SSE : Sustainability Report 2022

Powering change together

SSE PLC SUSTAINABILITY REPORT 2022

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 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, including East Asia, Europe and North America.

Data assurance and Sustainability Report The Directors of SSE plc are responsible for the preparation and presentation of this Sustainability Report. SSE takes an integrated approach to assurance, using internal audit and external assurance providers to ensure accurate and complete disclosures where appropriate. Where data has been

THE YEAR IN NUMBERS

Absolute scope 1 and 2 GHG	Renewable energy capacity in
emissions:	construction*:

6.2MtCO e 2.4GW
(2020/21: 7.6MtCO2e)	2	(2020/20: 2.0GW)

Measurement restatements

This report reflects a number of structural changes within SSE plc in the reporting year.

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.

This Sustainability Report for the period 1 April 2021 to 31 March 2022 aims to provide enhanced disclosure of SSE's policies, practice and performance against its key economic, social and environmental impacts and goals.

On occasion the report refers to activities of joint ventures and in these instances it is made clear this is the case.

externally and independently assured this has been noted in the relevant tables. SSE has objective reporting criteria for preparing and presenting the independently assured information disclosed in this report and the performance measures are in accordance with the reporting criteria. See sse.com/ sustainability/policies-and-assurances for more information.

Installed renewable capacity connected to SSEN Transmission's network:

7.8GW

(2020/21: 6.8GW)

Total Recordable Injury Rate per

100,000 hours worked:

0.17

(2020/21: 0.14)

Median UK gender pay gap:

18.0%

(2020/21: 18.3%)

Investment in communities:

£11.2m

(2020/21: £10.6m)

These include the disposal of its Contracting and Rail business; the formation NEOS Networks, a standalone joint venture Telecoms business; and the sale of SSE's stake in gas distribution operator SGN.

UK/Ireland taxes paid:

£335m/€46.4m

(2020/21: £379m/€20.4m)

UK/Ireland economic contribution:

£5.8bn/€438m

(2020/21: £5.2bn/€439m)

Stories in action

Throughout this report, SSE's sustainability policies, practice and performance are brought to life through strategy in action identified with the following icons:

Engagement	Innovation	Partnering	Dilemma
in action	in action	in action

Alternative Performance Measures

SSE assesses the performance of the Group using a variety of performance measures. These measures are not all defined under IFRS and are therefore termed 'non-GAAP' measures. A reconciliation from these non-GAAP measures to the nearest prepared measure in accordance with IFRS is presented and described on pages 204 to 212 of SSE's Annual Report 2022. The Alternative Performance Measures SSE uses might not be directly comparable with similarly titled measures used by other companies.

Powering change together

SSE PLC Annual Report 2022

The SSE plc Sustainability Report 2022 is complemented by SSE's Annual Report 2022 which can be found online at sse.com.

Contents

Chief Executive's Statement	03
SSE's business model	04
SSE's approach to sustainability	08
Structured sustainability governance	12
Identifying the issues that matter	14
Emerging trends	16
Working with and for stakeholders	18
Partnerships that power change	19
SSE's Group Principal Risks	20
Climate-related opportunities and risks	21
Accelerating climate action	22
A strategy to support net zero	25
Performance against the net zero plan	26
Embedding climate action	28
Targeted action to address GHG emissions	30
Adapting to a climate changed world	33
Providing affordable and clean energy	34
Delivering net zero in a cost-effective way	37
Serving electricity distribution customers	38
Low carbon energy solutions for customers	41
Investing in industry, innovation and infrastructure	46
Creating value in the transition to net zero	48

SSE's approach to innovation and technology	49
Driving sustainability in the supply chain	52
Ambitious renewables growth to support net zero	56
Building a network for net zero	60
Powering communities to net zero	62
A changing role for thermal generation in a net zero world	64
Committed to decent work and economic growth	66
A fair and just transition	69
Paying a fair share of tax	70
Sharing economic value	72
Guaranteeing fair work	76
Creating an inclusive workplace	79
Getting everyone home safe	84
Protecting and enhancing the natural environment	86
Embedding effective environmental management and governance	89
Enhancing the natural environment	90
Responsible production and consumption	94
Data and performance	98
ESG rating and indices performance	99
Sustainability-linked Executive remuneration	100
SASB Standards Disclosure	102
Limited Assurance opinion on GHG and water data	104

Cover image: SSE Renewables employees on the Sloy/Awe hydro scheme, pictured at Loch Sloy.

