Ceres Power : Sustainability Report

Sustainability Report

October 2022

Reaching net zero is critical.

It represents a significant challenge, but also

1. huge opportunity.

Professor Dame Julia King

Baroness Brown of Cambridge

Non-executive Director

Introduction

This summer saw the highest ever temperature recorded in the UK, touching 40.3oC in Coningsby, Lincolnshire in July and globally we have seen devastating events including flooding leaving almost one third of Pakistan under water. Climate change is here, and it is affecting us all. Even if we reach net zero and uphold the Paris Agreement, limiting global temperatures to well below 2oC, preferably 1.5oC compared to pre-industrial levels, we will see very significant changes in our climate over the next 30 years.

Reaching net zero is critical. It represents a significant challenge, but also a huge opportunity. The UK Climate Change Act 2008 was the world's first legislated target to reduce our emissions by 80% from 1990 levels by 2050. In 2019, the UK went further and made a legal commitment to reduce emissions by 100% by 2050. It might seem like a small increment, but the last 20% is the hardest as it derives from hard-to-abate areas such as heating, industry, heavy transport, shipping, and agriculture, which cannot be solved by electrification alone.

Across our global energy systems, we are likely to benefit from big gains in efficiency over time, but in parallel we will need to reinforce power grids that are coming under increased demand from electrification. As we seek to reach 100% removal of emissions, it turns out we will need another energy vector. Hydrogen has a significant role to play in many of these harder-to- decarbonise sectors.

Ceres' technology aligns well with this objective; our fuel cells generate electricity highly efficiently, supporting greater electrification and the need for scale, flexibility, storage, and resilience in national grid systems. Run in reverse as an electrolyser, they generate green hydrogen at high efficiencies-using commonly found materials that can be mass produced at low cost with a limited carbon footprint.

Ceres aims to embed its technology with global partners to enable big investment, manufacturing at scale, and decarbonisation in multiple sectors and geographies. As the Company grows, Ceres has taken the first steps to evaluate its own emissions. Over the next five to ten years, continued growth will lead to our emissions inevitably increasing even as we reduce our emissions intensity, and as a Board we will be challenging Ceres

Introduction A Message from the CEO x Sustainability KPIs x Who we are x Platform technology to x

address decarbonisation x Sustainability at Ceres x Sustainability strategy x Materiality assessment

Sustainable Development Goals x

to set a credible sustainability strategy and a pathway to reducing our emissions. However, growth in short-term emissions will also be a sign of business success, and if Ceres can reach the target of having multi- gigawatts of its technology deployed by 2030, our fuel cells will significantly reduce global energy emissions for years to come.

Ceres already has 3MW of manufacturing capacity at its pilot plant, which would displace over 4,500 tonnes of CO2 a year if run continuously1. Reaching multi-gigawatts of global capacity through our partners by 2030 has the potential to displace up to 1.6m tonnes of CO2 per gigawatt each year, compared to conventional technology in an average G20 country. That is equivalent to nearly half a million people today, and is both a huge opportunity for addressing climate change globally as well as for UK economic growth.

The onus on each and every business to ensure proper oversight of climate-related risks and opportunities has never been higher. Over the coming year, Ceres will be formally integrating the recommendations of the Task force on Climate-related Financial Disclosures into our governance and reporting regime as we seek to transition from our AIM listing to a Premium listing on the Main Market of the London Stock Exchange.

Beyond climate change-and as reflected in this inaugural Sustainability Report-we believe that an effective approach to sustainability should also be underpinned by an analysis of the wider social and governance considerations that are most relevant in the context of our business. Signing up to the UN Global Compact is our latest and most significant commitment to building a long-term sustainable business, inextricably linked to doing the right thing for our people, our communities, and the planet.

I look forward to working with my colleagues on the Board, as well as with Phil and Ceres' management team, to further progress the Company's sustainability journey over the coming years.

Professor Dame Julia King

Baroness Brown of Cambridge

Non-executive Director

2

1. Ceres in-house model of carbon intensity per kWh of Ceres fuel cells in combined heat and power mode, compared to the carbon emissions produced by consuming electricity from the centralised grid in an average G20 country according to The Climate Transparency Report 2020. Available at: www.climate-transparency.org/g20-climate-performance/the-climate-transparency-report-2020.

About this report

This is Ceres' first standalone Sustainability Report reflecting our journey in progressing our environmental, social and governance (ESG) initiatives and standards. All data cover the calendar year January to December 2021, unless otherwise specified.

Ceres is managing its most material sustainability risks as well as how it intends to protect the planet for future generations through deploying its technology and thus decarbonising hard-to-abate sectors.

Through widely used ESG frameworks and standards, we aim to be transparent in the risks and opportunities we face, and communicate the current management of our impacts on all organisational stakeholders. We are laying out the beginnings of our sustainability strategy and will look to use this analysis of our current operations as a base for future metrics and key performance indicators (KPIs) to which we will hold ourselves accountable.

