American States Water : ESG Report – Print Friendly

2020-2021

Environmental, Social

and Governance (ESG) Report

AMERICAN STATES WATER COMPANY

Significant Highlights

32%	62.5%
SINCE 2007, WATER USAGE	WOMEN REPRESENT
PER CUSTOMER BY GOLDEN STATE	62.5% OF THE INDEPENDENT
WATER COMPANY (GSWC)	DIRECTORS ON THE COMPANY'S
CUSTOMERS IS DOWN 32%	BOARD, OR 5 OUT OF 8

$7,596	36%
INFRASTRUCTURE	RENEWABLE POWER AT BEAR
INVESTMENT PER CUSTOMER	VALLEY ELECTRIC SERVICE,
CONNECTION WAS $7,596	INC. (BVES) REPRESENTED
FOR OUR REGULATED	36% OF TOTAL ELECTRIC
UTILITIES	SUPPLY PURCHASES

60%

	PERFORMANCE ON SUPPLIER
TARGET GOAL TO REDUCE	DIVERSITY, CUSTOMER
GREENHOUSE GAS EMISSIONS	SATISFACTION, AND EMPLOYEE
60% BY 2035 BASED ON 2020	SAFETY ARE INCLUDED
BASELINE NUMBERS	IN MANAGEMENT COMPENSATION
	PLANS

Based on 2021 data, except the baseline used in the greenhouse gas emissions goal.

Sound environmental, social responsibility and governance (ESG) practices are an integral part of our business at American States Water Company and its subsidiaries. Over time, we have increased the breadth and depth of our ESG efforts and disclosures, and present our beliefs and policies, consistent efforts, and tangible achievements in this report.

We celebrated our 92nd year in business in 2021, enjoying sustained growth over that period. This growth was realized by balancing the needs of our customers, shareholders, suppliers, and employees and the communities in which we serve, with the needs of the environment in which we operate. Our leadership team considers it a privilege to operate in this great country of ours and we are focused on conserving the many resources with which we have been entrusted. California is one of the leading states in the nation in setting environmentally-sensitive policies. We have proven ourselves in this environmentally- conscious state as well as the eight other states where we provide service to customers.

We are committed to upholding high ESG standards through our delivery of safe and reliable water, wastewater and electric services to our customers. We are also committed to proactively maintaining the integrity of our systems, managing a strong water supply portfolio and an increasingly renewable electric supply portfolio, and planning for climate variability issues and risks. We are proud of our longstanding conservation efforts, and of our workplace culture in which we strive for diversity and inclusion while prioritizing employee safety and well-being. In fact, compensation for our leadership team is linked to performance on metrics for customer satisfaction, supplier diversity and employee safety.

With nearly a century of history behind us, we are proud to be here for the long haul and run our business for the long-term benefit of all of our stakeholders.

Robert J. Sprowls

President and CEO

CEO LETTER // 1

Table of Contents

ESG HIGHLIGHTS							4
ABOUT THIS REPORT		8
ABOUT OUR COMPANY				9
Overview and Service Area	9
Mission and Values	10
Subsidiaries	11
Fiscal Responsibility	12
COVID-19 RESPONSE		13
GOVERNANCE, ETHICS, HUMAN RIGHTS AND RISK MANAGEMENT		14
Corporate Governance	14
Business Ethics	16
Human Rights	19
Risk Management	20
STAKEHOLDER ENGAGEMENT		22
Our Stakeholders	22
Industry Association Memberships	23
Policy Influence	23
Political Contributions	23
SERVING OUR COMMUNITIES		24
Overview	24
Community Engagement	25
CUSTOMER FOCUS		28
Customer Service	28
Education	32
Water Access and Affordability	33
Protecting Customer Data	33

