SSE : Net Zero Transition Report 2022

Progressing towards net zero

SSE'S NET ZERO TRANSITION REPORT 2022

About SSE

SSE has the largest renewable electricity portfolio in the UK and Ireland, providing energy needed today while building a better world of energy for tomorrow. It develops, builds, operates and invests in low-carbon infrastructure in support of the transition to net-zero, including onshore

Progressing towards net zero

SSE is committed to providing transparent disclosures around its progress towards its net zero ambitions, supporting high-quality stakeholder engagement on climate-related issues.

and offshore wind, hydro power, electricity transmission and distribution networks, alongside providing energy products and services to customers. SSE's ambitions for the development of renewable energy now extend beyond the British Isles to carefully selected international markets.

UK-listed and headquartered in Perth, SSE is a major contributor to the economies in the UK and Ireland. It employs around 11,000 people and is real Living Wage, Living Hours and Fair Tax Mark accredited.

Enhancing climate engagement with shareholders

SSE believes that both the Company and its investors will benefit from enhanced engagement on climate-related issues. SSE proposed an enabling resolution (resolution 19, see appendix A) to its 2021 Annual General Meeting (AGM) that asked shareholders to accept and approve the Company's proposal to adopt a plan to become a net zero business in its Scope 1,

2 and 3 greenhouse gas emissions by 2050 or sooner. The resolution also set out a framework for annual shareholder advisory votes on SSE's Net Zero Transition Report at future AGMs. The resolution received near unanimous support, with 99.96% of the votes cast in favour.

FROM TARGETS TO ACTION

SSE's Net Zero Transition Plan

March 2022

d action to GHG emissions

A plan for a net zero transition

In March 2022, SSE published its Net Zero Transition Plan which clearly sets out for stakeholders the key actions SSE will take to drive progress towards its net zero ambitions and its interim science-based targets aligned to a 1.5oC pathway. This plan is summarised on page 2 and the full report can be found at sse.com/sustainability.

Demonstrating progress

To demonstrate progress against its Net Zero Transition Plan, SSE has committed to producing an annual Net Zero Transition Report. The Net Zero Transition Reports will be subject to non-binding shareholder advisory votes at SSE's AGMs.

This is SSE's first Net Zero Transition Report covering progress over 2021/22.

It incorporates, by reference, climate disclosures from SSE's Annual Report 2022 and SSE's Sustainability Report 2022 and acts as an aid to stakeholders in navigating its report on progress.

A non-binding advisory resolution to receive SSE's Net Zero Transition Report is proposed in resolution 21 at the 2022 SSE plc Annual General Meeting.

Contents

SSE's Net Zero

Transition Plan

This details SSE's targets and actions to achieve its net zero ambitions.

SSE's Net Zero Transition Report

This report summarises SSE's progress against the Net Zero Transition Plan

SSE's Annual Report and Sustainability Report

Provides climate-related disclosures and should be viewed alongside SSE's Net Zero Transition Report

Progressing towards net zero	1
Net Zero Transition Plan on a page	2
SSE's performance against its Net Zero Transition Plan	4
Targeted action to address GHG emissions	6
Governance and accountability	8
Appendices	10

Being mindful of emerging frameworks

SSE recognises that the thinking around net zero transition plans is still in its early stages. SSE created its Net Zero Transition Plan in line with what it believes is current best practice. As thinking matures and new frameworks and regulatory requirements emerge, SSE will consider these and reflect them in its Net Zero Transition Plan.

Feedback is encouraged and very welcome. Please get in touch by emailing [e-mail] if you have any comments or queries relating to the content of this report.

SSE plc net zero Transition Report 2022

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NET ZERO TRANSITION REPORT

Net Zero Transition

Plan on a page

The below graphic shows SSE's short-, medium- and long-term carbon targets, alongside key	S1 Scope 1 S2 Scope 2 S3 Scope 3
action it will take to achieve them.

	Short term (to 2025)		Medium term (2025 - 2035)				Long term (2035 - 2050)
2025											2035																		2050

Target

Engage with 50% of suppliers by spend to set an SBT by 2024.

S3

Reduce the carbon intensity of scope 1 GHG emissions by 80% by 2030, from 2017/18 baseline.