*Based on equity share at 31 March in each financial year

SSE plc Sustainability Report 2021

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SUSTAINABILITY REPORT

Chief Executive's statement

2021/22 highlights

Powering change together

Refreshed 2030 Goals

In February 2022, SSE refreshed its 2030 Goals, making them more ambitious and ensuring they remain stretching to the end of the decade. See more on page 10.

The purpose of SSE's annual sustainability report is to disclose the impact of its business activities on people and the environment. Designed to complement the statutory disclosures in the Annual Report, SSE's social and environmental impacts are comprehensively monitored and disclosed. Led from a strategic objective to 'create value for shareholders and society', SSE recognises that it has a far wider impact on the world than simply its annual financial results.

to access the benefits a low-carbon economy can bring. These principles of a just energy transition to net zero have parity within SSE's plans to achieve net zero.

Integrity

Any plan to meet net zero, indeed, any strategy to create value for SSE's wider stakeholders, requires comprehensive transparency. Its why SSE continues

Net Zero

Transition Report

SSE published its Net Zero Transition Plan in March 2022 and has produced a report on progress against this Plan, which will be subject to shareholder vote at the upcoming AGM in July. See more on page 26.

Action for a just transition

SSE's work over 2021/22 has reinforced the importance of a just transition to net zero, which has included a worker insights report and partnership collaboration to share learnings. See more on page 69.

Increasing climate ambition

SSE announced more stretching net zero ambitions, alongside aligning its Science Based Targets Initiative- approved interim carbon targets to a more stretching 1.50C pathway. See more on page 25.

2021/22 was an exceptional year for business delivery, with a capital investment plan between 2021 and 2026 pursuing clean growth opportunities that are critical to removing greenhouse gases from our energy systems and tackling climate change. It was also a year where SSE spelled out, with greater clarity than ever before, the greenhouse emissions targets it must meet to become a net zero business.

Targets

The publication of a Net Zero Transition Plan in March was the culmination of a series of actions taken earlier in the year. New science-based greenhouse gas targets were set in November, accelerating the speed in which emissions reduction plans are delivered. This means, amongst other things, that rather than targeting to cut our absolute scope 1 and 2 greenhouse gas emissions to 6 million tonnes of carbon dioxide equivalent in 2030, we will be cutting them to 3 million tonnes. With COP26 focused on accelerated climate action, I like to think SSE's plan is net zero acceleration in practice.

Action

Setting robust, independently verified targets is one thing. But, as our

Net Zero Transition Plan outlines, the targets are only as good as the actions designed to meet them. The same argument is true for nation states and the Nationally Determined Contributions set in advance of COP26. In SSE's case, we are clear on what we must do: we must bring about a responsible phased reduction of carbon emissions associated with unabated gas generation, and establish new carbon capture power stations, as quickly as possible. At the same time, we must increase renewable energy output - and we are developing wind, hydro and solar projects to increase it fivefold by the end of the decade.

Because SSE understands that tackling climate change is not simply a technical challenge to meet through investment in large-scale assets, SSE seeks to support the human challenge too. Working people need to become reskilled, communities must benefit from the economic activity that results and all energy consumers must be able

to quantify, annually, its overall socioeconomic impact. It's also why we publish, in significant detail, our journey in improving inclusion and diversity within the company. It also means we must be honest about the challenges we face. While excellent progress is being made - SSE's carbon emissions are down again this year - I have no doubt there will be bumps in the path ahead. Our commitment to stakeholders is to let them know when those challenges arise.

Finally, the spirit in which this report is published, is to stimulate further engagement and feedback from the many people and organisations that have an interest in SSE and its business activities. As always, I would encourage you to get in touch with us directly, using the email address [e-mail].

Alistair Phillips-Davies

Chief Executive

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SUSTAINABILITY REPORT

SSE's purpose, vision and strategy

SSE's business model

OUR PURPOSE

To provide energy needed today while building a better world of energy for tomorrow.

OUR STRATEGY

To create value for shareholders and society in a sustainable way by developing, building, operating and investing in the electricity infrastructure and businesses needed in the transition to net zero.

Our business explained

OUR VISION

To be a leading energy company in a net zero world.

