Force for Good
2020 ESG Report Forward Looking Statements 2020 ESG REPORT
Statements contained in this presentation concerning Energy’s risk management techniques, including hedging, and ability to meet its debt obligations largely depend; the expectations, beliefs, plans, objectives, goals, strategies, with respect to electricity and fuel prices, interest rates and risks inherent with variable rate indebtedness; disruption future events or performance and underlying assumptions counterparty credit and non-performance risks; methods in financial markets; acquisition or divestiture activities, and other statements that are not statements of historical of accounting and developments in or interpretations including Talen Energy’s ability to realize expected synergies fact are “forward-looking statements.” These statements of accounting requirements that may impact reported and other benefits from such business transactions; often include words such as “believe,” “expect,” “anticipate,” results, including with respect to, but not limited to, hedging Talen Energy’s ability to achieve anticipated cost savings; “intend,” “plan,” “estimate,” “target,” “project,” “forecast,” activity; Talen Energy’s ability to forecast the actual load the execution and development of Talen Energy’s future “seek,” “will,” “may,” “should,” “could,” “would” or similar needed to perform full-requirements sales contracts; the enterprises, including the ability to permit, develop and expressions. Although we believe that the expectations and effects of transmission congestion due to line maintenance construct its proposed renewable energy, energy storage, assumptions reflected in these statements are reasonable, outages and the performance of transmission facilities data center, and digital currency facilities, realization of there can be no assurance that these expectations will prove and any changes in the structure and operation of, or the assumptions underlying statements regarding future to be correct. Forward-looking statements are subject to pricing limitations imposed by, the Regional Transmission enterprises, and the realization of estimates of valuations many risks and uncertainties, and actual results may differ Organization (“RTOs”) and Independent System Operators of future enterprises; Talen Energy’s ability to optimize its materially from the results discussed in forward-looking (“ISOs”) that operate those facilities; blackouts due to competitive power generation operations and the costs statements. In addition to the specific factors discussed in disruptions in neighboring interconnected systems; federal associated with any capital expenditures; significant “Significant Business Risks” in our financial statements, the and state legislation and regulation, including federal and increases in operation and maintenance expenses, such following are among the important factors that could cause state tax laws and regulations, and costs of complying with as health care and pension costs, including as a result of actual results to differ materially from the forward-looking governmental permits and approvals; costs of complying changes in interest rates; the loss of key personnel (for statements: Talen Energy’s or its subsidiaries’ levels of with environmental and related worker health and safety laws health or other reasons) and the ability to hire and retain indebtedness; the terms and conditions of debt instruments and regulations; the impacts of climate change including qualified employees; possibility of strikes or work stoppages that may restrict Talen Energy’s ability to operate its changes in regulation or their enforcement; the availability by unionized employees; war, armed conflicts or terrorist business; operational, price and credit risks in the wholesale and cost of emission allowances; the performance of Talen attacks, including cyber-based attacks; and pandemics, and retail electricity markets; the effectiveness of Talen Energy’s subsidiaries and affiliates, on which its cash flow including for COVID-19.
2 Contents 2020 ESG REPORT
Letter from Management 5 About Talen 6 Approach to ESG 8
ESG Oversight 10 Board of Directors 11 Governance Committees 12 Ethics and Compliance 13 Regulatory and External Affairs 14 Cybersecurity 15 Supply Chain 16
Environmental Management 18 GHG and Air emissions 19 Coal Combustion Residuals 20 Water and Waste 21
Health and Safety 23 Employment 24 Training and Development 25 Community Engagement 26
SASB Table 27
3 1 Executive Summary LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Letter from Management As the world continues to rapidly evolve, and the communities where our employees live and work. We recently set an ambitious target to reduce our CO emissions the demand for reliable, zero-carbon electricity 2 by 75% in a 20-year period, from 2010 to 2030. We have continues to increase, Talen is embarking on committed to the cessation of coal at the Montour, Brandon a transformation to advance clean energy Shores, and H.A. Wagner facilities by the end of 2025, and the Brunner Island facility by the end of 2028. infrastructure and better align with market demands and sustainability-focused goals. In short, we are Our value of “No Harm” has helped to foster a proactive culture and ensures the health and safety of our employees, positioning ourselves to be a “Force for Good” while contractors, and communities. Through the efforts of leading the energy transition. each Talen employee, we have materially improved our safety performance over the past six years, proven by our Talen’s transformation includes two components: maintaining OSHA Incident Rate of 0.34, which is much better than the our current commodities-based business, and growth through top performance industrial benchmark. We bring value to new opportunities in renewable energy, energy storage, data the communities in which we operate by providing stable centers, and digital coin. We are well positioned to capture employment, safe operations, and engagement with local value in these four growth areas through our diverse portfolio organizations. of generation facilities, advantaged real estate, existing transmission infrastructure, and importantly, a highly trained Talen understands that robust corporate culture is the and capable workforce. With our focus on maximizing the foundation of strong corporate governance and solid ESG value of the electrons we produce, we are uniquely positioned performance. Our values of Excellence, No Harm, Integrity, and to meet the challenges, and capture many of the opportunities, Continuous Improvement help to foster a culture that supports presented by the energy transition. proper governance, from the Board of Directors to each Talen employee. Moving forward, we will continue to be transparent We believe that if we excel in Environmental, Social and with you and build upon the trust and mutual understanding that Governance (“ESG”) matters, we will be a Force for Good, and we all value. no company can be a Force for Good if they do not deliver on ESG. As we transform, we will expand our ESG focus, and our Through our transformation and strong focus on ESG, Talen performance in these areas will continue to underpin Talen’s believes we are well positioned as a “Force for Good” to lead the long-term success. energy transition. We appreciate your interest in Talen and our ESG story. Talen is working to address climate change by decarbonizing our generation fleet in a way that also provides grid resiliency, strong financial performance, and mitigates negative impacts in
5 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
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W Talen’s Purpose, About Talen A 13 GW Portfolio
B Mission, and Values L E
S guide strategic
| 19 Generation Facilities
decisions and the B TALEN TALEN
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T GROWTH COMMODITIES actions of all employees
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E 4 Markets Served S by setting a strong R A FORCE T Y E FOR GOOD S S company culture. Talen is a performance-driven T S O A 2,000+ Employees R A G G IN company that owns, operates, E T | RA DA NE acquires and optimizes high-quality TA | COIN 13 GW OF GE power infrastructure in North PURPOSE: Be a force for good while America. Talen’s current commodities advancing the energy transition and maximizing portfolio consists of 19 generation value for our stakeholders. facilities, and nine locations with MISSION: peaking units, that are collectively Generate energy and provide capable of producing approximately digital infrastructure solutions in a way that achieves our purpose 13,000 MW of power—making it one and delivers the best possible outcomes for our people, of the largest competitive power ISO-NE communities, and stakeholders. infrastructure companies in North DARTMOUTH VALUES: COLSTRIP America. MAAC Excellence is the core driver SUSQUEHANNA of everything we do. MONTOUR LOWER MOUNT BETHEL NEWARK BAY MARTINS CREEK We strive to do no harm to EMAAC KEYSTONE YORK our people, our communities, CONEMAUGH or the environment. WECC BRUNNER ISLAND CAMDEN PRIMARY FUEL PEDRICKTOWN TYPE IN 2020: BRANDON SHORES We demonstrate integrity by H. A. WAGNER COAL delivering what we promise. NATURAL GAS RTO NUCLEAR We focus on continuous improvement to encourage innovation and lead change.
