RWE : Sustainability Strategy Report 2023

Energised by nature.

Sustainability Strategy Report 2023

Highlights from 2023

	€
45 TWh	89%
electricity from	of our investments are
renewable sources	in green technologies

20,135	0
employees working	serious environmental
for sustainable and	incidents
reliable energy (FTE)

Further reports

Annual Report with Non-financial Group statement 2023

Sustainability Management Report 2023 Sustainability Performance Report 2023

Sustainability Strategy Report 2023

Contents

01	Meet RWE	3
	A transforming energy company	4
	Sustainability as an integrated part of
	doing business	6
	Sound governance for sustainability themes	9

02	We grow	12
	Sustainable investments	13
	Innovation	16
03	We act	18
	Climate change	19
	Biodiversity	22
	Circular economy	25
04	We care	27
	Occupational health and safety	28
	Social responsibility	30
	Diversity, equity and inclusion	33
	Compliance and ethics	35

01

Meet RWE

1. transforming energy company with sustainability at its core

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1. transforming energy company

We are RWE. We are at the forefront of the sustainable

energy transition. Through our global operations we deliver increasingly climate friendly electricity to households and businesses. Last year marked RWE's 125th anniversary. During these 125 years, not only has our society undergone dramatic changes but the way electricity is produced and ­consumed has also changed. At RWE we have kept abreast of these changes, deploying more modern and innovative ways to produce and deliver energy. The very first megawatt hours that RWE produced came from hard coal. Later,

lignite­ and nuclear fuel rods became our main energy sources. And with our 'Growing Green' strategy we are further ­following this path to a net zero energy system.

We're growing our green business while responsibly

phasing out coal energy. Sustainability is a core principle of our corporate strategy and culture, and we're making rapid strides in broadly and deeply integrating it into everything we do. We express our corporate purpose with the guiding principle 'Our energy for a sustainable life'.

Most of the countries in which we operate have aligned their energy policies with ambitious climate protection targets. They want to reduce their greenhouse gas emissions caused by the use of fossil fuels to net zero in the long term while ensuring a reliable and affordable energy supply. RWE is accelerating the energy transition by investing billions in wind power, photovoltaics, battery storage systems and the ­hydrogen economy, while at the same time phasing out

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billion

RWE significantly ­increases worldwide investments­ for green technologies in the years 2024 to 2030.

coal-fired power generation. As of April 2023, we had shut down all our nuclear power plants in Germany. While we are proud of our progress, we are acutely aware that the climate crisis is accelerating and the window for limiting global warming to 1.5°C is rapidly closing. The UN Environment Programme has estimated that the current climate pledges put the planet on track to warm by 2.5 - 2.9°C by the end of this century and therefore more needs to be done to avoid a climate catastrophe.

RWE, one of the largest producers of low carbon electricity,

is leading the way to a green energy world. In November 2021, through our Growing Green strategy, we set ourselves ambitious renewable growth targets. At our 2023 Capital Markets Day we reported on our progress, which is ahead of plan, and we also significantly increased our growth targets. As per our new plan we will invest € 55 billion in the period from 2024 to 2030 which will enable us to expand our generation capacities to over 65 GW. These investments will be across our entire portfolio that includes offshore and onshore wind, solar, batteries, biomass, hydropower as well as hydrogen-capable gas-firedpower plants.

In keeping with our purpose 'Our energy for a sustainable life', RWE is committed to delivering value to societies, com- munities, employees, shareholders and other stakeholders.

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Sustainability as an integrated part of doing business

Sustainability is at the core of our strategy, and our

purpose­ - 'Our energy for a sustainable life' - accurately describes our path forward. This means we strive for sustainability across all our activities. In order to build a business that is ready, able and willing to meet today's and tomorrow's challenges, it's vital for us to consider all real and potential, small and large-scaleimpacts in our own activities and relevant parts of our value chains. The sustainability landscape is dynamic, with themes that are constantly evolving as some challenges grow in importance and we learn more about the different aspects and topics.

