SSE : Sustainability Report 2021

POWERING

CHANGE

SSE PLC SUSTAINABILITY REPORT 2021

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.

UK-listed and headquartered in Perth, SSE is a major contributor to the economies in the UK and Ireland. It employs more than 10,000 people and is real Living Wage and Fair Tax Mark accredited.

This Sustainability Report for the period 1 April 2020 to

31 March 2021 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.

THE YEAR IN NUMBERS

ABSOLUTE EMISSIONS	RENEWABLES IN CONSTRUCTION
(SCOPE 1 AND 2)	AND OPERATION
7.6MtCO2e 5.8GW
RENEWABLES CONNECTED TO SSEN	MEDIAN GENDER PAY GAP (UK)
TRANSMISSION'S NETWORK	AND OPERATION
6.7GW	18.3%
NUMBER OF SAFE DAYS	RENEWABLES COMMUNITY FUNDS
271	AND OPERATION
£10.2m

UK/IRELAND TAXES PAID

£379m/€20.4m

UK/IRELAND ECONOMIC CONTRIBUTION

£5.2bn/€439m

Coronavirus statement

The report covers the first full year of operations within the constraints of the coronavirus pandemic. Thanks to a highly resilient business model and the commitment and flexibility of its employees, SSE maintained the safe and reliable supply of electricity throughout the year and did not draw on furlough or rates relief in doing so. Further detail of SSE's response to the coronavirus outbreak can be found on sse.com/coronavirus and throughout this report.

Stories in action

Throughout this report, SSE's sustainability policies, practice and performance are brought to life through stories 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 172 to 177 of the Annual Report 2021. The alternative performance measures SSE uses might not be directly comparable with similarly titled measures used by other companies.

Our cover: Jasmine Allen emerges from the nacelle of one of the turbines at Greater Gabbard wind farm, 12 miles off the coast of Suffolk. Jasmine, 21, is an apprentice in SSE Renewables and featured in SSE's 2021 brand campaign in the lead-up to COP26.

POWERING

CHANGE

SSE PLC ANNUAL REPORT 2021

The SSE plc Sustainability Report 2021 is complemented by SSE's Annual Report 2021 which can be found online at sse.com.

Contents

CHIEF EXECUTIVE'S STATEMENT	3
SSE'S BUSINESS MODEL	4
STRUCTURED SUSTAINABILTY GOVERNANCE	9
IDENTIFYING MATERIAL ISSUES	10
TAKING MEANINGFUL CLIMATE ACTION	18
CLIMATE-RELATED FINANCIAL DISCLOSURE	26
PROTECTING THE NATURAL ENVIRONMENT	36
PROVIDING AFFORDABLE AND CLEAN ENERGY	42
INVESTING IN INDUSTRY, INNOVATION AND INFRASTRUCTURE	52
DELIVERING A JUST TRANSITION TO NET ZERO	66
COMMITTED TO DECENT WORK AND ECONOMIC GROWTH	70
DATA AND PERFORMANCE	94

SSE plc Sustainability Report 2021

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SUSTAINABILITY REPORT

CHIEF EXECUTIVE'S STATEMENT

POWERING

SUSTAINABLE CHANGE

With all eyes on COP26 in Glasgow later this year, SSE is focused on the practical and positive action required to build a net zero carbon economy.

The coronavirus pandemic demonstrated powerfully the nature of our interconnected world and the importance of co-ordinated and collaborative action across borders.

As we look forward to the most important international conference on climate change since the Paris Agreement, the imperative to transform our businesses and economies has never felt so urgent. With average global temperatures reaching 1.2°C above pre-industrial levels, the window of opportunity to prevent rises above 1.5°C is closing. It is therefore both a privilege and a responsibility to be a Principal Partner of the UK Government's presidency of COP26 in Glasgow this November. SSE's role as a sponsor is to be a positive contributor before, during and after the conference through the practical action that removes carbon emissions from the electricity system.

Right now, SSE is constructing more offshore wind generation capacity than any other company in the world and we continue to build new pipelines for the future too. We are tackling, head on, the complexity of removing carbon emissions from flexible thermal generation, so that homes and businesses can be assured of the secure electricity supplies they have, rightly, got used to. These are the practical actions that must be replicated in every electricity system in the world, if the objectives of COP26 are to be met.

The purpose of this report, however, is to disclose to our shareholders and stakeholders the policies, practices and performance of efforts to be continuously more sustainable in our business activity. As we pursue our vision to be a leading energy company in a

net zero world, our business strategy deliberately reflects our objective to create value simultaneously for shareholders and society.

