communities, can see that Kirby is indeed committed to a sustainable business model and No Harm to people, equipment, and the environment – every day.

Sustainability Report Highlights

Guiding ESG Frameworks & Standards

Kirby is relying on the following frameworks and standards to guide our ESG journey

“The Kirby Way”

Safety

Our guiding principle is No Harm to people, the environment or equipment. Safety is at the core of everything we do and always drives our decision making.

People

Our people make the difference. We invest in the tools and resources to empower our employees and we promote a workplace that values mutual respect, knowledge, and teamwork.

Integrity

Do the right thing by having the highest ethical standards whilealways being transparent and accountable for our actions.

Excellence

Creating value for our customers and shareholders by providing the highest quality service and products.

Community

Sharing our success with each other and the communities we live and work in by protecting the environment and encouraging volunteerism.

Kirby Contributes to a Better Quality of Life Every Day

Kirby’s products and services are vital to the development of common end-products such as those illustrated in this slide and used by people daily. Our involvement stretches from our marine transportation business which safely and efficiently moves millions of cargo tons of petrochemicals, refined products, and agricultural liquids annually, to the environmentally friendly oilfield equipment manufactured by Kirby Distribution and Services. We are proud to play a critical role in the supply chain of countless products which create a better quality of life for people around the world.

Stakeholder Engagement & Participation

Blue-Sky Maritime Coalition (BSMC)
– Kirby is a founding member and serves in leadership positions (Board of Director & Treasurer)
– BSMC members recognize the need to address global climate change and are committed to accelerating the transition of waterborne transportation in the United States and Canada toward net zero GHG emissions through development of infrastructure, encouraging innovation and promoting policies

Getting to Zero Coalition
– The coalition acknowledges that an urgent and equitable decarbonization of the maritime supply chain by 2050 is possible and necessary, with urgent action to be taken immediately and over the coming decade

Business Network for Offshore Wind (BNOW)
– Kirby is a leadership member and also serves in the network’s Gulf of Mexico working group
– BNOW is a nonprofit, educational organization with a mission to develop the offshore wind renewable energy industry and its supply chain

Increased engagement with customers regarding environmental matters including:

The ESG Team actively engages with a variety of stakeholders to best understand and address the most pressing ESG matters. Some of
the stakeholders are listed below

Climate-related Risks & Opportunities

Kirby’s Marine Transportation Group moves millions of cargo tons of petrochemical, refined, and agricultural products annually. Demand for these products has increased over the years and according to the International Energy Association is expected to continue moving forward. Therefore, Kirby is met with a dual challenge with respect to emissions from transporting said products and climate-related risks and opportunities. Below is a summary of the framework used in Kirby’s report on the Task Force of Climate-related Disclosures.

Governance:

Board oversight:
– ESG & Nominating Committee
ESG issues
– Audit Committee  Climate-related risk & opportunities
Management oversight:
– Climate-related risk & opportunities
– ESG/Sustainability issues

Risk Management:

Our enterprise risk management process, Kirby is performing a scenario analysis of risks and opportunities associated with changing weather patterns that could have significant impact on our operations
– Hurricane scenario
– High water scenario
– Energy technology transition

Strategies with Examples:

Transition Risks:
– Policy & Legal – Oil & gas regulations changes
– Technology – Transition to low-emissions equipment – Energy technology
– Market – Eco-friendly fracking equipment
– Reputation – Cargo spills

Physical Risks:
– Acute – Hurricanes
– Climate – Flooding

Target & Metrics:

– Kirby Corporation is committed to reducing the negative externalities of climate-related risks & developing strategies to capture opportunities

– To address its marine fleet’s CO2e emissions, the Company has established a 40% emissions reduction target per barrel of capacity through 2040

– See slide 17 for more information