S1

Reduce absolute scope 1 and 2 GHG emissions by 72.5% by 2030 from a 2017/18 base year.

S1 S2

Reduce absolute GHG emissions from use of products sold by 50% by 2034 from a 2017/18 base year.

S3

Net zero for SSE's scope 1 and 2 emissions by 2040.

S1 S2

Net zero for all SSE's remaining scope 3 emissions by 2050.

S3

Summary Actions

Scope 1	Scope 2
• Reduce emissions from unabated gas generation	• Reduce electrical losses
•	Develop new low-carbon flexible generation	from SSEN Distribution
• Transparent advocacy in favour of enhanced policy	• Deliver a net zero
• Explore options for neutralising residual emissions	property estate
• Build a renewable energy portfolio of 13GW of capacity by 2031
• Reduce leakage and reliance on SF6
•	Switch vehicle fleet to electric in line with EV100 commitment

• Reduce reliance on SSEN's Scottish Island back-up diesel generation

Scope 3

• Support customers to fuel switch and consume less gas
• Advocate for a pathway for decarbonised heat
• Establish a framework for supplier collaboration on net zero action
• Partner with the CDP supply chain engagement programme

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NET ZERO TRANSITION REPORT

SSE's performance against its Net Zero Transition Plan

To drive improved performance, SSE measures and reports progress against stretching targets that are science-based and aligned to the ambitions set out in the Paris Agreement.

Short term (to 2025)		Medium term (2025 - 2035)

2025

S1 Scope 1 S2 Scope 2 S3 Scope 3

Long term (2035 - 2050)

2035

2050

Target	Engage with 50% of suppliers by
	spend to set an SBT by 2024.

	S3
Performance
Progress from baseline
	Through SSE's engagement with
	the CDP supply chain reporting
	and workshops SSE has made
	good progress on engaging
	suppliers to set science-based
	targets (SBTs). In 2019/20, 4%
	of suppliers by spend had set or
	committed to set SBT through
	the Science Based Targets
	Initiative, which has increased to
	48% in 2021/22.
	Target achievement
	96%
	towards achieving its
	supplier engagement target.

Reduce the carbon intensity of scope 1 GHG emissions by 80% by 2030, from 2017/18 baseline.

S1

Progress from baseline

Scope 1 GHG intensity has fallen from 307gCO2e/kWh in 2017/18 to 259gCO2e/kWh in 2021/22 - a fall of 16%. This is due to a combination of factors, including a reduction in thermal generation output alongside the change in the thermal generation fuel mix, as well as the increase in the contribution of renewable generation output over this period.

Target achievement

20%

towards achieving its scope 1 GHG intensity reduction target.

Reduce absolute scope 1 and	Reduce absolute GHG emissions from use
2 GHG emissions by 72.5% by	of products sold by 50% by 2034 from a
2030 from a 2017/18 base year.	2017/18 base year.

S1	S2	S3
Progress from baseline	Progress from baseline
SSE's scope 1 and 2 GHG emissions	Scope 3 gas sold GHG emissions have fallen by 3%
have fallen by 44% from 11.07	between 2017/18 and 2021/22 ,from 2.54MtCO2e to
MtCO2e in 2017/18 to 6.24MtCO2e	2.3MtCO2e reflecting a loss in customers and lower
in 2021/22, largely as a result of	demand due to market conditions.
lower output from thermal power
stations and the closure of SSE's
last coal-fired power plant in March
2020 which has led to a reduction
in generation emissions as well
as energy consumption in SSE's
thermal power stations.
Target achievement	Target achievement
60%		19%
towards its scope 1 and 2	towards its target to reduce
absolute GHG emissions	GHG emissions from gas sold
reduction target.	to customers.

Net zero for		Net zero for all
SSE's scope 1		SSE's remaining
and 2 emissions		scope 3
by 2040.		emissions by
			2050.
S1	S2		S3

*SSE changed the way it accounts for the GHG emissions from its 50% owned Seabank gas-fired power station from 1 October 2021. Prior to this date SSE had operational control of the plant under a Power Purchase Agreement and as such 100% of emissions from the station were accounted for in scope 1 inventory.

Following cessation of the agreement on 30 September 2021, 50% of its emissions (aligned with equity ownership) will be accounted for within scope 3.