1 Coal owned at 100%; Talen’s Montour, Brandon ERCOT Shores, and H.A. Wagner plants will cease coal-fired operations by the end of 2025, while Brunner Island, which primarily runs on natural gas, will cease coal-fire operations by the end of 2028. 6 NUECES BAY 2 Coal owned at less than 50% LAREDO BARNEY DAVIS LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Talen’s Transformation
Talen’s current growth platform Renewables and Battery Storage Talen seeks out partners with strong track records processing, and digital currency mining by in renewable energy development and construction providing power directly to these facilities. This includes 2.7 gigawatts of renewable Talen believes in a diverse generation portfolio and to mitigate project-related risks. Together with its can provide a stable source of income outside of recognizes the value of zero-carbon, renewable energy energy and battery storage projects, partners, Talen operates with three core commitments the traditional market. as part of the evolving generation mix. In 2020, the in mind: health and safety, protecting the environment, and the development of data centers company announced a strategic repositioning which and being good neighbors. Talen recently broke ground on a hyperscale data and digital currency mining facilities, includes investments in renewable energy generation center campus that will be adjacent to its zero and battery storage resources. This strategy allows at strategic locations across its Approximately 1.6 GW of wind and solar projects carbon Susquehanna nuclear generation facility in Talen to pursue new growth opportunities that are in various stages of development, while initial Pennsylvania. The company plans to complete this asset portfolio. capitalize on its existing footprint and align with applications for the development of over 1 GW of 48 MW, hyperscale data center in 2022 and intends its carbon emissions reduction ambitions. Talen’s battery storage has been submitted with a majority to serve the needs of large consumers of computing generating assets are well suited for co-locating in the feasibility review process. power across the globe, under long-term contracts. renewables and battery storage projects, as much of Talen sees significant opportunity in the creation of a its land footprint is located within key load centers digital infrastructure platform utilizing power assets and near existing interconnection infrastructure. This with certain characteristics and fiber connectivity. allows Talen to take advantage of brownfield sites that Data Centers and Digital Coin reduce the need for additional infrastructure, thereby Electricity is at the core of the digital infrastructure Additionally, Talen plans to construct and operate minimizing costs and environmental impacts. that enables global cloud computing and digital a 100 MW digital currency mining facility at Talen’s currency mining. The proliferation of these innovations Susquehanna nuclear generation facility, with the SOLAR: ability to expand the operation up to 300 MW. As with WIND: Montour 1 100 MW will require significant digital infrastructure Northwest 600 MW Montour 2 140 MW development in the coming decade. Talen plans data centers that enable cloud computing, power is SOLAR: Brunner Island 61 MW Northwest 300 MW Martins Creek 64 MW to use its existing footprint not only for renewable the principal input and cost in digital currency mining, Holtwood 20 MW Sunbury 20 MW energy and battery storage development, but also and Talen’s vision is to create low to zero-carbon Undisclosed 180 MW DEVELOPMENT PORTFOLIO1 for the development of data centers that can be coins, with the appropriate regulatory overlay, mined in STORAGE: STORAGE = 1,080 MW York 200 MW powered by existing assets or by newly developed the United States in a secure, compliant location. Lower Mt. Bethel 100 MW SOLAR = 1,030 MW Martins Creek 72 MW renewable energy assets and battery storage. Rather Harwood 33 MW WIND = 600 MW than exporting power via transmission lines, Talen
SOLAR: plans to meet the growing demand for data storage, South Texas Solar 145 MW STORAGE: Camden 20 MW STORAGE: Newark 170 MW South Texas Storage 75 MW STORAGE: Wagner 135 MW Brandon Shores 275 MW 7 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
ESG POLICIES Approach to ESG Company policies and compliance manuals help guide Talen’s approach to ESG by setting expectations and guiding behavior. Listed below are Talen’s purpose is to become a examples of the key policies that guide Talen’s ESG approach. Force for Good in the energy transition, and the company believes • Code of Business Conduct and Ethics that ESG provides the necessary • Cyber Security Policy framework to fulfill this purpose. • Data Classification and Talen’s bottom-up approach to ESG, Handling Policy with keen oversight from its Board, • Discrimination and ensures employees are empowered Harassment Policy to address ESG topics in a manner • Environmental Policy that is suitable for local conditions, • Equal Employment while aligning with corporate ESG Opportunity Policy strategy and ensuring strong • External Affairs Policy1 accountability. This also allows for • Health and Safety Policy ESG to be embedded within Talen’s • IT Compliance Policy corporate culture, which starts at the • Risk Management Policy top and is interwoven throughout its • Supplier Code of Conduct business units. • Workplace Violence Policy
1 Includes guidance on conflicts of interest, government relations, charitable activities, and gifts and entertainment 8 2 Governance LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
