CEZ : Sustainability Report 2023

CEZ Group Sustainability Report 2023

Responsible

in the Flow

of Change

responsibly helpfully judiciously in detail transparently

We have the determination, the team, the clear vision, and most importantly the energy to meet the objectives defined in the strategic VISION 2030. Input energy and patient work brings results. We supply energy to our customers safely, we develop new technologies, we build new energy resources, we invest in the development of new products and services and introduce innovations. The measures implemented contribute to a sustainable growth in the value

of CEZ Group. We look into the future with optimism, which is a fundamental prerequisite for securing the Clean Energy of Tomorrow.

CEZ Group

Sustainability Report 2023

Content

	Statutory Declaration	5	3.4.	Water Resource	33
			3.4.1.	Water Consumption	33
1.	Foreword	7	3.4.2.	Water Storage	34
3.4.3.	Wastewater Management	35
1.1.	Statement of the CEO	7	3.5.	Biodiversity and Ecosystems	36
1.2.	Statement of the CSO	10	3.5.1.	Protection and Restoration of Biodiversity	36
			3.5.2.	Bird Protection	37
2.	Introduction	13	3.5.3.	Protected Animal and Plant Species	37
3.5.4.	Mine Reclamation	38
			3.5.5.	Ensuring Ecosystem Functions on Watercourses	39
2.1.	CEZ Group Business Environment	13	3.5.6.	Other Activities in the Field of Biodiversity and
2.1.1.	CEZ Group's Mission and Vision	13		Education	39
2.1.2.	Strategic VISION 2030-Clean Energy
	of Tomorrow	13	3.6.	Resource Use and Circular Economy	40
2.1.3.	Fulfilment of the VISION 2030	14	3.6.1.	Waste and Natural Resources	40
2.1.4.	Specific Objectives of the VISION 2030	16	3.6.2.	Resources Used/Materials	43
			3.6.3.	Energy Consumption and Reduction of Energy
2.2.	Stakeholder Engagement and Materiality			Intensity	44
	Matrix	17
2.2.1.	Stakeholder Engagement	17	4.	Social	46
2.2.2.	Materiality Assessment	18
2.2.3.	Materiality Matrix	19
			4.1.	Community Relations	48
3	Environmental	22	4.1.1.	Corporate Citizenship	48
4.1.2.	Human Rights	51
3.1.	Environmental Protection Policy and		4.2.	CEZ Foundation	52
	Management Systems	24
3.1.1.	Environmental Management System	24	4.3.	Human Capital	53
3.1.2.	Energy Management System	25	4.3.1.	Responsible Employer	53
			4.3.2.	Employee Training and Development	58
3.2.	Greenhouse Gas Emissions	26	4.3.3.	Security Personnel Trained in Human Rights
3.2.1.	Scope 1	26		Policies or Procedures	60
3.2.2.	Scope 2	27	4.3.4.	Training of Suppliers and Contractors	60
3.2.3.	Scope 3	28	4.3.5.	Requalification	61
3.2.4.	Emission Intensity Reduction	29	4.3.6.	Cooperation with Schools	63
3.2.5.	Avoided Emissions	29	4.3.7.	Health and Safety	63
3.2.6.	Ozone-Depleting Substances	29
			4.4.	Customer Orientation	71
3.3.	Pollution	30	4.4.1.	Approach to Customers	71
3.3.1.	Emissions of Pollutants	30	4.4.2.	Net Promoter Score	74
3.3.2.	Wastewater Management	32	4.4.3.	Digitalization	74
3.3.3.	Soil Pollution	32	4.4.4.	Ombudsman	75
3.3.4.	Prevention of Serious Accidents	32

