SUSTAINABILITY REPORT 2020 to the Essential Ones

SUSTAINABILITY REPORT SUSTAINABILITY REPORT 2020 To the essential ones

This Sustainability Report is dedicated to all the employees of ENGIE Brasil Energia, who, amid the pandemic – characterized by hardship and uncertainty round the world – acted with bravery, resilience and empathy to continue delivering an essential service to society with excellence.

Without the efforts of each and every one of them, together with the team spirit that is part of our values, the results reported here would not have been possible. Our Company thanks, recognizes and is proud of you for the essential work done.

Essential, like energy. Essential, like people. Essential, like life.

2 / 140 SUSTAINABILITY REPORT Presentation its developments. We reached year- cess, which has been intensive since 2020 end 2020 with net revenues in excess 2015, was crucial for us to be able of R$ 12 billion, up 25% from 2019, to place approximately 70% of em- R$ 6.5 billion in EBITDA and net income ployees in work-from-home regime of R$ 2.8 billion, in each case up more in just two days. Similarly, the remote than 20% YoY. The factors contributing operation of a large portion of our to the numbers’ evolution include hy- generation plant helped reduce risks drological risk renegotiation, the contri- and keep up plant performance. This bution from TAG and the Transmission was only possible because we already segment, and a combination of changes had appropriate systems and tools in in volume of energy sold and average net place, as well as skilled teams willing Message from the selling price. Beyond these, we realize to adjust routines and processes. that our results reflect a collective effort to overcome hardship, which is expressed The pursuit of solutions for the electric Management in the exemplary commitment of our em- energy industry’s delicate situation, given [GRI 102-14] ployees, in the support from our Board of the sharp drop in consumption and a po- Directors and our controlling shareholder, tential increase in delinquency that dis- and the collaborative chain that formed tribution companies face, added to the t was April 2020 when we released forts were focused on guaranteeing within the Company and without. need for urgent steps to be taken. To- our latest Sustainability Report. the supply of electric energy – which is gether with other players, we discussed Surrounded by uncertainty stem- essential to society – while protecting We thereby proved the effectiveness alternatives to support the more sensi- ming from the recently declared people, guaranteeing the health of our of strategic actions structured over tive links in the chain, working towards Ipandemic, we were trying, as we teams and support to the communities the past few years to make ENGIE solutions to give breathing room to the reported at the time, to understand in which the Company operates. Brasil Energia more and more resilient companies hit hardest by the crisis. Once risks, predict impacts, and adapt our Based on these pledges, we stood shoul- and connected with the future. In one again, the union of the industry’s players activities. Back then, all of our- ef der to shoulder to face the crisis and illustrative case, the digitalization pro- led to balanced decisions that prevented

3 / 140 SUSTAINABILITY REPORT an even more violent shock to the coun- North and South of Brazil. Although we as well as making short-term energy 2020 try’s production and confirmed the reg- did face pandemic-related restrictions purchases – all done online on a swift ulatory maturity of the Brazilian electric – and, in the case of Gralha Azul, envi- and secure medium. energy industry’s players. ronmental licensing-related legal issues that led to a temporary construction We created tools for our employees to With funding raised on the market- stoppage –, we reached yearend with foster connection – not just for busi- place, we stuck to our financial disci- our plans adjusted to ensure the least ness purposes, but above all to enable pline and the delivery of results to ex- impact possible on schedules. them to connect with one another. ecute the investment plans drawn for Among the highlights, the socialization 2020. We continued implementation of The field teams’ sharp pace – as they and mental health programs included a three major projects: the Campo Largo maintained operational excellence series of online events, outreach cam- II Wind Complex, in the Northeast, and while faithfully adopting contingency paigns and psychological support. Add- the Novo Estado and Gralha Azul Trans- measures to control the risk of conta- ed to the sanitary protocols put into mission Systems, respectively in the gion – was matched by our people in place, these actions guided our teams the administrative and business areas. as to the gradual, voluntary and safe In addition to supporting implemen- return to working at the Company’s The field teams’ sharp pace – as they tation and operation activities, they facilities. They also supported learning found room to innovate, benefitting about new working formats that will maintained operational excellence various stakeholder groups. Our Clients probably stay with us going forward. while faithfully adopting contingency in the Free Energy Market, for example, now have available E-conomiza, a solu- For the communities where ENGIE Bra- measures to control the risk of contagion tion intended to facilitate small and me- sil Energia is present, we offered differ- – was matched by our people in the dium-sized businesses’ migration to the ent support models. The health crisis free contracting environment, and the demanded prioritizing immediate as- administrative and business areas. Energy Place, a digital relationship plat- sistance to those most vulnerable, pro- form that enables managing contracts viding the basics to face the loss of jobs

4 / 140 SUSTAINABILITY REPORT 2020 and income, and to help healthcare insti- component of ENGIE’s business strate- tutions improve the conditions of their gy since 2015 – and an absolute neces- service to the population. These two sity to ensure prosperity in the long run. vectors drive our social responsibility Knowing this, we continue to prioritize efforts during the pandemic, defining investments in generating energy from the allocation of more than R$ 7 million. renewable sources. In 2021, we begin Some of the funds came from the Sol- construction of phase one of the Santo idary Campaign, which enjoyed healthy Agostinho Wind Complex, in the state support from our employees reinforcing of Rio Grande do Norte, which will add community engagement as an essential 434 MW to the Company’s installed trait of the Company’s culture. capacity, to be dedicated to the Free Energy Market. We remain dedicated to building the future. The global shock that the pan- On another front, we moved forward demic caused raised the warning for with our assets de-carbonization plan. an equally global dilemma with which The buyer prospecting process for the we have a direct connection: climate Pampa Sul Thermal Plant, in Rio Grande change – which tents to cause econom- do Sul, resumed. As for the Jorge Lacer- ic, social and environmental impacts on da Thermal Complex, in Santa Catarina, a scale at least as challenging as the one the process was to effectively resume endured in 2020. The prospects under- in February 2021, with a prospective score the urgency of decarbonization, a buyer’s review of the acquisition, in due

5 / 140 SUSTAINABILITY REPORT diligence process to be completed in itive solution to the problems caused 2020 June 2021. In parallel, a special Work- to large hydro generators during the ing Group was formed and will be ded- hydric crisis of the early 2010s. These icated to the study of alternative solu- two examples reinforce sector’s reg- tions for the asset. The study includes ulatory safety, which becomes more an in-depth review of socio-economic modern every year. Improvements are implications, based on a dialogue with also expected in the evolution of dis- all stakeholders. We are confident that cussions on the New Gas Law, which sharing the challenges that the shift in- has huge potential to add to the indus- volves will lead to equally collaborative try’s dynamics and improve integration solutions over the coming years. between gas and electric energy.

We know that transformations needed We remain focused on building the fu- for the energy transition will continue ture. Making the environment more fa- to require the energy industry to adapt, vorable for business will be key to the mobilizing agents in the public and pri- Brazilian economy’s recovery, clearing vate sectors. In 2020, we made im- the path towards growth. ENGIE Bra- portant regulatory gains, such as Pro- sil Energia has complete confidence in visional Measure 998, which created the country’s potential for sustainable the conditions to move ahead with the development and, as we proved in this modernization of the Brazilian elec- atypical year of 2020, is ready to con- tric industry, making it more sustain- tribute to overcoming the challenges Maurício Stolle Bähr Eduardo Antonio able and competitive, and Law 14052, facing the future with integrity, cour- Chairman of the Board Gori Sattamini which put an end to the short-term age and responsibility. of Directors Chief Executive and Investor market’s paralysis by providing a defin- Relations Officer Good reading!

6 / 140 HIGHLIGHTS for thefirst time. Efficient Index (ICO2) of B3, Component of 2021’s Carbon 16 Index (ISE)of B3–for the Corporate Sustainability Component of 2021’s the advent of theISE. th consecutive year, from RECEIVED IN2020 AWARDS RECOGNITIONSAND Istoé Dinheiro magazine. da Dinheiro Award, hosted by Industry inthe Best Company intheEnergy magazine Globo’s Época Negócios Award, sponsored by Editora Sector, Época Negócios 360º Best Company intheEnergy For thesecond year inarow, . As Melhores As for the11 revenues upto R$8billion”, “companiesnet with (Anefac) Accounting Executives Administration and Association of Finance, Trophy of theNational Winner of theTransparency – category th time. SUSTAINABILITY REPORT 2020 7 / 140

SUSTAINABILITY REPORT 2020

Expressão Ecology Awards – Ranked by the Institutional Investor magazine(Electric & Other Utilities – Latin America), as follows: private-sector clean energies th category – hosted for the 27 time by publishers Editora st winners index overall st place overall and sell-side st place overall and sell-side Expressão, with the project “Lages 1 ENGIE Brasil Energia 1 Best CEO 1 Best IR Companies Co-Generation Unit: an example of the transformative potential of the place overall and sell-side place overall, sell side e buy side circular economy and of renewable nd st energy generation”. 2 Best CFO 1 Best ESG metrics

st place overall e sell-side st place overall and buy-side 2020 Citizen Company Award 1 Best Analyst Day 1 Best IR professional from the Santa Catarina Chapter of the Brazilian Sales and Marketing Managers’ Association (ADVB/SC). The Company was recognized in two categories: Highlight of the ALAS20 (Agenda Líderes Sustentables 2020), a Latin-American initiative that reviews Community Outreach with the sustainable development and corporate governance-related practices. Among Brazilian companies, ENGIE case “Community-support actions Brasil Energia was recognized as follows: facing the pandemic”, and Cultural Development, with the case “Culture and Sustainability Centers”. th “Investor relations rd “Sustainability rd “Corporate governance 4 leaders” 3 leaders” 3 leaders” 8 / 140 SUSTAINABILITY TRACKING INDICATORS Change Change REPORT [GRI 102-7] Indicators 2020 2019 2018 2020/2019 2020/2018 2020

Change Change Shares (R$) Indicators 2020 2019 2018 2020/2019 2020/2018 Net earnings per share 2.47** 2.83 2.79 -12.7% -11.5% Operational and commercial Average price per share – ON * 42.57 40.90 25.95 4.1% 64.0% Operating plants 60 60 41 0 19 Dividends per share 2.47** 1.53 2.79 61.4% -11.5% Total installed operating capacity (MW) 10,431.20 10,431.20 9,725.50 0.0 7.3% * Average closing price, daily averages. Total own installed capacity (MW) 8,710.50 8,710.50 8,004.80 0.0 8.8% ** Ex- the effects of hydrological risk renegotiation. Own installed capacity from renewable sources (MW) 7,508.50 7,508.50 7,147.80 0.0 5.0% Own installed capacity from renewable sources (%) 86.2 86.2 89.3 0.0 -3.1 p.p. Environmental Energy selling (average MW) 37,889 37,925 36,411 -0.1% 4.1% Donation and planting of seedlings (thousands) 360 404 414 -10.9% -13.0% Average net sales price (R$/MWh) 4,313 4,329 4,157 -0.4% 3.8% Plant visitors (thousands) 33 90 106 -63.3% -68.9% Energy selling (average MW) 193.8 189.5 181.2 2.3% 7.0% Water consumption (millions of liters) 459,275.3 426,629.6 493,096.6 7.3% -6.9% Number of consumers from free market (ACL) 720 621 515 15.9% 39.8% Waste generated (millions of tons) 2.526 2.064 1.447 22.4% 74.6% Installed capacity – ENGIE Geração Solar Distribuída (kWp) 17,824 20,014 10,059 -10.9% 77.2% Percentage of waste recovered (%) 82.9% 69.4% 99.9% 13.5 p.p. -17.0 p.p. CO emissions per energy 2 256.1 190.0 184.7 34.8% 38.7% generated – Operational Control (kgCO2/MWh)

CO2 emissions per energy generated – Corporate

Economic-financial (R$ million) [GRI-201-1] Participation (kgCO2/MWh) 211.4 152.4 145.0 38.7% 45.8% Total Assets 35,186.2 30,135.5 23,735.5 16.8% 48.2% Shareholder’s equity 7,741.9 6,998.8 6,320.6 10.6% 22.5% Human capital Net revenue from sales 12,259.2 9,804.5 8,794.8 25.0% 39.4% Number of employees at ENGIE Brasil Energia 1,538 1,398 1,337 10.0% 15.0% Net income 2,797.3 2,311.1 2,315.4 21.0% 20.8% (as at December 31) Ebitda 6,484.5 5,158.2 4,367.6 25.7% 48.5% Percentage of women in the workforce 19.9% 19.1% 18.6% 0.8 p,p, 1.3 p,p, Total debt (loans, financing and debentures) 9,498.3 15.5% 75.5% Investment in training and 16,672.2 14,437.0 3.8 5.6 4.5 -32.1% -15.6% Net debt 11,786.4 10,191.8 6,856.3 15.6% 71.9% professional development (R$ million) ROIC* (%) 22.7 20.8 23.0 1.9 p.p. -0.3 p.p. Total number of hours of training 66,064 74,986 83,124 -11.9% -20.5% Number of occupational accidents and accidents Net debt/Ebitda 1.8 2.0 1.6 -0.2 0.2 5 7 3 with employees commuting to and from work Investments 4,013.1 4,903.0 3,452.1 -18.2% 16.3% Frequency Rate (FR) – direct employees* 0.41 0.00 0.97 * ROIC: effective tax rate x EBIT / invested capital (invested capital: debt – cash and cash equivalents – deposits earmarked for debt servicing + SE). Frequency Rate (FR) – direct employees + long- 0.62 1.72 1.39 term service providers* Accident frequency rate (FR) for out-sourced short 0.78 0.63 1.64 Investments in social responsibility programs term suppliers + construction work * Non-incentivized investments (R$ thousand) 7,504.2 4,034.6 3,497.0 86.0% 114.6% * FR: number of workplace related accidents for every million hours of exposure to hazards. Incentivized investments – Infancy and Adolescence Fund. Culture Incentive Law. Law for Sport. Health and 15,129.7 21,841.0 16,880.3 -30.7% -10.4% others – (R$ thousand)

9 / 140 SUMMARY 4 3 2 1 Performance 56 The Company 11 Strategy 28 Context and Governance 20 Corporate Economic-financial Performance 63 Operational Performance 59 Macroeconomic Scenario 57 Risk and opportunities management 51 Risk andopportunitiesmanagement Competitive Strategy 33 Markets andSegments 29 Sustainability Governance 26 Policies andCommitments 23 Governance Structure 21 Our Business 15 Corporate Profile 12 7 6 5 The Report 119 Planet 100 People 75 Supplementary brochure 131 Independent Verification127 Statement GRI/SASB Summary 123 Material Topics Definition 122 Stakeholder outreach Reporting profile 120 Atmospheric Emissions 115 Waste 114 Energy 113 Water andEffluents 111 Biodiversity 103 Investors 98 Clients 97 Suppliers 95 Communities 86 Employees 77 120 SUSTAINABILITY REPORT The Company 2020

Present in 2,800 kilometers

22 years’ 21 Federative of transmission lines presence in Units (under construction) Brazil ENGIE and CDPQ completed the acquisition of the remaining 10% equity stake in TAG, in the amount of R$ 1 million. TAG thus 4,500 becomes the first 100% private- kilometers sector natural gas transportation of gas pipelines company in Brazil

Purpose plants 60 in operation To act to accelerate the transition towards Corporate Profile a carbon-neutral economy, through reduced Our Business energy consumption 10,431.2 MW 8,710.5 MW and more environmen- Total installed Own installed capacity capacity tally-friendly solutions.

Renewable energy 86.2%

11 / 140 SUSTAINABILITY REPORT At the end of 2020, the Company´s capital stock amounted R$ 4,903 million, a 2020 Corporate profile total of 815.927.740 common shares trading regularly on B3. The Company is [2030 Agenda Goal: 16.6] also present in the United States over-the-counter market, where Level I American Depositary Receipts (ADRs) are traded under the EGIEY symbol at a ratio of one The Company ADR for every common share. [GRI 102-1; 102-2; 102-3; 102-5; 102-6; 102-7; 102-16]

resent in Brazil for 22 years, ENGIE Brasil Energia S.A. (“ENGIE Brasil En- MISSION: ergia” or “Company”) acts as an energy infrastructure operator whose Provide innovative and sustainable activities break down into centralized and distributed generation, sales, solutions in energy. trading, and transmission. In 2019, it also began to operate in the natural Pgas transportation sector after acquiring a stake in Transportadora Associada de Gás (TAG). Taken together, all projects directly operate in 21 Brazilian states. VISION: Transform people’s relationship with Shareholding structure energy aiming at a sustainable world.

VALUES: ENGIE Brasil Participacões Ltda. 68.71% Banco Clássico S.A. Professionalism, sense of partnership, Others teamwork, creation of value, respect for the environment, ethics. 21.43% 9.86%

12 / 140 SUSTAINABILITY REPORT Controlling entity 2020

ENGIE Brasil Energia’s controlling shareholder is ENGIE Brasil Participações (“EBP”, or “ENGIE Brasil”), which also holds a 40% stake in Jirau Energia – the concession holder for the Jirau Hydroelectric Plant. Offering integrated solutions to business- Purpose es and cities, ENGIE Brasil operates domestically with a focus on energy, telecom- To act to accelerate the transition to a carbon-neutral munications, public lighting, safety and security, and urban mobility. society, through reduced energy consumption and more environmentally-friendly solutions. At the global level, ENGIE S.A. (“ENGIE”) – with registered offices in France and present in approximately 70 countries – employs approximately 170 thousand on five continents, with 101.0 GW in installed capacity for electric energy, of which 52% come from natural gas and 31% from renewables.

In May 2020, the shareholders of ENGIE S.A. approved the Group’s Purpose State- ment and its inclusion in the organization’s Bylaws. As the product of a robust consultation process involving stakeholders around the world, ENGIE’s purpose reconciles economic performance and a positive impact on people and the plan- People Planet Performance et, so that the company’s actions can be evaluated holistically and at all times. To contribute to To contribute to To reconcile a better quality of the envirnment by positive impact life for all people, reducing energy no the planet through solutions consumption and people Purpose ENGIE that reduce the and offering with business carbon footprints more sustainable performance. Find out more by clicking here. of cities, local solutions. authorities and businesses. The following infographic shows ENGIE’s purpose and its key pillars.

13 / 140 SUSTAINABILITY REPORT 2020 Corporate structure Corporate structure* (as at 12.31.2020)

As the following infographic shows, ENGIE Brasil Energia controls subsidiaries and also maintains stakes in plant con- ENGIE S.A cession consortia in its generator complex. In 2019, the

main corporate changes were the increased equity stake 99,12% in TAG, from 29.25% to 32.5% and the inclusion of Novo Enegy International Estado Transmissora de Energia (Find out more in the “Context and Strategy” chapter). 100,00% EGIEY ADR Brasil Participações Ltda. NÍVEL I

100.00% 40.00% 68.71% 100.00% Geramamoré Part. e Comerc. ENGIE Brasil de Energia ENGIE Jirau Energia Energia Soluções

100.00% 48.75% 100.00% 100.00% 100.00% 100.00% 100.00% 99.99% 100.00% 32.50% 99.99% ENGIE Companhia ITASA Pampa Companhia Brasil Energias Companhia Lages Brasil Energias Geração Solar Transmissão Energética Estreito Itá Energética S.A. Sul Energética Jaguara Complementares Energética Miranda Bioenergética Comercializadora Distribuoída de Energia II

40.07% 100.00% 100.00% 95.00% 100.00% 100.00% 100.00% 100.00% 100.00% 99.90% 100.00% 81.44%

CESTE Ibitiúva Energias Energias Gralha Azul Novo Estado Tupan Hidropower Ferrari Campo Largo Assú V Umburanas Consórcio Bioenergética Eólicas do Eólicas do Transmissão Transmissora Estreito Energia Nordeste Ceará de Energia S.A. de Energia

* Simplified structure. 14 / 140 SUSTAINABILITY REPORT Our 2020 business Centralized Generation • 60 operated power plants. [GRI 102-2; 102-4; G4-EU1] • 8,710.5 MW own installed capacity. [2030 Agenda Goals: 7.2, 7.3, 9.4, 16.6] • 6.2% of Brazil´s installed capacity.

ENGIE Brasil Energia’s business model Transmission (under construction) reflects our commitment to a car- • 2,800 km of transmission lines. bon-neutral economy, proposing evo- • 6 new substations. lutions for the energy supply and consumption dynamics that contribute to Gas Transportation a more sustainable future. In addition • 32.5% EBE equity stake in the Company (TAG). to de-carbonization, the model’s axes • 4,500km of gas pipelines in operation in the include the digitalization process – Southeast, Northeast and North regions. Operating • 47% of the Brazil’s gas transmission capacity. which gained a strong boost given the segments of global context in 2020 – and energy ENGIE Brasil supply decentralization. The Company Energia therefore prioritizes energy genera- Distributed Solar Generation tion from renewable sources and • 2,598 photovoltaic systems installed since 2016, which corresponds to a increasingly incorporates the offering 53.8 MWp of installed capacity. of integrated and innovative solutions Trading to meet society’s demands towards • Beginning of operations in 2018. sustainable development. • 5,893 GWh of energy sold, which corresponds to 13.5% of the total commercialized.

15 / 140 SUSTAINABILITY Assets breakdown REPORT (as at 31.12.2020) 2020 Total Total Own installed Own physical Expiration of Expiration of installed physical Ownership capacity guarantee concession/ Size Ownership Compression stations concession/ capacity guarantee (MW) (aMW) authorization1 authorization (MW) (aMW) Gas Pipelines Hydroelectric power plants Transportadora From 2039 to 1 Salto Santiago 1,420.0 733.3 100% 1,420.0 733.3 09.27.2028 25 4,500 km 32.5% 11 Associada de Gás (TAG) 2041 2 Itá 1,450.0 740.5 69.0% 1,126.9 564.7 10.16.2030 Total Total Own installed Own physical Expiration of 3 Salto Osório 1,078.0 502.6 100% 1,078.0 502.6 09.27.2028 installed physical Ownership capacity guarantee concession/ 4 Cana Brava 450.0 260.8 100% 450.0 260.8 08.26.2033 capacity guarantee (MW) (aMW) authorization 5 Estreito 1,087.0 641.1 40.1% 435.6 256.9 11.26.2037 (MW) (aMW) 6 Jaguara 424.0 341.0 100% 424.0 341.0 12.28.2047 Expanssion - Generation 7 Miranda 408.0 198.2 100% 408.0 198.2 12.28.2047 6 8 Machadinho 1,140.0 547.1 19.3% 403.9 165.3 07.14.2032 26 Jirau (Hydro) 3,750.0 2,212.6 40% 1,500.0 884.6 08.13.2043 Conjunto Eólico Campo 9 São Salvador 243.2 148.2 100% 243.2 148.2 04.22.2037 27 361.2 192.5 100% 361.2 192.5 12.10.2054 Largo II (Wind) 10 Passo Fundo 226.0 113.1 100% 226.0 113.1 09.27.2028 Expiration of 11 Ponte de Pedra 176.1 133.6 100% 176.1 133.6 09.30.2034 Size Ownership Substation concession/ Total 8,102.3 4,359.5 6,391.7 3,417.7 authorization Thermoelectric power plants Expanssion - Transmission 122 Jorge Lacerda Complex 857.0 649.9 100% 857.0 649.9 09.27.2028 28 Gralha Azul 1,000 km 100% 5 03.2048 13 Pampa Sul 345.0 323.5 100% 345.0 323.5 03.30.2050 29 Novo Estado 1,800 km 100% 1 03.2048 Total 1,202.0 973.4 1,202.0 973.4 Complementary power plants Umburanas Complex - 143 360.0 213.3 100% 360.0 213.3 08.03.2050 Phase I (Wind) Campo Largo Complex (1) Does not consider the extension of 154 326.7 166.5 100% 326.7 166.5 08.03.2050 (Wind) concessions of certain plants, resulting 165 Trairi Complex (Wind) 212.6 100.8 100% 212.6 100.8 02.04.2045 from adherence to the renegotiation of 17 Ferrari (Biomass) 80.5 35.6 100% 80.5 35.6 07.26.2042 the hydrological risk referred to in Law No. 18 Assu V (Solar) 30.0 9.2 100% 30.0 9.2 06.07.2051 14.052/2020. 19 Lages (Biomass) 28.0 16.5 100% 28.0 16.5 10.28.2032 (2) Complex made up of 3 plants. 20 Rondonópolis (SHP) 26.6 14.0 100% 26.6 14.0 12.18.2032 (3) Complex made up of 18 wind farms. 21 José G. da Rocha (SHP) 24.4 11.9 100% 24.4 11.9 12.18.2032 22 Ibitiúva (Biomass) 33.0 17.3 69.3% 22.9 12.0 04.05.2030 (4) Complex made up of 11 wind farms. Nova Aurora R&D not 23 3.0 100% 3.0 not applicable not applicable (5) Complex made up of 8 wind farms. (Solar) applicable not (6) ) The transfer of the 40% stake of ENGIE 24 Tubarão R&D (Wind) 2.1 100% 2.1 not applicable not applicable applicable Brasil Part. in Jirau HPP to the Company Total 1,126.9 585.1 1,116.8 579.8 should be examined timely. General total 10,431.2 5,918.0 8,710.5 4,970.9 16 / 140 SUSTAINABILITY REPORT Centralized generation 2020

At the end of 2020, ENGIE Brasil Ener- market probes. Concerning the Jorge due diligence process to be completed gia operated a generation complex with Lacerda Thermal Complex, a Working by June 2021. The Pampa Sul Thermal an installed capacity of 10,431.2 MW, Group made up of employees from var- Power Plant, by its turn, will see intensi- composed of 60 plants – 11 hydroelec- ious areas has been formed to better fied commercial probes for disposal this tric plants, four conventional thermo- articulate the process with authorities, year – a process that was proceeding at electric plants and 45 complementary trade partners and communities. In Feb- a more leisurely pace thus far because of plants: two Small Hydroelectric Plants ruary 2021, subsequent to the facts dis- the asset’s ongoing construction activi- (SHP), 38 wind plants, three biomass cussed in this Report, a proponent began ties and operational tests. and two solar photovoltaic. Of these evaluating the asset for disposal, in a ventures, 56 are wholly owned by the Company – in the others, it participates in consortia that own the concession or ENGIE Brasil Energia energy matrix grant. Thus, the total installed capacity (Proprietary installed capacity) at the end of 2020 was 8.710,5 MW, in a matrix formed predominantly by renewable sources (86.2% of total).