The Talen Board of Directors has oversight of Talen’s ESG performance 19 Board of Directors meetings in 2020 ESG and meets frequently to provides guidance on strategic ESG issues. In 2020, the Board had 19 formal meetings. The Board also receives 15 Federal agencies provide oversight of Talen Oversight regular updates from Talen’s Risk Management Committee and Nuclear Oversight Committee (NOC). The Risk Management Committee, comprised of a member of the Board, and senior management in Talen’s commercial group, provides oversight of Talen’s commercial At Talen, ESG is the responsibility risk management activities. The NOC, comprised of a member of the Board of Directors of all employees. However, the Board and unaffiliated, leading nuclear experts, including former Chief Nuclear Officers, advises and assists in the fulfillment of the Board’s Board and senior management responsibilities to ensure strong governance and oversight at the Employees provide robust oversight and set Susquehanna nuclear facility. Trade unions Customers the tone for the organization. CEO/Chairman and Talen’s Chairman & CEO and President & CFO are responsible for setting Investors President/CFO Individual ownership helps to foster, the day to day ESG strategy, including any ESG related targets. They Communities and permeate throughout the receive regular updates from business unit and functional leaders Governments Regulators organization, a corporate culture during quarterly Performance Review Meetings (PRMs) where ESG- related information and operational concerns are relayed. Additionally, Suppliers Business Unit and that embodies ESG performance. the company’s annual Upward Feedback survey allows every employee Rating agencies Function Leaders to provide anonymous feedback on their supervisor’s character, Industry associations performance, and commitment to health and safety, with results reviewed Advocacy groups Independent NGOs by senior management. System Operators Public Utility The Talen ESG Team is comprised of employees from different E.S.G. Team Commissions departments who work across functions to develop, elevate, and externally communicate Talen’s ESG initiatives. This team has expertise in ESG and is responsible for informing and executing Talen’s ESG strategy and tracking performance through data collection, analysis, and reporting.
Talen continually engages with various stakeholders to gather insights and ensure transparency in operations and performance. Additionally, more than 15 federal agencies, in addition to state, municipal, and local agencies, regulate and provide oversight of the company and its industry.
10 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
RALPH ALEXANDER Chairman of the Board The Board of Directors performs, Board of Chief Executive Officer, Talen Energy among other things, the following roles: Directors • Oversees Company strategy, including ESG matters
• Hires independent auditor Talen’s Board of Directors is comprised • Approves independent audit of two members of senior management and non-audit services and three members from current • Reviews and approves equity owner, Riverstone Holdings. executive compensation These Board members have extensive and benefits and accomplished backgrounds in • Continuously evaluates Talen’s core commodity business composition of the Board and renewable energy development. TALEN • Evaluates Company corporate governance practices As Talen expands to include new ENERGY • Reviews Risk Management growth opportunities, it is actively DREW KARIAN CORP. ALEX HERNANDEZ Committee plans Director DIRECTORS: Director seeking to expand the Board to add Managing Director, President and Chief Financial Officer, • Reviews Nuclear Oversight diverse backgrounds, experience, Riverstone Holdings Talen Energy Committee plans and strategic capabilities to further Talen’s success. In particular, Talen is targeting a diverse set of executives, each with a strong background in one or more of the growth platforms. These diverse viewpoints and experiences will enhance Talen’s ability to successfully manage its transformation. DAVID M. LEUSCHEN PIERRE F. LAPEYRE, JR. Director Director Co-founder and Senior Managing Director, Co-founder and Senior Managing Director, Riverstone Holdings Riverstone Holdings 11 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
SUSQUEHANNA INDEPENDENT RISK MANAGEMENT COMMITTEE Governance EXTERNAL OVERSIGHT To ensure proper governance of Talen’s risk management process, U.S. Nuclear Regulatory Commission the Risk Management Committee reports to the Board of Directors (NRC) non-cited violations are Committees and provides oversight of Talen’s commercial risk management determined to have very low safety activities. significance and are documented in SUSQUEHANNA GOVERNANCE inspection reports, but do not meet The Committee is led by Talen’s Managing Director of Risk and the level of severity for a Notice of meets quarterly, or as necessary, to evaluate the nature and Due to the complex nature of nuclear operations, Talen’s Violation. In 2018, Talen received magnitude of the risks in specified exposure areas, and to approve Susquehanna Steam Electric Station has additional governance 19 non-cited violations. However, amendments or revisions to Talen’s Risk Management Policy. structures in place to define roles, responsibility, and due to efforts to enhance safety, The Risk Management Policy addresses the management of accountability regarding environmental and social performance. environmental impact, and operational commercial risk exposure from price, volumetric, liquidity, and Oversight comes in the form of CEO monitoring and oversight excellence, in 2020, the number of non- credit risk. The Policy provides guidance on risk management at the station, charter implementation of the Nuclear Oversight cited violations was reduced to 4. This governance, approval of commercial activities, risk hedging, Committee (NOC), and through feedback from the Nuclear Safety represents a 79% reduction from 2018 reporting, compliance management, and relationships with Review Board (NSRB) and Nuclear Advisors. and a 60% reduction from 2019. regulators and customers.