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CEZ Group

Sustainability Report 2023

5.	Governance	77	6.5.	KPI Turnover	119
			6.5.1. KPI Turnover - Additional Information	120
5.1.	CEZ Group Corporate Governance	79
5.1.1.	Governance Bodies	79	6.6.	KPI CAPEXt	121
5.1.2.	Sustainability Governance and ESG		6.6.1.	KPI CAPEXt - Additional Information	122
	Management	80
5.2.	Climate Risk Management and TCFD	83	6.7.	KPI OPEXt	124
6.7.1.	KPI OPEXt - Additional Information	125
5.2.1.	Transition Risks	83
5.2.2.	Physical Risks	84	6.8.	Noneligible Activities	126
5.2.3.	TCFD and Climate-related Milestones	85
			6.9.	Additional Disclosure According to
5.3.	Diversity and Equal Opportunity	86		Annex 12 of Regulation 2021/2178	127
5.3.1.	Women in Leadership Positions	88
5.3.2.	Gender Pay Gap	90	7.	Annexes	130
5.4.	Business Conduct	92
5.4.1.	Code of Conduct and Ethics in CEZ Group	92	7.1.	Selected Indicators	131
5.4.2.	Sustainable Supply Chain	96
5.4.3.	Tax Governance	98	7.2.	Other Indicators	147
5.4.4.	Cyber Security and Information Privacy	100
			7.3.	Biodiversity Indicators	161
5.5.	Asset Management	104
5.5.1.	Renewable and Conventional Energy	104	7.4.	WEF Index	166
5.5.2.	Nuclear Energy	106
5.5.3.	Distribution	107	7.5.	GRI Index	167
6.	EU Taxonomy	110	7.6.	SASB Index	171
			7.7. EU Taxonomy Annex 12 templates	172
6.1.	General Principles	111
6.2.	Contextual Information - Methodology and		Abbreviation	179
	Implementation in CEZ Group	112
6.3.	EU Taxonomy Eligible Activities	113	Independent Auditors' Reports	182

6.4. Technical Screening of Economic Activities

	in Year 2023	114
6.4.1.	Renewable Energy	114	Identification of ČEZ, a. s.	191
6.4.2. Transitional Energy - Natural Gas and Nuclear	115
6.4.3.	Infrastructure Activities	116
6.4.4. Energy Services and Other Eligible Activities	116
6.4.5.	DNSH Adaptation	117
6.4.6.	Social Safeguards	118

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CEZ Group

Sustainability Report 2023

Statutory Declaration

To the best of our knowledge, the Sustainability Report gives an accurate and fair overview of the non-financial data for 2023, sustainable business strategy, and targets set for the future development of CEZ Group.

Prague, April 22nd, 2024

Daniel Beneš	Michaela Chaloupková
Chairman of the Board of Directors	Member of the Board of Directors
ČEZ, a. s.	ČEZ, a. s.
	Chief Sustainability Officer
	CEZ Group

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CEZ Group

Sustainability Report 2023

1. Foreword

1.1. Statement of the CEO

GRI 2-22

Dear readers,

I am pleased to present to you the Sustainability Report of CEZ Group for the year 2023, which marks its eighth edition. This will also be the last time we publish it as a standalone document; starting from next year, in accordance with new legislation, it will be an integral part of the Annual Financial Report. This change reflects how rapidly sustainability indicators have become equally significant as financial ones. In the following text, I would like to introduce to you the most important events and achievements we have accomplished in the ESG in the year 2023.

Although there was a significant stabilization of commodity prices during the year 2023 compared to the extreme year of 2022, the price of electricity continued to remain at significantly higher levels than those we were accustomed to before the crisis. Its amount has been significantly shaped by the cost of carbon allowances, which are the main economic instrument of the European Union's climate ambitions. Therefore, one of the key activities we are focusing on is the gradual reduction of all emissions. In line with the declared public commitments ofthe CEZ Group within our strategic VISION 2030-Clean Energy of Tomorrow, we aim to end production in coal-fired power plants and transform our production portfolio to emission-free. In heating locations, we will cease coal usage by 2030, and coal-fired power plant operations will be terminated no later than 2033. However, this is likely to occur sooner considering the development of market conditions.

