Financial information

PGE Polska Grupa Energetyczna SA: Non-financial report of PGE SA and PGE Group for 2021

Sprawozdanie niefinansowe z działalności PGE Polskiej Grupy Energetycznej SA i Grupy Kapitalowej PGE za 2021 rok

EXTRA-FINANCIAL REPORT

On the activities of PGE Polska Grupa Energetyczna SA and PGE Capital Group for the year 2021

ended December 31, 2021

TABLE OF CONTENTS

LETTER FROM THE PRESIDENT OF THE EXECUTIVE BOARD OF PGE POLSKA GRUPA ENERGETYCZNA SA …. 3

Our approach to reporting ………………………………………….. ……………………………………………. …. ……………. 4

  • 1. Overview of the activities of the PGE Group ……………………………….. ………… ……………………………………. ……… 5

    Business model ……………………………………….. ………………………………………….. .. ………………. 5

    The strategy of the PGE Capital Group until 2030 with a perspective until 2050 ……………………………. 9

    Activities of the PGE Group with regard to the EU Environmental Taxonomy ………………………………… .. …… 14

  • 2. ENVIRONMENTAL ……………………………………….. ………………………………………….. ……………. 19

    Climate awareness ………………………………………….. … ……………………………………….. … …………. 19

    Carbon footprint of the PGE Group ………………………………………. …………………………………………….. ….. 24

    Management of environmental protection processes ………………………………………. ………………………………… 27

    Concern for air quality ………………………………………….. …….. …………………………………… …….. ………… 28

    A responsible approach to the management of water resources ……………………………………….. …….. …………… 30

    Circular Economy ………………………………………… ……………. …………………………… ……………. …………… 35

    Waste …………………………………………. ………………………………………….. ………………………… 39

    Land reclamation ………………………………………….. …………………………………………….. ….. …………. 41

    Biodiversity ………………………………………… …………………………………………. ………………….. 44

  • 3. SOCIAL ………………………………………….. … ……………………………………….. ……………………………… 50

    Just transition ………………………………………… ………………………………………….. .. ………………. 50

    Dialogue with stakeholders ………………………………………….. …………………………………………….. ….. .. 53

    Employees …………………………………………. ………………………………………….. ………………….. 59

    Cooperation with contractors ………………………………………….. ……………………………………………. …. 70

    Customers ………………………………………… …………………………………………. ………………….. 73

    Community involvement ……………………………………….. ………………………………………….. .. ….. 79

  • 4. GOVERNANCE ………………………………………….. …….. …………………………………… …….. ………………. 87

    Corporate governance ………………………………………. ……………………………………………. …. …….. 87

    Approach to managing ESG issues ……………………………………. ……. ………………………………………… ……. 91

    Conformity …………………………………………. ………………………………………….. ………………….. 92

    Anti Corruption ……………………………………….. … ……………………………………….. … ………………. 98

    Improving the process for avoiding conflicts of interest ……………………………………….. ……………… 99

    Information security management ………………………………………….. …….. …………………………………… …….. 101

    ICT security ……………………………………….. … ……………………………………….. … ………………… 101

    Risk management ……………………………………….. …………………………………………. ……………… 102

4.8.1 Climatic risks ………………………………………. …………………………………………….. ….. ………………….. 105

4.8.2 Identification of ESG risks ………………………………………….. ………………………………………….. ……. 106

5.

Indicators and tables ……………………………………….. …….. …………………………………… …………………. 118

Index of GRI content and principles of the Global Compact ……………………………. ……. ………………….. 118

Significant clues concerning the PGE Capital Group and the company PGE SA ………………………………… .122

Research and development projects in the field of environmental protection ……………….. 149

Approval of the declaration of extra-financial information ……………………………….. . ……………….. 153

Glossary of industry terms ……………………………………………… ……. ………………………………………… ……. … 154

Contact …………………………………………. ………………………………………….. ………………….. 157

LETTER FROM THE PRESIDENT OF THE EXECUTIVE BOARD OF PGE POLSKA GRUPA ENERGETYCZNA SA

| GRI 102-14 | GC-7 | GC-8 | GC-9 |

Ladies and gentlemen,

2021 was a year in which we actively turned strategy into action. Our desire to be a leader in the sustainable energy transition is evident in the extra-financial dimension of the Group’s operations, centered on the positive impact of our activities on the environment.

