ERG S p A : 30 Mar 2021 ERG S.p.A. - Consolidated Non-Financial Statement drawn up pursuant to Italian Legislative Decree 254/2016 at 31 December 2020

Consolidated2020Non-Financial Statement

drawn up pursuant to Italian Leg. Decree 254/2016

We are #SDGsContributors

shareholders and stakeholders
ContentsLetter to4
Our history: 1938-2020	6
ERG in 2020	7
Key economic and sustainability indicators	10
ERG's responses to the health emergency	12
The governance of sustainability	14
2018- 2022 ESG Plan	16
Methodological note	21
Planet
Context	24
Gradual decarbonisation of our production portfolio	25
Energy efficiency	28
Building while respecting the environment	32
Towards increasingly circular waste management	33
Managing and minimising water use	34
1Engagement	36
Context
Dialogue with our stakeholders	37
ERG and its institutional stakeholders	37
ERG and international relations	40
Strengthening our engagement with Local Communities	42
Investor relations and financial communication	44
2Communication activities to boost ERG's reputation	45

(Translation from the Italian original which remains the definitive version)

People

Context	47
People governance	47
Human capital management and development	48
Performance & Rewarding	50
The search for new talent	53
Diversity & inclusion	56
Internal communications	56
Industrial relations	58
Leadership in safety	59
3Health and safety for our communities	61
Governance
ERG's context and values	63
Governance	63
Anti-corruption: the group's commitment to ethical integrity	69
Privacy: development and training	71
Cybersecurity	71
Internal control and risk management system	72
Enterprise risk management	73
Climate change risk management	75
Risk management activities during the scope of the NFS topics	76
The tax control framework for formalising a tax approach	78
4Supplier management	79
The Edoardo Garrone Foundation	82
PERFORMANCE DATA AND INDICATORS	85
INDEPENDENT AUDITOR'S REPORT	104
GRI CONTENT INDEX	109

(Translation from the Italian original which remains the definitive version)

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LETTER TO SHAREHOLDERS AND STAKEHOLDERS

Dear shareholders, dear stakeholders,

2020 marks a watershed for humanity. The pandemic and the ensuing economic crisis have confronted us with unprecedented challenges, forcing us to rethink our way of life and reinforcing the urgency of issues such as the planet's social and economic development, human well-being and environmental protection. These are all issues whose importance was already addressed by the 17 Sustainable Development Goals established by the United Nations in 2015.

The past year was also characterised by an ongoing and intensifying focus on Environmental, Social, and Governance (ESG) issues. Businesses play a primary role in this context. In addition to pursuing concrete objectives in terms of sustainability, they must comply with increasingly stringent and challenging standards in terms of transparency of and access to information, aspects that currently determine their competitiveness and their appeal to the financial markets, which are increasingly focused on how and to what extent ESG factors are included in corporate development plans. Meeting such objectives is an even more demanding undertaking for businesses in the energy sector for which the spread of power generation from renewable sources has become the driving force in the fight against climate change.

ERG is a leader in this energy transition, through the development of its renewable energy portfolio, and has based its business model on the concept of social responsibility, on the relationship of trust built over time with all stakeholders and on the ability to create shared value, focusing on environmental, social, and governance issues.

Even during the most critical phases of the pandemic crisis, by carefully and effectively managing our operations and logistics, while complying with the highest occupational health and safety standards, we were able to maintain the continuity of an essential service such as the supply of electricity. Our investments over the past few years in digital technology have enabled us to resort to remote working extensively both in Italy and abroad. In reaffirming ERG's Investment Grade rating, the Fitch rating agency highlighted our ability to manage the impact of the Covid-19 pandemic as a distinctive factor.

ERG allocated EUR 2 million to support local communities where its production sites are located that have been affected by the health emergency and, on a proposal from our internal Social

Partners, the Group's employees donated a total of 2,300 hours of their work. San Quirico S.p.A., the Company's controlling shareholder, allocated also EUR 1 million to Genoa's front-line hospitals engaged in the healthcare emergency.

In 2020, the pandemic led to a significant overall drop in demand for electricity in all reference markets, and prices fell significantly in all the countries in which we operate. This negative backdrop was further worsened by wind and water conditions in Italy that were well below historical averages. Although expected, the year's results were also affected by the gradual withdrawal from the cogeneration regime of our CCGT plant in Priolo.

The Company was able to react with great determination and effectiveness, implementing the appropriate countermeasures: scenario risk hedging operations, a significant reduction in the cost of debt by issuing a new Green Bond and concurrent liability management operations, as well as substantial cost-cutting actions.