Due to our commitment to de-car- Hydroelectrics 73.4% Complementaries bonizing our portfolio, the study of Thermoelectrics alternatives for the Jorge Lacerda Ther- mal Complex (SC) and the Pampa Sul Thermal Power Plant (RS) continued 13.8% 12.8% underway, including as-yet inconclusive

17 / 140 SUSTAINABILITY REPORT Distributed solar generation 2020

[GRI 103-1; 103-2; 103-3] [SASB IF-EU-420a.2]

The Company has operated in the dis- Thus, the solution offered to the mar- tributed generation market since 2016 ket by the Company is complete: from through ENGIE Geração Solar Dis- the feasibility assessment to the mainte- tribuida S.A. (“EGSD”). The presence nance of the installed system, including Number of installed in the distributed solar generation seg- the design of the project, the interface systems and capacity ment is a strategic move, contributing with the concessionaire and the monitor- to a more dynamic energy matrix and ing of performance. In 2020, stood out 20,014 666 closer to the final consumer. the remote generation projects, in which EGSD performs investments and rents 17,824 the deployed infrastructure for customers (energy as a service model). 459

Focused on the B2B segment, this type of 10,059 contracting corresponded to 92% of the 185 2,598 power sold in the year, strengthening the distributed solar Company’s relationship with large com- generation systems panies - which contributes to consolidate implemented since the the Group’s strategy. Since the beginning beginning of EGSD. 2018 2019 2020 of its operations, EGSD has reached the mark of 2,598 deployed systems, totaling Installed systems 53.8 MWp of installed capacity. Installed capacity (kWp)

18 / 140 SUSTAINABILITY REPORT Natural gas transportation 2020

Transportadora Associada de Gás S.A. – Jointly with the existing partners, a subsidiary of ENGIE S.A. and Caísse de Dépôt (TAG) is the responsible for the largest et Placement du Quebec (CDPQ), in July EBE acquired the remaining 10% minority natural gas transportation natural opera- stake still in the hands of Petrobras and worth R$ 1,006.7 million, so that the Com- tion in Brazil, with 4,500 km of high pres- pany now holds a total of 32.5% of TAG’s shares. sure gas pipelines extending along the country’s southeastern and northeastern seaboards as well as a further section of Corporate structure - TAG line between Urucu and Manaus, in the state of Amazonas, crossing 10 Brazilian states and around 180 municipalities.

The gas pipeline network has several inter- 32.5% 32.5% 35.0% connection points, among them, 10 gas distributors, ENGIE S.A. ENGIE Brasil Energia 13 active gas entry points (including ENGIE Brasil Energia’s presence into the natural gas segment in Brazil is in line with the two Liquefied Natural Group`s global strategy of being a leader in the energy transition. This requires large Gas (LNG) terminals) scale and sophisticated infrastructure such as TAG`s gas pipelines, contributing to the and a further 90 gas business diversification and decarbonization of the Brazilian energy mix. exit points as well as 11 compressor stations for supplying refineries, fertilizer TAG is significantly contracted – around 99% - for an average term of approximately plants and thermoelectric power plants. 10 years through current agreements with Petróleo Brasileiro S.A. (Petrobras).

19 / 140 SUSTAINABILITY REPORT Corporate 2020 governance Creation of ENGIE Brasil Energia’s Disclosure of priority Audit Multi-Annual Non-Financial Committee Sustainability Plan Objectives installed, strengthening until 2030 the Company’s compliance mechanisms ISO 37001 ENGIE Brasil certified for Anti-Bribery Intensive Management Systems dissemination of the active Whistleblower Channel

Management structure 100% Policies and Skills programs commitments ZERO for all employees for recycling on Sustainability corruption allegations ethical tenets received in 20200 Governance 20 / 140 SUSTAINABILITY REPORT Management structure 2020 [2030 Agenda Goals: 16.5, 16.6]

thics and integrity drive ENGIE matters related to risk management, Brasil Energia’s business and ethics, internal controls, compliance relationships. The Company and internal and external auditing, as strives to ensure shareholders’ suggested by the latest guidelines for Erights, the transparency of its actions, this B3 listing segment. and risk mitigation towards sustainable growth. To this end, we act in line In addition,ENGIE Brasil’s ISO 37001 with best governance practices, such certification has been ratified. The as those in the Brazilian Corporate Go- standard evaluates the requirements vernance Code, and are listed in the for and provides guidance towards Novo Mercado – a B3 listing segment establishing, implementing, maintain- made up of companies with more rigo- ing, reviewing and improving the cor- rous corporate rules that enhance the porate anti-bribery system. rights of minority shareholders. Each year, the Company publishes Over the course of 2020, we contin- its Report on the Brazilian Corporate ued to work on adapting to the Novo Governance Code, in which it dis- Mercado rules changes. To this end, closes what principles and practices The Report is available on our Web- ENGIE Brasil Energia’s governance in May, the Board of Directors formed prescribed in the document are fol- site — https://www.engie.com.br/en/ practices, and is regularly reviewed the Audit Committee — made up of lowed internally – those that are not investors/corporate-governance/. It is by the Board of Directors as a means three members, two of which are inde- require justification under the “com- also worth emphasizing that the Code for monitoring and reflecting on cor- pendent – to advise the Directors on ply or explain” principle. supports the continued evolution of porate conduct.

21 / 140 SUSTAINABILITY REPORT 2020 Administration structure

[GRI 102-18; 102-22] Management Organization Chart (as at 12.31.2020) Shareholders’ Meeting The General Shareholders’ Meeting Fiscal is the most senior deliberative body Council in ENGIE Brasil Energia’s governance Board of Directores structure, followed by the Board of Directors and the Management Board. Special Independent Statutory Audit Committee for Related Committee The composition and duties of the Parties Transactions corporate governance bodies may be Internal viewed on our Website. Audit Presidency and Investor Relations

Internal Controls Legal Investor and Compliance Affairs Relations

Business Development, Regulation Energy Trading Generation Financial Administrative Strategy and and Market Office Officer Officer Officer Innovation Officer Officer

Non-permanent structure. Its installation is extraordinary, subject to the call of the respective body to which it reports. Comprises the Management Board.

22 / 140 SUSTAINABILITY REPORT Policies and commitments 2020 [2030 AGENDA GOALS: 10.4, 16.5, 16.6, 16.B]

ur ovalues and orga- • Policy for Combating Corruption and • Trading and Disclosure Policy: lays Members: these were published in nizational culture are Bribery: establishes the commitment down practices for disclosure and 2019 and aim to add transparency enshrined in codes and to comply with all the laws for pre- the use of corporate information as to the Company’s top-manage- policies which when vali- vention of corruption and bribery in well as for the trading of securities ment activities and procedures. Odated by the Board of Directors, provide the conducting of the businesses. issued by ENGIE Brasil Energia, guidance for conducting the businesses such as shares and debentures. • Personal Data Privacy and Protec- and the relationship with the different • Sustainable Management Policy: tion Policy: In line with Law No. stakeholders with which we interact. eexpresses the Company’s guide- • Risks and Opportunities Management 13.709/2018, also referred to as lines with respect to quality, energy Policy: aims to maintain and enhance the General Data Protection Law The policies and codes which we share management, environment, climate the Company’s value, reputation and (“Lei Geral de Proteção de Dados” with our value chain and which therefore change, occupational health and internal motivation, encouraging the – LGPD) and European Regulation are made public through our website, are: safety, social responsibility and taking of legally reasonable risks that EU 2016/679, the Policy stab- stakeholder engagement. are deemed acceptable and eco- lishes principles, standards and • Ethics Code and Practical Guide to Eth- nomically viable. responsibilities governing the safe ics: a series of fundamental principles • Human Rights Policy: establishes use and storage of individual or to be followed by all who directly or commitments and guidelines fo- • Policies for the Appointment, corporate information to which indirectly are involved in actions of cusing on the Company’s projects, Compensation and Evaluation of the Company may have access responsibility at the Company. operations and value chain. Directors, Officers and Committee based on its interactions.

• Investments and Derivatives Policy: establishes the criteria for in- Policies vesting available resources in the financial market and limits on the All the mentioned policies can be accessed by clicking here. use of derivatives. 23 / 140 SUSTAINABILITY REPORT Ethics and integrity 2020

[GRI 102-16; 102-17; 103-1; 103-2; 103-3; 205-1, 205-3; 412-3]

In line with the principle of integrity, the Code of Ethics and the Anti-Corruption and Bribery Policy define the guidelines In 2020, all employees for the relations established between underwent training and ENGIE Brasil Energia and the various stakeholders with which it interacts. recycling in ethical precepts. In addition, managers and employees are provided with guides with specific approaches, such as the Gift and Hos-

pitality Procedure, the Guide to Rela- To strengthen the compliance culture, the pandemic. before recorded Image tionship with Business Consultants, the we also rely on regular practices for the Guide to Ethics in Supplier Relation- prevention and verification of risk situ- Personal Data and Privacy and Personal cial online event took place on Decem- ships and the recently launched Privacy ations and inappropriate facts, such as Data Policy, (iii) Fraud, Corruption and ber 9 to celebrate the International and Data Protection Policy Personal. due diligence processes, audits, train- Zero Tolerance and (iv) Human Rights. Anti-Corruption Day. At each of these ing and awareness actions, contractual A fifth track, on Competition Law, was opportunities to interact, the Company provisions and an internal activities offered on a non-mandatory basis. reinforced dissemination of the whis- control program of the Company. In tleblower channel (see next), encour- 2020, all employees underwent training Furthermore, additional lectures and aging employees to use the platform and recycling in ethical precepts, subdi- discussions have been delivered and and to check with their managers to vided into four tracks of knowledge: (i) held on ethics and related topics, such clear doubts on the application of cor- Our Group, Our Ethics, (ii) Protection of as workplace harassment, and a spe- porate policies for this matter.

24 / 140 SUSTAINABILITY REPORT 2020 Meticulous evaluation of investment All of these actions contributed agreements or contracts to ENGIE earning, in 2020, its ISO 37001 certification for Anti-Bribery As per ENGIE’s due diligence policy, every project that the Company Management Systems. develops or acquires must undergo ethics due diligence, including analysis of exposure to Human Rights-related risks. Doubts or allegations

After the process, any risks identified are analyzed by ENGIE Brasil’s Ethics The Company has since 2019 main- and Compliance area and shared, together with any relevant recommen- tained an outside channel for ethics-re- dations, with the teams involved – which may in certain cases include the lated reports or allegations. It supple- Ethics Compliance and Privacy Department of ENGIE (France). ments the internal tools dedicated to the area. Access is available by means of Some of the main transactions covered include: the Website https://www.canalintegro. com.br/EngieBrasilEng or by telephone • Acquisition and disposal of projects or assets (goods, rights and at +55 0800 580 2586 (toll-free). equity) from or to third parties (including developers of projects undergoing transfer to the Company); All of the situations reported are cov- • Partnerships/joint ventures; ered by strict secrecy, with guaran- • Retainer of Engineering, Procurement and Construction (EPC) teed non-retaliation. Regardless of the and civil construction services; channel used, all reports and claims are • Business consultancy; investigated by ENGIE Brasil Energia’s • Land leases; and Ethics No allegations of corruption • Retainer of intermediaries. were received in 2020.

25 / 140 SUSTAINABILITY REPORT Sustainability governance 2020 [2030 Agenda Goal: 16.6]

s a means to foster align- In 2020, ENGIE disclosed its priority non-financial objectives to be attained by 2030. ment between business They are as follows: views and the demands inherent to sustainable Adevelopment, both globally and locally, ENGIE adds non-financial objectives. to economic performance goals. With a focus on people and the planet, these goals also drive the corporate strategy, side by side with financial aspects. They thus reinforce out contribution to sustainability ba- Reduction Increase Increase sed on initiatives specifically targeted to 43 Mt of total gas emissions the share of women in Group the share of renewable sources in on renewable energy generation, the from electric energy generation management roles to 50% – in the worldwide energy production promotion of gender equality, and the – in 2019, for example, the total 2019, they held 29% of leader- mix to 58% – from 28% in 2019. fight against climate change. was 80 Mt. ship positions.

ENGIE’s managers worldwide monitor and report on these and other non-financial objectives systematically. At ENGIE Brasil Energia, an action plan is underway, carried out by several areas to contribute effectively to the Group’s targets on the global level.

26 / 140 SUSTAINABILITY REPORT 2020 Non-financial In line with the non-financial objectives, in 2020 the Company’s Sustainability Forum prepared a Multi-Annual Sustainability Plan that is the product of a comprehensive consultations process with internal and external stakeholders, as well as macro trends objectives and and benchmarkings. The purpose of the plan is to drive improvements, from incremental ones to those of the greatest strategic compensation relevance, facilitating communication with and effective engagement of the publics with which the Company relates.

In addition to a portion pegged to financial objectives, executives’ Sustainability Plan Shared organizational culture short-term variable compensation (bonus) is set based on ENGIE’s To engage stakeholders in aspects relative to the energy transition and sustainable value generation. competencies and values. One element of competencies evaluation is executive engagement in Innovation and market attaining non-financial objectives, To act as a promoter of the energy transition, among other environmental, offering sustainable and innovative solutions Governance To strengthen the culture social and governance aspects, with high value added to all parties, serving the and drive the integrated market in a competitive way. Act with integrity and such as ethics and corporate sustainability practice to transparency in all its management requirements. build the Company’s strategy activities, as well as in in value generation alongside Climate and environment the management of the with stakeholders. The long-term variable compensa- To foster the sustainable use of natural resources to Sustainability Plan. tion, by its turn, is directly affected minimize environmental impacts and promote a low- carbon economy in the energy transition process. by the attainment of non-financial objectives, with previously established goals and deadlines that Social responsibility reflect directly on the incentives. To promote social transformation and empower communities and partners by means of local development, education and culture.

27 / 140 SUSTAINABILITY REPORT Strategy 2020 and context INNOVATIVE FREE ENERGY MARKET (ACL) SOLUTIONS: Positive Business Energy Place and E-conomiza Prospects with a trend towards expansion of the free electric energy and natural Registration of the Campo gas market, along with the global Largo II Wind Complex’s energy transition context carbon credits project as a Clean Development Mechanism (CDM)

134% R$ 56.7 growth in own installed million allocated to the Research capacity in 1998-2020 &Development Program

Progress on projects underway (12/31/2020) Markets and 75% Segments Gralha Azul Transmission System Competitive 72,4% Strategies Campo Largo II Wind Complex 54% Risk and opportunities Novo Estado Transmission System

management 28 / 140 SUSTAINABILITY REPORT 2020

Markets and segments [GRI 103-1; 103-2; 103-3; 201-2] [2030 Agenda Goals: 7.2, 7.3, 9.4, 13.3]

tructural changes in energy systems, which characterize the so-called energy transition, have been driving businesses and governments to pursue a balance between expanded access to energy and climate-change mitigation — based on an understanding that climate change directly Simpacts socio-economic development. The manner according to which risks related to this topic are managed is discussed in greater detail in the “Risk and opportunities management” topic.

The following infographic shows a few concepts, trends and opportunities associated with the energy transition, as well as their reflections on society.

29 / 140 Energy transition SUSTAINABILITY [2030 Agenda Goals: 7.2, 7.3, 9.4, 13.3] REPORT 2020 Current scenario Future scenario

Trends and challenges The projected transformation

DECARBONIZATION: The pursuit of sustainable development requires society Cleaner matrix: Reduced use of fossil fuels minimizes greenhouse gas emissions, to steer its activities towards a low-carbon economy. In addition to changing the helping fight climate change. energy matrix as a means to replace fossil fuels, the process requires individual habit changes, as well as changes to business models. “Prosumer”: Individuals or companies generating their own energy become producers and consumers at once (or “prosumers”). There is even the potential for them Challenge: Intermittent generation to choose whom to sell their energy to - and at what price. Why? Dependence on the instant availability of natural resources (sunlight and wind) for solar and wind generation requires complementary solutions to Energy Cloud: The additional energy generated by a home, for example, can be maintain ‘round-the-clock quality energy supply. injected into the grid and allocated to another consumer anywhere by means of an online dealing platform. DECENTRALIZATION: The use of photovoltaic solar panels and other distributed energy resources allows individuals or companies anywhere to autonomously generate electric Real-time information: With smart meters and communication systems, energy price energy at competitive costs. This implies revising the traditional remuneration model for changes can be transmitted to consumers almost immediately, which enables encouraging essential services, fostering innovative business models. consumption at times of surplus generation and, by the same token, discouraging it at Challenge: New grids times of scarcity, optimizing the system’s balance in real time. Why? Energy currently flows from large power plants into the grid. With Smart products: The Internet of things allows programming devices to consume decentralized generation, girds become active with two-way transmission, making energy when the input is cheapest. Or, similarly, to shut down automatically when operation more complex – they need to include smart control systems with intense prices increase. communication and data supervision.

DIGITALIZATION: New technologies – particular emphasis on mobile devices, the Internet of Things, and Big Data – enable efficiency gains and the automation of At the national level, two trends are gaining increasing traction, under the indirect energy-related systems for the purposes of cost-cutting and operational flexibility. Challenge: Investments influence of the energy transition: the opening-up of the natural gas sector; and the Why? Every party involved in energy generation and consumption (government, gradual decrease in minimum consumption for access to the free electric energy mar- individuals, companies) will need to upgrade the energy infrastructure and to invest ket (ACL). Given this context, we are positioning ourselves to maximize the opportu- in new communication and control systems and technological solutions. nities created by these expansionary shifts, even as we minimize the associated risks.

30 / 140 SUSTAINABILITY REPORT 2020 Free Energy Market Expansion

Trend: The Free Energy Market’s growth stems from Objectives: increased access to the Free Energy market is expected to increase the participation of new several factors, two of which are particularly notewor- players (suppliers and consumers), generating increased liquidity and competitiveness and, thereby, thy. The former concerns regulation. According to the lower prices compared with those of the Regulated Contracting Environment (ACR), in addition to existing rules, the free contracting environment is open enhanced socio-environmental appeal, as it enables offerings pegged to renewable sources and trace- to customers consuming over 0.5 MW for incentivized able socio-environmental attributes. energy (with a focus on the expansion of renewable sources) and over 1.5 MW for conventional energy. Bills on the topic, within the context of the reform of Number of consumer agents on the market* 46,750 the Brazilian Energy Industry, are still being analyzed by 38,814 the regulator, leaving a possibility open for a reduction in consumption parameters in the coming years. 25,469

20,747 The latter factor is of an economic and commer- 15,768 cial nature. Given the negotiation flexibility that is 12,703 9,955 the mark of the Free Market, acquiring energy in 8,023 5,819 6,142 4,062 5,192 this environment enables customized offerings that 1,755 1,791 1,826 648 665 940 1,101 1,577 match customers’ effective needs, which usually generates cost savings on the input. This also allows 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 abr/19 2020 2021 2022 2023 2024 2025 2026 2027 pegging offerings to certain energy sources, so that customers may be associated with renewable energy *Estimated number of consumers on the market considers partial migration of the potential (eligible) market. sources alone, if they so wish.

31 / 140 SUSTAINABILITY REPORT Liberalization of the 2020 natural gas industry

Trend: The Brazilian natural gas market Goals: Expansion of Electricity Electricity Matrix is experiencing a period of evolution, 1. Increased number of operators: (GW) 2021 - 2030 in 2030 with a model change from monopo- expanding infrastructure by listic to competitive. The shift stems means of new investments, creat- GW W GW W 5.4 .3 GW G .0 2.0 GW G 1 5 .0 32 2 .5 6 15. from the Government divestment pro- ing liquidity and competitiveness .3 4 GW 0 0 GW 6 1 0 G 1 2.2 GW 9. W gram for the segment – which began and reducing prices to consumers. 1.4 GW 8.0 GW 1.09 GW 3.0 GW GW in 2016 – and reflects a new industry 0.35 GW 1.0 0.28 GW 0.3 GW context characterized by rising sup- 2. System flexibility: According to ply of gas on the international market ENGIE’s strategy, natural gas is he 46.82 GW 196.3 GW at competitive prices. Empresa Bra- strategic fuel for the energy transi- sileira de Pesquisa Energética (EPE) tion, as it enables flexible thermal forecasts indicate that, from 2021 power plants and replaces other to 2030, natural gas is expected to fossil fuels – it is worth mentioning become the fastest-growing electric that increase intermittent genera- HPP Solar HPP Solar energy generation in Brazil, adding up tion (solar and wind) may add insta- Wind Nuclear Wind Nuclear to 16 GW in capacity – as the figure bility to the energy system. Natural Gas Coal Natural Gas Coal Biomass Diesel Biomass Diesel beside shows. In the same period, SHP SHP the Brazilian natural gas production is expected to grow from 73 to 140 Fonte: EPE (Empresa de Pesquisa Energética) M m3/day in the basic scenario.

32 / 140 SUSTAINABILITY REPORT Competitive advantages 2020 [GRI 103-1; 103-2; 103-3] [2030 Agenda Goals: 7.2, 7.3, 9.4, 13.3]

NGIE Brasil Energia strives to We summarize the corporate strategy as three key pillars that complement one another mutually in pursuit of the respond dynamically to ener- corporate objectives: gy transition-related challenges and opportunities, essen- Etial to consolidate the carbon-neutral economy. The Company is attuned to the local and global impacts that industry transformation has been ha- ving on the activities and perceived Commercial and portfolio- Expansion and Innovation and carbon value of businesses in this sector as management dynamism diversification neutral transition (3Ds) well as the attempts to stay ahead of the process in Brazil. Recognized as a • Proper balance of terms, prices, • Growth through acquisitions • Decarbonization. large energy infrastructures operator and market risk management. (capturing opportunities with • Decentralization. results in the short run). • Digitalization. – and supported by its Controlling • Closeness with customers Entity’s energy and energy efficien- through customized offerings • Organic growth cy services expertise –, ENGIE Brasil for different demand profiles (constructivist vision for Energia has a head start in spearhea- and consolidated partnerships. long-term results). ding this transformation.

33 / 140 SUSTAINABILITY REPORT Competitive Advantages 2020

PREMIUM RATING STRATEGIC INDUSTRY Fitch Ratings rated the Company’s Local Long-Term Defensive profile in times crisis Rating as ‘AAA(bra)’ and in global scale “BB”, one notch Projects with high bankability above the Brazilian sovereign rating Diversification among segments in the power sector

HIGH-CALIBER CORPORATE INDUSTRY LEADERSHIP GOVERNANCE AND SUSTAINABILITY Largest independente power producer group Diversified and qualified team in Brazil First class controlling shareholder Market cap: R$35.9 billion in 12/31/2020 Component of B3’s Novo Mercado and ISE Controlled by ENGIE S.A., world leader in (since its inception in 2005) energy

STABLE FINANCIAL PERFORMANCE CLEAR COMMERCIAL STRATEGY Strong cash flow Heavily contracted in the next years ROE and ROIC above sector median Diversified portfolio between free customers No FX exposure and regulated ones Benefits from windows of opportunities

HIGH OPERATIONAL PERFORMANCE CASH FLOW PREDICTABILITY Benchmark indexes of availability Inflation-indexed contracts ISSO 9001, 14001 and OHSAS 18001 certified plants Hydro based, with diversification on complementary Use of advanced technology for remote operations and sources and active portfolio management predictive maintenance Long-term contracting strategy

34 / 140 SUSTAINABILITY REPORT Expansion and diversification 2020

The meticulous selection of investment Trend in own installed capacity projects, funds raising at competitive (in MW) costs, superior planning abilities and execution and implementation disci- pline make the Company’s expansion 2020 8,711 growth of 2019 8,711 one of the core elements of the busi- 134% 2018 8,005 ness strategy. ENGIE Brasil Energia thus 2017 7,678 growth sustainably, maintaining high 2016 7,010 rates of return and accepting appropri- 2015 7,044 2014 ate risks for its corporate profile. 7,027 2013 6,965 2012 6,909 2011 6,908 2010 6,472 2009 6,472 2008 6,188 2007 6,094 2003-2006 5,918 2002 5,890 2001 5,036 2000 4,846 1999 3,719 1998 3,719

35 / 140 SUSTAINABILITY REPORT Energy generation 2020 Campo Largo Wind Complex II

Throughout 2020, the Company continued its implementation activities of the phase II of Campo Largo Wind All the installation licenses for Complex, located in the municipalities of Umburanas and Sento Sé, approximately the 11 wind farms comprising the 420 kilometers distant from the state project have been issued. capital, Salvador. Campo Largo II represents 361.2 MW of installed capacity and 192.5 MWa of assured energy with investments of about R$ 1.6 billion. region. Power output from Campo Largo II will be sold entirely in the Free Con- The Project will enjoy the benefits of the tracting Environment (ACL). synergies with existing structures such as the substation and transmission line, All the installation licenses for the installed by the Company to support eleven wind farms comprising the The following represents continuing work in progress during the fourth quarter 2020: both the Campo Largo and Umburanas project have been issued thus allow- civil works; the installation of the medium voltage networks connecting up the wind – Phase I wind complexes with a total ing activities to proceed in all areas turbines with the collector substation; and the manufacture, delivery and assembly of of 686.7 MW of installed capacity. With of the project. Requests for operating the wind turbines. Work on the expansion of the collector substation was completed the installation of the second phase of licenses for the first wind farms have and the commissioning of the wind turbines initiated. By the end of fourth quarter of Campo Largo, ENGIE Brasil Energia’s already been filed. The agreement for 2020, 72.4% of the work had been completed. Authorization has already been granted total installed wind capacity will sur- financing the project was signed with for test operating the first wind turbines. The first wind farms started commercial pass the mark of 1 gigawatt (GW) in the the BNDES on April 27, 2020. operation in February 2021 while the last are expected for the third quarter of 2021.

36 / 140 SUSTAINABILITY REPORT Santo Agostinho Wind Subsequent to the facts reported In May 2017, ENGIE Brasil Partici- 2020 Complex – Phase I herein, in January 2021, ENGIE signed pações (EBP) announced the engage- an agreement with Siemens Gamesa for ment of Banco Itaú BBA S.A. to pro- With 434 MW in total installed capac- the supply of wind turbines, allowing vide financial advisory services for ity, phase one of the wind complex the initial phase of the Santo Agost- an economic-financial study for the lies in the municipalities of Lajes and inho Wind Complex to proceed. This preparation of a proposal for the even- R$ 2.2 billion Pedro Avelino, distant approximately phase, at an estimated investment tual transfer to ENGIE Brasil Energia 120 km from the city of Natal, the of approximately R$ 2.2 billion and (EBE) of EBP’s stakes of 40% in ESBR investments planned for the Santo Agostinho Wind Complex. state capital of Rio Grande do Norte. responsible for creating about a thou- Participações S.A. (ESBRpar) – holder In June 2016, Rio Grande do Norte sand jobs in the region, involves the of 100% of the capital stock of Jirau environmental authority Instituto de supply of a total installed capacity of Energia – and the 100% participation Desenvolvimento Sustentável e Meio 434 MW to clients in the free market. in Geramamoré Participações e Comer- Ambiente (Idema) issued the prelim- cializadora de Energia Ltda. Assessment inary license, declaring the project to Jirau Hydroelectric of the transfer has been put on hold, be environmentally viable. The appli- awaiting more favorable conditions for cation for installation license was sub- Power Plant the discussions to resume. mitted to the Idema in June 2020. Jirau Energia is responsible for the The accumulated recorded generation operation, maintenance and sale of for the year was 1,721.8 MWa, 10.6% energy generated by the Jirau Hydro- below the 1,926.4 MWa for 2019, electric Power Plant, located in the with FID (Uptime Factor) of 99.7%. Madeira River, in the city of Porto Velho, state of Rondônia. Since Novem- ber 2016, Jirau HPP has 50 generating units in operation, representing a total installed capacity of 3,750 MW.