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NET ZERO TRANSITION REPORT

Targeted action to address GHG emissions

SSE's Net Zero Transition Plan sets out a clear plan of action it will take to accelerate clean energy development, while reducing emissions from thermal sources of electricity generation. Progress against those actions is summarised on this page, alongside where more information can be found.

Actions	Where to find more information	Key progress in 2021/22
SCOPE 1
Reduce emissions from unabated gas generation	Annual Report - pages 54 to 55	GHG emissions from SSE's electricity generation fell by 19% between 2020/21 and 2021/22, and were the lowest since SSE's
	Sustainability Report - pages 24 to 27	records began.
Develop new low-carbon flexible generation	Annual Report - pages 27 and 104	SSE Thermal progressed plans for the development of two new power stations equipped with carbon capture technology, with both
	Sustainability Report - pages 64 and 65	projects moving forward to differing degrees in the UK Government's process to encourage and support competitive carbon capture
		plants.
Transparent advocacy in favour of enhanced policy	Sustainability Report - page 28	SSE continued to advocate for increased support for lower-carbon thermal generation technologies.
Explore options for neutralising residual emissions	Sustainability Report - page 31	SSE showed its support for Direct Air Carbon Capture and Storage (DACCS) in the UK Government's proposed Scottish Cluster and
		submitted evidence on negative emissions technologies to the UK Environmental Audit Committee.
Build a renewable energy portfolio of 13GW of capacity by 2031	Annual Report - pages 100 to 101	SSE made good progress on key renewables projects and at 31 March 2022 it had 2.4GW of capacity in construction*
	Sustainability Report - pages 56 to 59
Reduce leakage and reliance on SF6	Sustainability Report - page 96	SSEN Transmission progressed with further trials of SF6 alternatives at its substations, including the first substation with SF6-free Siemens
		Energy Clean Air Power Voltage Transformers. SSEN Distribution published its enhanced SF6 leakage reduction strategy as part of its
		RIIO-ED2 Business Plan.
Reduce reliance on SSEN's Scottish Island backup diesel	Sustainability Report - page 63	SSEN Distribution's new RIIO-ED2 business plan outlines its commitment to produce a diesel strategy to transition away from carbon-
generation		intensive fuels on the Scottish Islands.
Switch vehicle fleet to electric in line with EV100 commitment	Sustainability Report - page 97	SSE made good progress towards its EV100 commitment with over 40% of its car fleet now fully electric and it increased its fully electric
		van fleet from 12 to 41.
SCOPE 2
Reduce electrical losses from SSEN Distribution	Sustainability Report - page 32	SSEN Distribution has implemented a number of measures to reduce electrical losses. Its new RIIO-ED2 business plan sets out an
		updated losses strategy for 2023 to 2028.
Deliver a net zero property estate	Sustainability Report - page 97	Energy consumed in SSE's offices, depots and data centres fell slightly compared to the previous year. SSE purchased 100% of its
		electricity for use in its facility managed offices from renewable sources, backed by renewable guarantees.
SCOPE 3
Support customers to fuel switch and consume less gas	Sustainability Report - pages 41 to 43	The proportion of SSE Business Energy's customers choosing green products grew to 30%, up from 6% the previous year. SSE Airtricity
		supported domestic customers with energy efficiency, resulting in energy savings of 8.7GWh in 2021/22.
Advocate for a pathway for decarbonised heat	Sustainability Report - page 44	SSE advocated for solutions to decarbonise heat networks and low carbon heat incentives through responses to a number of
		government consultations and activity through its trade associations.
Establish a framework for supplier collaboration on net zero	Sustainability Report - pages 32, 54 and 55	SSE's programme of supplier engagement included holding webinars with Supply Chain Sustainability School on the topic of carbon
action		and the development of Powering Net Zero Pact, in collaboration with 10 of its strategic suppliers to drive action towards a fair and just
		energy transition.
Partner with the CDP supply chain engagement programme	Sustainability Report - page 32	SSE and collaborated with CDP Supply Chain to deliver its first supplier webinar focusing on carbon reporting. SSE was also awarded an
		'A' in the CDP Supplier Engagement Rating assessment in 2022.

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* Based on equity share

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