We identify important topics related to environmental, social and governance issues through a systematic

approach. It's crucial for us to engage with our stakeholders and take on board their feedback when modifying our

strategic­ priorities and planning with regards to sustaina­ bility. RWE interacts with a wide range of stakeholders on a daily basis: political decisionmakers, non-governmental organisations, customers, partners, suppliers, shareholders, and our own employees, who in many cases are represented by trade unions or other bodies. We value these contacts, not least because they give us opportunities to align and review our priorities. By engaging with our stakeholders, we learn about the different perspectives and this informs our priorities at RWE.

Our sustainability strategy lays out our priorities and

complements our green growth ambitions. In order to define our strategy, in 2021 we carried out an online survey across a wide range of stakeholders to get their feedback on environmental social and governance matters,

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including­ business conduct topics such as corruption and bribery. We updated this analysis in 2022 and 2023, evaluating the effects the topics have on RWE as a company as well as the impact RWE has on sustainability matters, and as a result updated our materiality analysis to meet the future requirements of the EU Corporate Sustainability Reporting Directive (CSRD). We recently used the new catalogue of ESG topics and sub-topics anchored in the CSRD together with our internal expertise and other external sources to evaluate potential new topics. We have validated our topic evaluation with selected stakeholder groups. With all the input and reviews, we continue to define our sustain­ ability strategy around the identified nine priorities.

Our nine priorities address the entire spectrum of envi- ronmental, social and corporate governance matters:

climate change, biodiversity and recultivation, circular

­economy, occupational health and safety, diversity, equity and inclusion, social responsibility, compliance and ethics and sustainable investments as well as innovation. We have grouped these topics in three 'We-Statements' that underline our joint responsibility at RWE to drive sustainability forward not only within our company and but also with part- ners. Our actions are guided by these priorities. Our aim is to set an example in transitioning from a conventional to a sustainable business model.

We believe in conducting a thorough scenario analysis to understand the uncertainties around the future and plan

for these as best as possible. The challenges we face in managing sustainability matters arise over the long-termhorizon and from the substantial uncertainty surrounding the assessment of potential effects and probabilities of

occurrence. Our Group-wide risk management system is used for identifying, assessing and controlling quantifiable risks as early as possible. This includes opportunities and risks arising from sustainability matters in cases where these exceed the acceptable thresholds as per the applicable laws. We have analysed possible implications for the company as well as our business environment and stakeholders with regards to financial significance and material impact. Quantifying the aforementioned criteria has proved particularly challenging. We chose one approach for assessing the financial significance, taking both the probability of occurrence and the potential financial impact into account, and another for assessing the material impact, by also considering the remediability of possible impacts as well as geographic factors. Some transitional risks, i.e. risks from long-term developments, are difficult to quantify or even identify. We take appropriate actions to mitigate these risks as far as possible - some of our approaches and the progress we have made are described in this report.

We continuously strive to assess risks more accurately, e.g. risks from climate change. In 2022, we conducted the first cross-portfolio climate risk assessment. Based on this analysis of over 250 RWE locations worldwide, in 2023 we continued with a stepwise implementation of our climate risk assessments with a focus on new assets. In doing so, we have prioritised technology-specific risks pertaining to the- major expansion of our offshore and onshore wind businesses. Most assets in our pipeline were assessed for climate impacts focusing on the period ending 2039 in line with the lifetime of the assets. In addition to technology-specific risks, we have also included a technology-agnostic analysis for new locations based on the modelled probabilities

Deep Dive

Our priorities

We grow:

We are growing green and creating long-term value by investing in technologies for a sustainable future.

We act:

We apply scientific principles to conserve nature for future generations.

We care:

We acknowledge our stakeholders' interests and act responsibly wherever we operate.

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of extreme weather events due to precipitation, wind speeds and temperatures. The aim here is to identify relevant risks of significant damage to infrastructure. To date, we have noted no foreseeable risks which could have a material impact on our activities. The next step to complete the implementation will involve looking at further specific data such as the age and service life of our assets in operation to identify vulnerabilities. In the reporting year, we have also designed and started implementing an internal control system (ICS) for sustainability. For several years, we

Deep Dive

Our RWE Group sustainability strategy focuses on nine priority topics

have identified main risks and implemented different controls for the collection of our ESG data. This is now reviewed, completed and documented in a systematic approach.

RWE Group consists of several operating companies with a differentiated and complimentary set of responsibilities.