Develop BuildOperate

CO2	The Net Zero Acceleration Programme
	Invest

OUR GOALS

With an eye to net zero, in 2022 SSE revised its interim goals aligned to the UN's SDGs for 2030.

Cut carbon intensity by 80%

Reduce Scope 1 carbon intensity by 80% by 2030, compared to 2017/18 levels, to 61gCO2e/kWh.

Increase Renewable	Enable low-carbon	Champion a fair and
energy output fivefold	generation and demand	just energy transition
Build a renewable energy portfolio	Enable at least 20GW of renewable	Be a global leader for the just transition
that generates at least 50TWh of	generation and facilitate around 2	to net zero, with a guarantee of fair work
renewable electricity a year by 2030.	million EVs and 1 million heat pumps	and commitment to paying fair tax and
	on SSEN's electricity networks by 2030.	sharing economic value.

OUR VALUES

All of this is underpinned by a set of core values designed to guide decisions and actions in SSE.

Safety	Service
If it's not safe	We are a company that
we don't do it.	customers can rely on.

Efficiency	Sustainability	Excellence	Teamwork
We focus on	We do things	We continually	We work together,
what matters.	to add	improve the way	respect each other
	long-term value.	we do things.	and make a difference.

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SUSTAINABILITY REPORT

SSE's purpose, vision and strategy

SSE's business model

SSE's strategy is to create value for shareholders and society in a sustainable way by developing, building, operating and investing in the electricity infrastructure and businesses needed in the transition to net zero. SSE's businesses are well positioned to capture the growth opportunities generated by driving and accelerating the net zero agenda through electricity infrastructure.

A strategically coherent business mix focused on net zero

Decarbonising generation

Enabling electrification

Providing energy solutions

SSE Renewables

What it does

Develops, builds, operates and invests in assets that generate electricity from renewable sources.

How it supports net zero Develops and generates zero-carbonelectricity at large scale from onshore and offshore wind farms and provides clean flexible power from hydro-electricityschemes.

2.4GW

Renewable generation capacity in construction*

SSEN Thermal

What it does

Generates electricity from thermal sources in a flexible and reliable way, and its Gas Storage business holds around 40% of the UK's underground capacity, supporting security of supplies in the UK.

How it supports net zero Produces progressively lower- carbon electricity and electricity system support to enable net zero transition. Facilitates increasing levels of renewable electricity

by offering flexibility to balance renewables' natural variability. SSE's Thermal's Gas Storage assets have potential to be repurposed to hold lower carbon gases in future, including hydrogen.

5.3GW

Energy Portfolio

Management

What it does

Secures value for SSE's asset portfolios in wholesale energy markets and manages volatility through risk- managed trading of energy- related commodities.

How it supports net zero Provides efficient route- to-marketfor low-carbonelectricity, supports system balancing and provides energy solutions for business energy customers.

SSEN Transmission

What it does Owns, operates and develops the electricity transmission network in the north of Scotland.

How it supports net zero Connecting sources of renewable electricity generation to the national grid and transporting that clean electricity to areas of demand.

7.8GW

Renewable generation capacity connected to SSEN Transmission's network

SSEN Distribution

What it does Owns, operates and maintains the electricity distribution networks in the North of Scotland and central southern England.

How it supports net zero Through the timely connection of local renewables and the coordinated delivery of network investment and flexible solutions to alleviate network constraints and allow for further electrification.

3.8 million

Homes and businesses supplied by SSEN Distribution

Customers

What it does

SSE Business Energy and SSE Airtricity provide energy and related services to households, businesses and public sector organisations across Great Britain and the island of Ireland.

How it supports net zero Increases the accessibility of green energy solutions through the provision of customer-drivenpropositions and acts as a partner to customers and stakeholders as they seek ways to respond to the climate crisis.

c.1.2 million

Domestic and business customer accounts

Distributed Energy**

What it does

Focused on investing in, building and connecting localised flexible energy infrastructure, as well as developing solar and battery projects, operating heat networks, and offering integration, aggregation and trading capability.

How it supports net zero

Through offering services that bring low- carbon, on-site generation, storage and delivery flexibility close to the point of use. Diverse capabilities across a range of low- carbon technologies offer a local 'whole system' approach.

380MW

solar and battery pipeline secured with >1GW more sites under assessment

Installed thermal generation capacity

• Based on equity share at 31 March 2022
• Following the sale of its Contracting arm, SSE Enterprise is now referred to as Distributed Energy

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