The NOC reports directly to Talen’s Board of Directors and assists in the fulfillment of the Board’s responsibilities to ensure healthy governance and oversight is in place, including oversight of operational safety, which enables safe and reliable nuclear energy production. The NSRB is an external review committee responsible for providing a comprehensive and independent oversight of Susquehanna-related activities pertaining to operational safety and compliance with regulatory requirements. The NSRB is established as a review, audit, and advisory group, whose function is to independently verify that Susquehanna is being tested, operated, and maintained in accordance with safety and environmental requirements.
TO LEARN MORE about Talen’s efforts to manage nuclear safety and emergency preparedness, see the 2020 Talen Energy SASB Table.
12 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Ethics and CODE OF BUSINESS CONDUCT AND ETHICS Talen has a robust Code of Business Conduct and Ethics which guides behaviors and clearly defines expectations regarding how employees should Compliance conduct themselves as they interact with others inside and outside the company. It also provides information on how to share concerns regarding actions or behaviors that do not align with these expectations. All Talen Talen and its employees and directors, officers, and employees are expected to adhere to the principles directors are committed to and procedures in the Code of Business Conduct and Ethics. conducting business in accordance Additionally, Talen’s Supplier Code of Conduct sets forth similar with all applicable laws, rules, and expectations and requirements for vendors and contractors. See the Supply Chain section for more details. regulations, to promote honest and ethical conduct, and to “do the right thing”. This commitment is ETHICS HELPLINE an extension of Talen’s “No Harm” culture – a dedication to fostering The Talen Ethics Helpline provides employees with a toll-free telephone number and web-based system that are available 24/7 and can be accessed a safe and injury, harassment, anonymously from inside or outside of the company. Employees are and discrimination-free working encouraged to use the Ethics Helpline for: environment, and to acting • Guidance or clarification on business ethics or responsibly and ethically in the compliance questions communities in which Talen operates. • Reporting suspected misconduct or violations of the Code of Conduct
• Assistance, if employees are not sure where their concern should be addressed
Helpline calls are monitored by Talen Legal personnel and all reported items are logged and addressed accordingly. Talen’s Code of Business Conduct and Ethics expressly prohibits retaliation of any kind against employees for calls or complaints made in good faith. 13 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Regulatory and LOBBYING Talen does not have an affiliated Political Action Committee (PAC). Talen does, from time to time, engage constructively with federal and External Affairs state legislators and regulators, as well as local officials, on policies that may have an impact on the company’s assets, businesses, and corporate strategies. In some states, where lobbying rules allow, Talen does provide Talen’s Regulatory and External political contributions through PACs, via contract lobbyists, or direct Affairs team gauges the potential contributions to support specific initiatives. impact a proposed policy will have on the company, pursuant to law INDUSTRY ASSOCIATIONS or regulation, and the potential effectiveness of Talen’s engagement Talen limits the number of industry associations in which it participates, in the shaping of that policy. Talen to maximize its impact, and the company does not get involved in all association matters. Talen does engage with certain industry associations takes an open and transparent to share best practices and to participate in standard setting and policy approach when engaging with discussions, when relevant to its business or strategic initiatives. Industry associations also provide members with the ability to educate policymakers regulators regarding compliance and they enable Talen to participate in rulemaking processes in a cost- activities and has developed strong effective manner. relationships with regulators. The Regulatory and External Affairs team also participates in certain regulatory proceedings that have a direct impact on the company.
14 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Talen’s Cybersecurity Program is organized into six domains to Cybersecurity address different cybersecurity threats:
• Identity and Access Management
• Vulnerability Management
Talen believes that protecting • Logging and Monitoring company information and computing • Contingency and Crisis Management assets is a responsibility of every employee and contractor. Failure • Security Governance to exercise acceptable information • Cyber Risk Management security practices and appropriate Talen’s Cybersecurity Policy addresses threats to the company usage of Talen’s computing resources that originate and manifest through cyberspace, and helps to could place the company and others facilitate a cross-functional, collaborative culture that mitigates at significant risk. Therefore, Talen cybersecurity risks and improves overall information assurance across the organization. takes an inter-departmental approach, ensures compliance with the Nuclear
Regulatory Commission (NRC) and CYBERSECURITY TRAINING North American Electric Reliability As cybersecurity is every employee’s responsibility, Talen takes Corporation (NERC), and aligns with measures to ensure that employees are well-informed and vigilant the National Institute of Standards of cybersecurity threats. The company provides employees and Technology (NIST) Framework. with computer based training to learn how to identify and avoid elaborate and targeted phishing attacks. Additionally, employees are encouraged to report any suspicious emails they receive and take the following approach: if you are unsure, you should always report.
15 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Supply Chain Services SUPPLIER CODE OF CONDUCT Talen is committed to maintaining the highest ethical standards by operating in full compliance with applicable laws, rules, regulations, policies, and procedures. To ensure this commitment is shared with suppliers, Talen has made the Supplier Code of Conduct Talen’s Supply Chain team performs sourcing publicly available. All suppliers are responsible for and procurement functions and is committed to knowing, understanding, and abiding by these standards and ensuring their employees and subcontractors know, obtaining quality material and services in a cost- understand, and comply. effective and timely manner. Suppliers are evaluated for their ability to provide products or services, capacity, pricing, and management support in SUPPLIER DIVERSITY conformance with standard terms and conditions. In 2020, Talen began a strategic initiative to better understand the impact it has throughout its supply Talen’s suppliers are also evaluated for their shared commitment chain and how the company supports suppliers that to safety and quality, and are responsible for complying with identify within various diversity categories. Talen began environmental requirements and standards published by Talen. providing new suppliers with an opportunity to identify The terms and conditions of Talen’s contracts and purchase within a diversity category on a Supplier and Contractor orders include safety and environmental guidelines, and these Information Form, and contacted current suppliers to ESG aspects are often covered in the scope of work. Suppliers encourage them to self-identify within any applicable are monitored for contract compliance by a contract owner diversity category. The following supplier categories using internal systems for tracking, and Talen is implementing are currently being tracked internally: small business, the use of a sophisticated Supplier Management Platform to women-owned, minority-owned, disability-owned, enhance supply chain management activities. American-Indian owned, veteran or disabled veteran- owned, and Historically Underutilized Business Zone small business.