The greatest impact we make is to deliver the profitable solutions to climate change. From the development of awe-inspiring offshore wind farms and incredible subsea transmission infrastructure, to the complexity of repurposing thermal generation assets to support a renewables-led energy system, SSE is in the business of climate action that transitions our energy system to a net zero world. And in doing so, we support green economic activity, creating jobs, prosperity and fair returns to our shareholders.

In this years' report, we spell out the role of each of SSE's business units in the mission to establish net zero. And because a net zero economy is as much about people as it is about technology, assets and infrastructure, we outline the principles that guide us to help deliver fairness as we transform to a carbon free society.

This notion of a 'Just Transition' to net zero is something we have considered throughout 2020/21. Inspired by a thoughtful question at our 2020 Annual General Meeting we published our Just Transition Strategy in November. That strategy has prompted further work, particularly in our electricity distribution business plans and with our supply chain partners: with the respective objectives of ensuring universal access to the wonders of smart local grids; and, sharing economic opportunities with local people from a growing offshore wind industry.

Long term environmental and social

sustainability requires constant and creative innovation. The potential of greater digitalisation in our industry enables us to achieve more, for less. Innovation can also provide answers to the emerging challenges of our time: from restoring nature to reusing materials in a way that eradicates the notion of 'waste'. These are issues for the future, but this year's report places significance on the importance of a culture of ongoing innovation for the benefit of all SSE's stakeholders.

That culture of innovation is also designed to ensure we are alive to the constant need to update our sustainability objectives and, in 2021/22, we look forward to a review of our 2030 Goals to ensure they remain stretching right to the end of the decade.

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

Alistair Phillips-Davies

Chief Executive

18 June 2021

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SSE plc Sustainability Report 2021

SSE plc Sustainability Report 2021

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SUSTAINABILITY REPORT

OUR BUSINESS MODEL

SSE'S

BUSINESS MODEL

Sustainability is embedded throughout SSE's business model, from its strategic pillars to what it does and who it does it for.

SSE'S PURPOSE AND STRATEGY

OUR PURPOSE	OUR STRATEGY
To provide energy needed	To create value for shareholders
today while building	and society in a sustainable way
a better world	by developing, building,
of energy for	operating and investing in the
tomorrow.	electricity infrastructure and
	businesses needed in the

OUR 2030 GOALS

On the road to net zero in 2050, SSE has set four interim goals aligned to the UN's SDGs for 2030.

CREATING VALUE FOR SHAREHOLDERS AND SOCIETY

Along with key financial metrics, SSE reports on a number of non-financial KPIs, recognising the wider value that the business creates for society.

Non-financial KPIs

RENEWABLE OUTPUT (INC. PUMPED STORAGE)	CARBON INTENSITY OF ELECTRICITY				JOBS SUPPORTED IN UK AND IRELAND
(GWh)*			GENERATED (gCO2e/kWh)
2021		10,242	2021			255		2021
					43,560
										2021		43,560
2020			11,442	2020					288	2020
							60,550
										2020			60,550
2019		10,464	2019				284	2019
					105,250
										2019				105,250

transition to net zero.

Cut carbon intensity by 60%

Strategic relevance: Renewables are core to SSE's business strategy, which is centred around the net zero transition. SSE has a goal of trebling its

Strategic relevance: As a significant generator of electricity, SSE has a responsibility to reduce its carbon intensity in line with climate science.

Strategic relevance: SSE relies on the people that

work for it in order to operate, with its activities

Strategic relevance: SSE relies on the people that

supporting jobs in both urban and rural areas.

Strategicwork for itrelevance:in order toSSEoperatrelies, withon theits peopleactivitiesthat

OUR VISION

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

			P
			O
			L
		E
D	E	V

I

N

V

BUI L D

A	T	E

Treble renewable energy output

Help accomodate 10m electric vehicles

Champion fair

Tax and a real

Living Wage

renewable output by 2030.

Performance: Whilst renewable output decreased slightly due to unfavourable weather conditions across wind and hydro, SSE Renewables' portfolio proved to be highly resilient.

*Includes pumped storage, biomass and constrained off wind in GB.

TOTAL RECORDABLE INJURY RATE PER 100,000 HOURS WORKED (EMPLOYEES AND CONTRACTORS COMBINED)

Performance: The carbon intensity of SSE's generated electricity decreased by 11% between 2019/20 and 2020/21, and was the lowest since SSE's records began.