37 / 140 SUSTAINABILITY REPORT Energy transmission 2020 Gralha Azul Transmission System

On December 15, 2017, the Com- The project’s financing contract was signed with the Brazilian Devel- pany made a successful bid for Lot 1 opment Bank (BNDES) on March 30, 2020. of Aneel Transmission Auction 02 for a stretch of about 1,000 kilometers Location – Gralha Azul (Paraná) in the state of Paraná (PR), marking EBE’s debut into the energy trans- SE IVAIPORÃ mission sector in Brazil. The project also includes the installation of five Section 1 SE CASTRO NORTE new substations and expansion of Section 5 another five existing ones. The con- PR SE PONTA GROSSA cession term for the public utility Section 3 SE PONTA GROSSA SUL transmission service, including the SE GUARAPUAVA OESTE licensing, the construction, assembly SE IRATI NORTE SE BATEIAS and the operation and maintenance of Section 4 the transmission line installations will SE SÃO MATEUS DO SUL be 30 years as from signature date SE AREIA Section 2 of the concession agreement, with a SE UNIÃO DA VITÓRIA NORTE maximum cut-off date for entry into operation set for March 9, 2023. SC

38 / 140 SUSTAINABILITY REPORT On October 15, 2020, the Com- compliance with the applicable law, 2020 pany was informed of a preliminary the project includes execution of 17 Federal Court ruling issued under a environmental programs intended The Company has been using Class Action (“Ação Civil Pública” – to mitigate, control and compensate ACP), suspending the environmen- environmental impacts caused by additional efforts to reduce tal licenses for transmission lines on the works. The programs cover plant the Ivaiporã – Ponta Grossa C1 and life, and wildlife monitoring and seed suppression of endemic and C2 stretch and the Ponta Grossa – recovery, archeological identifica- threatened species. Bateias C1 and C2 stretch. On the tion and monitoring, environmental following day, ENGIE Brasil Energia education, construction oversight, was given notice under a second ACP, social communication, recovery of now filed by the Federal Prosecutor’s degraded areas, and environmental (RPPN) and Integral Protection Con- Office and the Paraná State Prosecu- management, among other aspects. servation Units, the heightening of tor’s Office to suspend the works in The Company has been using addi- transmission towers and the use of their entirety, as well as all licenses tional efforts to reduce suppression of drones for the cable payout process and permits issued by the Instituto endemic and threatened species and as well as the installation of self-sup- Água e Terra (IAT), the authority this, when unavoidable, is done in a ported towers in areas of indigenous responsible for the licensing process. controlled and responsible manner to vegetation. All efforts taken have minimize this impact as well. ensured that only 2,2% of the proj- It is worth emphasizing, for context, ect’s transmission line and substation the responses of both the Federal The actions put into place to preserve areas of influence were impacted. environmental authority Instituto the largest possible number of species Brasileiro do Meio Ambiente e dos along the entire length pf the Trans- Worthy of note is that all impacts arising Recursos Naturais (Ibama) and the IAT mission System include diversions from the construction including brush on the appropriateness of the proj- from the route in sensitive areas such clearance are subject to environmental ect’s environmental licensing. In full as Private Natural Heritage Reserves compensations and reforestation with

39 / 140 SUSTAINABILITY REPORT initiatives exceeding the requirements (mentioned above) was lifted on 2020 enshrined in the legislation. In addition December 9, 2020, thereby enabling to these compensatory measures, there resuming implementation activities. are those of a voluntary nature, developed in accordance with the Company’s By the end of the year, the overall sustainability policies. These measures implementation of the Gralha Azul include the donation of 3.5 thousand Transmission System was 75% com- native tree seedlings, the support for plete with civil work and electro-me- projects which conserve the fauna and chanical assembly of the transmission flora and replanting double the area lines and substations meeting the effectively deforested as prescribed in schedule established in the federal the Brush Suppression Authorizations concession agreement. The estimated rather than simply observing the obli- month for completion of the project gation of restoring the area effectively within a reduced timeframe remains degraded. In addition, under the proj- as September 2021, 18 months ect, three araucária trees are planted ahead of schedule in relation to final for every one that is felled, totaling, delivery date. by yearend, 2.8 thousand araucaria saplings planted. The outlook for a reduction in investment value against the figure indi- As a result of the Company’s efforts cated by Aneel remains at approxi- to demonstrate the robustness of mately 15%, thus rendering feasible the project’s environmental licens- the provision of a cheaper transmis- ing process, in addition to voluntary sion tariff for consumers nationwide compensating measures, the injunc- and more especially consumers in the tion issued by the Federal Court state of Paraná.

40 / 140 SUSTAINABILITY REPORT Novo Estado Transmission System 2020

In December 2019, through its sub- Location – Novo Estado (Pará and Tocantins) sidiary, ENGIE Transmissão de Ener- By the end of the year, a workforce of gia Participações S.A., the Company SE XINGU 500 KV more than 6,000 has been mobilized for (expansion) signed a purchase and sale agreement the construction work. 60% of the tow- SE ITACAIUNAS 500 KV for the purchase of stock, the issue of (expansion) ers’ foundations have been completed Sterlite Novo Estado Energia S.A., held and 16% of them have already been fully by Sterlite Brasil Participações S.A., SE SERRA PELADA 500 KV assembled. In the fourth quarter, trans- as the successful bidder for Lot 3 of (new) mission line cable slinging operations Aneel Transmission Auction 002/2017, began in both the Xingu - Serra Pelada held in December 2017. The operation TO TL and the Serra Pelada – Miracema TL closed on March 3, 2020 and on May PA sections. Civil work on the Serra Pelada 29, 2020, the First Amendment Instru- substation is at an advanced stage of exe- ment to the respective Concession SE MIRACEMA 500 KV cution – the overall level of completion Agreement was signed, consolidating (expansion) being 36% while substation expansion transfer of ownership. is at the civil works phase. The cutoff date for the transmission systems to The object of the concession is the con- been issued by the Brazilian Institute was made on the civil work itself. go into operation is March 9, 2023, but struction, operation and maintenance of the Environment and Renewable On June 26, 2020, a project financ- the Company’s forecast is to reduce this of approximately 1,800 kilometers of Natural Resources (Ibama). ing agreement was signed with the period to December 2021. transmission lines, a new substation BNDES. Subsequently, on August and upgrades to a further three exist- The leading contractors began mobi- 19, 2020, a financing agreement was ing substations in the states of Pará and lizing on March 2020, construction signed with the Banco da Amazônia Tocantins, for a term of 30 years. The beginning in April with activities at S.A. (BASA), for the funding of part of installation license of the project has the construction sites. On May, a start the installation of the project.

41 / 140 SUSTAINABILITY REPORT Projects under development 2020

By the end of 2020, ENGIE Brasil Energia maintained several projects in the development phase - that is, with feasibility studies at an advanced stage, which may or may not be implemented - as shown below:

Assú I, II, III and IV Photo- voltaic Centrals – RN Installed Capacity: 120 MW

Santo Agostinho WC (Phase II) – RN Installed Capacity: 366 MW

Umburanas WC (Phase II) – BA Installed Capacity: 250 MW

Campo Largo WC (Phase III) – BA Installed Capacity: 250 MW

Campo Largo Photovoltaic Complex – BA Installed Capacity: 400 MW

Alvorada Photovoltaic Complex – BA Installed Capacity: 90 MW

42 / 140 SUSTAINABILITY REPORT Commercial and portfolio-management dynamism 2020

[GRI 102-6; 103-1; 103-2; 103-3; G4-EU3]

The Company trades energy both on In 2020, free consumers represented 41.5% of physical sales and 37.6% of net The reduction in the participation of the Regulated Contracting Environ- operating revenues (excluding CCEE and other revenues), down 1.6 p.p. and 0.7 free consumers in physical sales and ment (ACR), through Aneel-sponsored p.p., respectively compared with 2019. in net operating revenues for the peri- auctions, and on the Free Contracting ods under analysis was largely due to Environment (ACL), entering into con- decreased consumption on the part of Breakdown of clients by Breakdown of Customers in tracts directly with business firms or Contracted Sales Comprising industrial clients affected by the Covid- energy traders. physical sales (%) 19 pandemic. However, this decrease Net Operating (%) was partially offset by migrations Our energy trading management strat- between trading company and free 7 13 14 8 13 13 14 12 egy on the free market is based on two 10 9 9 7 consumer profiles. Overall, the impact important distinctions: management of on net operating revenue was partially the energy portfolio and the chosen sales 42 38 38 attenuated by new agreements at aver- dynamics. Together, they enable superior 48 43 41 age prices higher than the average for results because few players share our current or terminated agreements. characteristics – which emerge from the fact that we are one of the largest energy 38 40 42 Based on proprietary selling capac- generators in Brazil, with the weight to 32 34 36 ity data and energy sale agreements offer competitive short- and long-term in force on December 31, 2020, the offerings, agility, and the dynamics of a Figure summarizes the Company’s 2018 2019 2020 2018 2019 2020 private-sector global player, attuned to the energy balance. market’s opportunities and needs. Trading operations Free consumers Trading companies Distribution companies

43 / 140 SUSTAINABILITY REPORT 2020

Energy Balance Diversification of Thus, the Company is a leader in the (% of total; MWa) clients portfolio commercialization of energy in the Free Market, adapting itself to different sce- 5,830 Stell 13.3% 5,679 5,488 narios to capture the opportunities 675 5,314 5,252 5,215 12% 789 Food 9.7% generated by the expansion of this mar- 14% 1,032 19% 1,539 29% ket and the new relationship modalities. 2,016 Rubber/Plastic 38% 2,426 8.2% 47% 3,145 2,880 54% 51% 2,446 Retail 7.2% 45% 1,770 In addition to energy from renew- 33% 1,242 24% 805 Cement 6.9% able sources, the Company also has 15% other related offers, such as distrib- Auto Makers 5.7% uted solar generation products and 2,010 2,010 2,010 2,005 1,994 1,984 34% 35% 37% 38% 38% 38% ACR Chimical/Petroq. 5.4% services and carbon emissions neu- ACL Uncontracted Metallurgy 5.2% tralization, offsetting and reduction 2021 2022 2023 2024 2025 2026 solutions. A recent example of the Textile 5.0% latter was the partnership with cos- Management of the energy portfo- Within the context of trading dynam- Wood 4.4% metics manufacturer Natura for the lio allows the Company to minimize ics, we have formed a diverse portfo- sale of carbon credits that will offset Machinery and Equip 4.0% short-term exposure risk, thereby lio of customers made up of compa- 100 tons of greenhouse gases emit- avoiding payment of high prices nies of different sizes and in different Pulp & Paper 3.5% ted. Another important milestone when there is a shortage of hydro- industries, mitigating the potential Water/sanitation 2.9% was the confirmation by the United electric generation – as has often impacts of negative circumstances for Nations Organization (UNO) that the Agriculture 2.8% been the case in recent years. certain segments, reducing the risk of carbon credits project of the Campo revenue losses. Other 15.8% Largo II Wind Complex (361.2 MW)

44 / 140 SUSTAINABILITY REPORT has been registered as a Clean Development Mechanism (“Mecanismo de 2020 Desenvolvimento Limpo” – MDL). The project is under construction and will contribute an annual average of 790 thousand tons of CO2e in Greenhouse Gas emissions reduction. This is ENGIE’s 23rd MDL project globally, and ENGIE Brasil Energia’s 10th.

Blockchain and decarbonization

By means of an innovation program, ENGIE Brasil Energia has partnered with the TEO (The Energy Origin) platform to provide added digitalization and security for its customers in Brazil.

Developed by an ENGIE-accelerated startup company in Paris, the platform stands as an innovative solution for automated, blockchain-based, certification of renewable attributes, enabling the traceability of energy

generation from non-polluting sources, as well as of 2CO consumption and emissions that the process avoids.

Therefore, ENGIE’s decarbonization solutions will incorporate blockchain technology by means of TEO, optimizing the certification and traceability processes associated with the Renewable Energy Contracts (ENGIE-REC) that the Company offers.

45 / 140 SUSTAINABILITY REPORT 2020 Solutions released in 2020

E-conomiza Looking to innovate in service to the Free Market, in July 2020, we Commercial and sectoral actions released E-conomiza, a solution intended for companies that wish to to face the pandemic reduce their energy costs by means of a simplified migration to the free environment. The offering focuses on small and medium-sized Every industry in the economy has tracted prices, but rather postpone- organizations spending a minimum R$ 40 thousand per month in been directly or indirectly affected ment of the settlement of a portion of energy – with the possibility of adding together the loads of different by the Covid-19 pandemic to some the amounts owed at market interest units to reach this level. Entry into contract with the Company allows degree, leading some Free Market rates. As for distribution companies, these firms to facilitate their migration process, as the Company will customers to seek contract renego- the electric energy industry’s play- represent them before the Electric Energy Trading Board (“Câmara de tiations. Applications were reviewed ers, including Aneel, worked together Comercialização de Energia Elétrica” – CCEE). on a case-by-case basis, taking into to draw a short-term bailout plan account the size of the impacts they for these organizations, preventing Energy Place endured, commercial ties, the princi- defaulting from contaminating the On a different front, adding the Free Market’s potential for expan- ple of good faith between contract- remainder of the industry chain – the sion and the increasing digitalization of the business, in November ing parties, and compliance with the initiative culminated in Provisional 2020 we released Energy Place, an online digital platform for con- agreements made. In all cases, there Measure 950, regulated by Decree sumers (both clients and non-clients), managers and consultancy was no reduction to previously con- No. 10.350, of May 18, 2020. firms. In addition to running energy e-commerce, the tool was developed to provide information and consumption histories, and to serve as a fully digital relationship and service channel. The platform is one of the links making up the multi-annual project to improve the commercial strategy, called Go To Market and which has been highlighted in previous reports.

46 / 140 SUSTAINABILITY REPORT Innovation and carbon neutral transition 2020

[GRI 103-1; 103-2; 103-3; G4-EU8] [2030 Agenda Goals: 7.2, 7.3, 8.2, 9.4., 9.5, 13.3]

Essential to the continuity of the busi- 150 most innovative companies accord- We showcase, next, the main innovation fronts on which the Company is active: ness and the capture of opportunities, ing to the Valor 2020 Brazil Innovation innovation in products, services and pro- Awards, hosted by newspaper Valor R&D cesses has increasingly gained connec- Econômico in partnership with Strat- tion with the corporate strategy. This is egy&, PWC’s strategy consultancy prac- The Research and Development (R&D) program is an important link in our inno- due to the fact that it blends in with the tice. The rankings are based on a survey vation-promotion. Aligned to open innovation culture, R&D is conducted on highly dynamic context of the energy completed by companies of different the basis of partnerships with companies, universities and research institutes, transition and the expansion of the free sizes and in different industries – the pursuant to Law 9.991/2000, which requires energy companies to invest 1% energy market, which require new solu- 2020 questionnaire’s central topic was of its annual net revenues in R&D. tions to meet society’s demands. “Future Competencies”, and reviewed the innovation practices of companies Throughout 2020, R$ 56.7 million was invested in the Program, according to To create an environment conducive to active throughout Brazil. the following distribution: innovation where employees can play an active role in building the Company’s • R$ 22.7 million to the National Science and Technology Development Fund future, we concerned ourselves with the (FNDCT); creation of platforms and the provision of the tools needed to disseminate an ever • R$ 11.3 million to the Ministry of Mines and Energy (MME) as funding for the more innovative culture. Empresa de Pesquisa Energética (EPE); and one of the country’s150

In 2020, these initiatives also helped most innovative • R$ 22.7 million to investment in new or ongoing R&D Projects. ENGIE Brasil to be one of the country’s companies.

47 / 140 SUSTAINABILITY REPORT R$ 28.2 million were allocated in the A highlight among the research proj- The prototype is the first unit in a line 2020 year to the 13 projects underway. ects had in 2020 the development and of machines at nominal power ratings certification of the first large domestic from 4.0 MW to 4.4 MW, depending The total portfolio of investment in wind turbine, at 4.2 M. The project is on wind characteristics at the instal- ongoing projects adds up to R$ 121.7 being conducted in partnership with lation site. IT is the Brazilian electric ENGIE Lab million, as the figure next shows. WEG – a Brazilian company special- industry’s largest R&D project ever izing in the manufacture of electric in terms of scope, length, budget and As a global company that aims to value R&D ENGIE: investments in motors, transformers and generators staffing. World-class technologies are and integrate with local competencies, undergoing projects/2020 – and with cooperation from Centrais being developed, such as a generator ENGIE began a move to internation- (R$ million) Elétricas de Santa Catarina (Celesc). with permanent magnets in the exter- alize the R&D+Innovation labs called nal rotor configuration, layout, and the ENGIE Labs, promoting projects in cooling of the elevator transformer. In areas synergistic with the business. this way, ENGIE, WEG and Celesc aim The 11th ENGIE Lab was set up in Bra- to develop a product that can compete zil in 2019 as an open innovation lab

R$ 84.0 globally with other large wind turbine – focusing on disruptive projects, incu- manufacturers. The lower cost and bation and venture-capital funding. R$ 18.2 R$ 8.3 improved quality of this R&D project R$ 11.2 have already guaranteed sale of an We thereby strive to develop innova- R$ 28.2 million early batch of 43 wind turbines, where tive solutions in the areas of systems, ENGIE will enjoy proceeds in the form equipment, hardware, software, busi- New Business allocated in the year to the Operational Eficiency 13 projects underway. of royalties per unit sold. ness processes and models, pilot proj- Environment ects and end-to-end projects in part- Estrategic Themes nership with companies with different profiles – from startups to major corporations, through member companies of the ENGIE Group.

48 / 140 SUSTAINABILITY REPORT 2020 Link-Lab

ENGIE Brasil Energia is a member of LinkLab, a program of the Santa Catarina State Technology Association (ACATE), that brings together large corporations and startups to leverage synergies in the development of innovative projects. In 2020, we launched seven internal challenges in search of creative solutions to address them. A total 88 startups submitted suggestions, out of which the ones with the most potential will be selected to develop proofs of concept.

Programa Inove

Mechanism to stimulate internal innovation, “Inove” is the incentive program aimed at operational and process improvements, which generate both cost reductions and increased safety and efficiency. In the 2020 edition, the Program rewarded 92 employees, with prizes that totaled approximately R$ 22 million R$ 200 thousand for their innovative initiatives. The 42 approved ideas approved ideas have have an expected financial return esti- an expected financial mated at R$ 22 million. return estimated.

49 / 140 SUSTAINABILITY REPORT Innovation marathon Innovation Day and Innovation Week 2020 In 2020, we held the Summer Hack, an innovation marathon dedicated to explor- The open innovation model requires sharing results and lessons learned ing opportunities in the Free Energy Market and developing new commercial along the way. To this end, ENGIE Brasil promove annually holds the solutions to serve customers in the segment. The event proposed a competition ENGIE Brasil Innovation Day, an event that gathers employees, startups between cross-disciplinary teams facing the challenge of developing high-value and other members of the ecosystem at the Museu do Amanhã, in Rio de solutions in a short period of time. Janeiro (RJ), to discuss the matter and recognize innovative projects. The initiative is part of the Innovation Week, a global Group program devoted In 54 intense hours of creative work, the marathon involved more than 60 people, to mobilizing, promoting and discussing innovations alongside with ENGIE including participants, mentors and jurors. partners worldwide.

In 2020, because of the pandemic, the Innovation Day was held remotely Patents secured by means of a live session on ENGIE Brazil’s YouTube channel. Connect- In 2020, the Company obtained its first two patents granted by the National ing people from different Brazilian regions, the event’s sixth edition Industrial Property Institute (INPI). The two domestically-developed inventions discussed the potential of innovation to develop people, conserve the are installed as field experiments in hydroelectric plants that the Group holds. planet, and boost business performance – the “3Ps” on which the Com- pany’s strategy lies. The former patent involves optic temperature sensors using the “Bragg networks” technology, which can be applied to several segments, but is being used in hydro The session’s highlights included four projects developed by Group plants to provide sensing for bearings and heat exchangers. employees in Brazil – three of which done by ENGIE Brasil Energia teams. They were all Innovation Trophy finalists – the Company’s annual The latter concerns a method to identify features of an electrical machine. The awards, shining the spotlight on solutions developed by teams in dif- solution assesses the status of electricity generators by analyzing the outer ferent countries to overcome managerial, technological, environmental magnetic field. This provides a non-invasive means to detect electrical, mag- and social challenges. netic and mechanical faults.

50 / 140 SUSTAINABILITY REPORT Risk and opportunities managment 2020 [GRI 102-11; 103-1; 103-2; 103-3; 201-2] [2030 Agenda Goals: 16.6, 16.7]

isk and opportunities analysis • Creation and maintenance is a permanent exercise at the of value, reputation and Company, involving, in addi- internal motivation. tion to directors and officers, Rall employees, especially those dedi- • Encouraging a certain degree of cated to management functions. The risk taking, deemed reasonable Risk Management Forum, transversal relative to legal, economic and and multidisciplinary, contributes to social aspects. strengthen this dynamic. The analysis 1 Tax Risk is guided by the Risk and Opportunity • Assurance of conformity of Management Policy, approved by the actions with legal and regulatory Description Board of Directors, and comprises the obligations as well as with ENGIE Adverse developments in the tax legisla- identification and classification of risks Brasil Energia’s values. tion, with potential impact on our results. regarding the probability of occurrence and the significance in terms of finan- Results of this joint evaluation are Mitigation cial, strategic and operational impact. registered in the Risks and Business Systematic tracking of proposed or Opportunities Matrix, an internal doc- effective legislative changes with the This assessment is carried out system- ument which serves as guidance to potential to affect the Company’s activ- atically, permeating all activities, based the Company. The analyzed and risks ities. This is done both individually and on three core principles: are categorized as follows: through trade associations.

51 / 140 SUSTAINABILITY REPORT 2020 2 Industrial safety risk 3 Project installation risk Description Contingency Damage to asset integrity, to the environment, and/or to occupational health and All NBR ISO 14001-certified plants Description safety stemming from the Company’s operating activities. have in place Emergency Plans that pro- The occurrence of events during the vide for specific actions under various development or installation of proj- Mitigation emergency scenarios, identified accord- ects which can result in delays in the Adopting best Engineering practices from plant construction to operation and main- ing to each project’s reality and nature. construction work schedule, additional tenance, monitoring civil structures by means of inspections, analyses and preven- As concerns dams, all of those that the installation costs and/or inefficiencies tive maintenance done by a specialized team. Every hydro plant under ENGIE Brasil Company operates are categorized as in project operation. Energia’s responsibility has a Dam Safety Plan that relies on topic-specific methodol- low-risk according to the matrix estab- ogies, in line with the laws and standards in force, as well as with the recommended lished by the National Electric Energy Mitigation criteria of the International Commission on Large Dams (ICOLD) and the Brazilian Agency (Aneel). In addition, we have in Management is entrusted to a highly Committee on Large Dams (CBGB). place rigorous health and safety prac- qualified and experienced construc- tices driven by the Sustainable Man- tion works management team. Con- agement Policy, in addition to Internal tracts with contractors and other Accident Prevention Commissions and suppliers involved are meticulously 12 NBR OHSAS 18001-certified plants tracked, including technical, financial, (Occupational Health and Safety). environmental and social aspects, driven in any case by a permanent dialogue with all stakeholders.

52 / 140 SUSTAINABILITY REPORT Hydrological risk and 2020 regulatory evolution

When rains are lacking in the hydroelectric plants’ catchment At the time, ENGIE Brasil Energia chose to adopt the rene- areas, the plants may generate power below their physical guar- gotiation for the energy traded on the ACR. This consisted antee, that is, below the required minimum. In this case, the in purchasing insurance against hydrological generation 4 Regulatory plant’s owner must “replace” the missing energy to make up the deficits, so that reimbursement amounts to which the risk physical guarantee, either by means of other generation sources plants were entitled could be used against the insurance in its portfolio or by acquiring energy in the short-term market, premium. Thus, 1,344.51 MWa of energy contracted on Description usually at high prices. To mitigate this risk, in a collective way, the ACR were protected from impacts greater than an aver- An adverse evolution of the regula- there is the Energy Re-Allocation Mechanism (MRE), in which age 7.5% generation deficit. tions governing the electric energy all centrally-dispatched hydroelectric generation companies are industry. These regulations, which the mandatory members. The MRE transfers surplus output from In 2020, Law 14.052 approved a new renegotiation where Federal Government historically influ- plants generating above their physical guarantee to other mem- generation companies would secure a right to extend their ences, may impact, for example, the bers with generation below physical guarantee. Energy transfers generation concession award periods by up to seven years, modes, terms and conditions of elec- within the MRE are compensated based on the Energy Optimi- considering only the portion of energy not renegotiated in tric energy sale agreements in force, zation Tariff (TEO), which covers the average cost of hydroelec- 2015 as a form of compensation for the additional costs production levels, sectoral charges, tric plant operation and maintenance. incurred. The Company’s Board of Directors approved adhe- and the relationships between indus- sion to renegotiations pursuant to the law for plants holding try players. The MRE helps to mitigate hydrological risk when the system electric energy generation concessions. as a whole may reach or exceed the sum total of the physical Mitigation guarantees of the plants that it comprises. However, starting in Because renegotiations reduce risk, but do not eliminate it, Active participation in debates on 2012, several members of the MRE began generating system- companies may also develop individual mitigation strategies. industry regulatory changes through atically less than their physical guarantees, a fact aggravated In our case, we mitigate the risk by maintaining a larger than trade associates, together with a stra- by dispatching outside the merit order. In 2015, after several usual portion of the energy uncontracted in the short term, tegic process that enables the Com- discussions between the market and the regulator, hydro gen- seasonally weigh allocation of own resources, and manage pany to stay ahead of any changes. erators were given an opportunity to renegotiate this risk. long and short positions on the short-term market. 53 / 140 SUSTAINABILITY REPORT 2020 5 Market risk 6 Cybersecurity risk 7 Risk of Non-Compliance with the Personal Data Privacy Law (LGPD): Description Description The supply of and demand for electric- Lacking or faulty planning, manage- Description Mitigation ity can deviate from forecast so affect- ment or security in connection with The use of digital technologies for relation- The Company prepared a diagnosis ing energy prices and volume. resources and services in the areas ships between companies and individuals and implementation schedule for con- of Information and Communica- through the collection of personal informa- trol and monitoring implementations Mitigation tion Technology (ICT), Automation tion has been increasing to customize and so that the Company would be com- Application of a proactive commercial Technology (AT), and the Internet of improve service levels and the consumer pliant with the law before it gained strategy and smart management of Things (IoT), that may have a negative experience. Lacking or faulty planning, force, in August 2020. This includes the energy portfolio to nimbly capture impact on the Company’s continued management or security of these resources training programs, process reviews price changes, minimizing losses and operations and image. may lead to the unauthorized disclosure and supplier relations, in addition to magnifying gains. of such personal information, leaving the the development of new procedures, Mitigation Company exposed to regulatory risk in con- Additional information may be found Definition of policies, management pro- nection with private information security. in the “Ethics and Integrity” section. cesses, controls and employee awareness of the risks that digital technologies pose. This involves the Information 8 Commercial counterparty risk and Communication technologies (ICT) and the automation technologies (AT) Description Mitigation used in industrial operation, control and The risk of a commercial counterparty Active Counterparty credit risk manage- supervision activities. with which the Company has energy ment based on the Counterparty Risk purchase or sale operations failing policy as approved in January 2019. to fully honor their obligations, with impact over revenues.

54 / 140 SUSTAINABILITY REPORT 2020 9 Operationalization of the strategy risk 10 Ethics and compliance risk

Description Description Adversity in the process of ENGIE’s strategic repositioning around its three basic Noncompliance, whether internal or with outside collusion, with values and prin- pillars: digitalization, decentralization and decarbonization, due to the external ciples pursuant to the Code of Ethics may lead to cases of corruption, fraudulent and internal contexts. use of the Company’s property, interference in bidding processes, and disregard of human rights. Failure to comply with the standards and regulations applicable Mitigation to the Company’s activities. In terms of the external angle, we attempt to join discussions with the regulator and society at large on topics such as the opening of the Free Energy Market, the evolution Mitigation of distributed energy regulations distributed energy and carbon pricing, among others. In addition to the Ethics Policy Code, to the establishment of the Ethics Commit- In these discussions, we made a contribution by providing the Company’s points of view tee and to an external whistleblowing channel, we embraced a rigorous internal and interests. Internally, we invested in training, skills and structures – both physical and controls program called Income, that all direct and indirect subsidiaries apply. IT – to enable the free flow of innovation and connections between areas, in a manner Income was created in 2005, to meet the US Sarbanes-Oxley Act. It covers every compatible with the energy transition’s less steady and more dynamic scenario. operation by means if 12 processes that subdivide into 14 sub-processes. In addition to internal controls evaluations, the overall environment is analyzed based on the methodology provided by the Committee of Sponsoring Organi- zations of the Treadway Commission (COSO).