Despite the obstacles caused by excessively long and complex authorisation procedures, intensified by the health emergency, in 2020 our growth path in renewable energy continued, albeit with some delays compared to Plan forecasts. We reached

336 MW of wind capacity under construction or ready to build across the UK, France and Poland. In Germany, we entered into a co-development agreement for 600 MW in photovoltaic sector: another major step forward in our portfolio's technological and geographical diversification. The acquisition of 3 wind farms in France increased our installed capacity in the country to around 400 MW. The Framework Agreements signed with Vestas and Enercon for the supply of wind turbines for repowering and greenfield projects in France and UK ensured the coverage of our development plan at competitive conditions and with latest generation technologies.

2020 net income rose to EUR 106 million (EUR 104 million in 2019) while EBITDA declined slightly to EUR 481 million (EUR 504 million in 2019), within the guidance range. We invested EUR 156 million in 2020 (EUR 432 million in 2019).

The adjusted net financial indebtedness as at 31 December 2020 was EUR 1,439 million, down compared to the EUR 1,476 million as at 31 December 2019. The change mainly reflects the investments in the year (EUR 156 million), the distribution of dividends (EUR 115 million) and the payment of taxes (EUR 25 million), more than offset by the positive cash flows (EUR 392 million). The Board of Directors will propose to the Shareholders'

5

Meeting a dividend of EUR 0.75 per share, as indicated in our Business Plan.

Since entering the renewable energy sector, ERG has reduced by 90% its Carbon Index, the amount of CO2 emitted for each kWh produced, which, at the end of 2020, stood at

150 gCO2/kWh, equal to half of the Italian average and a quarter of the European average. Today, by producing energy from renewable sources, we are avoiding the emission of about

3 million tonnes of CO2 each year, for a total of over EUR 9 million tonnes since 2018, perfectly in line with our objectives. As at the end of 2020, 90% of our indirect energy consumption was covered by green electricity purchases.

People are a key factor in ERG's development path, and the Company has always allocated substantial resources to them for their personal, professional, and managerial growth. In 2020, we provided a total of 28,804 hours of training, of which about 73% via distance learning and 27% face-to-face, involving about 95% of the Company's workforce - 37.4 hours per capita. A total of 116 training courses were held (up 45% on the previous year), and 30% were held in English, in line with the Group's international expansion. The "Leadership in safety" project, a training program dedicated to responsible behaviour in terms of safety, continued in 2020: no employee accidents were reported during the year. Our commitment to Diversity and Inclusion also continued with the Gender Equality Assessment and our partnership with Valore D.

The Covid-19 emergency has inevitably hindered the implementation of many initiatives in the communities where we operate. However, while paying great attention to compliance with health and safety provisions, we tried to provide maximum support to alternative solutions or created digital versions of the events we have traditionally supported, dedicated to young people, school and culture.

ERG's ongoing commitment to the fight against climate change and to building a sustainable development model received important acknowledgements also this year: the "A-" rating (formerly B) in the Climate Change programme promoted by the Carbon Disclosure Project (CDP), which ranks the Group among the 25 Italian companies considered "Leaders"; MSCI confirmed its "AA" rating and Vigeo Eiris rated ERG as Advanced, the

highest level of its assessment scale, also assigning ERG first place in the world ranking for reporting on the impact of climate change on operations.

Our Consolidated Non-Financial Statement, approved by our Board of Directors together with our Financial Statements, has undergone a substantial update in terms of structure and content. The structure of 2020 reporting reflects the four pillars that will become the founding elements of our ESG strategy, consistent with the Social Development Goals defined by the United Nations:

1. PLANET: commitment to combating climate change through the decarbonisation of our power generation portfolio thanks above all to the development of energy production from renewable sources;
2. ENGAGEMENT: commitment to foster a proactive dialogue with each of the Group's stakeholders to understand their needs and integrate them into our way of doing business;
3. PEOPLE: focus on the well-being, growth and enhancement of our people, as well as on their health and safety;
4. GOVERNANCE: construction of an infrastructure of principles and management bodies that ensure not only compliance with but also the application of operational best practices, as the foundation for a sustainable development model.

In 2021, we anticipate a recovery in the general economic situation with positive effects on energy demand and prices. We expect our EBITDA to be in the range of EUR 480 million to EUR 500 million, our net financial indebtedness to be between EUR 1,350 million and EUR 1,450 million, and capital expenditure to be between EUR 235 million and EUR 275 million, most of which will be allocated to the construction of the greenfield projects currently underway in the UK, Poland and France. We will also move forward with the authorisation procedures required for repowering.

In May, we will present our new 2021-2025 Business Plan, which will include our ESG objectives in a highly integrated strategic perspective.

ERG has grown and will continue to grow under the sign of sustainability.

We are #SDGsContributors

Edoardo Garrone

Luca Bettonte

Chairman

Chief Executive Officer