Priority topics

Environment

Climate Change

R&D and

Innovation

Biodiversity

& Recultivation

Circular

Economy

Our holding company RWE AG defines the operational framework and overarching targets for the Group to which our Group companies contribute additional topics and actions relevant for their business areas from a regulatory or strategic perspective. For example, for our offshore wind business, the topics of biodiversity, local benefits, climate change and circular economy are focal points.

Social		Social		Diversity &		Occupational
	Responsibility		Inclusion		Health & Safety

Governance		Sustainable		Compliance &
	Investment		Ethics

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Sound governance for sustainability themes

We have a clear and strong governance framework for

all sustainability themes across the Group. RWE is organised so as to ensure clear accountability and alignment with strategic objectives across environmental, social and governance themes.

RWE's governance framework is derived from applicable statutory regulations, the Articles of Incorporation of RWE and the provisions of the German Corporate Governance Code. Sustainability is addressed in the highest

­management bodies of our Group. In accordance with legal requirements, RWE has a 'dual governance system'. This means that the members of our Executive Board (a manage­ ment body) and Supervisory Board (a monitoring body) are clearly separated, without any overlap between the two. The Supervisory Board of RWE AG has 20 members, ten

of which are elected at our Annual General Meeting in

accordance­ with the German Stock Corporation Act; the other ten are elected by our employees in compliance with the German Codetermination Act. The Supervisory Board has a sub-committee that meets regularly to discuss ­strategic and sustainability matters. Furthermore, other sub-committees are responsible for associated topics such as auditing or determining the sustainability elements in the executive remuneration. Staffing the company's responsible corporate bodies appropriately is a key element of good corporate governance. Therefore, the Supervisory Board has published specific goals with respect to its composition and established a skills matrix. One field of expertise that is deemed material is sustainability. Detailed information about the matrix and the skills of the individual members

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of the Supervisory Board can be found in the Corporate Governance Declaration that we publish separately.

As part of its role of managing the Group, the Executive Board is responsible for all environmental, social and governance topics. The Executive Board and Supervisory Board closely collaborate and regularly communicate with

Deep Dive

Sustainability organisation in RWE

one another for high priority topics. In addition to Board responsibilities, we have a strong sustainability organisation at RWE that ensures continuous progress on all strategic priorities and regulatory requirements. The achievement of sustainability targets is built into the remuneration of the Executive Board of RWE AG. The current remuneration system for the members of the Executive Board has been in place since 2021. The Annual General Meeting endorsed the remuneration system on 28 April 2021 with a majority of 93.19 %. Detailed information can be found in the Remuneration Report, which is published separately.

The Strategy & Sustainability department is responsible for Group-wide development and steering of important

sustainability topics. It works closely with the Group's functional departments to align ambitions, targets and potential measures, regularly reports to the Executive Board on the progress made in achieving prioritised sustainability objectives and informs the Supervisory and Executive Boards on important matters as required. The Director of Strategy & Sustainability reports directly to the CEO of RWE AG. Strategic targets and actions are aligned between RWE AG and the Group companies. The accountability for implementing new processes and conducting projects to drive sustainability lies in specialist departments of RWE AG or the Group companies.

RWE AG

Supervisory Board

CEO		CFO		CHO

Strategy & Sustainability

Segments

Offshore		Onshore		Hydro/		Supply &		Coal/
		Biomass/
Wind		Wind/Solar			Trading		Nuclear
		Gas

Each with sustainability teams and integrated expertise

We have a strong sustainability organisation at RWE that ensures we progress on our most important strategic topics while complying with regulatory requirements. Our company's strategic orientation is determined by the Executive Board of RWE AG, which is responsible for establishing and achieving the Group's objec- tives. The Supervisory Board is directly involved in the corporate and sustaina­ bility strategy for example via the Strategy and Sustainability Committee. We take an integrated approach to spurring ­sustainability, which is why we distribute responsibility for our main topics. The Strategy & Sustainability department is assigned to the office of the CEO and

is in charge of developing the Group's sustainability strategy, reporting and implementing initiatives of strategic relevance. This is done by working closely with the relevant functions and Group companies, which can develop their own strategies and have appointed their own sustainability officers.

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