16 3 Environment LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
COAL PLANT FUEL CONVERSIONS Additionally, Brunner Island, which primarily ran on natural gas CORE ELEMENTS OF Environmental in 2020, will cease coal-fire operations by the end of 2028, as TALEN’S ENVIRONMENTAL In November 2020, Talen announced a strategic repositioning established in a prior agreement. Talen continues to engage MANAGEMENT PROGRAM Management that will eliminate the use of coal by its wholly owned generation with the Sierra Club and other stakeholders to develop action facilities, which collectively represent approximately 5 GW of plans and that can improve its environmental performance • Identify and communicate capacity, or approximately 35% of Talen’s generation capacity. while mitigating negative impacts in the communities where compliance expectations to Talen’s Montour, Brandon Shores, and H.A. Wagner plants will employees live and work. employees Talen believes that great companies cease coal-fired operations by the end of 2025. The company aspire to do no harm to their people, plans to convert 4 GW of capacity at these plant to lower • Empower employees to “do the carbon fuel sources, therefore preserving generating capacity 0 Coal in wholly-owned portfolio by end right thing” the communities in which they and employment opportunities within local communities. of 2028 operate, and the environment. As • Provide oversight to ensure 4 GW of coal capacity conversions compliance the owner of numerous electric planned at three plants by 2025 generation facilities, Talen is subject • Engage Talen leadership team to a multitude of Federal and on environmental strategy, performance, risks and State laws and regulations, and is opportunities committed to complying fully with • Identify solutions through multi- these requirements. The company disciplined teams, industry accounts for its environmental groups, and external advisors performance through internal tracking • Engage policymakers and other and external reporting, and strives to stakeholders on emergent continuously improve performance issues to identify outcomes through strategic decisions and engagement with stakeholders.
18 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
From 2018 to 2020, Talen’s CO2 emissions decreased by 57%, to retirements, fuel conversions, or operational and market EMISSIONS TARGET nitrogen oxides (“NO ”) emissions by 58%, and sulfur dioxide conditions. GHG and x (“SO ”) emissions by 76%. Additionally, from 2018 to 2020, Talen 2 75% REDUCTION in Air emissions reduced the carbon intensity of its fleet, or the CO2 emitted Emissions reductions were realized through strategic decisions CO2 emissions by 2030 per every megawatt hour (“MWh”) of electricity generated, by to retire coal units, conversion to cleaner fuels, and are also 37.5%. When calculating reduction percentages, Talen does not the result of market conditions. For example, in 2020 alone, Talen has set a target to reduce CO emissions 75% by 2030, account for emissions associated with assets that have been Talen retired a total of 430 MW of coal capacity, contributing to 2 Talen internally tracks its Greenhouse sold1. The sale of a carbon-emitting asset does not reduce the improvements in both its absolute emissions and the carbon with a baseline year of 2010. To establish this target Talen Gas (“GHG”) and air emissions emissions being released into the atmosphere; therefore, the intensity of its generation fleet. company only accounts for emissions reductions attributed assessed the overall impact associated with the generation strategic decisions – such as of electricity to identify areas planned fuel conversions – would have on a future emissions for improvement, and externally profile. By analyzing these reports its emissions performance strategies alongside current and to the EPA and state agencies to projected market conditions, Talen established an aggressive target ensure regulatory compliance and that will help guide its decisions transparency. In 2020, Talen produced moving forward and allow it to 9.7 million metric tons (“MT”) of reduce emissions further, and in a shorter period, than others in carbon dioxide (“CO2”). the industry.
57% reduction in CO2 emissions since 20182
430 MW coal capacity retired in 2020
37.5% reduction in CO2 intensity (CO2/MWh) since 20182
TO LEARN MORE about Talen’s future emissions reductions strategies and emissions reduction target, see the 2020 Talen Energy SASB Table.
19 1 Athens and Millennium were sold in 2020 and are not included in emissions reduction percentages 2 Reduction percentage does not include emissions from assets that have been sold LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
In 2020, due to plant retirements and decreased coal BENEFICIAL USE Talen engages with other organizations to pursue Coal Combustion generation, Talen produced 82% less CCR than in beneficial use solutions for the CCR its plants 2018, and 75% less than in 2019. Gypsum accounted CCRs have many potential industrial uses. For produce. In 2020, 45% of the CCR produced by Talen Residuals for 44% of the total CCRs produced, while fly ash example, fly ash can be used to increase the was collected for reuse, including 65% of gypsum, accounted for 39%. workability and strength of concrete, gypsum is 35% of fly ash, and 11% of bottom ash. Additionally, used in wallboard manufacturing, and bottom ash at Talen’s Brunner Island and Montour power plants, can be used as a non-corrosive, anti-skid material the company harvests fly ash that has been collected When coal is burned to generate MT OF COAL COMBUSTION RESIDUALS on icy roads. By using CCR waste streams for other in impoundments for beneficial reuse. In 2020, an (THOUSANDS) electricity, coal combustion residual purposes, companies can not only reduce the need for additional 196,542 metric tons (MT) of fly ash was CCR impoundments and landfills, but also reduce the harvested for use in cement manufacturing. (CCR) such as fly ash, bottom ash, need for raw material procurement and processing, and gypsum are produced as a which can have environmental benefits such as 1,400 byproduct. CCRs are one of the most 1,312 reduced industrial process emissions. significant sources of industrial 148 waste in the United States and FLY ASH HARVESTED FROM IMPOUNDMENTS 984 (THOUSANDS MT) are regulated by federal and state 126 agencies to ensure safe disposal in 672 surface impoundments or landfills.