The results of the Internal Audit tests and of the analysis of the overall control environment are subject to approval from the CEO and the Chief Financial and Investor Relations Officer. Their reviews are subsequently submitted to the Board of Directors.

55 / 140 SUSTAINABILITY REPORT Performance 2020

+ 25.7% R$ 7.4 billion in value added Ebitda R$ 4 billion invested

+ 21% R$ 2 billion in proceeds distributed Net Income

plants remotely 48 operated 35,163 Gwh generated in 2020 from the Generation Operations Center (COG), in Macroeconomic Florianópolis (SC) scenario Operational performance 42.2 milion 79.9% 3 Economic-financial m of natural of total installed capacity certified NBR ISO 9001, gas transported performance NBR ISO 14001 and OHSAS 18001 per day

56 / 140 SUSTAINABILITY REPORT Macroeconomic scenario 2020

he pandemic caused a global National Consumer Prices Index – economic downturn that Bra- Comprehensive (IPCA) as published by zil experienced since March IBGE. The IPCA was 4.31% in 2019. As 2020, leading to a 4.1% drop for the jobs market, the effects of the Electricity power Tin the country’s Gross Domestic Product recovery were modest until the fourth (GDP), according to Brazilian Geogra- quarter, with unemployment at 13.1%, industry phy and Statistics Institute (IBGE). It is close to the historic ceiling according the greatest annual retreat since 1990. to the IBGE. GDP was up 1.1% in 2019. According to data from the Energy 1.6% The financial market experienced a Research Company (“Empresa de Although the retraction was smaller series of sharp oscillations on several Pesquisa Energética” – EPE),net energy net energy consumption in than expected by a majority of analysts global indices because of the uncer- consumption in Brazil was down 1.6% Brazil was down in 2020. mid-year, recovery was uneven across tainties caused by the pandemic. These in 2020, at 474.231 GWh – after segments – generally, according to the were mitigated, even if temporarily, by increasing by 1.4% in 2019. Residential Applied Economics Research Institute government stimulus and bailout pack- consumption was up 4.1%, commercial the Southeast by 2.8%, for the worst (IPEA), manufacturing and retail reached ages, in addition to positive prospects was down 10.5%, and industrial lost performance nationally yearend operating at average levels associated with Covid-19 vaccines. 1.1%. Other classes were down 2.3%. above the pre-crisis period, whereas Once again, the Brazilian funds rate In the breakdown by region, the North Free market consumption was up 13.1% services lagged significantly below. (SELIC) reached yearend at its lowest and Center-West reported increases in 2020, exceeding recent years’ records level on record, at 2.0% p.a., while the of 4.8% and 1.2%, respectively. The – growth was 1.9% in 2019 and 6.3% in In the context, accumulated infla- US Dollar (Ptax) exceeded R$ 5.19 – it other regions were down, the North- 2018. Consumption on the captive mar- tion has been 4.52% according to the was trading at R$ 4.03 at yearend 2019. east by 2.4%, the South by 1.2% and ket was down 2.3% in 2020 from 2019.

57 / 140 SUSTAINABILITY REPORT 2020 Influence of the hydrological scenario on the sector

The 2020 hydrological scenario – which At yearend, the situation was most supplied 56,7 GWa of Natural Affluent critical in the Southeast, with the low- Energy on the National Interconnected est reservoir level in 20 years (16.4% Demand for energy was down System (SIN) – was the fourth worst in of maximum volume in December). two decades, and only surpassed by This implied a resolution for using 1 GW in terms of annual. 2019, 2017 and 2014. extra thermal assets (outside the merit order) in the last quarter of 2020. On the other hand, the storage in the Northeast was the highest in recent history, reaching 90% of maximum vol- Therefore, the average Differences ume mid-year – due to a combination Settlement Price (“Preço de Liquidação of satisfactory rainfall and changes in de Diferenças” – PLD) in 2020 was the policy for the use of São Francisco R$ 177/MWh. Closely associated 80.5% River basin reservoirs. with the effects of load reduction, was the GSF in 2020 - the energy surplus supply vis-à-vis system generates below Under impact from the pandemic, demand left the year’s average price its physical guarantees for demand for energy was down 1 GW R$ 48/MWh lower than in 2019. another year. in terms of annual average load compared with 2019. This is down 3 GW According to CCEE data, the GSF (Gen- from previous estimates according to eration Scaling Factor) in 2020 was forecasts for 2020. 80.5%, down from 81.0% in 2019.

58 / 140 SUSTAINABILITY REPORT Operational performance 2020 [GRI G4-EU1; EU2; EU11; EU30] [SASB IF-EU-550A.2.] [2030 Agenda Goals: 7.2, 7.3, 8.2, 9.1, 9.4]

n addition to abiding by corpo- ratio of 96.4%, 99.7% in the case of rate policies in every activity, the Out of the 10,431.2 MW operated by the hydroelectric plants, 76.9% for the Company’s operational evolution the Company, 52.4% (5,467,6 MW) are thermoelectric power plants and 93.5% is based on the strictness of the done remotely, by the Generation Oper- for plants powered from complementary Icontrols forming its Integrated Man- ation Center (COG), located at ENGIE’s sources — incorporating SHPs, biomass, agement System (SIG), a platform that Florianópolis (SC) headquarters. In this wind and photovoltaics. consolidates information and perfor- model, sophisticated technological mance indicators. resources, which allow real-time mon- If all programmed stoppages are taken into itoring and ensure system reliability, consideration, internal overall uptime for In 2020, out of the 60 plants in increase the operational efficiency of the full 12 months of 2020 was 90.9%, operation, 12 were certified accord- the generating complex. In all, 47 of the that is, 94.6% for the hydroelectric plants, ing to NBR ISO 9001 (quality), NBR 60 plants in the generator park are oper- 66.0% for the thermoelectric plants and ISO 14001 (environment) and NBR ated via COG, among them the Machad- 90.2% in the case of plants fired from OHSAS 18001 (Occupational Health inho Hydroelectric Plant, which started complementary energy sources. On a year- and Safety) standards. In addition, the remote operation in 2020, the first in on-year comparative basis, global internal Jorge Lacerda Thermoelectric Com- a consortium to be managed remotely. uptime was 1.1 p.p. higher, comprising plex is NBR ISO 50001 certified with increases of 2.2 p.p. and 1.1 p.p. at the respect to Energy Efficiency. Conse- During the year, excluding scheduled hydro and complementary plants, respec- quently, the percentage of certified shutdowns, plants operated by ENGIE tively, and a reduction in the case of ther- installed capacity is 77.9%. Brasil Energia achieved an uptime moelectric uptime of 3.1 p.p.

59 / 140 SUSTAINABILITY REPORT Uptime operating, considering scheduled shutdowns 2020 94.6% 93.9% 92.4% 91.5% 90.9% 90.2% 89.7% 89.1% 84.8% 73.4% 69.1% 66.0%

2018 2019 Hydroelectric Thermoelectric Complementary Consolidated 2020

The reduction in availability at the all, the Covid-19 pandemic provoked a thermoelectric power plants during significant reduction in the National Inter- 2020 against 2019, is due princi- connected System’s load factor. Similarly, pally to unscheduled outages, in turn this fed through to global production at reflecting greater exposure to faults in ENGIE of approximately 35,163 GWh continuous operations. The increase (4,003 MWa), 20,4% down on 2019, in hydroelectric and complementary when the total was 44,058 GWh (5,030 energy sourced plants on the other MWa). In 2020, only thermoelectric hand was due to shorter time spans output was higher relative to the pre- required for executing the work. ceding year, 13.2% up on 2019. In the case of hydroelectric and complemen- Related to electricity output from plants tary operations, the decrease was 27.4% operated by ENGIE Brasil Energia, over- and 5.0%, respectively.

60 / 140 SUSTAINABILITY REPORT Energy Generation Generation by As to the Company’s thermal generation, Average volume of gas 2020 (MWa) Complementary Source its increase might reduce (as a function transmitted (MWa) of the Company’s level of contracting) (MM m³/day) 5,030 529 exposure to the Price for the Settlement 4,491 502 529 9 of Differences (PLD), the opposite being -4.1% 235 4,003 8 81 the case when there is a decrease, all 472 577 502 75 44.0 42.2 21 14 other variables being equal. 653 236 8 Related to gas transportation, the 83 Transportadora Associada de Gás - TAG 3,784 3,924 418 405 2,848 22 receives natural gas daily at gathering

123 points along its pipeline network and delivers it to the carrier Petrobras at entry points known as city gates, in 2018 2019 2020 2018 2019 2020 return being remunerated for the transportation service, comprising a portion Hydroelectrics Wind Biomass Thermoelectrics SHP Solar for the effective transportation of the 2019 2020 Complementaries natural gas molecule and also a charge for unutilized capacity (ship-or-pay). Modernizations In 2020, we proceeded with the mod- In this context, it is worth pointing out that an increase in the Company’s hydro- For the year as a whole, transmitted ernization of the Salto Osório Hydro- electric generation does not necessarily reflect an improvement in economic-fi- gas volumes were 42.2 million m3/day electric Plant, a large project that began nancial performance. Conversely, a reduction in this type of generation does not (44.0 million m3/day in 2019). in November 2017. The first modern- inevitably imply a deterioration in economic-financial performance due to the ized generating unit is scheduled for adoption of the Energy Reallocation Mechanism (MRE), which defrays the risks delivery in the first quarter of 2021 and of hydro generation among its participants. full completion is expected in 2023.

61 / 140 SUSTAINABILITY REPORT In addition to upgrading operating attri- 2020 butes, the modernization will improve efficiency, with a physical guarantee increment estimated at 13.9 MWa.

13.9 MW

Physical guarantee increments estimated at the Salto Osório Hydroelectric Plant.

The modernization agreement for the Jaguara Hydroelectric Plant, by its turn, was executed in late 2020 with the purchase of a new generator for Gen- erating Unit #01. Manufacture of the part is expected to conclude in 2021, so that field deployment will take place the year after. Entry into an agreement for the modernization of the Miranda Hydroelectric Plant’s instrumentation and control systems (including speed regulator, generator voltage regulator and oversight system) is expected in the first quarter of 2021.

62 / 140 SUSTAINABILITY REPORT Economic-financial performance 2020 [GRI 201-1; 201-4] Result by segment – 2020 x 2019 (in R$ million) Electric energy The Company’s financial Generation Transmission Trading Solar panels Gas transportation Consolidated result and taxes are not 2020 allocated by segment since Net operating revenue 8,539.1 2,555.3 1,083.9 80.9 - 12,259.2 Management administers the Operational costs (3,328.6) (2,274.3) (1,111.5) (81.5) - (6,795.9) Gross income (loss) 5,210.5 281.0 (27.6) (0.6) - 5,463.3 cash flow on a consolidated Selling. general and administrative expenses (267.8) (1.1) (3.1) (5.4) - (277.4) and corporate basis. Other operating expenses. net (4.7) - - - - (4.7) Impairment (98.8) - - - - (98.8) Equity income - - - - 487.1 487.1 Income (loss) before financial results and taxes 4,839.2 279.9 (30.7) (6.0) 487.1 5,569.5 2019 Net operating revenue 8,427.7 169.9 1,109.0 97.9 - 9,804.5 Operational costs (4,294.1) (151.5) (1,111.4) (96.0) - (5,653.0) Gross income (loss) 4,133.6 18.4 (2.4) 1.9 - 4,151.5 Selling, general and administrative expenses (243.2) - (2.9) (7.1) - (253.2) Other operating expenses, net 320.4 - - - - 320.4 Impairment (4.9) - - - - (4.9) Equity income - - - - 81.1 81.1 Income (loss) before financial results and taxes 4,205.9 18.4 (5.3) (5.2) 81.1 4,294.9 Variation Net operating revenue 111.4 2,385.4 (25.1) (17.0) - 2,454.7 Operational costs 965.5 (2,122.8) (0.1) 14.5 - (1,142.9) Gross income (loss) 1,076.9 262.6 (25.2) (2.5) - 1,311.8 Selling, general and administrative expenses (24.6) (1.1) (0.2) 1.7 - (24.2) Other operating expenses, net 642.6 - - - - (325.1) Impairment (93.9) - - - - (93.9) Equity income - - - - 406.0 406.0 Income (loss) before financial results and taxes 633.3 261.5 (25.4) (0.8) 406.0 1,274.6

63 / 140 SUSTAINABILITY REPORT Net operating revenue 2020

On a year-on-year comparative basis, Evolution – Net operating revenue net operating revenue rose from (R$ million)

R$ 9,804.5 million in 2019 to R$ +111 2,385 (17) 12,259 81 12,259.2 million in 2020, or an increase of 9,805 127 84 34 30 (164) (25) 2,555 R$ 2,454.7 million (25.0%). 170 98 1,109 1,084

Generation and energy sales from the 8,428 8,539 portfolio: increase of R$ 111.4 million +25% (1.3%), mainly driven, by the following positive effects: NOR 2019 Price and Tax Indemnity Export ST trading/ Trading Transmission Photovoltaic NOR 2020 sales volume recovery and other CCEE panels (i) R$ 126.5 million increase in revenue from energy sales contracts in Generation and portifolio’s sale Trading Transmission Photovoltaic panels regulated and free markets, as result of a combination of variations in (iv) R$ 28.8 million relative to Trading: reduction of R$ 25.1 mil- struction work on the Gralha Azul and energy volumes sold and the net indemnification for interruption to lion (2.3%) mainly due to the nega- Novo Estado transmission systems. average selling price; business and a corresponding claim tive result from marking to market of and the collection of a contractual future sales and the decline in reve- Solar panels: a decrease of R$ 17.0 (ii) R$ 83.5 million non-recurring from fine for downtime. These effects nues from operations executed, par- million (17.4%) in the sale and instal- tax claw backs; were partially attenuated by: tially offset by growth in transactions lation of solar panels due to weaker realized in the short-term market. demand, principally a reflection of the (iii) R$ 30.5 million from the export of (v) a decrease of R$ 163.6 million in Covid-19 pandemic. energy in 3Q20; and transactions across the short-term Transmission: an increase of R$ 2,385.4 market, principally the CCEE. million, largely due to advancing con-

64 / 140 SUSTAINABILITY REPORT 2020 Equity Income

ENGIE Brasil Energia’s 32.5% equity is inappropriate, as the 2019 equity stake in Transportadora Associada de income only covers six months of TAG Gás S.A. (TAG) resulted in a contribu- results. In addition, in a large share of tion of R$ 487.1 million to the Compa- the latter half of 2020, the Company’s ny’s Ebitda in 2020 via equity income. equity stake in TAG was 32.5%, greater Comparison of the effects impacting than the 29.25% applicable to periods equity income results in 2019 and 2020 preceding the additional acquisition.

Income statement TAG (R$ million)

6,004 (2,244) Contribution to Ebitda (140) (1,445)

(581) 1,594 487

NOR TAG Cost of Financial Income taxes Net income 2020 services result TAG 2020

65 / 140 SUSTAINABILITY (iii) R$ 406.0 million due to a higher result from the corporate stake in the jointly REPORT Ebitda and Ebitda Margin controlled subsidiary — TAG. 2020

On a full 2019 x 2020 year comparison, Ebitda increased R$ 1,326.3 million (25.7%) These positive effects were counterbalanced by the following negative effects: from R$ 5,158.2 million in 2019 to R$ 6,484.5 million in 2020, a combination of the following positive effects: (iv) R$ 25.4 million from the energy trading segment — of which R$ 45.2 million are a result of the effects of marking to market, albeit partly attenuated by (i) R$ 684.8 million (13.5%) in the generation and electric energy sales portfolio the positive impact of R$ 19.8 million originating from executed transactions segment of the Company; and from operating expenses; and

(ii) R$ 261.5 million from the energy transmission segment; and (v) R$ 0.6 million (13.6%) from the solar panel segment.

Evolution - Ebitda (R$ million)

6,485² 47 (46) 406 83 60 (78) (94) (143) 968 127 84 (321) 262 (25) 487 (1) 280 5,158 81 18

+26% 5,754 5,068

(4) (5) (5) (31)

Ebitda Hydrological Price Tax Purchases Export and Royalties ST trading/ Charges for Impairment Third-party Indemnif. Photovoltaic Transmission Trading Equity Ebitda 2019 risk and sales recovery for indemnity CCEE¹ the use of grid services, supplier panels income 2020 renegotiation volume portfolio received and fuel personnel and Pampa Sul (TAG) other TPP

Generation and portfolio´s sale Trading Transmission Photovoltaic panels Equity income (TAG)

1 - Considers the combined effect of changes in revenue and expenses. 66 / 140 SUSTAINABILITY REPORT The generation segment, the variation Excluding these effects, Ebitda for this (v) R$ 61.7 million increase in the Generation Ebitda margin 2020 of which is shown in item (i) above segment in 2020 would have declined costs of outsourced materials was affected by non-recurring events from R$ 5,753.2 million to R$ 4,800.8 and services; The Ebitda margin for the generation booked in the comparative years in million and in 2019 from R$ 5,068.4 segment recorded an increase of 7.3 p.p. the amount of R$ 636.3 million with million to R$ 4,752.3 million. With this (vi) R$ 46.6 million from the from 60.1% in 2019 to 67.4% in 2020. respect to the following events: on a 2019 x 2020 comparative bases, increase in charges for the use Ebitda for this segment would have of the network; ( i ) an additional R$ 967.7 million in reported an increase of R$ 48.5 mil- recovered energy costs in the light of lion (1.0%), mainly a reflection of the (vii) R$ 46.1 million in the result the renegotiation of the hydrological following positive effects: from transactions conducted risk in 2020; on the short-term market; (i) R$ 126.5 million, result of the (ii) R$ 83.5 million gain from the combination of variations in energy (viii) R$ 31.1 million in successful legal action in 2020; volume sold and the average net higher own fuel selling price; consumption; (iii) the negative effect of R$ 321.0 million of other operating revenues (ii) R$ 82.6 million reduction in energy (ix) R$ 24.6 million in increased from indemnifications received for purchases; selling, general and non-compliance with contractual administrative expenses; conditions from the supplier (iii) R$ 47.1 million decrease in royalty responsible for the construction of payments; and (x) R$ 18.8 million in increased Pampa Sul and booked in 2019; and payroll overheads; and (iv) R$ 28.8 million in indemnification ( i v ) R$ 93.9 million arising from the for interruption to business. These (xi) R$ 7.6 million of other revenues, increase in asset impairment effects were partially offset by costs and operating expenses. between compared years. the following negative effects:

67 / 140 SUSTAINABILITY REPORT Consolidated Ebitda Net income 2020 Margin On a 2019 X 2020 comparison basis, net income The consolidated Ebitda margin reg- increased from R$ 2,311.1 million in 2019 to istered an increase of 0.3 p.p. from R$ 2,797.3 million, that is an increase of R$ 486.2 52.6% in 2019 to 52.9% in 2020. million or 21.0%. This positive effect is due to the Excluding the non-recurring effects following impacts: R$ 486.2 millon already mentioned the consoli- Increase in net income dated Ebitda would have posted an (i) an increase of R$ 1,326.3 million in Ebitda; between 2019 and 2020. increase of R$ 690.0 million (14.3%) between the years 2020 and 2019. (ii) increase of R$ 675.4 million of net The Ebitda margin on the same com- financial expenses; Evolution – Net income parable basis would have shown a (R$ million) decrease of 4.0 p.p. (iii) a further R$ 113.0 million in income tax and social contribution; and 1,326 (52) (113) It should be pointed out that the (675) 2,797 consolidated Ebitda margin is par- (iv) an additional R$ 51.7 million of depreciation 2,311 tially reduced by the effects of and amortization. energy trading operations, booking of revenue and costs for the con- Excluding non-recurring items which impacted the struction of the transmission lines periods (renegotiation of hydrological risk, asset +21% and the operations transacted by the impairment, and successful legal action in 2020 and EGSD subsidiary, where margins are indemnity payments received for non-compliance characteristically inferior to those of with contractual conditions plus asset impairment in the company’s other operation. 2019), net profit in 2020 would have been R$ 15.9 Net income Ebitda Depreciation Income Financial Net income 2019 and taxes result 2020 million (0.8%) higher. amortization

68 / 140 SUSTAINABILITY REPORT Value added and financial support received 2020

Value-added distribution Out of R$ 361.7 million distributed Out of R$ 3,024.3 million (R$ million and % of total) to employees: distributed to the government:

R$ 229.0 million (3.1%) R$ 1,882.0 million (25.3%) 3,024.3 ; 41 compensation and charges. federal taxes. 2,622.3 % ; 35 1,260. % % 8; 1 R$ 44.5 million (0.6%) 1.7; 5 7% R$ 64.9 million (0.9%) 36 % state taxes. .0; 2 benefits. 75 1 R$ 5.0 million R$ 48.2 million (0.6%) municipal taxes. profit sharing. R$ 163.1 million (2.2%) R$ 19.6 million (0.3%) sectoral charges. Fundo de Garantia por R$ 929.7 million (12.5%) Tempo de Serviço (FGTS). charges on concessions payable.

Government The total monetary value of financial support ENGIE Brasil Energia received from Shareholders the government in 2020 was R$ 77.9 million, as follows: Third parties Employees • R$ 67.6 million in federal incentives, via Amazon Development Superintendence Retained (Sudam) and Northeast Development Superintendence (Sudene); In 2020, the Company generated R$ 7,444.1 million in value added. The • R$ 2.7 million in connection with the Lei do Bem, also federal, for RD&I results were distributed across our stake- incentives; and holders as the figure shows. The result is up 20.0% from 2019’s R$ 6,201.7 mil- • R$ 8 million in Bahia State incentives, in connection with the lion and up 35.6% from 2018. “Desenvolve Bahia Program.”

69 / 140 SUSTAINABILITY REPORT Debt Total debt (ii) raising of loans via Law 4131 for 2020 (R$ million) R$ 1,132.4 million from overseas As of December 31, 2020, total con- financial institutions, totally solidated gross debt, representing 16,672.2 protected by hedge operations, 14,437.0 principally loans, financing, debentures 9,498.3 and allocated for the formation of and redeemable preferred shares, net working capital and for the financing of hedging operations, totaled of Company’s business plan; R$ 16,672.2 million — an increase of 15.5% (R$ 2,235.5 (iii) a debentures issue for million) compared to the posi- R$ 1,009.3 million, for financing tion as at December 31, 2019. the implementation of transmission projects and for The variation in the Company’s 2018 2019 2020 allocation to Pampa Sul; debt is related essentially to a combination of the following (i) drawdowns from the Brazilian (iv) injection of R$ 476.8 million events during 2020: Development Bank (BNDES) and on- from the subscription of lending banks amounting R$ 2,181.3 preferred shares of Novo Estado million, largely for the construction Participações S.A.; of the Campo Largo II Wind Complex and the Novo Estado and Gralha Azul (v) generation of R$ 1,150.0 million in transmission systems; charges to be paid and monetary restatement; and

(vi) R$ 3,714.3 million in amortizations of loans, financing and debentures.

70 / 140 SUSTAINABILITY REPORT Debt breakdown Maturity Term Loans 2020 (R$ million) The average weighted nominal cost

4,033 of debt at the end of 2020 was 7.6% (same as registered at the end of 2019).

61% 2,579 2,019 2,079 On December 31, 2020, the Compa- 1,833 1,802 1,301 ny’s net debt (total debt less result of 12% 14% 823 derivatives operations, deposits ear- 13% 203 marked to the guarantee of debt servicing and cash and cash equivalents) 2021 2022 2023 2024 2025 2026 a 2031 a 2036 a 2041 a 2030 2035 2040 2044 was R$ 11,786.4 million, as increase of IPCA Fixed 15.6% compared with the end of 2020. TJLP CDI Fixed CDI TJLP IPCA

7.6%

average weighted nominal cost of debt at the end of 2020.

71 / 140 SUSTAINABILITY REPORT Capital expenditures 2020

In 2020, the Company invested R$ 4,013.1 million, of which: Capital expenditures For the coming years, the Company in 2020 has an investment plan totaling (i) R$ 655.8 million were used for the acquisition of corporate stakes: (R$ million) approximately R$ 6 billion. R$328.6 million for the acquisition of a 100% corporate holding in Novo 59.9 9 8 2. 7 655.8 Estado Energia S.A. and; R$ 327.2 million f or the acquisition of an 9 6 2. Budgeted investments additional 3.25% in Transportadora Associada de Gás S.A. (TAG); 4 .3 1 36 1 2 4 . . and respective sources of 6 9 1 2

2 , financing

(ii) R$ 3,214.7 million applied in the construction of new projects as follows: 1 4,013.1 (in R$ million) (ii.i) R$ 1,229.2 million for the Novo Estado Transmissora de Energia transmission line; 3,517

R$ 972.9 million in the Campo Largo II Wind Complex; 1,568 (ii.ii) 3,271 935 754 397 (ii.iii) R$ 859.9 million invested in the Gralha Azul Transmission Line; 633 245 356 Novo Estado Campo Largo II 2021E 2022E 2023E in the Pampa Sul Thermoelectric Power Plant and (ii.iv) R$ 136.3 million Gralha Azul Equity interest acquisition Debt funded, including acquisitions liabilities (ii.v) R$ 16.4 million in other investments; Modernization, maintenance and revitalization Shareholder’s equity funded, Pampa Sul including acquisitions (iii) R$ 142.6 million were allocated to generator complex maintenance, revitalization Othres and modernization projects, of which, R$ 9.9 million invested in the modernization of the Salto Osório Hydroelectric Power Plant.

72 / 140 SUSTAINABILITY REPORT Dividends 2020

The Company’s Board of Directors, shares were traded ex- interim Directors approved proposed comple- Even in the face of the challenges at meetings held 07.30.2020 and dividends from 08.10.2020 and mentary dividends for fiscal year 2020, raised by the Covid-1 pandemic 12.15.2020, approved distribution 12.21.2020, respectively. The total in the amount of R$ 609.6 million and investments made in 2020, the of interim dividends in the respective interim dividends approved equals (R$ 0.7471177357 per share), to be total proposed proceeds for the fis- amounts of R$ 677.7 million, equiva- 100% of the adjusted net income of ratified at the Annual General Meet- cal year reached R$ 2,016.8 million lent to R$ 0.8305737385 per share, 1H20. Subsequently, and after the ing, which will determine the payment (R$ 2.4717315830 per share), equiv- and R$ 554.5 million, equivalent to herein reported facts, at a meeting terms and conditions. alent to 100% of payable net earnings R$ 0.6795603315 per share. The held February 11, 2021, the Board of (excluding hydrological risk renegotiation).

History of dividend distribution (payout) (1) For the purposes of comparability between fiscal years, 2.79 an adjustment in dividend per 2.47 2.45 share was made in the light of the share bonus approved on 1.90 1.75 1.81 1.82 December 07, 2018. 1.53 (2) Considers the annual payable net income. (3) Based on volume-weighted 5 100% 100% 100% 100% 100% 100% 100% closing price of ON shares in 0.93 0.96 1.02 0.81 the period. 72% 0.76 58% 9.2% 57% (4) Figures for 2019 were 55% 8.2% 55% 55% 8.6% 7.1% 6.1% 5.7% resubmitted in the light of 5.7% 5.0% 6.3% 4.5% 3.5% 3.7% 3.5% the AGM’s decision on the retention of interim dividends for fiscal year 2019. 4 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (5) Payout equivalent to 100% of the distributable adjusted net income (ex-hydrological Dividend per Share¹ (R$) Payout² Dividend Yield³ risk negotiation).