2 // TABLE OF CONTENTS

INFRASTRUCTURE INVESTMENTS						34
The Need for Investment	34
Our Approach	35
Customer Benefits	37
ECONOMIC IMPACT AND SUPPLIER DIVERSITY				38
ENVIRONMENTAL IMPACT AND WATER SUPPLY		39
Environmental Guidelines	39
Climate Variability	40
Wastewater and Sewer Systems	42
Water Supply	43
WATER EFFICIENCY AND CONSERVATION			46
Golden State Water Company	46
ASUS Conservation	49
WATER QUALITY				50
Stringent Environmental Regulation and Testing	51
Addressing Water Quality Risks	52
Programs and Research	53
RENEWABLE ENERGY AND OTHER CONSERVATION		54
Renewable Energy	54
Conservation by our Electric Customers	54
Reduced Energy Consumption	55
Other Conservation Efforts	55
OUR WORKFORCE		56
Occupational Health and Safety	57
Talent Acquisition, Development and Retention	63
RECOGNITION		70
CONTACT US		72

TABLE OF CONTENTS // 3

ESG Highlights

AMERICAN STATES WATER COMPANY BELIEVES THAT ITS

EMPHASIS ON ENVIRONMENTAL, SOCIAL RESPONSIBILITY AND GOVERNANCE (ESG)

ISSUES IS FUNDAMENTAL TO THE SUSTAINABILITY OF THE COMPANY.

THE FOLLOWING ARE KEY COMPONENTS OF THESE EFFORTS. FURTHER DETAILS

CAN BE FOUND IN THE BODY OF THIS REPORT.

1. Safe and Reliable Service

Providing safe, reliable water, electricity and wastewater services to over one million customers every day including homes, commercial and industrial businesses, and military bases

Proactive investments are made to replace and protect our infrastructure

For our regulated utilities, our infrastructure investment per customer connection was $7,596 in 2021

$1 out of every $2.70 collected from our customers went back into infrastructure at our regulated utilities in 2021

Our regulated utilities' capital improvement program has totaled $634.6 million in the past five years, improving water and electric reliability and reducing water loss throughout our water systems

American States Utility Services, Inc. (ASUS) has spent over $430.6 million to renew and replace utility infrastructure, and made over $623.0 million of upgrades to utility infrastructure on military bases since commencing its first military privatization contract in 2004

We plan for and address risks posed by climate variability and other events, ensuring supply and resiliency in order to provide safe and reliable service

Our drinking water meets state and federal drinking water standards, and we follow stringent environmental regulation and testing requirements

Annual Water Quality/Consumer Confidence Reports are published for all our customers

Multiple water sources are used at our regulated water business, including 50-60% from our own groundwater sources

Over the long term, we are exploring opportunities to secure additional supplies from desalination and increase use of reclaimed water, where appropriate and feasible to reduce stress on our water supplies

4 // ESG HIGHLIGHTS

2. Water Efficiency and Conservation

Since 2007, water usuage per customer by GSWC customers is down 32%

We aggressively promote conservation through conservation/tiered rates, education, events, free water conservation kits, and customer rebates and programs

Our water utility has an established Water Audit and Leak Detection program

Water loss, including through water leakage, theft and meter inaccuracies, represented 7.6% of total company production for the period 2017-2021

WATER USAGE PER CUSTOMER thousands of gallons

2007
2 0 2 0	2 0 2 1

ELECTRIC USAGE PER CUSTOMER mega-watthours

2007
2 0 2 0	1
	2 0 2

3. Reducing Environmental Impact

California, home to our regulated utilities, is one of the leading states in the nation in setting environmentally-sensitive policies

Target goal to reduce our greenhouse gas emissions 60% by 2035 based on 2020 baseline numbers

Since 2007, electric usage per customer by BVES customers is down by nearly 10%

BVES's renewable power represented 36% of total electric supply purchases. California's Renewables Portfolio Standard requirements continue to escalate, reaching 50% by 2026 and 100% carbon free by 2045. In addition, BVES is considering developing solar generation and battery storage facilities.

5% of the energy consumed by our electric customers is generated by customer-owned renewable sources (solar)

We educate our electric customers on our energy saving programs, which encourage innovation and conservation. These efforts have helped to save millions of kilowatt hours of electricity.

We offer bill credits to BVES customers who install a solar- or wind-generating facility that produces renewable energy in excess of their on-site use

Many initiatives are used to reduce energy use in our operations

ESG HIGHLIGHTS // 5

ESG Highlights cont.