The production of gradually decommissioned coal sources will be taken over primarily by existing and new nuclear and renewable sources. In 2023, the Temelín and Dukovany nuclear power plants generated 30.4 TWh of electricity (surpassing the 30 TWh threshold for the eighth time in history), representing more than half of the total consumption of the Czech Republic last year. The public tender for the construction of a new block in Dukovany has reached its final stage: offers for the construction of a new nuclear source

in Dukovany were received on October 31, 2023, from three bidders (French company EDF, South Korean company KHNP, and American-Canadian company Westinghouse). In 2023, preliminary selection of additional sites for the placement of small modular reactors also took place, specifically at the existing coal locations of Tušimice and Dětmarovice. By 2030, we aim to add a total of 6,000 MW of renewable, primarily photovoltaic, sources. Last year, we succeeded in obtaining investment support totaling over CZK 3 billion for projects with a total installed capacity of 728 MWp.

We monitor the results of our decarbonization activities through the reduction of emission intensity. In 2023, the emission intensity of the CEZ Group reached a level of 0.27 t CO2e/MWh, representing a year-on-year decrease of 8% despite the ongoing energy crisis. All our medium-term targets in coal production reduction, including the ambition to reduce emission intensity to below 0.26 t CO2e/MWh by 2025, remain valid. Our commitments to achieve climate neutrality by 2040 have been validated by the global expert initiative SBTi. ČEZ, a. s., became the first Czech company to receive confirmation that its intention is sufficiently ambitious and is in line with the sub-1.5°C scenario.

We are also helping others with decarbonization. ČEZ Distribuce connected a record 52,109 photovoltaic power plants with an installed capacity of 605.5 MW to the grid last year. The majority of these were rooftop installations on family homes. In 2023, ČEZ Prodej, which focuses on the household segment, and ČEZ ESCO, which focuses on corporate installations, built rooftop photovoltaic power plants with

a total capacity of 53 MWp. This represented a 75% increase in capacity compared to 2022.

Similar importance is devoted to social aspects as to environmental ones. Last year, ČEZ, a. s., once again became Employer of the Year in the category of large companies with over 5,000 employees. Participating companies are evaluated based on a special methodology by PricewaterhouseCoopers Czech Republic, which examines a total of 14 indicators. ČEZ, a. s., also defended its first place in the TOP Employers survey, where Czech university students vote. ČEZ, a. s., has been the most sought-after employer from the perspective of young people for several years in a row.

In the past year, ČEZ Prodej further engaged in supporting energy savings for its customers. It launched an extensive program called ČEZ Akademie focusing on providing expert advice in a clear and accessible manner. Online activities were also supplemented with events directly in regions for customers who prefer personal contact. As a result, the company became the most trusted supplier in the Czech Republic for the eighth time in 2023.

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CEZ Group

Sustainability Report 2023

As part of our sustainable development strategy, we are also committed to proper governance and management of the company. We enforce a zero-tolerance policy towards corruption and ensure that all our operations are conducted ethically and transparently. At the end of 2023, we successfully completed the second supervisory audit and thus defended our international certification of the anti-corruption management system according to the ISO 37001:2016 standard. The safety and satisfaction of our employees are also a priority for us. In 2023, we joined the Women's Empowerment Principles initiative to support gender equality in employment, in the market, and in communities, and became one of the first signatories of the Charter against Domestic Violence. Along with other companies, we commit to helping victims among our own employees. Last year, we also supported the establishment of employee groups.

Thanks to significant progress in fulfilling our environmental, social, and governance commitments, we have achieved our goal of being among the top 20% of companies in ESG ratings. We have also succeeded in several prestigious international sustainability competitions. For example, we won the Responsible Business Awards 2023 competition organized by Reuters in the Reporting and Transparency category. The expert jury particularly appreciated the online data library that clearly maps nearly 1,800 ESG indicators, which is publicly accessible.