73 / 140 SUSTAINABILITY REPORT Capital markets and performance of shares 2020

The Company’s shares are traded on EGIE3 vs. Ibovespa vs. IEEX Fitch Ratings Agency Classification the Brazilian stock exchange (B3) under (Base 100 – 31.12.2019) the EGIE3 (100% common shares) sym- Domestic Rating AAA(bra) International Rating – Issues bol. In addition, the Company has a BBB- 110 in Reais IEEX = 82,846 Level I American Depositary Receipts International Rating – Foreign 105 BB Currency issues (ADRs) Program, the securities for 100 Ibovespa = 119,017 Sixth debenture issue Rating, 95 AAA(bra) which are traded on the United States due 2024 90 EGIE3 = R$ 43.94 Over-The-Counter (OTC) market under Seventh debenture issue, due AAA(bra) 85 2026 the EGIEY symbol at a ratio of one ADR 80 to every one common share. 75

70 ENGIE Brasil Energia’s registered a deval- 65 uation of 10.1%, while IEEX and the 60 EGIE3 55 Ibovespa posted growth of 8.1% and IBOV 50 2.9%, respectively. Average daily volumes dez-19 jan-20 fev-20 mar-20 abr-20 mai-20 jun-20 jul-20 ago-20 set-20 out-20 nov-20 dez-20 IEEX For additional details on traded were R$ 81.1 million, a growth of economic and financial 35.1% compared with 2019 when trad- performance, view our ing turnover was R$ 60.0 million. Ratings 2020 Management Report. In 2020, Fitch Ratings reaffirmed the Company’s National Long-Term Rating at ‘AAA(bra)’, On the last trading day in December stable outlook, and its international rating at ‘BB’, stable outlook, one level above the 2020, the closing price of the Com- sovereign rating. pany’s shares was R$ 43.94/share, translating intoa market capitalization of R$ 35.9 billion.

74 / 140 SUSTAINABILITY REPORT People 2020 Zero 140 fatal 1,538 direct jobs accidents created direct Communities

employees operating Culture 6 Centers Gender equality In a survey with employees, 33 thousand 3 women are now part of the participants of the Power 98% Plant Visitation Program Company’s senior management of respondents said they – two at the Board of Directors believe that ENGIE is a socially million paid as and one at the Executive Board responsible company. R$ 87 royalties

Facing the pandemic Other publics

thousand Employees R$ 7.1 59 3.2 suppliers evaluated million donated to support thousand Covid-19 tests on several criteria each quarter. local communities and done on employees Communities healthcare institutions customers 720 served on the Suppliers Free Energy market. Launch of the 208 Clients Neighborhood Women Project thousand investors – twice as in 100 municipalities in 13 regions of Brazil many as at yearend 2019. Investors

75 / 140 SUSTAINABILITY REPORT 2020 Solid connections [GRI 102-43]

eople lie at the foundation of ENGIE Brasil Energia’s purpose. We strive so that they will act as agents for planetary change, which motivates us to guarantee our employees’ development and welfare, maintain a dialogue with stakeholders, promote inclusiveness, Pand remain watchful of the social impacts of all of our activities. As part of this pursuit, we share our values, policies, practices and other information that proves relevant to the various publics with which we interact. This has the support of several dialogue platforms, such as events, public hearings, communication channels and power plant visitation programs, among others. In addition, we work for effective community engagement, contributing to representation associations and sustainable development forums of the regions where the Company operates.

In 2020, facing the Covid-19 pandemic magnified the impact of ENGIE Brasil Energia’s social responsibility actions, reflecting on the precautions taken on behalf of employees and service providers, as well as on the support provided to communities to overcome the health crisis and its developments.

76 / 140 SUSTAINABILITY REPORT Employees 2020 Workforce profile

[GRI 102-8; 102-41; 103-1; 103-2; 103-3; 401-1; 405-1] [2030 Agenda Goals: 8.5]

At ENGIE Brasil Energia, human capital is an essential asset for business development. In line with the purpose of accelerating the energy transition In 2020, the Company created 140 and contributing to the construction new jobs — 272 employees were hired of a more sustainable future, our and there were 132 terminations. employees have available ethically- minded programs and platforms intended for personal and professional development to enable quality of life, recognition and satisfaction. By yearend, 1,538 people formed our workforce — the figure covers workers In 2020, in the face of the Covid-19 pan- active in the Company’s wholly-owned demic, people management addressed projects. Add to these 47 interns and additional challenges that were overcome another 143 employees associated based on the unbridled commitment to with partly owned companies (108 at ensuring the physical and mental health TAG, 31 at Companhia Energética Est- of employees and their families. reito and four at Itá Energética).

77 / 140 SUSTAINABILITY REPORT 2020 Number of employees, by gender Number of employees by Percentage share of own and category age group employees by region (in 12.31.2020) (as of 12.31.2020) (as of 12.31.2020)

Region Northeast 6,9%

Management Region 69% North 255 6,8% 37

17% 14% Anallysts, engineers and specialists

343 Region Region Center-West Southeast 148 0,5% 30 - 50 5,1% Under 30 Region Operators, technicians Over 50 South 634 80,8%

121

Percentage share of All employees have a right to freely associate employees by gender and, in 2020, 100% of the workforce were

80% 1,538 employees covered by collective bargaining. 20% up 10% from 2019

78 / 140 SUSTAINABILITY REPORT Internal Survey – ENGIE&ME Occupational Health 2020 To measure the effectiveness of the programs developed for employees and and Safety their engagement with corporate objectives, we regularly hold organizational climate surveys. The surveys also enable benchmarking against domestic and [GRI 103-1; 103-2; 103-3; 403-1; 403-8; 403-9] international companies. [SASB IF-EU-320a.1] [2030 Agenda Goals: 8.8] In 2020, 92% of the workforce completed the form. As a result, some of the survey cycle’s highlights include: Physical and psychic employee integ- forced its preventive health programs, rity is a priority commitment for the and added new efforts to prevent the Company, as per our Sustinable Man- spread of the novel coronavirus. agement Policy. Care for the health, safety and welfare of ENGIE Basil recommend the Company Energia’s employees extends to third 95% as a good place to work; parties and subcontractors, with support from specific clauses governing the matter in the agreements executed with suppliers. 92% are proud 98% believe that to be associated ENGIE Brasil Energia is a socially Over the course of 2020, the Company with the Company; responsible company; persisted on the intensive accident prevention work it has been carrying out in 97% believe that 89% believe that recent years to gain employee engage- ENGIE Brasil Energia is an environ- Management supports diversity and ment compliance with standards and mentally responsible company; inclusiveness at ENGIE Brasil Energia. adoption of recommended practices. In addition, the Company also rein-

79 / 140 SUSTAINABILITY REPORT Fighting Covid-19 2020

As soon as the World Health Organiza- because of the digitalization efforts and Company constantly sought to instruct, to work remotely or remain on leave. tion (WHO) declared the pandemic, the investments that the Company has been monitor and motivate its employees At yearend, employees were working Company deployed a Crisis Committe making for years as one of its corporate by means of several initiatives. To this on-site by rotation, so that a maximum on March 13, 2020, made up of the strategy’s pillars. end, a healthcare channel was made 30% of the facilities were in use – and Management Board and professionals available to fully support employees maintaining every distancing precaution from different areas and regions. To As for employees for whom remote and their family members – confiden- and rigorous hygiene. Covid tests were evaluate impacts and measures to be work was not viable, such as those tially, free of charge, and available 24 administered fortnightly to employees adopted – both reactive and proactive directly involved in operations and hours a day, seven days a week, by and service providers – a total 59 thou- – the group began to interact systemat- essential maintenance, we established e-mail or telephone. sand tests were run in the year. ically, casting a holistic and diverse eye plans for different degrees of mitiga- on problems and solutions. tion, contingency, confinement and On a different front, employees got isolation. In addition, we took addi- weekly questionnaires to determine As concerns employees, one of the ear- tional precautions — such as physi- their levels of anxiety, satisfaction and liest measures recommended by the cal distancing between workers and engagement. The results were shared Committee and endorsed by top man- more frequent cleaning of equipment with everyone and discussed collectively agement was to adopt a work-from- and facilities – to maintain the supply and openly for the exchange of impres- home regime for employees whose jobs of electric energy, which is a socially sions and suggestions among colleagues, were appropriate for execution in such essential service. together with content and lectures a format – beginning on March 17, as a intended to mitigate recurring issues. means to reduce the exposure of a sig- Recognizing the psychosocial impacts nificant portion of our staff. It is worth of this, where the Company’s response Gradually, and more intensely in the lat- 59 thousand emphasizing that we were able to imple- time was short, but the adaptation ter half of the year, the Company rees- ment this measure quickly, with no need period for all workers and their families tablished employees’ return to on-site tests were for significant technology adaptations, to the new reality might be lengthy, the work – those in high-risk groups continue run in the year.

80 / 140 SUSTAINABILITY REPORT Accident prevention 2020

As a result of actions intended to Management of hazardous and near-ac- In 2020, the Sipat was prevent occupational or commuting cident situations, including records and held in August, in virtual accidents, no fatal accidents were monitoring, takes place by means of a format because of the reported in 2020 and the annual specific system that consolidates time pandemic. It featured Health and Safety indicators per- series and integrates Occupational presentations and aware- formed in line with the previously Health And Safety (OHS) indicators with ness-building sessions on established standards and goals, as other corporate management systems. topics like mental health, anxi- the figures on page 82 show. In 2020, 5,886 events were logged on ety, healthy and conscious use of the system – of these, 80 were catego- technology tools and social media, ENGIE Brasil Energia preventively rized as HIPOs (High Potential Events), and guidance on Covid-19 prevention. establishes performance targets on a category that is given distinctive treat- this matter that managers must meet. ment with detailed action plans. The following figures show the main The targets include the so-called OHS indicators monitored over the Management Safety Visits (VGS). The The Company also has in place 17 year –ENGIE Geração Solar Dis- practice requires on-field inspection Internal Accident Prevention Commis- tribuída (EGSD) data are pro- of the application of safety proce- sions (CIPAs), formed by 96 elected and vided in separate. dures, so that managers must mon- appointed members, pursuant to the itor control measures and reinforce NR5 standard, and representing 100% of communication with the teams. A employees. A CIPA focuses on preventing total 1,379 VGS were carried out in occupational accidents and diseases and 2020 – in each case while abiding by one of its main responsibilities is to pro- all pandemic-related safety protocols. mote the Internal Occupational Accidents Prevention Week (Sipat), held at all power plants and at the headquarters as well.

81 / 140 SUSTAINABILITY REPORT Occupational Health and Safety Indicators (except EGSD) Development 2020 Indicator 2018 2019 2020 2020 Goal [GRI 404-1; 404-3; 406-1] Not Frequency Rate (FR) – direct employees 0.970 0.000 0.413 stablished [2030 Agenda Goal: 4.4]

Severity Rate (SR) - direct employees 0.000 0.000 0.006 ≤ 0.020

Frequency Rate (FR) – direct employees + The continued development of tions – which prevented on-site meet- 1.390 1.720 0.621 ≤ 0.800 long-term service providers employee competencies and skills ings – the company reported an 11.9% Frequency Rate (FR) – short-term service 1.640 0.630 0.787 ≤ 2.400 providers + work under construction enables deployment of the organiza- training-hours decrease from 2019. tional strategy and agile adaptation to Even so, approximately 66.1 thousand the evolution of the market in which hours were dedicated to training, with ENGIE Brasil Energia operates. In R$ 3.8 million invested, down 32.1% Occupational Health and Safety Indicators EGSD 2020, due to pandemic-related restric- from the previous year’s amount.

Indicator 2019 2020 2020 Goal 2021 Goal

Frequency Rate (FR) – direct employees 4.650 0.000 ≤ 4.63 ≤ 3.50 Severity Rate (SR) – direct employees 0.302 0.000 ≤ 0.069 None Respect for Human Rights [GRI 404-1; 404-3]

In 2021, the above indicators will be measured based on a different methodology. Implementation of the externally managed whistleblowing channel in late 2019 The new targets will be as follows: helped employees feel comfortable reporting discrimination and harassment events, as well as other ethics- and integrity-related matters. The Company has thus been able to provide satisfactory responses to whistleblowers and, with their Indicator 2021 Goal assistance, identify situations that deviate from proper conduct. Operation and maintenance Frequency Rate (FR) ≤ 1.40

Own employees Severity Rate (SR) ≤ 0.02 In 2020, out of seven discrimination reports filed, four were deemed accurate Construction sites Frequency Rate (FR) ≤ 2.4 and led to the adoption of corrective measures.

82 / 140 SUSTAINABILITY REPORT 2020

To ensure career advance, we improved tematizing the PDIs of all employees, the tools intended for the personal and the People and Culture Management professional development of 100% of area identifies trends and proactively employees. In 2020, the Company proposes training programs or col- launched a digital platform that sys- lective development opportunities to tematizes career dialogues between meet the expectations of the majority. managers and their teams, supporting the identification of development From among several skills-building opportunities associated with needs platforms, employees have access arising from positions, businesses, and to the ENGIE University, a corporate the interrelation of professional expec- university coordinated by the Con- tations and aspirations. An in-house trolling shareholder. It provides edu- campaign was also held to promote the cation and development programs to tool and dialogues. the Group’s employees on a global scale. ENGIE University contents, as As a consequence of the dialogues, well as other training tools, integrate Individual Development Plans (PDI) with the Corporate Education Portal, are prepared by employees with guid- with an assortment of development ance and validation from their immedi- offerings that employees may access ate superior as a crystallization of the freely or at the suggestion of either objectives and aspirations discussed managers or the People Management while reflecting on their careers. By sys- and Culture area based on their PDIs.

83 / 140 SUSTAINABILITY REPORT 2020 Diversity and inclusiveness

[GRI 405-1] [2030 Agenda Goals: 5.1, 5.5, 8.5, 8.6, 10.2, 10.3, 10.4] Reinforcing Inclusiveness Our Human Rights Policy, as the ees were offered several workshops Company Code of Ethics, provides for to address topics in the areas of dis- In 2020, two of the Company’s programs made a special contribution to non-discrimination as a key element of crimination, harassment and disrespect. increased sensitivity towards abiding by the principles of equality in the work- our corporate culture. In this sense, no The goal was to bring about reflection place and beyond. The programs, called “Exchanging Looks” and “Inclusive form of prejudice is tolerated – ethnic- on behaviors or situations that fail to Conversations”, promoted Webinars intended for an exchange of experiences ity, religion, gender, political or parti- reflect the empathy and inclusiveness with and perceptions of diversity, towards opposing prejudice and eliminating san choices, age, social status, physical expected of a diverse workplace. inequality. Some of the topics addressed include: disabilities, or any other personal traits. In 2021, the learning journey will continue • Micro-aggression and unconscious biases; In addition to being the right thing to with specific training programs on uncon- • Domestic violence; do, fostering a diverse and inclusive scious decision-making biases. In addition • Parenthood; environment is a mora imperative. It is to internal awareness-building activities, • The LGBTI+ movement; crucial for ENGIE Brasil Energia to make the Company has been making voluntary • Identifying disrespect and harassment; sure that the workplace offers oppor- pledges and attending corporate forums • Anti-racist attitudes; tunities to everyone. In 2020, employ- and movements on this subject. • Masculinity.

84 / 140 SUSTAINABILITY REPORT Gender equality 2020

ENGIE Brasil Energia pays attention ing gender equality and empowering to the whole range of diversity-re- all women and girls. By late 2020 as lated groups and causes, and has women were 19..9% of the workforce, in recent years been working more up 0.8 p.p. from the previous year and intensely on gender equality — an up 4.2 p.p. over five years. increased share of women in leadership roles is one of the ENGIE Group’s According to the guiding principles non-financial objectives, at the global of UN Women, the Company has level. In this sense, an important 2020 ensured the inclusion of at least one milestone was the integration of three woman among the finalists in its hire women as members of ENGIE Brasil selection processes. The initiative is Energia’s senior management – two compounded by an effort to pursue of them as Directors and one as an women from outside the Company Executive Officer. for technical careers, the provision of benefits to reconcile the professional In Brazil, in 20199, the Company and personal lives, and training to in addition to the legally mandated to recognize and retain employees, endorsed the “Women’s Empow- offset biases that prevent equitable 120 days, the Company offers an the Company monitors its rate of erment Principles” (WEPs), a UN evaluation compared to men. additional 60 days. For men, in addi- post-maternity return to the job. In Women initiative. By establishing tion to the 5 days as per the law, the 2019-2020, the rate was 96% – out this emphasis, we also contribute As a member of the Citizen Company Company offers 15 more days. of all the employees taking maternity more effectively to the fifth Sustain- Program, ENGIE Brasil Energia offers leave in the past two years, only one able Development Goal (SDG) of the extended maternity and paternity To determine the effectiveness of left the workforce. 2030 Agenda, which proposes attain- leave to its employees. For women, the policies and practices intended

85 / 140 SUSTAINABILITY REPORT Communities 2020 Youth and the [GRI 103-1; 103-2; 103-3; 201-4; 413-1, 413-2] disabled [2030 Agenda Goals: 4.7, 8.3, 10.2, 11.3, 11.A, 12.8, 17.17]

ENGIE Brasil Energia has since 2019 s partners in the pursuit of improving the socio-economic conditions licensing authority and the communities been a member of the Alliance for Mer- sustainable development, of the most underserved social groups. themselves – this may include the Pros- cosur Youth, an initiative that aims to the communities of the re- ecutor’s Office, local associations and support the beginning of the working gions where the Company Identifying local impacts third-sector organizations. Based on this life by means of a network of partner Aoperates stand as priority stakeholders process, the licensing authority estab- companies developing actions and pro- for ENGIE Brasil Energia. As a result, the Electric energy generation and trans- lishes tracking and monitoring programs grams with this public in mind. In 2020, company keeps dialogue channels open mission activities generate direct and – many of which remain active through- approximately 17% of ENGIE’s work- and supports several community initiati- indirect impacts on the surrounding out a project’s useful life as a condition force was under 30 years old – intern- ves, allocating social investments to the communities. These effects, and nega- for the renewal of operating permits. ships and apprenticeships concentrate following main strategic areas: access to tive ones in particular, are evaluated and the majority of young employees. culture and sports, protection of children measured both in pre-implementation In the projects’ operational phase, interac- and teenagers, income generation, and studies – with socioeconomic analy- tions with and commends and complaints Our diversity policies also promote social inclusiveness. ses as part of Environmental Impact from the community are logged into the the inclusion of Special Needs Persons Studies (EIAs), for example –, during Integrated Management System to gen- (SNPs). At yearend 2020, 53 of them In projects undergoing implementation, implementation and in the operational erate “action plans for stakeholder com- were employed with the Company. and based on engagement of local com- phase. The results of these studies, and munications”, which follow a registration, To facilitate admission, we announce munities and guidance from licensing in particular of implementation-related analysis and, as the case may be, action opportunities open to this group on a authorities, the Company also fosters ones, are presented to the communi- and subsequent feedback to the stake- special Website: (https://www.oportuni- skills-building and productive activities, ties in public hearings (whether online holders involved. In 2020, 93 claims were dadesespeciais.com.br/Engie/). particular emphasis being due on sup- or in person) where they are subject to logged into the system – which covers port to association and cooperativism, and discussions between the Company, the 100% of operations.

86 / 140 SUSTAINABILITY REPORT Other impacts – both negative and pos- opment projects not associated with 2020 itive – perceived by certain neighbor- project implementation. These invest- ing communities are provided on page ments have been distributed across xx, as part of the report on the formal own and incentivized resources, as the stakeholder engagement process, using table below shows, to magnify posi- structured consultation panels held tive impact on communities. The total every three years and which also gen- funding was down 12.5% from 2019 erate logs, action plans and feedback. due mainly to the suspension of certain projects pursuant to pandemic-related In 2020, the Company invested social distancing guidance. R$ 22.6 million in community devel-

Investments in social responsibility (in thousands of R$)

Change Source 2018 2019 2020 2020 x 2019 Non-incentivized investments 3,497.0 4,034.6 7,504.2 86.0%

Investments through the Infancy and Adolescence Fund - FIA 1,837.0 2,609.0 1,868.4 -28.4%

Investments under the Culture Incentive Law – Rouanet Law 8,798.0 9,375.0 7,264.6 -22.5%

Investments under the Sport Incentive Law 1,610.0 2,490.0 1,418.5 -43.0% Investments under the National Support Program for 1,597.0 2,535.0 1,661.0 -34.5% Oncological Care - PRONON Investments under the National Care Support Program for 1,607.4 2,546.0 1,436.3 -43.6% People with Special Needs - PRONAS/PCD Investments through the Municipal Fund for the Elderly 1,430.9 2,286.0 1,480.9 -35.2%

TOTAL 20,377.3 25,875.6 22,633.9 -12.5%

87 / 140 SUSTAINABILITY REPORT Facing the pandemic 2020

Recognizing its social role, ENGIE Brasil thus intended. In the early days of the tion and diagnosis. One of the main Energia carried out a series of actions health crisis, the focus was on immedi- efforts on this front was setting up an in support of communities to face the ate support to healthcare institutions as emergency fund for Fundação Instituto Covid-19 pandemic and its effects, a means to improve their conditions to Oswaldo Cruz (Fiocruz) to increase allocating R$ 7.1 million to initiatives serve the population, via the donation of test production. ENGIE Brasil Energia hospital equipment and materials. Then, joined forces with five other companies support turned to underserved house- in the electric energy industry for an holds, which benefitted from foodstuffs initial allotment of R$ 9 million to the donations and more structure jobs and fund – of which the Company provided income-generation projects. R$ 1.5 million. Another highlight was the “Estímulo 2020” Program, a move- In parallel with solidary action, ENGIE ment to provide skills and financial sup- R$ 7.1 million remained connected with research port for small entrepreneurs to maintain destined to support communities institutions dedicated to the develop- their activities during the pandemic, in tackling the pandemic ment of solutions for Covid-19 preven- with R$ 1.0 million in financial support from ENGIE Brasil Energia. trolling shareholder agreed to waive their compensation for June, July and To demonstrate engagement with sup- August, 2020. The respective amounts port to communities, and inspired in were incorporated into the Solidary similar steps taken by the officers of Campaign held for the employees, and ENGIE S.A. in France, all of the Com- allocated to assist healthcare institu- pany’s Directors appointed by the con- tions and underserved persons.

88 / 140 SUSTAINABILITY REPORT 2020

The Mulheres do Nosso Bairro project, The project’s initiatives include fostering which the Company launched in Octo- entrepreneurship, free online skills-build- ber 2020, aims to support the women ing courses, information on support net- in local communities to overcome the works, sensitization and awareness-build- negative effects of the pandemic. In line ing actions against domestic violence, and with ENGIE Brasil Energia’s pledge to support to health during pregnancy. The foster gender equality, the initiative is project launched with a R$ 770 thousand based on the realization, as reported in injection of funds and covers more than UN studies, that women were the hard- 100 municipalities in 13 Brazilian states. est bit by the health crisis – they make On another of the initiative’s drivers, the up 70% of the fighting front (social 1st edition of the Call for Projects ended work and healthcare jobs) and hold the in December 2020, recognizing 28 largest share of grey-market jobs, which female entrepreneurs who will receive a here hit hard in the period and enjoy total of R$ 500 thousand to develop their little social protection. businesses, generating a positive impact on their households and communities.

Neighborhood Women

Find out more by clicking here.

89 / 140 SUSTAINABILITY REPORT Culture and Sustainability Centers Visitations 2020

One of Company’s main community Centers Location Program relations efforts concerns the Culture and Sustainability Centers – designed, Another important tool for community implemented and maintained since outreach and the dissemination of the

2011 with EBE sponsorship, using both 7 sustainability culture is the Visitations incentivized and own funds. These ven- Program. The Company partners with ues foster cultural and educational ini- other entities to maintain structured tiatives in the communities neighboring visitation routines at the plants that the Company’s operations, providing form its generation complex, introduc- 6 community socialization opportuni- (GO) in August ing the projects’ operations and the ties and access to artistic manifesta- 2019, near the socio-environmental projects carried tions such as drama, music, dance and Cana Brava Hydroelectric out in the surrounding areas. cinema – so seldom found in smaller Plant. Two more centers countryside towns. Six centers have have been approved by the 4 The program is supplemented by pre- Implanted Centers 8 been implemented thus far, the latest Ministry of Citizenship and the 3 1 sentations at schools and in other 5 2 1 Alto Bela Vista (SC) of which opened in the city of Minaçu Bureau of Culture for construc- community environments, focusing 2 Capivari de Baixo (SC) tion start – as they rely on tax on the same topic and emphasizing 3 Concórdia (SC) benefits from the latter. They environmental education. The program 4 Quedas do Iguaçu (PR) are the Trairi Culture Center (CE) involved approximately 33 thousand in 5 Entre Rios do Sul (RS) and the Saudade do Iguaçu Culture 2020, markedly lower than in previ- 6 Minaçu (GO) Center (PR). Another center awaits the ous years, due to activities suspended Centers in the process Bureau’s approval in Itá (SC). of implementation because of the Covid-19 pandemic. 7 Trairí (CE) 8 Itá (SC)

90 / 140 SUSTAINABILITY REPORT Financial compensation 2020

The Company also contributes indirectly to value generation in the communities where it operates by means of Finan- cial Compensation for the Use of Hydro resources (CFURH) which is applicable to hydroelectric plants. Pursuant to the law, municipalities and states receive 45% each of these funds – the Federative Unit takes the remaining 10%.

The pro-rating is done based on the percentage of flooded area per municipality. In 2020, ENGIE Brasil Energia paid R$ 87.5 million in royalties. The exact amount allocated to each of the 70-plus municipalities collecting compensation can be viewed here.

Support to volunteering

ENGIE Brasil Energia has since 2018 beneficiary projects and their social support to the purchase of staples, held the “Energia Voluntária” cam- causes. The 2020 Campaign involved PPEs, and personal hygiene and paign, which encourages employees 52 employees, generating donations cleaning products. In the first cam- to donate from their Income Tax bills of approximately R$ 100 thousand. paign, the Company matched the to social projects such as culture cen- amount donated by employees. Two ters, day-care centers, orphanages, In the same vein, the Company more rounds where held where the R$ 563 thousand hospitals, or homes for the elderly. held three campaigns to encour- Company tripled amounts collected The Company provides consulting age employees to donate to entities from its teams. The campaigns raised were collected through support to enable the donations. from around the Company’s opera- R$ 563 thousand, considering 1,528 three campaigns to encourage the donation of Another important face of the ini- tions that lent assistance those most donations from employees and the employees to entities. tiative lies in engaging donors with affected by Covid-19, with particular stake of ENGIE Brasil Energia.

