Environmental policy

The continuous growth in the world’s population supported by economic models and consumption patterns that lead to climate change, the accelerated degradation of natural resources and biodiversity and the inherent risks to public health, require responsible actions from companies as well as proactive and differentiating strategies capable of reversing these trends, promoting respect for the environment and the development of a society based on sustainable consumption patterns.
The EDP Group’s activities are carried out within the framework of its Sustainable Development Principles, guided by the highest ethical standards while consistently promoting the guiding principles of the United Nations (UN) Global Compact.
In this sense, and recognizing the crucial role of the energy sector, EDP - Energias de Portugal, S.A. (EDP) is committed to contributing to the successful implementation of nine Sustainable Development Goals (SDGs) of the UN Agenda 2030, and highlighting those of greatest environmental relevance: (i) 7 – contributing to ensuring affordable, reliable and sustainable energy, (ii) 12 – contributing to ensuring sustainable production and consumption patterns (iii) 13 – acting to combat climate change, and managing the risks arising from this, (iv) 15 – collaborating in the protection of life on Earth, through the sustainable use of terrestrial ecosystems and, in particular, fresh water, and (v) 17 – establishing partnerships to accelerate the implementation of these objectives.
This EDP Group Environmental Policy outlines the strategy and respective action plans, the implementation of which must be monitored, giving priority to the use of methodologies of recognized international merit.

This Environmental Policy establishes EDP’s vision and commitments regarding the management of environmental and climate issues, the guiding principles for the ongoing improvement of environmental performance, in the short and long term, and the foundations for the definition of objectives and targets for the EDP Group in considering the expectations of stakeholders.

The Environmental Policy applies to (i) EDP (ii) companies 100% owned, directly or indirectly, by EDP and (iii) the companies in which EDP is in a controlling relationship within the limits established in the Binding Instructions and in the Policies and Procedures in force. This Policy is also applicable to Fundação EDP, to Fundacíon EDP and to Instituto EDP – which, for the purpose of this normative, shall be considered part of EDP Group.
The Environment Policy is also applicable to entities that provide services at EDP facilities or in the name of and on behalf of companies that are part of the EDP Group.
EDP will also promote the application of the principles of this policy to the other stakeholders in the value chain, whether these are joint ventures, customers, or service providers.

The preparation of this Environmental Policy was based on the following guidelines:

    • ISO 14001:2015
    • ISO 26000:2010
    • Global Reporting Initiative
    • UN Global Compact
    • ISO 14040:2005/AMD:2020
    • Sustainable Development Goals - United Nations 2030 Agenda
    • OECD Guidelines to Multinational Enterprises

   • Principles of Sustainable Development for the EDP Group
    • EDP Code of Ethics
    • Supplier's Code of Conduct
    • Stakeholder Relations Policy
    • EDP’s Social Investment Policy

Due diligence: this is the process of analyzing a company before entering into a contract. The analysis includes areas of activity, the outlook regarding the future of the business, and the status of its assets and liabilities.
Joint venture: agreement between two or more companies that establishes strategic alliances for a common commercial objective, for a fixed period.

Climate adaptation: internalizing the knowledge and practices necessary to strengthen the capacity of the company to prevent, respond to and repair damage resulting from the effects of climate change, in the context in which it operates, while taking advantage of the opportunities that may arise.

Circular economy: this is a production and consumption model which involves sharing, leasing, reusing, repairing, reconditioning, and recycling existing materials and products for as long as possible. In this way, the product life cycle is extended.

Natural Capital: a way of contextualizing nature and assessing the environment from an economic perspective, with the living (for example, biodiversity) and non-living (for example, fossil fuels, minerals, metals, wind, and solar energy) elements of the environment seen as a “stock” or an “asset”, resulting in numerous benefits in the form of ecosystem services.

Ecosystem Services: these are the benefits that people derive from ecosystems. These include provisioning services, such as food and water; regulating services such as flood, drought, land degradation and disease regulation; support services such as soil formation and nutrient cycling; and cultural services, such as recreational, spiritual, religious services and other non-material benefits.

Mitigation hierarchy: a framework for managing risks and potential impacts related to biodiversity and ecosystem services. This results from a sequence of actions to anticipate and avoid and, where it is not possible to avoid, minimize, and, when impacts occur, restore, and, where significant residual impacts persist, compensate with biodiversity offsets.