TAXES PAID IN THE UK/IRELAND

workpportingPerfsu rmance:for it injobsorderThroughin bothto operurbits operationte,n andwithruralits inacareastheivities.UK
suand Ireland,jobsin 2020/21in both urbanSSE supportedand rural areas41,400.
Perfpportingrmance: Through its operations in the UK
2,160 jobs respectively. Figures for 2019/20
and Ireland, in 2020/21 SSE supported 41,400
Performance: Through its operations in the UK
have now been restated to exclude SSE Energy
and Ireland,2,160 jobsin 2020/21respectivelySSE. supportedFigures for41,4002019/20
Services.
andhave2,160now beenjobs respectivelyrestated to .excludeFig res SSEfor 2019/20Energy
Services.	f
have now been restated to exclude SSE Energy
Services.

ECONOMIC CONTRIBUTION IN UK/IRELAND

E ST

	R
E
P

2021

£379.0m

2021

£5.2bn

O

(page 17)

2021 0.15

€20.4m

€439m

2020

£421.6m

2020

£5.7bn

2020 0.16

€18.1m

€650m

2019

£403.7m

2019

£8.9bn

VALUES

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

Safety	Service		Sustainability	Excellence	Teamwork
If it's not safe,	We are a company	We focus on what	We do things	We continually	We work together,
we don't do it.	that customers	matters.	responsibly to add	improve the way	respect each other and
	can rely on.		long-term value.	we do things.

20190.16

Strategic relevance: Safety is SSE's No. 1 value, and everybody in the Company operates to the safety licence of "if it's not safe, we don't do it".

Performance: Against the backdrop of a challenging year, SSE's TRIR has decreased to 0.15, making 2020/21 SSE's best year on record for safety performance.

€14.6m

UK				Ireland

Strategic relevance: Taxes support the public services everyone relies on. When companies do well, they should share their success with society through the payment of taxes.

Performance: Taxes paid in the UK decreased slightly in 2020/21 and increased in the Republic of Ireland.

€689m

UK				Ireland

Strategic relevance: SSE depends on a healthy and thriving economy to enable its business success, which is why it calculates the value it adds to UK and Irish GDP each year.

Performance: SSE continued to make a strong economic contribution in the UK and Ireland. Figures for 2019/20 have now been restated to exclude SSE Energy Services.

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SUSTAINABILITY REPORT

OUR BUSINESS MODEL

SSE'S BUSINESSES AND HOW THEY CONTRIBUTE TO NET ZERO

SSE is led by its purpose to provide energy needed today while building a better world of energy for tomorrow and is principally involved in the generation, transmission and distribution of electricity; and also in the supply of energy and related services to customers in the UK and Ireland. Renewable electricity generation and electricity networks form the low-carbon electricity core of SSE. Complementing this core, flexible thermal generation is undergoing its own transition for a net zero world, customer facing businesses provide both a route to market and solutions for customers to reduce their carbon emissions and its Enterprise business provides distributed energy solutions for businesses and organisations.

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- carbon electricity at large scale from onshore and offshore wind farms and provides clean flexible power from hydro-electricityschemes.

5.8GW

Renewable generation capacity in construction and operation

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 in the resource-richnorth of Scotland to the national grid and transporting that zero-carbonelectricity to areas of demand in the south.

6.7GW

Renewable generation capacity connected to SSEN Transmission's network

SSEN Distribution

What it does Responsible for safely and reliably maintaining the electricity distribution networks, supplying homes and businesses across central southern England and the north of Scotland.

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 enable the electrification and, therefore, decarbonisation of other energy sectors including transport and heat.

3.8 million

Homes and businesses supplied by SSEN Distribution

SSE 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 Supports the electricity system with important services that keeps the electricity system secure, provides flexibility to facilitate increasing levels of renewable electricity, at the same time as undertaking its own transition to progressively reduce the carbon emissions associated with its activities.

5GW

Installed thermal generation capacity

Customers

What it does

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

How it supports net zero Increases the accessibility of green energy solutions, acting as a partner to customers and stakeholders as they seek ways to respond to the climate crisis and provides a route to market for SSE's renewable electricity output.

c.1.2 million

Domestic and business customer accounts

SSE Enterprise

What it does

Provides localised flexible energy infrastructure to public sector, commercial and industrial markets in the UK, as well as the 'Energy as a Service' platform and digital services.

How it supports net zero Through offering grid edge services, bringing low- carbon, on-sitegeneration, storage and delivery flexibility close to the point of use, and offering local 'whole system' approach.

c. 10,500

Heat network customer accounts

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. 

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