91 / 140 SUSTAINABILITY REPORT Project highlights 2020

Fostering dedicated themselves to subsistence nism for trading foodstuffs produced by socio-environmental projects since it association farming, the initial focus of support was family farming, that allocates the produce began operating in the region. on transmitting know-how on produc- to public and/or charitable institutions, Based on an innovative technical sup- tion techniques with a strong educa- such as day-care centers, hospitals and Highlights in 2020 include initiatives port program developed by ENGIE tional appeal. schools. In addition to enabling family associated with Campo Largo II, which Brasil Energia, families relocated due to farming, application of the PAA met the is undergoing implementation. With the implementation of the São Salvador To create the conditions for the families to needs of the municipalities in the Plant’s a total R$ 2 million in funding, the Hydro Plant made association the bed- sustainably succeed in their new context, catchment area – all of which are small Company’s voluntary socio-environ- rock of their resumed socioeconomic ENGIE Brasil Energia encouraged asso- and with large shares of the population mental actions aim to stimulate social activities, engaging local farmers in part- ciation as a means to join forces, lever- enduring social vulnerability conditions. A embeddedness and improve the living nerships for sustainable agriculture and age results and share benefits. Thus was total of approximately 230 tons of food- quality of the communities by means the fight against famine. The initiative formed in 2011 the Association of Farm- stuffs have been delivered to the region of access to culture, education, health has been in place since 2009 and stands ers, Families and Artisanal Producers of since the project began. and sports, among other aspects. out for the application of a new model Palmeirópolis and Region (AFAP), the first of support to self-relocated families that of its kind to be formed by this type of Gains in Bahia choose greater autonomy, and may be public in Brazil. In 2020, 70 families in the replicated in different contexts. community were members of the AFAP. In the municipalities of Umburanas and Sento Sé, in the state of Bahia, The first step to enable the prosperity The Association’s formation and the sup- the Company maintained its invest- of families on the field was to provide port from ENGIE Brasil Energia, enabled ments in support of the communities million technical support to provide guidance synergies with other social agents in neighboring the Campo Largo I and R$ 17 for their socioeconomic activities in various partnerships. One highlight was II and Umburanas Wind Complexes. in socio-environmental their new homes. Given the profile of AFAP’s integration into the Foodstuffs ENGIE Brasil Energia has invested projects since it began these households, which previously Procurement Program (PAA) – a mecha- approximately R$ 17 million in operating in the region.

92 / 140 SUSTAINABILITY REPORT One of the year’s main projects has 2020 been the construction of a community Mandala Vegetable garden center in Campo Largo, which adds to four others that the Company built in implemented by ENGIE the communities of Federal, Rodoleiro, Brasil Energia in the region, Gruna and Barriguda Brasília. The latter also received the fourth Mandala benefitting 20 families. Vegetable garden implemented by ENGIE Brasil Energia in the region, benefitting 20 families through shared ital Empowerment Center in the city of and sustainable foodstuffs production. Umburanas. The center will offer training courses beginning in 2021, provid- In addition, the first steps have been ing the local community with opportu- taken for the 2021 execution of “In-Be- nities for learning, income generation tween Needles and Threads – Sewing and social inclusion. Dreams”, whose main beneficiaries will benefit the company itself by establish- a regional pioneer. It began in Octo- be the women of the Rodoleiro com- Skills-building ing organic and lasting relationships ber 2019 and enabled workers to act munity. In addition to implementing a with local stakeholders. as technicians in the Electrical, Elec- tailoring studio, the project provides for and local hiring tromechanical and Electronic areas. acquisition of equipment and materials, ENGIE Brasil Energia aims to support In 2020, for example, the Technical To celebrate the accomplishment, the as well as technical skills programs in the development and qualification Specialization Course for Wind Farm Company held a virtual graduation cer- partnership with SESI. of local labor, particularly in regions Maintenance and Operation was con- emony on September 22 for the 24 where its presence is more recent. The cluded. The program was delivered in graduates – who may work in future To promote entrepreneurial training Company understands that initiatives partnership with Senai in the munici- ENGIE projects or projects of other using digital tools, the Company has like this generate a positive economic pality of Jacobina, state of Bahia. The wind farm operators, which are seeing partnered with Recode to set up a Dig- impact on the community, even as they 460-hour specialization program was massive expansion in the region.

93 / 140 SUSTAINABILITY REPORT inclusion and food safety of the com- individuals. The information is sys- 2020 munity – whose cassava processing tematized by means of technology group is made up of 15 women. tools like GIS and BI – and geo-spa- tialization enables generating heat Novo Estado Project maps and viewing the regions that demand the most attention. Thus, In the implementation area for the specific action plans for every demand Novo Estado Transmission System, in identified can be developed and car- the North Region of Brazil, the Com- ried out with data provided to the pany intensified dialogue with local teams on a Web platform that facil- communities to clarify the phases and itates strategy-setting and supports Traditional communities tional material to prevent the spread impacts of construction works in each the decision-making process. of the novel coronavirus, the Company municipality involved. These interac- Respect and cooperation are the brand developed a series of socio-educational tions contributed, among other aspects, of ENGIE Brasil Energia’s relationship activities adapted to the restrictions cre- to the identification of demands for with traditional communities. In 2020, ated by the health crisis. support, providing guidance to the pri- the highlight was the support provided vate social investment ENGIE Brasil to the Quilombola Descendant Com- In addition, the Company articulated Energia will make in the coming years. munity of Rio do Meio, in the munic- the donation and installation of pho- ipality of Ivaí, state of Paraná, where tovoltaic panels to be used in the In 2020, the stakeholder management the Gralha Azul Transmission System is Community’s Cassava Processing Mill, system for the project was improved. being implemented. In addition to emer- built by the Pró-Rural Program of the In line with the corporate guidelines gency anti-pandemic measures, such as Paraná State Bureau of Agriculture and for stakeholder relationships, the the distribution of staple foods baskets, Supply. The goal is to contribute to the method developed manages inter- hygiene kits, facemasks and informa- economic independence, productive actions with both organizations and

94 / 140 SUSTAINABILITY REPORT Suppliers 2020 [GRI 102-9; 102-10; 103-1; 103-2; 103-3; 205-1; 308-1; 308-2; 414-1; 414-2] [2030 Agenda Goals: 8.7, 8.8]

e believe that exer- One driver for this evolution has been the ENGIE Due Diligence Policy that the cising a positive in- Group created to comply with French laws, which requires measures to prevent Suppliers fluence on the Com- corruption and detect damages to the environment, to health, or to human rights pany’s value chain is throughout companies’ value chains. Together with the Company’s consolidated assessment Wone means to disseminate best sustai- Sustainable Management and Human Rights Policy and its Code of Ethics, this nability practices. We therefore strive guideline drives relationships with trade partners. ENGIE Brasil Energia’s due diligence to continuously improve the socio-envi- process includes an automated Big ronmental analysis of suppliers and ser- Data tool that enables analyzing over vice providers – a group that numbered 238 criteria applicable to suppliers. 2030 non-financial 3,155 companies at yearend 2020. These include delinquencies of the objectives – suppliers company and its owners according to nationwide files, the status The Engie Group at the global level included among the pledges to be of environmental licensing, notices accomplished by 2030 two that relate to increased sustainability require- or embargoes, ties with slave labor, ments applicable to the supplier chain: corruption-related lawsuits or strong suspicions, conflicts of interest and • 100% attainment by 2030 of the responsible procurement index money laundering, ties with politically (except for energy purchases), which includes socio-environmental exposed individuals, codes of conduct assessments and inclusive procurement. or ethics, and human rights policy. • 100% attainment, by 2030, of preferred suppliers certified according to Science Based Targets (SBT) pledges.

95 / 140 SUSTAINABILITY REPORT Where required, Level 2 two due dili- 2020 gence takes place. This process is more Contracts underway detailed and in-depth as concerns sus- picious or noncompliant elements. In Upon selection for retainer, suppliers All mandatory documents for services include quality, safety, occupational 2020, the Company’s entire catego- certified in the due diligence phase(s) or suppliers are described both in the medicine and hygiene, the environ- rized suppliers base – approximately undergo specific documentation negotiation phase and in the agreement, social responsibility, improve- 3.2 thousand companies (including 799 reviews – a practice applicable to 100% ments between the parties. There- ments/innovations used or suggested new suppliers) – was analyzed quarterly of long-term service agreements that fore, suppliers declare agreement with during the service, and administrative according to the Level 1 procedure, are deemed high-risk for the Company. ENGIE’s Policies and values, in par- and legal matters. reducing the risk of involvement with Additional mandatory requirement con- ticular those associated with Human suppliers that are not aligned with the trols also apply to specific supplies or Rights, Ethics and Compliance. If a supplier’s performance fails to Company’s values and pledges – the services deemed critical. meet the agreed levels on any such analysis did not include suppliers of Services involving employees of con- aspects, action plans are prepared Geração Solar Distribuída (EGSD). tractors at ENGIE facilities include an jointly for adjustment. However, if a integration meeting involving 100% of plan is not effectively implemented, In 2020, no agreements for improve- the outsourced workers. These train- agreements may be terminated. ment or terminations of ties because of ing sessions emphasize safety proce- evaluations held were reported. dures and socio-environmental precautions applicable to every activity.

Once performance under a contract begins, periodic reviews take ´place to 238 evaluate the supplier’s performance in connection with previously estab- socioenvironmental and ethical criteria of suppliers are evaluated on a quarterly lished criteria. Aspects monitored, in basis, using a big data tool. particular as concerns critical services,

96 / 140 SUSTAINABILITY REPORT Clients 2020

[GRI G4-EU3]

ompanies in different industrial, commercial and service sectors make up the The year’s highlights include the tionship and service channel, opening Company’s customer base in the Free Energy Market. With relationships dri- launch of Energy Place, a digital calls for direct interaction with the ven by ethics and shared value generation, in 2020 we had agreements in channel that the Company created to Company’s experts. place with 720 free customers, up 15.9% from 2019. provide additional convenience, ease C of use and reliability to Free Energy In 2020, the Company also launched Evolution of free consumers1 Market agents. The initiative is yet E-conomiza, a solution intended to another important step that the Com- facilitate the access of Small and pany has taken to extend the benefits Medium-Sized Businesses (consum- 2,656 2,603 2,366 commercial & industrial of digitalization to customers, in line ing up to 1 MWm) to the Free Energy 2,293 sites served in 2020 1,639 with the accelerated internal shift. Market. With the solution, the entire 2,126 720 operational process of migration, as 621 Market share The platform offers 100% digital well as energy bill management, is 515 13% (of total energy in free Market) energy trading for monthly billing, and performed by ENGIE Brasil Energia

280 extends to all Free Market agents. In experts. An additional benefit lies in 228 25,766 GWh addition to this energy e-commerce, the ability to purchase energy from Of energy contracts closed with free customers in 2020 if offers managers and ENGIE cus- renewable sources, which adds value tomers important information for the to the customer’s operations. (Net Promoter purposes of contract management: 67.2 NPS Score) 2016 2017 2018 2019 2020 consumption history, data segmented Additional details on the portfolio’s profile Number of free consumers by consumer unit, and financial guar- and on solutions offered to our custom- (Customer Free customers contracted volume (aMW) 92.5 CSI Satisfaction Index) antees, in addition to other relevant ers can be found in the topic “Commer- 1. Net of trading operations aspects. It also serves as a digital rela- cial and portfolio management dynamics”.

97 / 140 SUSTAINABILITY REPORT Investors 2020

NGIE’s shareholder base con- dissemination of reliable information by conference calls for results presenta- In 2020 we also hosted the event “elec- tinued to grow exponentially means of official channels of communi- tions and meetings with market ana- tric Energy Markets – How to forecast in 2020, maintaining a trend cation – such as the repositories of B3 lysts. Some of 2020’s highlights include: and extract performance”, intended seen in recent years. By late and the Brazilian Securities Exchange for an exchange of experiences and to EDecember, the Company had more Commission (CVM) – that provide free encourage improved training of indus- than 208 thousand investors, from 99 access to materials such as: 285 institutions and analysts served try analysts so that they can provide thousand in 2019 (up 109.2%) and 32 in conferences (in person, conference more in-=depth analyses of concepts thousand in 2018 — which also re- • Material Facts; calls and videoconferences) and non- and potential gains for the Brazilian flects the increasing number of inves- • Announcements to Shareholders; deal roadshows. electric energy sector. tors, including individual investors, on • Announcements to the Market; the Brazilian stock market. • Quarterly Performance Reports As for Shareholders’ Meetings, the and results presentations; 1,966 viewers of conference calls and Company’s Website also provides Transparency is the brand of the Compa- • Management Report and Financial videoconferences for results presenta- channels and clarification on remote ny’s relationships with these stakehold- Statements; and tions – since 3Q20, results have been attendance by means of distance vot- ers, and is assured by means of the timely • Sustainability Report. disclosed by videoconference instead of ing, pursuant to CVM Instruction 561. disclosure of information on the Investor the traditional conference calls. There is also a specific channel of com- Relations Website, e-mail notices, and The “Talk to IR” channel is also avail- munication for shareholders to suggest conference calls and videoconferences able on the Website and enables direct matters for discussion at Meetings. to address relevant matters, such as the contact with our Relationship team – 45 viewers at the Annual Conference successful bidding in the energy trans- which had 883 calls in 2020, from 707 hosted by the Association of Capital mission auction and the acquisition of a in 2019. Interaction strengthens with Markets analysts and Investment stake in TAG. Furthermore, we ensure the the promotion of videoconferences and Professionals (Apimec).

98 / 140 SUSTAINABILITY REPORT 2020 Inside ENGIE Open, diverse and digital dialogue

The 2020 edition of “Inside ENGIE”, With a live and open broadcast To provide relevant, qualitative and stra- Going beyond the boundaries of the an annual meeting intended for on YouTube, the event addressed tegic information to a diverse audience business itself, the Company inno- investors and market analysts, was business evolution and the Com- – from those who help build the com- vated by releasing the Além da Energia held on December 11 in digitally pany’s strategic positioning in the pany on a daily basis to people more news hub, a Brand Publishing project adapted format. face of the industry’s trends and interested in the markets where busi- intended to produce and distribute regulatory changes. It thereby ness takes place. It was based on this curated and original journalistic con- enabled investors to gain more challenge that ENGIE put into motion tent associated with the energy transi- in-depth knowledge of the oper- over the course of 2020 a series of ini- tion, renewable energy and smart cities. ations and get in touch – albeit tiatives intended to strengthen its dia- By widely disseminating concepts and virtually – with Senior Managers. logue with stakeholders. trends on this subject, the platform aims to accelerate this transition, as provided 350 The event drew a total 380 In a year marked by digitalization, in ENGIE’s strategic objectives. views, 102 of which from insti- the production of information on the views, 102 of which from tutional investors. company and its businesses gained The text content available from the institutional investors. different formats. For those interested news portal adds to the audio-visual The event’s video and the presen- in corporate matters ENGIE Brasil production that offers webinars, pod- tations made during the day are began offering a monthly newslet- casts and videocasts available on dif- available at by clicking here. ter in place of the Boas Novas mag- ferent digital platforms. azine, with stories on the Company’s businesses and projects, in addition to managerial and sustainability practices, among other topics.

99 / 140 SUSTAINABILITY REPORT Planet 2020 ENGIE’s global and Planet-related non-financial objectives – emphasis on:

Licenses Greenhouse gas emissions Water Reaching a minimum from energy production consumption (scopes 1 and 3) down for industrial 58% environmental of renewables in the activities down 46% installed capacity mix, 6 licenses by 2030; 35% from 27.8% in 2019. renewed in 2020 by 2030;

Approval by the National Environmental Institute Execution of Socio-Environmental Programs (Ibama) of the Environmental Plan for Conservation in the implementation area of the and Use of the Reservoir Surroundings (Pacuera) for Novo Estado Transmission System the Itá Hydroelectric Plant, in Santa Catarina 21 Biodiversity

Water and Effluents ITÁ

Energy Projeto Asas Waste

Partnership with Embrapa Florestas on an Partnership with the Asas project to Atmospheric Araucaria conservation project, in Paraná protect wildlife wildlife in the Miranda Emissions Hydro Plant’s region, in Minas Gerais.

100 / 140 SUSTAINABILITY REPORT espect for the Planet, as well These evaluations are backed by in-depth 2020 for people, is a pledge that studies done by experts in each subject Licenses ENGIE’s non-financial ob- area and duly validated by the relevant renewed jectives reflect, as they drive environmental authorities – a requirement Rthe corporate strategy beyond eco- for securing and maintaining the neces- In 2020, the Operating Licenses (LOs) of the following projects nomic aspects. sary licenses. To supplement activities were renewed: carried out to ensure legal compliance, the Besides working to accelerate the tran- Company undertakes a series of voluntary • Trairi Wind Complex, in Ceará sition to a carbon-neutral economy – initiatives that focus on conserving natural a) Mundaú Wind Farm both in its own operations and in its resources and minimizing impacts on the Date of renewal: 11/20/2020. | Valid for: Six (6) yeras. customers and the communities where environment and communities. b) Santa Mônica Wind Farm it operates – the Company endeavors Date of renewal: 09/02/2020. | Valid for: 10 yeras. to responsibly and proactively address As a means to attain the corporate envi- socio-environmental matters, acting in ronmental objectives and targets, the • Tubarão Wind Farm, in Santa Catarina full compliance with the law and under- Integrated Management System (Sistema Date of renewal: 04/23/2020. | Valid for: Four (4) years. taking voluntary actions that contribute Integrado de Gestão – SIG) tracks several to sustainable development. performance and compliance indicators, • Water withdrawal, Adduction and Treatment for Industrial Supply such greenhouse gas emissions, water and in the Lages Co-Generation Unit, in Santa Catarina In this sense, we are committed to full effluents management, solid waste, and Date of renewal: 04/20/2020. | Valid for: Four (4) years. compliance with the environmental law. plant life and wildlife handling. To contin- Therefore, projects at their implemen- uously improve performance, we establish • 138 kV Transmission Line of the José Gelazio da Rocha SHP, tation and operation phases undergo annual targets for every project, given the in Mato Grosso rigorous evaluations as to their impacts most relevant aspects in terms of impact Date of renewal: 07/21/2020. | Valid for: Five (5) years. on the ecosystem. and resource usage. • Pampa Sul Thermal Power Plant, in Rio Grande do Sul Date of renewal: 02/04/2020. | Valid for: Five (5) years.

101 / 140 SUSTAINABILITY REPORT 2020 2020 environmental goal status, by Plant:

Total goals Met Not met

Jorge Lacerda Thermoelectric Complex (75%) 8 6 2

Cana Brava Hydroelectric Plant (43%) 7 3 4

Estreito Hydroelectric Plant (43%) 7 3 4

Itá Hydroelectric Plant (60%) 5 3 2

Machadinho Hydroelectric Plant (50%) 6 3 3

Passo Fundo Hydroelectric Plant (67%) 6 4 2

Ponte de Pedra Hydroelectric Plant (75%) 8 6 2

São Salvador Hydroelectric Plant (37,5%) 8 3 5

Salto Osório Hydroelectric Plant (43%) 7 3 4

Salto Santiago Hydroelectric Plant (71%) 7 5 2

Miranda Hydroelectric Plant (43%) 7 3 4

Jaguara Hydroelectric Plant (29%) 7 2 5

The 2020 highlights in this area include submission of the Plan for Environmental Conservation and Use of Reservoir Surroundings (Pacuera) for the Cana Brava Hydro Plant, in Goiás, and approval by the National Environment Institute (Ibama) of the Plan for the Itá Hydro Plant, in Santa Catarina, submitted to the authority in 2019.

102 / 140 SUSTAINABILITY REPORT Biodiversity 2020

[GRI 103-1; 103-2; 103-3; 304-1; 304-3] [2030 Agenda Goals: 2.5, 15.5, 15.8, 15.a]

o reduce the impact of its operations on the biodiversity of the regions where it operates, ENGIE Brasil Energia carries out a series of environmental programs and projects. The actions executed under these programs are dimensioned according to each project’s maturity Tstage, as well as the local ecosystem’s conservation status.

Projects undergoing implementation

Biodiversity management is one of the main challenges facing implementation of a project, be it for energy generation or transmission. To prevent critical environmental events in this phase, the Company carries out a series of preventive measure that go from mapping the pre-implementation status to the deployment of mitigation or handling plans. All of these activities are performed with the- con sent of the licensing authorities.

103 / 140 SUSTAINABILITY REPORT Gralha Azul Transmission Systems 2020

The project’s environmental license versity in addition to existing ones was granted and approved by the are minimal – and 31% are occupied Paraná State Water and Land Institute by vegetation. The most significant (IAT). The Gralha Azul Transmission effects associated with the project System also has authorizations and include increased electric and mag- consents given by the Palmares Cul- netic field levels, habitat fragmen- tural Foundation (FCP), the National tation and alteration, reduced plant Indian Foundation (FUNAI), the cover, and potential accidents involv- National Historic and Artistic Heritage ing wildlife, particularly during the Institute (Iphan), the State Historic implementation period. and Artistic Heritage Coordination (CEPHA), and all municipalities inter- Several actions are underway to miti- cepted and other relevant authorities. gate these impacts, such as the preservation of native tree species, limiting The transmission line’s path, which is plant suppression to the width strictly approximately 1,000 kilometers long required for implementation, technical and with minimum right-of-passage monitoring and guidance for execution clearance width of 60 meters, crosses of the Forest Replacement Program’s Controlled suppression 27 municipalities and approximately activities. These and other impacts will Plant suppression, where needed, is planned in advance and done with once duly 2.4 thousand properties. Approxi- remain under monitoring for the dura- approved by the relevant authorities, in full compliance with the applicable law. All mately 67% of the direct catchment tion of the construction works, which plant loss, as well as other impacts that may take place as a result of project implemen- area is occupied by pastures or farm- are still in their early stages, and some tation, has bene controlled, minimized, mitigated or offset by means of environmental ing – where new impacts on biodi- will extend into the operational phase. programs whose execution and results are properly reported to the relevant authorities.

104 / 140 SUSTAINABILITY REPORT 2020 In addition, the project includes a series of efforts to minimize plant suppres- Novo Estado Transmission System sion, such as using taller towers to prevent tree removal, the use of self-bearing towers exclusively in native vegetation areas and path detours from preservation The Novo Estado Project’s Transmission The project also provides, where areas (Such as Private Natural Heritage Reserves and Conservation units), urban Lines extend for a total of approximately applicable, for the use of self-bear- centers and consolidated tourist attractions, traditional communities (such as 1.8 thousand kilometers and their path ing towers in fragmented forest areas Native Land), to name a few precautions. was drawn to avoid more sensitive where detours were not possible, in areas wherever possible – preventing areas with high density of threatened interference with Conservation Units, and legally protected species, and in Native Lands and Quilombola commu- points where secondary vegetation nities. Cavities identified in speleologi- occurs at intermediate and advanced Partnership cal prospecting, most of which are rated regeneration stages. low-relevance, are being preserved. for conservation To reduce, control and offset environmental impacts, 21 environmental To promote conservation of the araucaria pine, a native species present in the programs and subprograms are being implementation area of the Gralha Azul Transmission System, ENGIE Brasil Ener- implemented. Actions provided for and gia executed a partnership with Embrapa Florestas in 2020. The partnership already executed include plant and wild- focuses on strengthening Embrapa’s araucaria seed (germplasm) bank, which life monitoring and rescue, archeological will be compounded by the creation of a benchmark network for the subject, prospecting and rescue, speleological involving farming families. The Company has invested approximately R$ 520 21 prospecting, environmental education, mil in the Project, whose initial phase will take place over the next three years. construction oversight, social commu- environmental programs and nication, recovery of degraded areas, subprograms are being implemented to reduce, control and compensate environmental management and action environmental impacts. plan for malaria control, among others.

105 / 140 SUSTAINABILITY REPORT Campo Largo II Wind Complex 2020

The geographic scope of biodiversity The complex lies on a migrating bird note due on the Licuri (Syagrus coronata). impacts associated with implementation route, the Northeast Route, according In 2020, 130 Licuri trees found in plant of the Wind Complexes in Bahia is rel- to the National Wild Birdlife Research suppression areas were relocated to atively limited. The main issues include and Conservation Center’ (Cemave)1 other areas of the project. The plan pro- plant suppression in the areas occupied Annual Report. In this respect, the vides for a minimum 15 saplings planted by wind turbines, administrative facili- Company monitors the bird fauna and for every individual of the species that ties, construction sites and internal and any carcasses, as the environmental requires suppression, with an estimated external access roads, with the result- licensing process requires, and has so 12 thousand saplings to be planted. ing effects on the fauna. There is also a far identified no incidents involving col- potential risk to archeological heritage, lision of any species of bird during the It is worth emphasizing that the Wind which is significantly present on site. wind turbines’ operation. Complexes neighbor the Boqueirão da Onça National Park and lie inside As such, impacts on the local ecosystem the namesake Environmental Preser- have been managed by means of the vation Area (APA), one of the largest Legal Reserve Preservation Program, the and best preserved remnants of the – Wildlife Monitoring, Distancing and Res- representing an important refuge and cue Program, and the Degraded Areas breeding zone for several species of the Recovery Program (mostly concerning local fauna and flora and, therefore, of construction sites), among others. The the utmost biological relevance. The 130 Company carries out offsetting measures Company considers means to partners

Licuri trees found in plant wherever needed. One illustrative case with local and national stakeholders to suppression areas were relocated has been the creation of a nursery for enhance preservation measures for the to other areas of the project. more than 70 native species, particular Park and its surroundings.