EDP recognizes the Environment as a strategic management element, aiming to reduce the impacts and dependencies of its activity through a set of commitments that ensure the implementation and maintenance of appropriate and effective environmental management systems, with the ultimate purpose of Sustainable Development, namely:
    • Protect the Environment and integrate its components within decision-making processes at the different stages of development, construction, operation, and decommissioning of infrastructure;
    • Properly manage environmental risk, in particular pollution prevention and emergency response in the event of an accident and/or catastrophe;
    • Promote ongoing improvement in environmental processes, practices, and performance, stimulating Research and Development and Innovation;
    • Comply with applicable environmental legislation, as well as other voluntarily obligations;
    • Consider the relevant expectations of the main stakeholders in decision-making processes;
    • Extend the management and improvement of environmental performance to the value chain, particularly by including environmental criteria in the selection of suppliers;
    • Communicate our performance in a regular and transparent manner to all stakeholders, in particular to local communities;
    • Raise awareness regarding the need to improve individual and collective environmental performance, thereby contributing to the public debate;
    • Consider the commitments of this Policy when making decisions during due diligence processes related to mergers and acquisitions.

Based on the Group's strategic priorities, EDP also makes specific commitments in order to protect the environment and enhance natural capital:

CLIMATE CHANGE
    • Achieve carbon neutrality in its activity through:
        o Increasing its renewable energy portfolio;
        o Ongoing reduction of direct and indirect greenhouse gas emissions;
        o Providing low carbon energy solutions to its customers, promoting electrification of consumption and energy efficiency;
    • Promote climate adaptation, maximizing the resilience of its assets to climate change.

CIRCULAR ECONOMY
    • Promoting efficient use of natural resources in its activities, wherever possible, within the framework of a life-cycle analysis, in particular:
        o Minimize the use of natural resources necessary to properly carry out its activities;
        o Optimize and efficiently manage internal products and services, promoting a circular economy for our customers;
        o Maximize the recovery of waste and its reintroduction into the economy as by-products;
    • Pay special attention to the water resource, promoting its sustainable management, either by minimizing its consumption or by mitigating the impacts on its quality.

BIODIVERSITY
    • Contribute to reducing the loss of biodiversity, promoting the mitigation hierarchy, and in the long-term aim for a net benefit in terms of biodiversity;
    • Contribute to deepening scientific knowledge of biodiversity and ecosystem services, namely through the establishment of partnerships.

The objectives of the Policy are implemented through the definition of goals, action plans and monitoring indicators. The choice of indicators and the definition of goals should attempt to be “SMART”^[1], promoting ongoing improvement, implemented in short, medium and/or long-term action plans which are monitored periodically, both in terms of operations and coordination and consolidation at the corporate level and/or within the scope of the compliance function.

    8.1 Policy Adjustment in the context of the Group’s companies
    The scope of the Environmental Policy is for the group of companies that make up the EDP Group, however, taking into account the specificities of each of these companies, there may be case-by-case adaptations to the aforementioned Policy in the following cases:
    I. Some commitments may not be applicable to the reality of a particular company;
    II. Specific commitments may be added, given the context in which a company carries out its activities.

    8.2 Revision
    This Policy will be revised at least every three years or whenever the external context or the strategic framework of the EDP Group so requires, either at the initiative of one of the Corporate Center Departments or at the initiative of one of the EDP Group companies represented on the Sustainability Committee. In any of these situations, the revision process must be carried out by the structure that proposed it, with the support of the Sustainability Department, while involving the other EDP Group structures whose activities are related to the revision to be undertaken.

    8.3 Responsibilities
    The Executive Board of Directors is responsible for approving the Environment Policy and its successive revisions.
    The Sustainability Committee is responsible for assessing the proposals submitted to the Executive Board of Directors.
    The Sustainability Department is responsible for monitoring the implementation of the Policy at the Group level, as well as any revisions.
    The Business Units are responsible for implementing the Policy within the scope of their activity and taking the initiative of proposing suggestions for changes to the Policy to the Sustainability Department.

    8.4 Communication
    Each of the companies that make up the EDP Group is responsible for communicating to stakeholders the Environmental Policy and the commitments assumed, as well as the environmental performance achieved within the specific context of each of them, with the appropriate periodicity and detail. In the event that the companies that make up the EDP Group identify context-specific aspects, they must refer to the respective framework within the EDP Group’s Environmental Policy.

    8.5 Stakeholder expectations
    Identifying and integrating stakeholder expectations in the environmental performance of the EDP Group must comply with the Stakeholder Management Methodology Guide in force.

    8.6 Training
    The Environmental Policy must be included in the curriculum contents of internal environmental training, throughout the EDP Group and externally, with suppliers and service providers, especially those who act in the name and on behalf of any of the companies that make up the EDP Group, as well as partner entities, when applicable.

^[1] Specific, Measurable, Attainable, Realistic, Timely

Approved by the Executive Board of Directors on the 17th February 2021.