Talen is focused on CCR compliance, 487 mitigating CCR issues, engineering remediation solutions, and evaluating 400 beneficial use opportunities. 473 361
20 TO LEARN MORE about coal combustion residuals management, see the 2020 Talen Energy SASB Table. LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Water and Waste WASTE GENERATION Talen’s plants produce industrial waste, some of which is regulated for proper reporting and disposal in accordance with the Resource Conservation and Recovery Act, which allows for federal and state oversight of specific waste types. In 2020, Talen started tracking waste internally, beginning with available historic data, to identify its most WATER USE significant waste streams. The company continues to search for areas of improvement in waste management and tracking. In 2020, Talen produced Thermal generation of electricity requires water in order to produce steam 8,800 metric tons (MT) of waste. Additionally, Talen understands the for electricity generation. At Talen, nearly all water withdrawals come from importance of recycling, and in 2020, a majority of the scrap metal, surface water sources such as rivers and lakes. Most water withdrawn is cardboard, battery, and e-waste generated at its plants was recycled. cooled and discharged back to the original source after use, while some water is consumed through evaporation. A variety of factors impact water usage such as starting and stopping units, the mode in which units are operated, equipment cycling based on load demand, and routine system maintenance. To reduce overall use, some Talen plants recycle water and reuse it between systems, and many also use evaporative cooling towers or reclaim wastewater for certain processes to further manage water use. The company continues to look for new ways to efficiently use water in a responsible manner.
In 2020, 1.25 million megaliters (ML) of water was withdrawn for use in Talen’s plants and approximately 6% of water withdrawn was consumed. On average, Talen plants consumed 2.27 cubic meters (m³) of water per every MWh generated. 74,238 ML water consumed in 2020
2.27 m³ water consumed per MWh generated in 2020
TO LEARN MORE about Talen’s water use, see the 2020 Talen Energy SASB Table. 21 4 Social LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Talen utilizes a safety strategic framework and takes a In 2020, Talen achieved the lowest safety performance in over COVID-19 decentralized approach to health and safety with centralized six years with eight OSHA recordable incidents across the fleet Health In 2020, the world faced reporting, knowledge sharing, and oversight. This empowers and an OSHA Total Recordable Incident Rate (“TRIR”) of 0.34. unexpected challenges from the Talen’s business units and plants to determine the most Talen’s TRIR performance is better than the DuPont industry and Safety COVID-19 pandemic. To stay appropriate health and safety procedures, training, engagement, standard, which considers top performers as those below 1.0 proactive in these unprecedented and incident resolution while facilitating knowledge sharing and TRIR. This strong safety performance is led by Susquehanna, times, Talen developed a fostering a “No Harm” culture across the company. which, using the operational and safety standards and metrics number of initiatives and tools adopted by the nuclear industry, is among the best in the nation. to help its employees remain Talen believes that great companies The company tracks and externally reports OSHA recordable The company’s overall improved performance is a result of an vigilant and safe, while ensuring incidents, and internally tracks lost time injuries, near miss enhanced health and safety framework and training, increased do not injure employees, suppliers, compliance with federal, state, incidents, and good catches to enhance knowledge sharing and leadership visibility and accountability, and a greater focus on guests, or the communities where and local governments’ guidance organizational learning. incident reporting, including near misses. they operate and is firmly committed and regulations. The company implemented its Coronavirus to fostering a culture of “No Harm” Policy which provides instructions across the company. on travel, quarantining, and OSHA RECORDABLE INCIDENTS TOTAL RECORDABLE INCIDENT RATE working from home, and continually disseminated critical health and safety information to employees. Additionally, Talen ensured compliance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) by covering the cost of COVID-19 testing for employees. As a result of these efforts, the average rate of COVID-19 infection among Talen employees was below the national average.
7.3% National Average COVID-19 Cases1 5.8% Talen Average COVID-19 Cases2
1 As of 12/31/2020, per CDC.gov 2 As of 12/31/2020 23 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
Employment LABOR RELATIONS FORBES BEST EMPLOYER At the end of 2020, unionized employees comprised 43.8% of As a result of efforts in 2020, Talen’s total workforce. Talen continues to maintain a strong Talen was named to Forbes’ 2021 relationship with its union workforce through monthly labor calls America’s Best Employers List for with plant leadership, strict adherence to collective bargaining mid-sized companies. Talen was agreements, and uniformity across plants. These efforts have ranked 1st among IPPs and 4th Talen strives to maintain an inclusive, drastically reduced the number of union-related grievances in the Utilities sector. To compile diverse, respectful, and collaborative since 2016, and have helped to build a culture of trust and the rankings, Forbes partnered teamwork amongst both union and non-union employees. with Statista to survey 50,000 workplace, and to have a strong Americans working for companies commitment to innovation, teamwork with at least 1,000 employees. and integrity. The company offers EMPLOYEE DIVERSITY Many of the companies on the list, including Talen, were recognized its employees challenging careers, Talen values the diverse backgrounds and experiences of its for their superior work during the competitive salaries, and exceptional employees. The company strives to build an inclusive culture COVID-19 pandemic, by rising to and reflect the composition of the communities in which it the occasion and finding ways benefits programs. operates. In 2020, 22% of non-union, salaried employees were to benefit and support their female and 28% of non-union, salaried employees identified as customers and employees. female and/or minority.