1 Belonging to Instituto Chico Mendes de Conservação da Biodiversidade (ICMBio). 106 / 140 SUSTAINABILITY SUMMARY - BIODIVERSITY MATRIX PROJECT REPORT Operational 2020 10 parameters analyzed projects 8 applicable parameters A tool to drive biodiversity conservation strategies (public policy, Priority licensing conservation units) The Biodiversity Matrix project has areas been in place since 2016. Its main pur- Biomes Phytoecological poses are to drive investments in the regions Company’s operations 10 with high % overlap. operations overlap 2 1 1 10 area, to align environmental conditions 17 PRIORITY AREAS 0% 50% 100% with priority conservation actions, to Considering neighboring areas: improve performance indicators, and Vegetative PriorityÁreas Extremely High 16 formations Prioritáriasareas 37 PRIORITY AREAS Very High 13 to leverage the positive impact on divided into 4 High 7 Biological Relevance classes threatened environmental attributes. Little Known 1

In 2020, the results of in-depth envi- Native lands ConservationUnidade de PRIORITY ACTIONS conservaçãounits most often mentioned in generation plant: ronmental studies at pilot projects

– the Salto Osório Hydro Plant, in Creation of Creation of Ecological Paraná, and the Campo Largo Wind Conservation Units Mosaics and Corridors Iba important Migrating Complex, in Bahia – enabled devel- bird and birds biodiversity oping priority actions and identify- areas The Trairi Wind Complex has high overlap rates with 5 different Priority Areas ing strategic stakeholders to engage in biodiversity conservation in the regions where the projects lie. Not applicable Territories, including natural resoucers, created to preserve Conservation different populations, habitats units and ecosystems

107 / 140 SUSTAINABILITY REPORT EBE’s projects lie close to 21 Conservation Units. The project also contributes to identify- In the future, in line with data availabil- 2020

11 Atlantic Rainforest 2 Caatinga 8 Cerrado ing the ecosystemic services of the great- ity and ENGIE’s strategic objectives, est relevance to each location, focusing this information may support deci- Plant Conservation Unit (UC) Area (ha) FU on more intense dependency, synergy or sion-making on investments on biodi- Apertado Municipal Natural Park 22.43 RS potential impact. For example, the two versity conservation. Uruguay River Forest Teixeira Soares Itá 429.12 RS Municipal Natural Park pilots found relevance in erosion and Fritz Plaumann State Park 733.36 SC water flow regulation, providing water for Itá is in contact with Espigão Alto State Park 1,443.68 RS 3 Full Protection Units, human and animal supply, regulating soil Machadinho Rio Canoas State Park 571.38 SC 2 of them created and supported by EBE. and water quality, recreation and tourism, Papagaio-Charão State Park 1,023.28 RS Passo Fundo Usina Hidrelétrica Itá among other services. Sagrisa Municipal Natural Park 1,425.00 RS Fritz Plaumann Park Teixeira Soares Park Salto Santiago Rio dos Touros Ecological Reserve 356.90 PR

Serra do Tombador Private Natural Heritage 141.71 TO Cana Brava Reserve Pouso Alto Environmental Protection Area 77.274,86 GO

Lago de São Salvador do Tocantins, Paranã and 14,587.11 TO Wildlife Release Area – RPPN Jacob Palmeirópolis Environmental Protection Area São Salvador Lago de Peixe/Angelical Environmental 77,274.86 TO In the region of the Miranda Hydro Plant, in Minas Gerais, the Company Protection Area In the area surrounding Jorge Lacerda, the is responsible for the Jacob Private Natural Heritage Reservation (RPPN), Rondonópolis Dom Osório Stoffel State Park 13,068.03 MT Company created the Encantos do Sul with 385 hectares of the Cerrado biome. A partnership was formed in José Gelazio Dom Osório Stoffel State Park 13,068.03 MT Environmental Park (50 há) from the 2020 with the Wildlife Release Areas (ASAS) project so that the area may Dunas da Lagoinha Environmental 1,320.88 CE restoration of a former welcome animals released from the Wildlife Treatment and Rehabilitation Protection Area ash disposal site. Trairi Mandaú River Estuary Environmental Center (Cetras) of the State of Minas Gerais, abiding by technical criteria 9,222.38 CE Protection Area on the local fauna and supporting capacity. Porto Ferreira State Park 681.42 SP Ferrari Sitio Kon Tiki Private Natural Heritage Reserve 11.89 SP These animals, which are usually the victims of trafficking or mistreatment, Chapada das Mesas National Park 16,599.37 MA Estreito are captured by environmental authorities and returned to nature after Fossilized Trees Natural Monument 18,018.99 TO Jorge Lacerda Baleia Franca Environmental Protection Area 8,534.08 SC receiving treatment at Cetras. ASAS is an initiative by Ibama and the State Forest Institute (IEF), with support from the Waita Research Institute. 108 / 140 SUSTAINABILITY REPORT Fish fauna and invasive species 2020

Attention to the fish fauna in the res- Concerning the latter, a highlight is an fish fauna. The project’s initial activ- Plant. The incident interrupted electric ervoirs of the hydroelectric plants that ongoing Research and Development ities focus on the São Salvador Hydro energy generation for approximately the Company operates is a key part of (R&D) project intended to study the Plant’s area, in the state of Tocantins. three hours and reduced the flow of our environmental management system. propagation dynamics of the golden the Correntes River in the region com- In this sense, monitoring activities have mussel (Limnoperna fortunei) in the As another point for constant attention prising the municipalities of Sonora two main purposes: conservation of the reservoirs of Hydro Plants on the Uru- from environmental management teams, (MS) and Itiquira (MT). Although the local fish fauna and preventing against guay River rapids, and also provides for the purpose of macrophytes control is to situation was rapidly addressed, the invasive species. testing biological control methods. The mitigate the effects of eutrophization (an event caused fish of the Curimatá clam is a small freshwater mollusk that excessive presence of nutrients in the (Prochilodus lineatus) species to attaches to and multiplies on the Plant’s water) and prevent their indiscriminate become trapped in a segment of the structures, with real or potential impacts development. This effort helps maintain river. The Plant’s environmental licens- on operations – which increase mainte- the reservoirs’ multiple use conditions ing authority was immediately notified nance costs, in addition to posing a risk and minimize impacts on operations and of the incident, as were the other local of misbalancing the local ecosystem. other species. stakeholders. To determine the significance of the event for the local fish On another front, an R&D project Event at the Ponte de fauna, a special consultancy firm was began in 2020 in partnership with retained. After the appropriate analy- the Paraná Federal University to Pedra Hydro Plant ses, the experts found that the amount develop and apply genetic tools – In 2020, an unexpected an untimely of fish affected – approximately 53 like next generation sequencing – to shutdown took place on tow genera- kilograms – posed no relevant loss to assist in monitoring the reservoirs’ tor units of the Ponte de Pedra Hydro fish inventories or to regional diversity.

109 / 140 SUSTAINABILITY REPORT Drought, reservoir levels Sapling donations and 2020 and impacts on the planting fish fauna ENGIE Brasil Energia maintains eight In the Iguazu and Uruguay Basins, a forest farms that help maintain the consequence of the record-setting biomes of the regions where they are drought was the drastic reduction in deployed by means of the production reservoir levels. As a result, lagoons of native species saplings, donations formed in the areas of the Passo Fundo to the community, and planting by the (RS) and Salto Santiago (PR) Hydro Company. In addition to helping con- Plants, requiring immediate and coordi- serve biodiversity, the nurseries play nated action with a dedicated fish-res- an educational role as some donations cue team throughout the dry season. are made at events held at schools and The effort enabled reducing impacts on other community venues. the local fish fauna. In 2020, a total of over 360 thousand saplings were planted or donated. This includes 2.8 thousand araucárias in Paraná as part of the offsetting measures connected with the implementation of the Gralha Azul Transmission System.

360 thousand

saplings were planted or donated.

110 / 140 SUSTAINABILITY REPORT Water and Effluents 2020

[GRI 103-1; 103-2; 103-3; 303-1; 303-2; 303-3; 303-4; 303-5] [SASB IF-EU-140a.1; IF-EU-140a.2; IF-EU-140a.3] [2030 Agenda Goals: 3.9, 6.4]

onserving hydro resources legally prescribed instrument to mini- Withdrawal and by maintaining water qua- mize the negative impacts of activities consumption lity and through rational carried out in the projects’ regions. Total water withdrawn consumption is an -ever In 2020, considering all sources of (in ML) C-present environmental management Also with the purpose of contrib- withdrawal, the total volume of water goal for ENGIE Brasil Energia. Addi- uting to the conservation of hydro used in operations was 459.3 thousand +7.3% tionally, the Company is a member of resources, we are members of the ML, up 7.3% YoY. As for consumption,

certain River Basin Committees in the Hydro Resources Councils of the States the Company used 9.7 thousand ML 493,096.60

regions where it operates. In this role, of Santa Catarina and Paraná. (+14%) in the same period. 459,275.31 it addresses the sustainable use of water by society before public- and priva- 426,629.60 te-sector institutions.

In the Plants’ catchment areas, water 2030 non-financial objective – Water consumption conservation also involves multiple use The ENGIE Group has made a global pledge to reduce water of reservoirs, which the Company dis- consumption for industrial activities by 35% by 2030 – from ciplines by means of the Environmen- 93Mm3 in 2019 to 60Mm3 in 2030. tal Plan for the Conservation and Use of Reservoir Surroundings (Pacuera), a 2018 2019 2020

111 / 140 SUSTAINABILITY REPORT The increase in consumption is associated with the operations of the Pampa The quality of the water discarded by the Company is also monitored on an 2020 Sul Thermal Power Plant, which had its operational startup in 2Q19. Thermal ongoing basis by means of physical-chemical analyses to make sure that it power plants in general are responsible for the bulk of the Company’s water returns to the water bodies at disposal standards compatible, at a minimum, consumption, as the resource is used to generate steam and in other indus- with those set forth by the applicable environmental law. In addition, all hydro trial processes – such as dredging heavy ashes from boilers. The measures plants implement the Reservoir Water Quality Monitoring Program. taken to reduce consumption include rainwater capture and the application of reuse technologies, minimizing pressure on local water sources. In 2020, water disposal totaled 450.6 thousand ML, up 7.8% YoY, which is explained by the operations of the Pampa Sul Thermal Power Plant. There were no cases of At hydroelectric plants, the most significant use involves the generator units’ noncompliance associated with water use (quantity, permissions, quality standards cooling systems – however, the water used in the process only travels through and regulations) over the year. the system and returns to the receiving water body with the same characteristics it had upon withdrawal – except for its temperature, which increases in the process but remains within the legal range. Headwaters conservation Main water management-related risks Carried out in partnership with governmental and third-sector organizations, the Headwaters Conservation Program contributes to the preserva- Potential Risk Mitigation strategies and practices tion of hydro resources and the improvement of the quality of the water NBR ISO 14001-certified Environmental Management System, Risk of emergency oil leaks at energy with preventive maintenance procedures, Operation tests and consumed by communities. Since the program started, 2,040 wellsprings generation plants, in particular inspections, firefighting systems, containment barriers, and hydroelectric ones, with potential water-oil separation systems and, in the event of an accident, the have been protected, 133 of them in 2020 alone, in the catchment areas water contamination Emergency Response Plan. of 14 plants that the Company operates. Hydro plant reservoir pollution due Environmental and Social and Property Inspection Teams active in to illegal use and occupation of and around reservoirs reservoir banks.

112 / 140 SUSTAINABILITY REPORT Consumption of energy from non-re- Grid electricity consumption was 270.8 approximately 63% of fuel consumption 2020 Energy newable sources was up 20% in 2020, thousand GJ in the year, down 55% at the Company’s thermal power plants, due mainly to the operational startup from 2019. Changes in electric energy is NBR ISO 50001-certified. The stan- [GRI 103-1; 103-2; of the Pampa Sul Thermal Power Plant. consumption are independent from dard focuses on continued energy per- 103-3; 302-1; 302-3] As such, the Company’s total energy the Company’s operations, and relate formance improvement and includes effi- [2030 Agenda Goals: consumption increased in 2020: 70.6 with demand from the National Sys- cient energy usage aspects. To maintain 7.3, 9.4] GJ, up 13.6% from 2019. tem Operator (ONS) for power plants the certification, several control actions to operate at certain times as “synchro- have been established that periodically Total energy nous condensers”, a practice that helps undergo to internal and external audit. n line with our Sustainable Manage- consumption regulate the voltage of the national ment Policy, the Company is commit- (GJ) Interconnected System (SIN) and con- ted to the adoption of measures to sumes grid energy. Energy intensity (GJ consumed/ GJ produced) reduce its consumption of fossil fuels. +13.6% IThese include the preferred use of dual- Furthermore, starting in 2018, we -fuel cars, the retainer of transport for the changed the methodology used to +43.0% employees of the majority of plants, and measure plants’ energy consumption: more intensive use of videoconferencing We now subtract from total energy 70,592,082.47 0.40 0.56 0.39 resources to prevent meeting-related tra- 62,122,642.97 consumed the volume of energy gen- 56,861,864.43 vel – which intensified in 2020 due to the erated by the plant itself. That is, fig- Covid-19 pandemic. ures now consider grid energy consumed alone.

As for fuel consumption, the Jorge Lac- erda Thermal Complex, responsible for

2018 2019 2020 2018 2019 2020

113 / 140 SUSTAINABILITY REPORT into a database to generate each unit’s Total waste 2020 Waste Waste Inventory. Beginning in 2021, (tons) Hazardous waste the Company’s entire solid waste man- [GRI 103-1; 103-2; 103-3; agement will have the support of spe- +22.4% In the Company’s operations, waste 306-1; 306-2; 306-3] cific software that integrates service rated as hazardous originates from [SASB IF-EU-150a.1; IF-EU-150a.2] providers nationwide, improving the chemical inputs. The risks associated [2030 Agenda Goals: 12.5] prospect of recovery. In addition, digi- with potential leaks and accidents are 2,526,946.63

talization adds reliability to generation 2,064,882.11 monitored by expert teams with the 1,447,158.45 aste management at and disposal control, as well as to the appropriate skills to address emer- all of our operations selection of appropriate suppliers to gency situations. As ISO 14001-cer- aims to guarantee carry out the activity. tified plants, the process undergoes proper disposal, as frequent audit that includes phases Wwell as enhancement, wherever possib- carried out by third parties. Waste management le, of materials recycling, re-use, and recovery processes. To guarantee proper In 2020, the Company posted a 22.4% Hazardous waste is stored at specific disposal, the Company requires con- increase in total waste generated. Out areas of the Waste Centers, sepa- 2018 2019 2020 tractors retained to collect and dispose of this, 82.9% have been recovered. rated from the remainder and sub- of waste to comply with the applicab- Ashes from thermal plants answer for Out of the total non-hazardous waste, ject to safe disposal depending on le environmental law, in particular Law the bulk of the waste; however, almost 2,477,991.1 tons (98%) correspond its physical status and hazard posed. 12305/2010, which governs the Natio- all of it is allocated to the cement to ashes from the coal burned at ther- Hazardous liquid waste, such as used nal Solid Waste Policy. industry and to agriculture (sugar-cane mal power plants. Two ash ponds col- oil, for example, are stored in covered, growing and planted forests). lect the waste removed from boilers. ventilated sites with restricted access, Digitalization of the process began in The parameters set by the Environ- waterproof floors and containment 2020. The plant waste weighing sys- mental Operating Licenses (LAO) are systems for emergency leaks. tem was automated based on digital monitored and periodically reported scales that input the quanta directly to the inspecting authority.

114 / 140 SUSTAINABILITY REPORT Atmospheric emissions Global Objectives Greenhouse gas Emissions 2020

ENGIE has a series of pledges and objectives at the global level in connec- [GRI 103-1; 103-2; 103-3; 201-2; 305-1; 305-2; 305-3; 305-4] tion with greenhouse gas emissions, chief among them: [SASB IF-EU-110a.1; IF-EU-110a.2; IF-EU-110a.3] Reference value [2030 Agenda Goals: 7.2, 7.3, 13.2, 13.3] Objective (2019) 2030 Objective Greenhouse gas emissions from energy production (scopes 1 and 3), in line with the Science 80 MtCO2e 43 MtCO2e riven by its purpose of ac- As part of the actions prescribed in Based Targets (SBT) path. celerating the transition the ENGIE Climate Change Policy, the Renewables as percentage of total capacity, in line to a carbon-neutral eco- Company periodically takes a Green- with the Science Based Targets (SBT) path. 27.8% ≥ 58% nomy, ENGIE continues house Gas (GHG) Emissions Inventory Dto implement its strategy to lead the to improve its mitigation and adapta- decarbonization movement. In ad- tion actions and strategies. The docu- These objectives are shared by all of tives are being reviewed in the light dition to supporting customers and ment accounts for and quantifies emis- ENGIE’s operating units around the of impacts on and interests of various suppliers in the right direction, the sions based on concepts and guidelines world, so that each contributes to stakeholders. One possible alternative pledge implies assertive management in accordance with the Brazilian GHG attainment in different ways. ENGIE is a selling process – subsequently to of emissions that our entities may ge- Protocol Program, and is verified by an Brasil Energia has for several years the facts reported herein, the Com- nerate, so that we can progress on independent outside party. The Inven- been committed to the disposal or pany announced, in February 2021, our own transition. tory’s consolidated data takes account de-commissioning of the last non-re- that a proponent is running due dil- of the two approaches that the Pro- newable assets in its portfolio: the igence on the asset’s disposal, in a gram uses: operational control and Pampa Sul Thermal Power Plant, process that will persist until June equity stake. Click here to view the whose buyer prospecting process will 2021, at least. Another possibility on full version of our 2020 Greenhouse resume with added efforts in 2021, the table is a phased decommission- Gas Emissions Inventory. and the Jorge Lacerda Thermal Power ing, in a process set to being in late Complex, for which viable alterna- 2021 for completion in 2025.

115 / 140 SUSTAINABILITY REPORT Carbon Credits for renewable sources expansion in customer, including the socio-environ- ect’s source of energy is coal combus- 2020 ENGIE Brasil Energia has ten renew- Brazil. Out of the 9.65 billion Euros that mental attributes of the project selected tion. As previously discussed, the both able energy projects registered with the the Controlling shareholder has raised by the buyer – whether wind, solar, or the Pampa Sul Thermal Power Plant and Clean Development Mechanism (CDM), from Green Bonds, more than 1 billion hydroelectric. In addition, they neutral- the Jorge Lacerda Thermal Power Com- corresponding to 49 plants, including were allocated to projects in Brazil. ize scope 2 emissions. Because these are plex have decommissioning or disposal the Campo Largo II Wind Complex, reg- bilateral agreements, the purchase limit is plans in place. Taken together, the assets istered in 2020 – the Complex gener- I-REC the renewable energy guarantee of the correspond to 99.3% of the Company’s ated no credits that year because it is as-yet uncertified company. emissions — 73.4% at Jorge Lacerda, and in its final implementation stages. Taken Renewable energy certificates (I-RECs) 25.9% at Pampa Sul. together, the projects are expected to substantiate that the electricity pur- Performance generate approximately 2.8 million chased by a customer comes from a carbon credits per year – this does not renewable source, and may be used to The Company emitted 5,884,220.76 Total emissions include Lages Bioenergética, which neutralize scope 2 emissions from their tCO e in under the operational control 2 (tCO2e) has already completed the 10 years of emissions inventory. ENGIE has cer- methodology, and 5,884,877.62 tCO2e Operational credit issues to which it was entitled. tified the São Salvador Hydroelectric under the equity stake approach, as Year Equity Stake Control Plant as an I-REC issuer (every MWh the table next shows – up 11.3% from 2020 5,884,220.76 5,884,877.62 Upon acquiring a carbon credit, the of energy generated corresponds to 2019 in each case. The Company’s total beneficiary may offset scope 1, 2, or one 1 I-Rec). Therefore, we generate emissions had been trending down for 2019 5,288,046.07 5,293,110.33 3 emissions from its inventory and add an estimated 800 thousand I-RECs/ five consecutive years, which is due 2018 4,367,433.91 4,368,848.15 other socio-environmental attributes year, approximately. mostly to the decommissioning/sale of to operations. In addition to the CDM three thermal power plants: Charquea- registration, the Company’s renewable ENGIE-REC das, Alegrete and William Arjona. From Data on other significant atmospheric energy projects are part of the ENGIE the entry into operation of the Pampa emissions (NOx, SOx, Particulate Group’s Green Bond funding structure Like I-RECs, the ENGIE-RECs substan- Sul Thermal Power Plant, in mid-2019, Material) can be seen in the Supple- and thereby raise international funds tiate the origin of the energy sold to a emissions resumed rising, as the proj- ment (attachment).

116 / 140 SUSTAINABILITY REPORT 2020 Direct Emissions Indirect emissions (Scope 1) (Scope 2)

The Company’s total direct emissions in The Company’s total indirect emissions

2020 were 5.853.984,06 tCO2e under in 2020 were 14.596,32 tCO2e under the operational control approach, and the operational control approach, and

5.852.774,10 tCO2e under the equity 16.459,89 tCO2e under the equity stake stake approach – up 11,3% in compar- approach, up 13,8% and 27,9% respec- ison with 2019. The increase is mainly tively, from the previous year. GHG due to the operational startup at the emissions from electricity consumed are Pampa Sul Thermal Power Plant, which mainly associated with the operations of took place in mid-2019 – therefore, the Jorge Lacerda Thermal Complex and 2020 was its first full year in operation. ancillary services provided by the Com- pany to the National Interconnected System (SIN) – which are necessary to balance grid voltage, requiring genera- Indirect emissions – Direct emissions – Scope 1 tors to operate as motors to consume Scope 2 (tCO e) 2 energy. This is a mandatory. (tCO2e)

Operational Operational Year Equity Stake Year Equity Stake Control Control

2020 5,853,984.06 5,852,774.10 2020 14,596.32 16,459.89

2019 5,260,402.94 5,265,263.89 2019 12,825.45 12,873.02

2018 4,340,467.59 4,341,640.86 2018 11,945.92 12,089.20

117 / 140 SUSTAINABILITY REPORT 2020 Other Emissions Emissions Intensity Sources (Scope 3) Like total emissions, the Company’s

emission intensity (amount of CO2 The Company’s total emissions from emitted to generate 1 MWh) had other sources in 2020 were 15.640,38 been trending down for five consec- tCO2e under the operational control utive years because of the sale and approach and 15.643,62 tCO2e under demobilization of thermal assets. The the equity stake approach, up 21.9% and figure resumed rising – 34.8% under 21.5% respectively, from the previous operational control and 38.7% under year. The Jorge Lacerda Thermal Power equity stake, if comparing with 2019 Complex answers for more than 80% of – because of the operational startup these emissions, which are mostly related of the Pampa Sul Thermal Power with the transportation of inputs like Die- Plant – 2020 was the asset’s first full sel fuel, and of waste, ashes in particular. year of operation.

Other emissions sources – Scope 3 Emissions Intensity (tCO e) 2 (kgCO2e/MWh)

Operational Operational Year Equity Stake Year Equity Stake Control Control

2020 15,640.38 15,643.62 2020 256.1 211.4

2019 12,825.45 12,873.02 2019 190.0 152.4

2018 11,945.92 12,089.20 2018 184.7 145.0

118 / 140 SUSTAINABILITY REPORT Reporting Material topics 2020 centralized in 4 Stakeholder Engagement perspectives: profile Survey involved about 600 people in 17 municipalities Leading the (conducted before the Covid-19 pandemic) energy transition

81 disclosures GRI (Global Reporting Initiative) reported Wholesome, prosperity oriented relations Reporting profile 12 disclosures SASB Stakeholders (Sustainability Accounting Standards Board) reported outreach Consistent Material Topics performance GRI/SASB Assurance Summary Statement Letter of Bureau Veritas Environmental Assurance Management

119 / 140 Publication SUSTAINABILITY REPORT ENGIE Brasil Energia publishes Sustainability Reports on an annual basis and can be accessed 2020 Reporting profile on our website. The previous edition was published in April 2020 and concerns fiscal year [GRI 102-3; 102-45; 102-50; 102-51; 102-52; 102-53; 102-54; 102-56] 2019. Comments on the publication may be submitted by e-mail to [email protected].

ince 2007 ENGIE Brasil Ener- end 2019, as disclosed in the 2019 Management gia Sustainability Report ac- Report and Financial Statements. cording to the standards pro- Stakeholder vided by the Global Reporting This Sustainability Report abides by the latest SInitiative (GRI), a nonprofit organization GRI-proposed guidelines, Standard version, “in outreach that proposes guidelines to guarantee the accordance - Essential” and subject to indepen- reporting quality of organizations worldwi- dent external review – conducted by BVQI do [GRI 102-40; 102-42; 102-43; 102-44; 102-46; 102-47; 102-49; 413-1; 413-2] de. Based on these guidelines, this edition Brasil Sociedade Certificadora –, reflecting the provides information on corporate mana- Company´s commitment with transparency. (see In line with the GRI guidelines, a key phase in the At events dedicated to dialogue, called Sustainabil- gement and on our environmental, social the independent auditors’ Letter of Assurance definition of the topics to be addressed in the ity Panels, representatives from various stakehold- and economic performance in the period on page 127. Company’s Sustainability Report involves stake- ers – such as employees, suppliers, communities, from January 1 to December 31, 2020. holder engagement. To make sure that the publi- customers and government authorities – submit The Report preparation process is coordinated cation addresses the interests of both the Com- their views of the impacts of ENGIE Brasil Energia’s The publication addresses the performance by the Investor Relations Area and involves sev- pany and its various stakeholders, the present activities, list topics of great interest and relevance, of the Company, with registered offices in eral teams throughout the Company. They con- edition is based on the outreachprocess carried and suggest actions to enhance the Company’s Florianópolis (state of Santa Catarina, Brazil), solidate indicators and provide information and out in the latter half of 2019, which involved contribution to sustainable development. Defini- and of the companies responsible for the analyses in connection with different views of the approximately 600 people in 17 municipalities tion of the stakeholders to be engaged took place majority of its sales and operations as at year- business and its relationship with sustainability. where we operate in different regions of Brazil. based on contact frequency, as well as on each group’s relevance to the business, as per guidance from ENGIE Brasil Energia’s Sustainability Forum.

120 / 140 SUSTAINABILITY REPORT Host locations of 2019 Sustainability Panels Main impacts of the Company’s activities as identified by 2020 Sustainability Panel Participants

POSITIVES NEGATIVES

Creation of jobs, income and opportunities. Communities displaced to implement projects. Estreito (MA) Environmental change: wildlife and plant life impact, noise, Tax revenue. Trairi (CE) emissions, landscape. Improved local infrastructure. Socio-economic consequences of decarbonization* Assú (RN) Renewable energy generation. Care for the environment. Social-environmental projects. Quality of life for employees

Palmeirópolis (TO) * Associated with the sale of thermal power plants.

Rondonópolis (MT) Minaçu (MG) To reach out to stakeholders who do not attend Change (IPCC), B3, the International Integrated the Panels, the Companhia launched – also in Reporting Council (IIRC), the United Nations Sacramento (MG) Sonora (MS) 2019 – a complementary survey done online Global Compact, the World Economic Forum, the that 34 respondents used. Because the Com- Sustainability Accounting Standards Board (SASB) Quedas do Iguaçu (PR) Rifaina (SP) pany deemed the fruits of the process relevant, and the Financial Stability Board (FSB) – under it based choice of this report’s topics on the the scope of the task Force on Climate Related Saudade do Iguaçu (PR) Florianópolis (SC) positive and negative impacts that stakeholders Financial Disclosures (TCFD). Aligning the report Itá (SC) Capivari de Baixo (SC) identified. In addition, given the pandemic -con with the recommendations from these organi- text, we revised the study done for materiality zations, which represent different stakeholder Entre Rios do Sul (RS) Lages (SC) definition purposes, referring to documents on groups, helps ensure the relevance of the topics Machadinho (RS) related matters prepared by various institutions, and aspects addressed, improving the transpar- such as the Intergovernmental Panel on Climate ency and accuracy of the information disclosed.

121 / 140 SUSTAINABILITY REPORT Material topics (2019/2020) 2020 Relevant 1. Consistent 3. Wholesome, topics performance prosperity oriented relation • Generating economic results and or the 2020 reporting cycle, the sharing value with society. • Preventing, monitoring and fighting corruption. Company retained the previous • Innovate to improve processes and • Team and community safety. year’s material themes, which are create new solutions and services. • Employee well-being, development and diversity. distributed along four key axes and • Boosting local communities’ prosperity. F15 topics, as the infographic beside shows. Rea- • Fostering best socio-environmental practices among lizing that the Covid-19 pandemic had a greater suppliers and customers. impact on topics already addressed by materiality. The publication provides deeper insight into information on how the health crisis was 2. Leading the addressed in different respects, such as- oc energy transition cupational health and safety, support to local • Prioritizing renewable energy gen- 4. Environmental communities, and operational and economic-fi- eration sources. Management nancial performance. • Dynamic relationship with custom- • Water and effluents. ers, focusing on providing sustain- • Biodiversity. able solutions. • Solid waste. • Emissions management. • Adaptation to climate change

122 / 140 SUSTAINABILITY REPORT Related indicators 2020

Based on the definition of the material topics. The Company selected the performance indicators to monitor and report. For this cycle, in addition to the disclosures proposed by theGlobal Reporting Initiative (GRI), which we traditionally report, the publication added, where applicable, indicators from the Sustainability Accounting Standards Board (SASB) — CDSB Framework and the Electric Utilities Power Gener- ators Standard (2018). Below, the GRI/SASB Summary shows the selected indicators categorized by topic.

