CEZ a s : Sustainability report 2021 - Print-friendly version

CEZ Group 2021

Sustainability

Report

CEZ Group 2021 Sustainability Report

Table of Contents

	Statutory Declaration	4	3.3	Environmental Conservation	27
			3.3.1	Water Management	27
1	Foreword	7	3.3.2	Biodiversity	29
3.3.3	EMS - Environmental Management System	31
			3.3.4	Air Pollution Monitoring	31
1.1	Statement from the CEO	7
1.2	Statement from the CSO	10	3.4	Energy Transition	32
			3.4.1	Transition to Renewable Energy: Hydro, Wind, Solar 33
2	Introduction	12	3.4.2	Transition to Emission-free Energy: Nuclear Power	34
3.4.3	Transition to a Cleaner Energy: Gas	34
2.1	CEZ Group Business Environment	12	3.5	Innovative Solutions	35
2.1.1	CEZ Group's Mission and Vision	12	3.5.1	ČEZ ESCO	35
2.1.2	Strategic VISION 2030-Clean Energy of Tomorrow	12	3.5.2	Smart Cities and Digitalization	35
2.1.3 ESG and Sustainable Development		3.5.3	Research and Development	36
	Social Objectives	13	3.5.4	Inven Capital	36
			3.5.5	Partnerships for Innovation	37
2.2	Stakeholder Management and Materiality Matrix	14	3.5.6	E-mobility	37
2.2.1	Stakeholder Engagement	14	3.5.7	Energy Consumption and Reduction
2.2.2	Materiality Assessment	14		of Energy Intensity	37
2.2.3	Materiality Matrix	15
			3.6	EU Taxonomy KPI Report	39
3	Environmental	17	3.6.1	General Principles	40
3.6.2	Contextual Information on Methodology	40
			3.6.3	Implementation at CEZ Group	41
3.1	Decarbonization	19	3.6.4	KPI Turnover	42
3.1.1	Scope 1	20	3.6.5	KPI Capex	42
3.1.2	Scope 2	20	3.6.6	KPI Opex	42
3.1.3	Scope 3	21	3.6.7	Noneligible Activities - Voluntary Disclosure	43
3.1.4	Emission Intensity Reduction	21
3.1.5	Ozone-Depleting Substances	22
3.2	Waste, Emissions, and Pollution	23
3.2.1	Emissions of Pollutants	23
3.2.2	Waste and Natural Resources	24

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CEZ Group 2021 Sustainability Report / Table of Content

4	Social	45	5	Governance	65
4.1	Community Relations	47	5.1	CEZ Group Corporate Governance	67
4.1.1	Corporate Citizenship	47	5.1.1	Governance Bodies	67
4.1.2	Human Rights	48	5.1.2	Sustainability Governance and ESG Management	67
4.2	CEZ Foundation	49	5.2	Climate-related Risk Management and TCFD	70
4.2.1 Programs and activities of CEZ Foundation in 2021 49
			5.3	Diversity and Equal Opportunity	72
4.3	Human Capital	50	5.3.1	Women in Leadership Positions	73
4.3.1	Responsible Employer	50	5.3.2 Gender Pay Gap	73
4.3.2	Employee Training and Development	53
4.3.3	Training of Suppliers and Contractors	55	5.4	Business Conduct	74
4.3.4	Requalification	56	5.4.1	Code of Conduct and Ethics in CEZ Group	74
4.3.5 Health and Safety	57	5.4.2	Sustainable Supply Chain	77
			5.4.3	Tax Governance	78
4.4	Customer Orientation	61	5.4.4 Cyber Security and Information Privacy	79
4.4.1	Approach to Customers	61
4.4.2	Net Promoter Score	62	6	GRI Content Index
4.4.3	Digitalization	63
4.4.4 Ombudsman	63		and Non-Financial Data 2021	82
			6.1	Selected Indicators	83
			6.2	Other Indicators	84
			6.3	Biodiversity Indicators	93
				Independent Auditor's Report	98

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CEZ Group 2021 Sustainability Report / Introduction

Statutory Declaration

To the best of our knowledge, the Sustainability Report gives an accurate and fair overview of the non-financial data for 2021, sustainable business strategy, and targets set for the future development of CEZ Group.

Prague, June 27, 2022

Daniel Beneš	Pavel Cyrani	Kateřina Bohuslavová
Chairman of the	Vice-Chairman	Chief Sustainability Officer
Board of Directors,	of the Board of Directors,	of CEZ Group
ČEZ, a. s.	ČEZ, a. s.

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CEZ Group 2021 Sustainability Report

1 Foreword

1.1 Statement from the CEO

GRI 102-14

Dear readers,

2021 was a turbulent year. While we focused on accelerating our sustainable business strategy, our resolve was tested. Persisting issues such as climate change and COVID-19 continued to afflict us. Unexpected events presented significant challenges. In July, South Moravia was hit by a tornado, and in October, alternative energy suppliers were forced to announce their closures, sending almost a million customers to competent suppliers of the last resort. So how did we fare?

Sustainability as the strategic core of our business

CEZ Group has always been a responsible corporate citizen. We recognize, however, the challenges of the modern era and the need for energy transformation. That is why we decided to step up. We intertwined our sustainability strategy with our business core and corporate strategy on our way towards a more stable and safer future. This accelerated trajectory is called VISION 2030-Clean Energy of Tomorrow. It centers our business around ESG principles. It defines specific and measurable targets and clear deadlines that we announced publicly in a dialogue with our stakeholders.

The focus of our Environmental pillar centers around accelerated decarbonization: we have committed to transforming our generation portfolio to a low-emission one and to achieving carbon neutrality. We will reduce our greenhouse gas emissions, SO2 emissions and NOX emissions by more than 50% by 2030. We will build 6 GW of renewables by 2030, as we phase out coal-fired heat generation by the same year. Coal-fired

power generation in Czechia is likely to be phased out by 2033 at the latest, given the government's priorities, while current market conditions indicate that CEZ Group's coal-fired facilities will operate until 2030 at the latest.

We readjusted the target year for reaching net-zero emissions reduction to 2040 in May 2022. This decision was motivated by three drivers: (1) the annual review of VISION 2030-Clean Energy of Tomorrow, (2) the launch of the REPowerEU plan, and (3) the proposal of the European Commission to set stricter goals within the Fit for 55 package.

In 2021, we shut down one of the largest coal-fired power plants in Czechia - Energotrans III. We decreased year-on-year emissions significantly: emission intensity for electricity generation (in tCO2e/MWh) decreased by 13%, SO2 emissions by 45% and NOX emissions by 26%. We are on track to meet our emission reduction targets in line with the Paris Agreement. SBTi validated our near-term target in May 2022. The coal exit goes hand in hand with land recultivation and a strengthened commitment

to biodiversity. In 2021, our mines Severočeské doly completed landscape reclamation of more than 90 ha and started reclamation of almost 45 ha. This is three times more than 40.6 ha of the land we acquired for mining. Biological monitoring includes mapping specially protected wildlife and preventing the spread of invasive species. We also cooperate with universities, NGOs, and regulators to ensure a science-based and transparent approach to protecting biodiversity.

The Social pillar focuses on our stakeholders, most importantly on our customers, employees, and communities. We intend to be the most reliable supplier of energy commodities and services in the region, focusing on security and stability of supply. We will modernize and digitalize our distribution and sales. We want to remain the most attractive employer in Czechia. We promise our employees affected by the coal exit that we will not leave anyone behind. We are fully committed to a just transition, and we will offer them a transfer to another position, retraining, or compensation. We will continue our collaboration with schools and universities to attract best talent.

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