Introduction

03 Introduction

04 A message from the CEO

05 Sustainability KPIs

06 Who we are

07 Platform technology to address decarbonisation

08 Sustainability at Ceres

09 Sustainability strategy

10 Materiality assessment

11 Sustainable development goals

For questions about

the report, please contact our investor relations team on [e-mail]

Environmental

14 Our role in the energy transition

15 Maturing our streamlined energy and carbon reporting (SECR)

16 Science based targets

1. Cradle-to-gateanalysis
2. Waste and recycling

Social

1. Health and safety
2. Community impact
3. Diversity and inclusion
4. Connect
5. Attracting and retaining talent
6. Supply chain

Governance

1. Board oversight of ESG
2. Managing sustainability risks
3. Governance policies
4. Stakeholder engagement
5. Climate-relatedrisks
6. Measuring our progress
7. SASB Index
8. Glossary

3

Ceres' clean energy technology will enable the reduction of carbon emissions globally.

Phil Caldwell

Chief Executive Officer

A message from the CEO

The recent global volatility has only served to highlight the urgency for energy security around the world, with governments under increasing pressure to decarbonise their economies and hydrogen now widely acknowledged as an essential part of the route to net zero. We need a different energy landscape and Ceres' purpose to deliver technology that enables a clean and efficient energy future is absolutely aligned with that goal.

Climate change poses both risks and opportunities for businesses, now and in the future. As the global temperatures rise, increasingly common climate- related disasters are disrupting ecosystems and human health, causing unanticipated business losses and threatening assets and infrastructure.

In response, governments and private sector entities are considering a range of options for reducing global emissions, which could result in disruptive changes across economic sectors and regions in the near term.

Our own technology is essential for that clean energy future, both as a means of converting fuels into electricity highly efficiently, where and when it is needed, but also as a means of producing green hydrogen through electrolysis that can help decarbonise industry or as a precursor to other sustainable fuels.

We are already working with some of the world's largest engineering and technology companies, such as Bosch, Doosan, Shell and Weichai, to deploy our technology in systems and products that address climate change and decarbonise some of the most energy-intensive sectors including for transportation, industry, data centres and everyday living.

Alongside the role our technology plays in enabling the energy system to decarbonise, we are focused on decarbonising our own business. As a growth company, Ceres expects that its short-term emissions will increase as it succeeds in its mission to embed its technology with global partners.

Introduction x A Message from the CEO x Sustainability KPIs x Who we are x Platform technology to x

address decarbonisation x Sustainability at Ceres x Sustainability strategy x Materiality assessment

Sustainable Development Goals x

This year we began reporting on our full Scope 3 emissions alongside Scopes 1 and 2 and are now working through a full science-based carbon reduction pathway in line with SBTi guidance to achieve net zero emissions before 2050. We intend to make real and tangible progress by working with our supply chain to achieve interim goals that will expedite our route to net zero. We will continue to provide updates on our progress

in 2023 and beyond.

To enable our sustainable growth we have been expanding and investing in our workforce, continuing to nurture and develop our people to meet the challenges and opportunities of scaling up our technology. Our operational and cultural behaviour is fully aligned with our purpose, ensuring we have a positive impact on the world and we are responsible in doing so.

As our partners adopt our technology and build global capacity and scale, Ceres' clean energy technology will enable the reduction of carbon emissions globally. We can't ignore that scaling technology comes with an environmental cost, but any increase in the environmental impact of Ceres will be drastically outweighed by the influence our technology will have on the world's ability to decarbonise. We have a dedicated team of scientists and engineers, alongside world-leading industrial partners and investors focused on creating a cleaner energy future for all.

Phil Caldwell

Chief Executive Officer

Chair of the ESG Committee

4

Sustainability key performance indicators

	2019	2020	2021
Economic	12 months to 31 December	12 months to 31 December	12 months to 31 December
Revenue and other income (£ million)	19.1	21.9	31.7
Gross profit (£ million)	11.6	14.6	20.3
Gross margin (%)	67	67	66
Environmental
Carbon emissions (tonnes CO e)	953	21,9501	29,6751
2
Emissions intensity (tonnes CO2e)/£100k REV	5	100	94
Emissions intensity (tonnes CO2e)/headcount	5	68	61
Energy consumption (MWh)	2,122.0	6,949.3	7,699.7
Water use (m3)	2,934	2,000	5,793
Electricity from renewable sources (%)	-	-	100%
Social
Employee share option scheme (participation levels as %)	-	57%	74%
Women in the workforce	16%	18%	20%
Training and development investment	£62,000 (£325 per employee)	£108,000 (£332 per employee)	£329,000 (£673 per employee)
Employee retention rate	88%	91%	94%

1. Increase in figures due to addition of Scope 3 emissions reporting.

Introduction x A Message from the CEO x

Sustainability KPIs Who we are x Platform technology to x

address decarbonisation x Sustainability at Ceres x Sustainability strategy x Materiality assessment

Sustainable Development Goals x

5