GRI/SASB Summary [GRI 102-55]

Disclosure Description Page Omissions 102-1 Name of the organization 12 102-2 Activities, brands, products, and services 12; 15 102-3 Location of headquarters 12; 120 102-4 Number of countries in which the organization operates 15 102-5 Ownership and legal form 12 102-6 Markets served 12; 43 102-7 Scale of the organization 12 102-8 Information on employees and other workers 77; 131 102-9 Description of the organization’s supply chain 95 102-10 Significant changes to the organization and its supply chain in the period 95 102-11 Precautionary Principle approach 51 102-12 External initiatives embraced or endorsed 133 102-13 Membership of domestic or international associations 133 102-14 Statement from the most senior decision-maker 3 102-16 Values, principles, standards, and norms of behavior 12; 24 102-17 Internal and external mechanisms adopted for guidance requests on ethical behavior 24 102-18 Governance structure 22 102-22 Composition of the highest governance body and its committees 22 102-40 List of engaged stakeholders 120 102-41 Percentage of employees covered by collective bargaining 77

123 / 140 SUSTAINABILITY Disclosure Description Page Omissions REPORT 102-42 Identifying and selecting stakeholders 120 2020 102-43 Approach to stakeholder engagement 76; 120 102-44 Key topics and concerns raised 120 102-45 Entities included in the consolidated financial statements 120 102-46 Defining report content and topic Boundaries 120 102-47 List of material topics 120 Explanation of the consequences of any restatements of information in 102-48 - previous reports Material changes from previous years as concerns material topics, limits on 102-49 120 topics addressed 102-50 Reporting period 120 102-51 Date of most recent report 120 102-52 Reporting cycle 120 102-53 Contact point for questions regarding the report 120 102-54 Reporting assumptions in accordance with the GRI Standards 120 102-55 GRI content index 123 102-56 External assurance 120 18; 24; 29; 33; 43; 47; 51; 77; 79; 103-1 Explanation of the material topic and its Boundary 86; 95; 103; 111; 113; 114; 115 18; 24; 29; 33; 43; 47; 51; 77; 79; 103-2 The management approach and its components 86; 95; 103; 111; 113; 114; 115 18; 24; 29; 33; 43; 47; 51; 77; 79; 103-3 Evaluation of the management approach 86; 95; 103; 111; 113; 114; 115 201-1 Economic value generated and distributed 51; 63 Financial implications and other risks and opportunities for the organization’s 201-2 29; 115 activities due to climate change 201-4 Financial support from government sources 63; 86 Percentage and total number of operations subject to corruption-related risk 205-1 24; 95 analysis and significant risks identified 205-3 Confirmed cases of corruption and steps taken 24 302-1 Energy consumption within the organization 113 302-3 Energy intensity 113 303-1 Interactions with water as a shared resource 111 303-2 Management of water-disposal related impacts 111 303-3 Total water withdrawal 111; 136

124 / 140 SUSTAINABILITY REPORT Disclosure Description Page Omissions 2020 303-4 Total effluents disposal in all areas 111; 136 303-5 Total water consumption 111 Location and size of areas held, leased or managed within protected areas or 304-1 103 adjacent thereto, and areas of high biodiversity rates outside of protected areas 304-3 Habitats protected or restored 103 305-1 Direct GHG (Scope 1) emissions 115 305-2 Indirect GHG (Scope 2) emissions from energy acquired 115 305-3 Other indirect (Scope 3) GHG emissions 115 305-4 GHG emissions intensity 115 305-6 Emission of Ozone Depleting Substances (ODS) 139 305-7 Emission of NOX, SOX, and other material atmospheric emissions 139 306-1 Waste generation and significant impacts related to waste 114 306-2 Waste generated, broken down by type and disposal method 114 306-3 Waste generation 114; 138 306-4 Waste not destined for final disposal 138 306-5 Waste destined for final disposal 138 308-1 Percentage of new suppliers selected based on environmental criteria 95 Material negative environmental impacts (actual and potential) along the supply 308-2 95 chain and measures taken in this respect 401-1 New hires and employee turnover 77; 131; 132 403-1 Occupational Health and Safety Management System 79 403-8 Employees covered by the occupational health and safety management system 79 403-9 Occupational injuries information 79; 132 404-1 Average training hours per year per employee, broken down by gender and category 82; 133 404-3 Percentage employees with regular performance and career development reviews 82 405-1 Governance body and workforce diversity 77; 84; 131 406-1 Total number of discrimination cases and steps taken 82

Percentage and total number of material investment agreements and contracts 412-3 24 that include human rights clauses or that underwent human rights screening

Percentage of operations with programs in place to engage local communities, 413-1 86; 120; 135 evaluate impacts, and/or foster local development

125 / 140 SUSTAINABILITY REPORT Disclosure Description Page Omissions 2020 Operations with significant actual and potential negative 413-2 86; 120; 135 impacts on local communities 414-1 Percentage of new suppliers selected based on human rights-related criteria 95 Material negative human rights impacts (actual and potential) along the supply 414-2 95 chain and measures taken in this respect G4-EU1 Installed capacity, broken down by primary energy source and regulatory regime 15; 59 Energy input into the grid, broken down by primary energy source and regulatory G4-EU2 59 regime – net energy production G4-EU3 Number of residential, industrial institutional and commercial consumer units 43; 97 G4-EU8 Electric energy research and development and sustainable development promotion 47 G4-EU11 Average thermal plant efficiency by energy source and regulatory system 59 G4-EU30 Average plant uptime factor by energy source 59 SASB Indicators

Disclosure Description Page Omissions Total water withdrawn, total water consumed, percentage of each in each region IF-EU-140a.1 115 under hydro stress IF-EU-140a.2 Number of cases of water-related noncompliance 115 Description of water-management risks and discussion of mitigating strategies IF-EU-140a.3 115 and practices IF-EU-110a.1 Scope 1 emissions 139 IF-EU-110a.2 GHG emissions associated with energy deliveries 111 Discussion of long- and short-term strategy or plan to manage Scope 1 IF-EU-110a.3 111 emissions, emissions reduction goals, and performance review Atmospheric emissions of the following pollutants: NOx (except N2O), SOx, IF-EU-120a.1 111 particulate material (PM10), lead (Pb) and mercury (Hg) IF-EU-150a.1 Quantity of coal combustion waste generated and percentage recycled 114 Total number of withheld coal combustion waste, broken down by potential IF-EU-150a.2 114 hazard rating and structural integrity evaluation IF-EU-320a.1 Total rate of reportable incidents, fatality rate and frequency rate 79 IF-EU-420a.2 Percentage electricity load served by smart grid technology 89; 59 ENGIE applies – at both its Generation Operations Center (COG) in Florianópolis at locally IF-EU-550a.2 Average system interruption duration and frequency index 59 operated plants – distinctive technological resources to ensure the reliability, safety and efficiency of the operation and, thereby, of the grid.

126 / 140 SUSTAINABILITY REPORT Independent assurance statement bureau veritas 2020

INTRODUCTION Bureau Veritas Certification Brazil (Bureau Veritas) was engaged by Brasil Energia S.A. (ENGIE), to conduct an independent assurance of its Sustainability Report for the year 2020 (hereinafter referred to as the Report). This assessment was conducted by a multidisciplinary staff with expertise in non-financial data.

SCOPE OF WORK The scope of this verification encompassed the Standard and Principles1 of the Global Reporting InitiativeTM GRI for Sustainability Reports, for the period from 1 January to 31 December 2020.

ENGIE AND BUREAU VERITAS RESPONSIBILITIES The collection, calculation and presentation of the data published in the report are ENGIE’s management sole responsibility. Bureau Veritas is responsible for providing an independent opinion to the Stakeholders, pursuant to the scope of work defined in this statement.

METHODOLOGY The assurance work covered the following activities: 1. Enterviews with the personnel responsible for material issues and Report content; 2. Review of documentary evidence provided by ENGIE in relation to the reporting period (2020); 3. Verification of performance data relating to the principles that ensure the quality of the information, pursuant to the GRI Standards; 4. Remote verification regarding corporate and operational indicators; 5. Desk review of ENGIE’s stakeholder engagement activities; 6. Evaluation of the method used to define material issues included in the Report, taking into account the sustainability context and the scope of the information published.

1 Materiality, Stakeholder Inclusiveness, Sustainability Context, Completeness, Balance, Comparability, Accuracy, Periodicity, Clarity, and Reliability 127 / 140 SUSTAINABILITY REPORT The level of verification adopted was Limited, according to the requirements of the ISAE 3000 Standard2, which were incorporated to the internal assessment 2020 protocols of Bureau Veritas.

LIMITATIONS AND EXCLUSIONS Excluded from the scope of this work was any assessment of information related to: • Activities outside the defined reporting period; • Statements of position (expressions of opinion, beliefs, goals, or future intentions) on the part of ENGIE; • Accuracy of economic and financial data contained in this Report which has been taken from financial statements verified by independent financial auditors; • Inventory of Greenhouse Gas (GHG) emissions; • Data and information regarding related companies that are not under operational control of ENGIE;

The following limitations apply for this assurance engagement: • The principles of Accuracy and Reliability were limited to data samples related to material aspects published within the Report; • Economic and financial data presented within the report were assessed against the GRI reporting principle of Balance.

TECHNICAL REPORT • ENGIE conducted a materiality study in 2019 that resulted in 15 material topics. This study was carried out through 34 face-to-face meetings and complementary consultations with stakeholder groups, included by the company. Additionally, we evidenced that the Report deepens information related to facing the health crisis generated by Covid-19; • In our understanding, the Report presents the impacts of the company’s activities in a balanced way; • ENGIE demonstrated an adequate data collection and compilation method in relation to the GRI reliability Principle. We evidenced an increase in the reliability of data and quantitative indicators during this verification cycle, so that the recommendation issued last year has been met.

2 International Standard on Assurance Engagements 3000 – Assurance Engagements other than Audits or Reviews of Historical Financial Information 128 / 140 SUSTAINABILITY REPORT CONCLUSION 2020 As a result of our assurance nothing has come to our attention that would indicate that: • The information presented in the Report is not balanced, consistent and reliable; • ENGIE has not established appropriate systems for the collection, aggregation and analysis of quantitative and qualitative data used in the Report; • The Report does not adhere to the Principles for defining report content and quality of the GRI Standards and does not meet its Core level.

DECLARATION OF INDEPENDENCE AND IMPARTIALITY Bureau Veritas Certification is an independent professional services firm specializing in Quality, Health, Safety, Socialand Environmental Management, with more than185 years’ experience in independent assessment. Bureau Veritas has a quality management system that is certified by a third party, according to which policies and documented procedures are maintained for the compliance with ethic, professional and legal requirements. The assessment team has no links with ENGIE and the assessment is performed independently. Bureau Veritas implemented and follows a Code of Ethics throughout its business, in order to assure that its staff preserve high ethical, integrity, objectivity, con- fidentiality and competence/ professional attitude standards in the performance of their activities. At the end of the assessment, a detailed report was drawn up, ensuring traceability of the process. This Report is kept as a Bureau Veritas management system record.

CONTACT Bureau Veritas Certification is available for further clarificationwww.bureauveritascertification.com.br/faleconosco.asp on or by telephone (55 11) 2655-9000.

São Paulo, Brazil, April 2021.

Alexander Vervuurt Lead Auditor; Assurance Sustainability Reports (ASR) Bureau Veritas Certification – Brazil

129 / 140 SUSTAINABILITY Company Address REPORT Rua Paschoal Apóstolo Pítsica, 5.064 - CEP 88025-255 — Florianópolis (SC) Phone: (48) 3221-7000 2020 Follow us

Shareholders or market analysts www.engie.com.br Twitter Investor Relations - [email protected] Phone: (48) 3221-7225 LinkedIn Facebook Instagram Youtube Shareholder service/Custody bank Banco Itaú S.A. Unified Service Newsletters and content: Phone: (11) 3003-9285 / 0800-7209-285 https://www.alemdaenergia.com.br/ https://bancaengiebrasil.com.br/ Depositary bank (American Depositary Receipts) https://blog-solucoes.engie.com.br/ The Bank of New York Mellon

Environmental, health & safety, or social responsibility matters Sustainability Forum - [email protected] Credits

Environmental, health and safety, or social responsibility matters General coordination Ethics Forum: [email protected] Investor Relations (RCI) Whistleblowing or inquiries: https://www.canalintegro.com.br/engiebrasil/ (guaranteed anonymity) GRI Consultancy, text and editing We Sustentabilidade Suppliers https://www.engie.com.br/fornecedores/ Graphic design and layout L7 Design Customers https://www.engie.com.br/solucoes/nossa-expertise/mercado-livre-de-energia/ Translations https://www.engie.com.br/solucoes/nossa-expertise/solar/ Tristar Traduções Ltda

130 / 140 SUSTAINABILITY REPORT SUPPLEMENTARY BROCHURE Number of employees in Number of employees 2020 2020 by job type in 2020, by employment type PEOPLE Male Female Male Female This section provides information and indicators in addition to those mentioned in the 2019 Sus-

tainability Report’s main volume, in connection with policies and practices embraced with the main Full-time 1,226 301 Permanent 1.095 271 Temporary 137 35 publics with which we interact. Part-time 6 5 Total 1,232 306 DIVERSITY [GRI 102-8; 405-1] HIRES Governance body membership by gender [GRI 401-1]

Under 30 Between 30 Male Female Over 50 y.o. Evolution in the Hire rate by region y.o. and 50 y.o. Board of Directors 78% 22% 0 22% 88% number of hires Executive Board 87.5% 12.5% 0 57% 43% 272 Number of employees, by gender and category 63.2% 634 140

28.3% 1.1% 7.4% 343 255

South 148

121 North

37 Northeast

Male Center-West Management Anallysts, engineers and Operators, 2019 2020 specialists technicians Female

131 / 140 SUSTAINABILITY REPORT Severances OCCUPATIONAL HEALTH AND SAFETY 2020 [GRI 401-1] [GRI 403-9]

Evolution in the number of Percentage severances Number of occupational accidents, except ENGIE Geração Solar Distribuída severances by region 2018 2019 2020 83 Own employees 7 Hours of risk exposure 2,060,731 2,338,743 2,420,548 5

132 3 Number of occupational and commuting 3 7 5 2 accidents without leave Number of days lost – occupational

79 30 0 15 accidents with leave % Number of fatal accidents 0 0 0 Contractor employees Hours of risk exposure 18,728,672 8,603,756 17,660,961 Number of occupational and commuting 155 55 102 accidents without leave Number of fatal accidents 0 0 0 2019 2020 Region South Region Center-West Region Northeast Region Southeast Number of occupational accidents at ENGIE Geração Solar Distribuída Region North 2019 2020 Own employees Turnover, by region Hours of risk exposure 215,037 174,088 Number of occupational and commuting accidents without leave 1 0 North Northeast Center-West Southeast South General Days missed – occupational accidents with leave 65 0 Number of fatal accidents 0 0 2.7% 0.7% 0.2% 0.3% 9.1% 13.1% Contractor employees Hours of risk exposure 126,073 97,396 Number of occupational and commuting accidents without leave 4 0 Number of fatal accidents 0 0

132 / 140 SUSTAINABILITY REPORT TRAINING AND DEVELOPMENT COMMITMENT TO OUTSIDE INITIATIVES 2020 [GRI 404-1] [GRI 102-12; 102-13]

Training Hours Average training and One way for ENGIE Brasil Energia to contribute to the development of the industry and of the com- development hours by gender munities in which it is present is to have employees and managers take part in associations devoted

2019 2020 to public interest and social well-being.

83,124 Male 52.9 47.1 The company is a member and the main supporter of the “National SDG Movement – We Can Santa 74,986 Female 31.8 26.4 Catarina”. It is also a member of the Ethos Institute’s “Corporate Compact for Integrity and against 66,117 Corruption” and of Women’s Empowerment Principles (WEP), a UN Women initiative.

Average training and development hours by category Other initiatives where the Company takes part • Brazilian Association of Small Hydroelectric are as follows: Plants and Hydroelectric Generation Cen- 2019 2020 • Brazilian Association of Electric Energy ters (ABRAPCH); Managers 44.6 29.0 Generation Companies (Abrage); • Health Care Association (Elosaúde); Analysts, engineers and • Brazilian Wind Power Association (ABEEóli- • Electric Energy Trading Chamber (CCEE); 40.6 35.7 specialists ca); • Electric Energy Research Center (CEPEL); Operators, technicians 56.7 52.3 2018 2019 2020 • Brazilian Maintenance Association (Abra- • Jacutinga River Watershed and Contiguous man); Watersheds Management Committee; • Brazilian Association of Electric Energy • Apuaê-Inhandava Rivers Watershed Man- Trading Agents (Abraceel); agement Committee; • Santa Catarina State Association of Energy • Passo Fundo River Watershed Management Producers (Apesc); Committee • Brazilian Association of Independent Elec- tric Energy Producers (Apine);

133 / 140 SUSTAINABILITY • Tubarão River Watershed and Lagoon Com- • Business Management Committee Foundation REPORT plex Management Committee; (Funcoge); 2020 • Canoas River Watershed Management • Eletrosul Pension and Welfare Foundation Committee; (ELOS); • São Lourenço River Watershed Committee; • Acende Brasil Institute; • Lower Iguaçu River Tributaries Committee; • Tocantins River Watershed Crisis Room, coordi- • Rio Grande do Sul State Energy Planning nated by the National water Agency (ANA); and Committee (Copergs); • Supplementary Pension Society (PREVIG). • Cantuquiriguaçu Territory Development Council (Condetec); • National Hydro Resources Council (CNRH); At the global level, Controlling Entity ENGIE is a • Santa Catarina State Hydro Resources signor of the Carbon Disclosure Program (CDP), Council (CERH-SC); the United Nations (UN) Global Compact, biodi- • Paraná State Hydro Resources Council versity protection initiative act4nature, and sev- (CERH-PR); eral initiatives focusing on climate change and • Santa Catarina State Environment Council; the energy transition: • National Industrial Confederation (CNI) • Solar Impulse Foundation; Environment and Sustainability Theme • We Mean Business; Council; • Business Leadership Criteria on Carbon • Electric Power Research Institute (EPRI/ Pricing (UN Global Compact); USA); • Caring for Climate (UN Global Compact); • Energy Research Company (EPE); • Hydrogen Council; • Santa Catarina State Industrial Federation • Terrawatt Initiative (founding member), (Fiesc); which aims to exert global-level influence on • Rio Grande do Sul State Industrial Federa- the regulatory conditions for massive and tion and Center (Fiergs); competitive construction of solar generation. • Science Based Targets (SBT).

134 / 140 SUSTAINABILITY REPORT Impact on communities 2020 [GRI 413-1; 413-2]

Summary – Significant negative impacts, both real and potential, on communities near Summary – Positive impacts on ENGIE Brasil Energia’s operations surrounding communities:

• Increased local commerce. Operation Implementation Operation Decommissioning type • Increased tax revenues. Increased population flow (temporary or permanent, depending Temporarily increased population flow. • Contribution to land usage planning. on project size and type). • Retainer of local businesses and labor. Community exposure to particulate Community exposure to particulate emissions and noise. emissions and noise. • Increased labor qualification and training. Interference with the surrounding community’s routine. Increased population flow (temporary Interference with the surrounding • Increased public-private partnerships to- General or permanent, depending on project community’s routine. Exposure of the local population to increased heavy vehicle traffic. wards socio-economic development. size and type).

Exposure of the local population to Morphological (natural contour and drainage), scenic and • Jobs and income generation. increased heavy vehicle traffic. habitat alterations. • Increased supply of alternative energy.

Reduced local economic activity post- Managing the local population’s expectations demobilization. • Addition to regional socio-environmental value. Hydroelectric Relocation of families and resulting changes to socio-economic Restrictions on the use of the reservoir Not many events/studies exist thus far on Strengthening the National Plants dynamics, due mainly to the reservoir. and its surroundings. the decommissioning of hydro plants • Interconnected System. Deteriorating economic activity, as thermal power plants directly and Atmospheric emissions (mostly CO , Thermal Relocation of families and resulting changes to socio-economic 2 indirectly employ a large number of as the particulate material is 99.9% Power Plants dynamics, due mainly to the reservoir. workers, , in addition to the generation contained by filters). of direct and indirect revenues in the surrounding area. Relocation of families and resulting changes to socio-economic dynamics in the areas where substations are built. Use of property land with topical changes Not many events/studies exist thus far on Transmission to economic dynamics (e.g.: restricted use the decommissioning of transmission lines. Plant suppression and land clearing, generating dust, noise and of land near the power lines). inconvenience for the population. Noise and vibration emissions from Not many events/studies exist thus far on Wind farms Increased noise and vibration. wind turbines. the decommissioning of Wind Complexes.

135 / 140 SUSTAINABILITY REPORT PLANET Total water used at Total water disposal 2020 We provide, next, complementary indicators on material environmental management topics. thermal plants (in ML) (in ML)

Water 493,071.40 488,568.10

[GRI 303-3; 303-4] 460,245.79

[SASB IF-EU-140a.1] 450,600.10 426,607.33 418,154.20 Water withdrawn (in ML)

2018 2019 2020 Change 2019/2020

Surface water 490,663.9 425,982.0 457,097.8 7.3%

Ground water 12.2 12.8 14.1 10.3% Third-party water 2,420.5 2,138.8 2,163.4 1.1% (city supply) Total 493,096.6 428,133.6 459,275.3 7.3%

2018 2019 2020 2018 2019 2020 Water usage at thermal power (in ML) Total water disposal (in ML) Change Procedure 2018 2019 2020 2019/2020 Change 2019 2020 Processing 6,000.9 5,847.87 5,670.12 -3% 2020/2019 Surface Cooling 487,070.5 420,759.46 454,575.67 8% 416,246.3 448,718.9 7.8% water Total 493,071.4 426,607.33 460,245.79 8% Third-party 1,907.9 1,881.2 -1.40% 450,595.97 ML Consumption* 4,511.1 8,459.08 9,649.80 17% water Total 418,154.2 450,600.1 7.8% Planned thermal discharges * Water consumption is not included in the total because it is part of the volume used for cooling.

136 / 140 SUSTAINABILITY REPORT ENERGY Average efficiency – Thermal power plants 2020 [GRI 302-1; GRI G4-EU11] 2020 Specific 2019 Specific Aneel 2020 2019 Change consumption consumption Thermal Plant/Unit Benchmark Direct energy consumption – non-renewable sources (%) (%) (p.p.) (Coal tons/ (Coal tons/ (RN 801) (GJ) MWh) MWh) UTLA 1 26.1 24.9 1,2 30% 0.72 0.76 2018 2019 2020 Change 2019/2020 Jorge UTLA 2 29.9 29.6 0,3 30% 0.64 0.65 Diesel fuel 160,411.96 209,448.19 217,656.00 3.9% Lacerda Complex UTLB 28.7 28.3 0,4 35 % 0.67 0.69 Fuel oil 124,675.09 121,905.74 21,744.00 -82.2% – CTJL UTLC 33.9 33.5 0,4 35% 0.56 0.58 (coal) Coal 44,122,138.66 48,926,974.19 58,714,992.00 20.0% Total 30.8 30.3 0,5 - 0.62 0.63 CTJL Total 44,407,225.71 49,258,328.12 58,954,392.00 19.7% Pampa Sul (coal) 34.4 36.3 -1.9 N.A. 1.00 0.93 Ibitiúva (biomass – 25.5 25.9 -0.4 N.A. N.A. N.A. Direct energy consumption – renewable sources sugar-cane bagasse) (GJ) Ferrari (biomass – 19.0 18.7 0.3 N.A. N.A. N.A. sugar-cane bagasse) 2018 2019 2020 Change 2020/2019 Lages (biomass – 21.7 23.2 -1.5 N.A. N.A. N.A. wood) Wood biomass 2,306,668.52 2,195,229.60 1,283,031.33 -41.6%

Sugar-cane biomass 9,841,862.20 10,064,558.51 10,083,854.97 0.2%

Total 12,148,530.72 12,259,788.11 11,366,886.30 -7.3%

Grid electricity consumption (GJ)

2018 2019 2020 Change 2020/2019

306,108.00 604,526.74 270,804.17 -55.2%

137 / 140 SUSTAINABILITY REPORT WASTE WASTE ALLOCATED TO FINAL DISPOSAL 2020 [GRI 306-3; 306-4; 306-5] [SASB IF-EU-150a.2] Hazardous waste (t)

WASTE NOT ALLOCATED FINAL DISPOSAL Disposal 2018 2019 2020

Hazardous waste Incineration (mass burning) 0.03 0.01 0.34 (t) Landfill 108.96 163.86 149.11 Local storage 48.94 30.95 56.03 Disposal 2018 2019 2020 Total 157.93 194.82 205.48

Re-use 34.78 34.54 59.93 Recycling 82.12 40.51 180.74 Non-hazardous waste Co-processing 150.32 280.88 127.68 (t) Total 267.22 355.93 368.35 Disposal 2018 2019 2020

Non-hazardous waste Landfill 576.79 614.24 431,483.14 (t) Local storage 18.30 119.41 8.06 Total 595.09 733.65 431,491.20 Disposal 2018 2019 2020

Re-use 1.25 14.4 5,850.47 TOTAL WEIGHT OF GENERATED WASTE Recycling 813,440.62 843,551.91 1,139,623.17 (t)

Composting 257.01 284.21 131,783.80 Hazardous 517.8

Degraded areas recovery 632,368.55 1,219,643.41 817,593.00 Ashes (non- hazardous) 2,477,991.1

Co-processing 12.00 41.36 95.26 Non- hazardous (others) 48,437.7

Total 1,446,079.43 2,063,535.29 2,094,945.69 Total 2,526,946.63

138 / 140 SUSTAINABILITY REPORT ATMOSPHERIC EMISSIONS 2020 Intensity of NOx, SOx and other atmospheric emissions by total [GRI 305-6; 305-7] net generation (Kg/MWh)* [SASB IF-EU-110a.1; IF-EU-110a.2; IF-EU-120a.1.] 2018 2019 2020 Change 2019/2020

NOX 0.37 0.27 0.47 72.6%

SOX 3.0 2.80 3.31 18.3%

NOX, SOX and other significant atmospheric emissions (t)* Poluentes orgânicos persistentes Not Not Not Not Measured (POP) Measured Measured Measured Percentage emissions Change 2018 2019 2020 in densely Not Not Not 2019/2020 Compostos orgânicos voláteis (COV) Not Measured populated areas Measured Measured Measured Poluentes atmosféricos perigosos Not Not Not NO 14,208.20 11,766.04 15,834.81 34.6% 89.7% Not Measured X (HAP, na sigla em inglês) Measured Measured Measured SO 114,706.24 119,984.76 112,551.33 -6.2% 90.2% X Material particulado (MP) 0.76 0.07 0.09 32.8% Persistent organic Not Not Not Not Not Not Not Not Measured Chumbo (Pb) Not Measured pollutants (POP) Measured Measured Measured Measured Measured Measured Measured Volatile organic Not Not Not Not Not Measured Mercurio (Hg) - 0.00 0.00 - compounds (VOC) Measured Measured Measured Measured Hazardous * Sampled data. Not Not Not Not atmospheric Not Measured Measured Measured Measured Measured pollutants Emission of Ozone Depleting Substances (ODS) – tCO2e (HAP) 2,894.02 2,820.39 2,978.21 5.6% 59.4%

Particulate material Not Not Not Not Operational Operational Operational Not Measured ODS Equity Stake Equity Stake Equity Stake (PM) Measured Measured Measured Measured Control Control Control Lead (Pb) - 0.10 0.16 60.0% 41.6% 2018 2019 2020 HCFC (R-22) 279.84 296.51 324.27 382.56 194.37 216.20 * Sampled data.

Intensity of NOx, SOx and other atmospheric emissions from all combustion plants (Kg/MWh)

2018 2019 2020

NOX 3.85 2.31 2.79

SOX 31.05 23.59 19.86 Particulate material (PM) 0.78 0.55 0.53

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