In the social field, we place particular emphasis on the transition of the coal regions in order to offer new perspectives to our employees and to the other inhabitants of these regions. The measures we have initiated and the investments underway in the regions of Bełchatów and Turoszów are an indispensable part of fair tranposition and support the

transition of the entire Polish energy industry.

In parallel with the progress of investments aimed at decarbonizing the Group, we are working to raise awareness of the climate in order to work effectively to reduce greenhouse gas emissions and build an organization that is resilient to change. Last year, we demonstrated this in particular by setting up a carbon footprint calculator covering the three perimeters, while launching work on the development of a sectoral framework for calculating the carbon footprint. We have also decided to begin reporting under the Carbon Disclosure Project and will continue to actively and increasingly comply with recognized reporting standards.

Effective management in the non-financial area of ​​a company’s operations must be ensured by the principles of corporate governance. Towards the end of last year, the PGE Board of Directors appointed the Sustainability Committee and Board Trustee for ESG, which ensures consistent development in the ESG area and the establishment of national standards in this regard. This is one of our main challenges for 2022, and we are determined to meet it.

I invite you to read our report, whose structures are aligned with the ESG concept, keeping in mind the expectations of our stakeholders.

Wojciech Dabrowski

Chairman of the Management Board PGE Polska Grupa Energetyczna SA

Our approach to reporting

| GRI 102-46 |

The report on non-financial information of PGE Polska Grupa Energetyczna SA and PGE Group for 2021 is prepared in accordance with the requirements of the amended Accounting Law, transposing Directive 2014/95/EU into Polish law. The report covers non-financial information for the period from January 1 to December 31, 2021 and includes consolidated data for the PGE Group and its parent company – PGE Polska Grupa Energetyczna SA As of December 31, 2021, the PGE Group included 83 companies in which PGE Polska Grupa Energetyczna SA directly or indirectly held more than 50% of the share capital. The extra-financial report covers 37 companies that declared having employees.

The chapters of the report in the narrative part are divided according to the ESG structure (E – environment, S – social, G – governance). This section includes references to GRI-compliant indicators. The 2021 extra-financial report includes 80 GRI Standards indicators, i.e. 35% more than in 2020, as well as company-specific indicators. The quantified indicators are presented at the end of the report. The indicators are broken down into the following areas: environmental, social, social, human rights and anti-corruption.

The non-financial report of PGE Polska Grupa Energetyczna and PGE Group incorporates selected indicators from the Global Reporting Initiative (GRI) reporting standard in its 2016 version, unless 2018 is indicated in the table. The report also refers to the 10 principles of the United Nations Global Compact.

In addition to selecting the most relevant subjects both from the point of view of the company and its environment, the authors of the report also selected, after internal consultation, the indicators most representative of the specificity of the activities of the PGE Group.

The key new features of the extra-financial report for 2021:

  • the recognition of the EU environmental taxonomy,

  • The PGE Group’s carbon footprint in three areas,

  • Management of the ESG domain,

  • the management of the Circular Economy,

  • approach to climate risk management,

  • approach to the fight against corruption,

  • approach to managing conflicts of interest.

1. Overview of the activities of the PGE Group

PGE Capital Group (“PGE Group”) is the largest energy group in Poland. It generates about 44% of Poland’s electricity and about 20% of the country’s district heating, and its electricity distribution area covers about 40% of the country’s territory. Jhe parent company of the PGE Group is PGE

Polska Grupa Energetyczna SA (“PGE SA”).

business model

| GRI 102-1 | GRI 102-2 | GRI 102-7 | GRI 201-1 |

PGE Group operates across the entire value chain: it generates electricity and heat in conventional and renewable power plants and cogeneration plants, then supplies and sells it to customers across Poland , both households and businesses, institutions and local governments. In 2021, the PGE Group continued the process of integrating the field of management of Combustion By-Products (CBS) through the creation of a new sector: the Circular Economy. The use of CBPs enables the EMP to reduce the extraction of natural resources, limit its impact on the environment and reduce CO2 emissions. Thus, the PGE Group implements measures aimed at making the energy sector waste-free, in line with the idea of ​​a circular economy oriented towards environmental protection.

Fig. Key figures of the PGE Capital group for 2021

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