Smart and Efficient Growth Drivers

We launched several significant innovative products, including building out our generative AI portfolio, extending our system innovation portfolio targeting high-fidelity CFD simulation, and completed key strategic acquisitions. These acquisitions expand Cadence’s computational software core competency in key high-growth verticals, including aerospace and defense. Additionally, with OpenEye Scientific, Cadence Molecular Sciences, we are accelerating drug discovery with Computational Software Industry’s first SaaS-based cloud-native platform.

Supporting Diversity, Equity, and Inclusion

We expanded our efforts to build a more diverse and inclusive team through expanding our recruitment pipeline, career support, retention, development, and community-building. Based on these efforts, the proportion of women at Cadence has increased for the tenth year in a row.

We also participated in an innovative three-year research project called The Great Transformation (TGT) in partnership with Great Place to Work® alongside a small cohort of Fortune 100 Best Companies. Based on the TGT experience and resulting recommendations, Cadence implemented programs to enhance how we listen to, and empower, the voices of employees from underrepresented groups.

In addition, for the fifth year in a row, we achieved global salary pay parity based on gender and U.S. salary pay parity based on race and ethnicity.

Committed to Net-Zero by 2040

We submitted both near-term and Net-Zero GHG reduction targets to the Science Based Targets Initiative for validation.

For the third year, Cadence received CarbonNeutral^® certification across our global operations, including our Palladium Cloud offering.

In early 2024, we strengthened our transition to long- term renewable energy by signing a virtual power purchase agreement (VPPA) to help finance a to-be- built solar farm in the U.S. Once operational, we expect our portion of the project will deliver solar power to the grid equivalent to our entire U.S. electric load and approximately half of our global Scope 2 emissions.

Tone at the Top

We reported to our Board of Directors on our ESG efforts and initiatives, including review of our decarbonization progress, diversity, equity, and inclusion (DEI) initiatives, and the Cadence Foundation signature programs. We are pleased that in May 2023, Mary Louise (ML) Krakauer assumed the role of Board Chair, reinforcing our commitment to advancing DEI.

Improved Cyber Resilience and Expanded Zero-Trust Security Model

We focused on improving security operations and cyber resilience by minimizing the time required to detect and respond to security incidents while continuously improving our security intelligence and analytics platform across hybrid environments. We expanded our Zero-Trust security model to include data protection chambers and we received external validation of our commitment to providing secure cloud-based products by achieving SOC 2 Type 1 attestation.

Focus on Climate and Diversity

To demonstrate our commitment to climate progress, we completed a full assessment of emissions throughout our value chain for all 15 Scope 3 categories—reporting emissions from hardware product use and end-of-life for the first time. Through partnering with suppliers, more than half of our 2023 upstream Scope 3 emissions are now calculated using supplier’s reported emissions, up from one-third in 2022.

We continued to identify and promote diversity in our supply chain as well as to extend our rigorous governance standards across our value chain. In 2023, we updated our Supplier Code of Conduct (SCOC) to align with RBA Code of Conduct 7.0 and initiated compliance of our top suppliers to the updated SCOC.