4. Our Broader Impact

We respect, promote and protect human rights in a number of ways as it relates to our business

The company's Board of Directors has adopted a policy of providing access to safe, clean and affordable water adequate for human consumption, cooking, and sanitary purposes in all states in which we operate. We successfully meet these policy goals through operations, programs, and/or services authorized by applicable federal and state laws and regulations or approved by applicable regulatory bodies

Our regulated utilities spend with diverse suppliers for 2021 was 31.3%, a four-fold increase since the inception of our Supplier Diversity Program in 2003. For nine consecutive years our regulated utilities have exceeded the CPUC goal for spending with diverse suppliers

At ASUS, we awarded 77.9% of available dollars to small businesses, far exceeding the U.S. government's requirements

We employ over 800 employees in nine states, and create hundreds more jobs, stimulating the economies in our communities through water, wastewater and electric system improvements

We engage with a variety of stakeholders to help identify risks and opportunities as it relates to our business, helping us better set business and sustainability strategies

Our Environmental Guidelines commit to protecting the environment, ensuring the health and safety of our employees, our customers, and the diverse communities where we operate

5. Customer and Community Service

More than one million people are served through our water and electric regulated utilities, as well as U.S. military personnel, families and civilians on 11 military bases through our contracted services business

We strive for best-in-class customer service, providing quality, reliable water, wastewater and electric service each and every day

Customers are our top priority. Communication is key, using various technology methods to educate and inform regarding water quality, conservation, system improvements, and long- term system and service resiliency

We continue to emphasize community engagement. With many of our live events on hold due to the COVID-19 pandemic, we engaged customers and community leaders through our social media platforms, online venues and meetings, and charitable contributions to non-profit organizations.

ASUS is considered by the federal government and the various military installations as one of the preeminent providers of water and wastewater operations, maintenance and capital construction on military installations across the country

6 // ESG HIGHLIGHTS

6. Corporate Governance

8 of 9 Board		Women on the
members are		Board represent
independent		5 out of 8
		independent
		directors, or
		62.5%
The roles of		75% of the
Chairman of the		CEO's long-
Board and CEO		term equity
are separated		awards are
		performance-
		based
The company		The company
maintains		does not
a clawback		maintain a
policy for its		poison pill
performance-
based executive
compensation

7. Our Workforce

Our employees are the foundation of our success. We challenge ourselves to attract, develop and retain the talent we need

Helping our employees thrive, we develop programs that seek to sustain and strengthen efforts in the areas of health and wellness, safety, recruitment, development, retention and employee protections

Strong Occupational Health and Safety practices reduce injuries, keep our workforce healthy, and reduce operating costs

Multiple employee protections are in place, including zero-tolerance policies prohibiting any form of discrimination, harassment and retaliation, a Diversity & Inclusion Policy, and other policies that result in a positive and fair corporate environment

Our workforce is representative of the U.S. workforce population in terms of racial diversity, and the percentage of women in our organization is closely aligned with the norms in our industries

ESG HIGHLIGHTS // 7

About This Report

We strive to publish our Environmental, Social and Governance (ESG) report every two years, and this report covers our sustainability performance for calendar years 2020 and 2021. Unless stated otherwise, data is based on calendar year 2021 to present the most current snapshot. In addition to its contents, additional information related to our ESG efforts can be found on our website, including our Task Force on Climate-related Financial Disclosures (TCFD) report, several standards from the Sustainability Accounting Standards Board (SASB), governance documents, SEC filings, Code of Conduct, Vendor Code of Conduct, and Diversity & Inclusion Policy.

Preparing this report provides an opportunity to assess and improve upon our ESG progress and performance. If you have feedback or questions, please contact Investor Relations at [e-mail].

GOLDEN STATE

WATER COMPANY

BEAR VALLEY ELECTRIC

SERVICE, INC.

HEADQUARTERED IN SAN

DIMAS, CALIFORNIA,

APPROXIMATELY 35 MILES

EAST OF LOS ANGELES, THE

COMPANY EMPLOYED MORE

THAN 800 PEOPLE AS OF

DECEMBER 31, 2021.

8 // ABOUT THIS REPORT