UPWARD FEEDBACK SURVEY
Talen’s annual Upward Feedback survey helps promote continuous improvement by allowing each employee to provide anonymous feedback on their supervisor’s character, performance, and commitment to health and safety. In 2020, 83% of employees participated in the Upward Feedback survey and 95% of managers received an overall positive rating. The correlation between positive responses and Talen’s ability to retain talent is evident in the company’s decreasing voluntary turnover rate. 83% of employees participated in Upward Feedback Survey 95% of managers received overall positive responses
24 1 As of 12/31/2020 2 Represents non-union, regular full-time employees LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
CORPORATE-WIDE TRAINING NUCLEAR TRAINING SUSQUEHANNA NUCLEAR LEARNING CENTER Training and The Susquehanna Steam Electric Station facilitates training Talen believes that training and development increases the programs to provide personnel with nuclear-specific knowledge, The Susquehanna Nuclear potential of employees, leads to higher operational efficiency, skills, and behaviors. These programs ensure station personnel Learning Center houses a full-scale Development and helps mitigate risks. The company offers courses in safety, consistently operate and maintain the plant reliably with a Unit 1 control room simulator to environmental compliance, regulatory compliance, leadership, focus on nuclear, industrial, radiological, regulatory compliance, upskill operators and familiarize and technical training to help employees build upon their and environmental safety. Of these training programs, twelve engineers, technicians and Talen takes a strategic and decentralized knowledge and skills. In 2020, Talen employees took part in over are evaluated by the Institute of Nuclear Power Operations developing leaders with plant 158,000 training hours. approach to training and development to (INPO) every six years to maintain accreditation by the National operational fundamentals. In 2018, ensure its employees are properly trained Academy of Nuclear Training. In 2020, over 118,000 training the simulator was enhanced with a TOTAL TRAINING COURSES COMPLETED state-of-the-art simulation model, in accordance with local conditions, are hours were provided through these training programs. IN 2020, BY CATEGORY which is used around the clock compliant with regulatory requirements, and to train operators on everything Safety 53% NUCLEAR TRAINING HOURS IN 2020 are prepared for current roles and career from normal plant operations to Regulatory Compliance 25% Maintenance/Technical 14,240 transient and accident response. advancement. The Learning Center also includes Technical 15% Operations 56,000 mechanical, electrical, and 2020 EMPLOYEE TRAINING HOURS Environmental Compliance 6% Non-Accredited 48,100 instrumentation labs which are equipped with hundreds of high- Corporate Training 158,000 Leadership 1% Total 118,340 quality training aids to facilitate Nuclear Training Programs 118,000 hands-on training.
Total Training Hours 276,000
133 training hours, on average, per employee in 2020
25 LETTER FROM MANAGEMENT ABOUT TALEN APPROACH TO ESG ESG OVERSIGHT BOARD OF DIRECTORS GOVERNANCE COMMITTEES ETHICS AND COMPLIANCE REGULATORY AND EXTERNAL AFFAIRS CYBERSECURITY 2020 ESG REPORT
SUPPLY CHAIN ENVIRONMENTAL MANAGEMENT GHG AND AIR EMISSIONS COAL COMBUSTION RESIDUALS WATER AND WASTE HEALTH AND SAFETY EMPLOYMENT TRAINING AND DEVELOPMENT COMMUNITY ENGAGEMENT
RELIEF DURING COVID-19 for food assistance driven by COVID-19, Talen donated funds MONTOUR PRESERVE Community to its communities with a focus on local organizations that In 2020, Talen and its employees supported COVID-19 relief could make the biggest impact. In total, Talen contributed over Built in 1972 to supply water to Engagement efforts by donating supplies, providing funds to local food 300,000 meals as part of these targeted initiatives. Additionally, the Montour Power Plant, the banks, and facilitating hospital morale events in its local Talen employees coordinated various morale events across 165-acre Lake Chillisquaque and communities. Talen provided N95 masks and latex gloves to its communities to thank and support medical workers. These surrounding Montour Preserve ten hospitals and health care facilities throughout Pennsylvania, events involved delivering thank you notes and signs, meals, is a popular outdoor destination Talen focuses community Maryland, Texas, and Montana, and even delayed a planned gift cards, and prizes to employees at hospital and healthcare for local residents. In addition to engagement and philanthropic efforts outage at its Colstrip, Montana plant to ensure supplies were not facilities. its commitment to stop burning diverted from the community. In response to the urgent need coal at the Montour plant by on the local communities where the end of 2025, Talen worked its employees live and work. The with local environmental groups company believes that a decentralized and entered into an agreement to transfer ownership of Lake approach to engagement and giving Chillisquaque and the surrounding allows it to more effectively identify land within Montour Preserve areas of need and have a greater local to an entity selected by the Middle Susquehanna Riverkeeper impact. Employees are empowered Association once the plant no to facilitate community initiatives and longer requires water from the lake. Additionally, Talen will donate giving, and to actively contribute time $1 million for future upkeep of and resources to local organizations. the preserve and $200,000 to the 20,000 N95 masks Middle Susquehanna Riverkeeper Association for clean water 17,000 pairs of latex gloves programs. The agreement will prevent commercial development 300,000+ meals to local of the Montour Preserve and community food banks ensure this important community 17 medical worker morale asset remains available to the events held across 6 locations public for years to come.
26 SASB Table 2020 ESG REPORT
Greenhouse Gas Emissions & Energy Resource Planning
SASB Code Metric Company Response
9,804,238 metric tons of CO2e (1) Gross global Scope 1 emissions Scope 1 emissions from the generation of electricity; emissions for the following power plants has been adjusted for Talen’s equity ownership, in accordance with GHG Protocol equity share methodology: Colstrip, Conemaugh, and Keystone.
(2) percentage covered under 14.3% IF-EU-110a.1 emissions-limiting regulations The following power plants are located in Maryland, Massachusetts, or New Jersey and are covered under the Regional Greenhouse Gas Initiative (RGGI): Brandon Shores, Camden, Dartmouth, H.A. Wagner, Newark Bay, Pedricktown.
