AAON, Inc. (AAON)

Criticisms on file

No material criticisms on file for this pillar.

Disclosed initiatives

• Renewable Energy Expansion

  Opted-in to additional renewable energy at Tulsa, Memphis, and Redmond facilities (2025); participating in utility demand-response programs.

  Incremental increase in renewable penetration; cost savings from LED retrofit (Tulsa, Longview nearly 100% LED; Redmond phased retrofit).
• Refrigerant Transition

  Completed transition to R-454B (lower GWP) for all HVAC systems manufactured Jan 1, 2025 per EPA regulation; incurred costs for new refrigerant, sensors, detectors, and facility modifications.

  Compliance with AIM Act; eliminates HFC use; increases product flammability and potential future insurance premiums.
• Heat Pump Electrification R&D

  NAIC laboratory developing low-ambient air-source heat-pump products to address electrification initiatives; BASX (Oregon) facility validates high-performance thermal solutions.

  Positions AAON for fossil-fuel phase-out scenarios; supports customer decarbonization commitments.
• Material Recycling & Waste Diversion

  Metal recycling: 17,328 tons (Tulsa), 15,715 tons (Redmond), 13,678 tons (Longview) in 2025. Waste-to-energy diversion: 3,960 tons (2025) vs 694 tons (2023).

  Significant operational circularity; reduces landfill dependency; demonstrates measurable year-over-year improvement.
• Sustainability Governance

  Published seventh annual Sustainability Report (2025); ESG Committee provides oversight; internal grassroots sustainability committee. Achieved Platinum level in Sustainability Alliance Scor3card benchmarking (2024, 2025).

  Institutional commitment to ESG transparency and stakeholder engagement; third-party validation of performance.

Criticisms on file

No material criticisms on file for this pillar.

Disclosed initiatives

• Competitive Compensation Benchmarking

  Company frequently benchmarks compensation and benefits against comparable industries and geographic regions to attract and retain skilled labor.

  Supports recruitment and retention in tight labor markets; supports 53% YoY headcount growth.
• Benefits Programs

  Medical plan (175% HSA match), 401(k) (175% match), profit-sharing bonus, tuition assistance, paid time off, paid parental leave, military pay, short/long-term disability, identity theft protection, group life insurance.

  Above-market offerings support employee financial security and development; family-friendly policies support workforce retention.
• Employee Safety & Wellness

  Safety, turnover, and absenteeism tracked as key human capital measures; self-insured for employee health and workers' compensation up to predetermined limits with stop-loss coverage.

  Safety focus supports operational performance; self-insurance structure incentivizes accident prevention.
• Executive Succession Planning

  Robust succession plans in place for all officers and senior leadership; adopted Executive Severance Plan (July 2024) to provide financial/transitional assistance upon termination without cause or for good reason.

  Mitigates business continuity risk from loss of key personnel; 5,897 employees require strong management pipeline.

Criticisms on file

• AI Governance & Compliance Risk

  Source: AAON 10-K Item 1A Risk Factors — 'Artificial intelligence technologies may introduce operational, cybersecurity, reputational, and compliance risks that could adversely affect our business.' Company acknowledges potential unintended use of AI in engineering, data analysis, customer support, and administrative processes; risk of unauthorized disclosure, bias, or regulatory non-compliance if controls inadequate.
• ERP Implementation Risk

  Source: AAON 10-K Item 1A Risk Factors — 'Complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations.' Delays, cost overruns, or ineffective implementation could adversely affect financial records, internal controls, and management reporting.

Disclosed initiatives

• ESG Committee & Oversight

  ESG Committee provides governance-level oversight for ESG and sustainability activities, sustainability report development, and internal grassroots sustainability committee education/recommendations.

  Institutional accountability for ESG performance; board-level awareness of material risks (climate, supply-chain, governance).
• Conflict Minerals Compliance

  Conducting country-of-origin inquiries per Dodd-Frank requirements since fiscal 2013; SEC disclosure since May 2014; due diligence on conflict-free sourcing.

  Supply-chain transparency; mitigates reputational and regulatory risk; acknowledges limited supplier availability for conflict-free minerals.
• International Trade Compliance

  Compliance with FCPA, UK Bribery Act, US Export Administration Act; use of foreign representatives in international markets subject to anti-corruption controls.

  Reduces legal and reputational risk from improper payments or export violations in emerging markets.
• Internal Controls & ERP Implementation

  Implementing new global enterprise resource planning system to replace legacy systems; significant investment in personnel and financial resources; controls may be tested during transition.

  Enhanced financial record accuracy and operational functionality if successfully deployed; near-term execution risk to internal controls over financial reporting.