We know that the journey to sustainable business never ends. Therefore, we regularly update our ESG program and define new ESG initiatives. In 2024, we will focus on implementing new European standards for sustainable development reporting, more thoroughly mapping our supply chain, defining new stakeholder engagement management, refining climate risk management, and focusing on biodiversity. We will continue to collaborate with our customers, suppliers, communities, and other stakeholders to understand their needs and expectations and continuously incorporate their feedback into the CEZ Group sustainability strategy.

This report was prepared based on information available as of April 15, 2024.

Daniel Beneš

Chairman of the Board of Directors and CEO of ČEZ, a. s.

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CEZ Group

Sustainability Report 2023

1.2. Statement of the CSO

Dear readers,

I am pleased to present to you the Sustainability Report of the CEZ Group for the year 2023. Sustainable development and corporate responsibility are the foundation of our current corporate strategy specified within the VISION 2030-Clean Energy of Tomorrow framework. We demonstrate the development and progress of the CEZ Group in the field of sustainability across all three ESG areas: environmental, social, and corporate governance. The main events of the year have already been summarized by the CEO in the introductory chapter, so I will focus mainly on outlining the standards and procedures for preparing the entire report.

The Sustainability Report of the CEZ Group for the year 2023 is issued in accordance with the Directive 2014/95/EU of the European Parliament and of the Council on non-financial reporting and its implementation into Czech legislation through an amendment to the Accounting Act. It presents non-financial data of the CEZ Group from January 1, 2023, to December 31, 2023. The Sustainability Report is a consolidated report of non- financial information for the CEZ Group, where the list of fully consolidated companies corresponds to the list provided on page 103 of the Annual Financial Report of the CEZ Group for the year 2023.

The Sustainability Report is prepared in accordance with globally recognized reporting frameworks to meet the highest standards of transparency. We use the fundamental version of the Global Reporting Initiative (GRI) 2021 standards, Sustainability Accounting Standards Board (SASB) standards for energy companies and electricity producers, and metrics and disclosed information from the World Economic Forum (WEF). For

a significant portion of Scope 1, we report greenhouse gas (GHG) emissions in line with independently verified emissions under the EU Emissions Trading System (EU ETS). For the remaining part of Scope 1, Scope 2, and Scope 3, we use the GHG Protocol.

We also support all 17 UN Sustainable Development Goals (SDGs), but we have selected 6 of them for more detailed focus: SDGs 5, 7, 8, 10, 13, and 16. Although some references to the SDGs are provided throughout the report, and an SDGs index is included, we have published a separate SDGs report with more detailed information.

We report key performance indicators defined by the EU Taxonomy for Sustainable Activities. While last year's report included sustainable activities with contribution to climate goal, this year we disclose sustainable activities and their taxonomy- alignment from perspective of all six environmental goals.

This report is prepared in Czech and English. In case of discrepancies, the Czech version prevails. All financial data is presented in Czech koruna (CZK).

Bureau Veritas (BV) audited the following three key performance indicators:

GHG emissions in Scope 1

GHG emissions in Scope 2 GHG emissions in Scope 3

Deloitte audited 16 selected key performance indicators based on GRI standards:

Employees (by gender, type of employment)

New employees and employees who terminated their employment

Occupational Health and Safety (OHS) coverage rate in the organization

Percentage of employees undergoing regular performance appraisal and career development assessment

Complaints related to customer privacy breaches and data loss

Cases of discrimination and corrective actions taken

Occupational accidents (number of fatal accidents, number of work-related accidents)

Employee qualification enhancement programs and transition assistance programs to other positions

Diversity of management boards and employees (by gender, by age)

Average number of training hours per employee per year

Energy consumption within the organization (consumption of fuels from non-renewable/renewable sources; sold energy)

Water consumption (focusing on surface water)

Water discharge (focusing on surface water)

NOx, SOx, and particulate matter emissions

Generated waste Significant spills

The scope of audited operations includes the entire CEZ Group, including companies operating abroad.

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