(3) percentage covered under 99.96% emissions-reporting regulations All of Talen’s power plants covered under mandatory EPA reporting except for the company’s 9 simple cycle peaking facilities in Pennsylvania and the Susquehanna nuclear plant, due to immaterial emissions.
1 2 Greenhouse gas (GHG) 2,623,809 metric tons of CO2 IF-EU-110a.2. emissions associated with Source: For PJM customers, 2020 CO2 emissions factor from PJM Environmental Information Services was used; for Montana customers, eGRID 2018 “State annual CO2 total output emission rate” for the state of Montana was used 1 Accounts for MWh net of zero carbon and renewable energy products power deliveries 2 CO2 emissions only
From 2018 to 2020, Talen’s CO2 emissions have been reduced by 57%, while the carbon intensity of its electricity generation assets was reduced by 37.5%. Talen does not consider assets that have been divested in emissions reductions percentages. Historic reductions were realized through strategic decisions to retire coal units or convert units to alternative fuels, and are also the result of market conditions. In 2020 alone, Talen retired a total of 430 MW of coal capacity. In 2021, Talen set a target to reduce CO2 emissions 75% by 2030, with 2010 as the baseline. Talen selected 2010 as the baseline year because the company views it as a pivotal year in climate change awareness and corporate action, and because of the COP16 commitment to keep global temperatures below 2°C. The 75% target was established by assessing the overall Discussion of long-term and impact strategic decisions – such as fuel conversion and coal plant retirements – would have on the company’s future emissions profile. Talen’s decision to set a target year of 2030 was short-term strategy or plan to done to more closely align with the Biden Administration’s ambitions for electricity sector decarbonization. Talen believes this is a robust and realistic target that carefully considers future manage Scope 1 emissions, IF-EU-110a.3 strategies. emissions reduction targets, and an analysis of performance The company’s short-term strategy to reduce Scope 1 emissions includes a pipeline of wind, solar, and battery project that are in various stages of development. Currently, Talen has against those targets approximately 1.6 GW of wind and solar projects and 1 GW of battery storage projects within the pipeline. This can help the company provide carbon free electricity in addition to grid reliability and resiliency. Talen’s long-term strategy includes the elimination of coal from Talen’s wholly owned generation facilities. The company plans to cease the use of coal at the Montour, Brandon Shores, and H.A. Wagner facilities by end of 2025, and the Brunner Island facility by end of 2028. Talen plans to achieve this by converting 4 GW of coal capacity between the Montour, Brandon Shores, and H.A. Wagner facilities to lower carbon fuels by 2025. The company is making a strategic decision to convert these assets in order to lower the carbon intensity of each MWh generated, while mitigating the negative impact on Talen employees and the local communities who rely on these facilities for jobs and tax revenue. SASB Table 2020 ESG REPORT
Greenhouse Gas Emissions & Energy Resource Planning cont.
SASB Code Metric Company Response
Talen operates in competitive retail electricity markets which allow customers to choose a retail electricity provider and plan that fits their needs. Talen purchases electricity from wholesale power markets to sells to its customers. (1) Number of customers served As of Dec. 31, 2020, 100% of Talen’s 1,289 customers are in states that have a Renewable Portfolio Standard. in markets subject to renewable IF-EU-110a.4 portfolio standards (RPS) and Talen offers carbon-free and renewable energy products to interested customers. The company’s Carbon Zero 24/7 Product is supported by its Susquehanna Nuclear facility, while the (2) percentage fulfillment of company’s renewable energy products are supported by the purchase of Renewable Energy Credits (RECs). In 2020, these voluntary programs accounted for 7.5% of the MWh sold to retail RPS target by market customers. Talen also complies with renewable portfolio standards through the purchase of RECs, which are sent to regulatory authorities upon retirement. Talen fulfills 100% of its voluntary and regulatory obligations in all of its markets. In 2020, RECs purchased to fulfill regulatory obligations accounted for 16.2% of the MWh sold to retail customers. Talen’s voluntary programs and regulatory obligations, combined, accounted for 23.8% of MWh sold to retail customers.
Air Quality
SASB Code Metric Company Response
Pollutant Metric Tons % in or near areas of dense population Air emissions of the following NOX 4,948 36% pollutants: (1) NOX (excluding SO21 4,492 38% N2O), (2) SOX, (3) particulate IF-EU-120a.1 matter (PM10), (4) lead (Pb), and PM10 258 48% (5) mercury (Hg); percentage Pb .131 72% of each in or near areas of dense Hg .031 23% population 1 SO2 only SASB Table 2020 ESG REPORT
Water Management
SASB Code Metric Company Response
Water Source Megaliters % in High or Extremely High Baseline Water Stress (1) Total water withdrawn and Withdrawn – Surface water 1,243,612 0.01% The following plants are located in a region with percentage in regions with High High Water Stress, in accordance with World Withdrawn – Groundwater 74 0% or Extremely High Baseline Resources Institute’s (WRI) Water Risk Atlas data: Water Stress Withdrawn – Utility/Municipality 1,469 1.34% Laredo, Newark Bay, and Elmwood Park. Total water withdrawn 1,245,115 0.01% IF-EU-140a.1
(2) total water consumed The following plants are located in a region with percentage in regions with High Megaliters % in High or Extremely High Baseline Water Stress High Water Stress, in accordance with World Resources Institute’s (WRI) Water Risk Atlas data: or Extremely High Baseline Total water consumed 74,238 0.14% Water Stress Laredo, Newark Bay, and Elmwood Park.
Number of incidents of non- compliance associated with IF-EU-140a.2 water quantity and/or quality Talen had 10 non-compliance events in 2020; however, none were material in nature. permits, standards, and regulations
Thermal generation of electricity requires water for many different purposes such as the production of steam for electricity generation, cooling of equipment, and operation of pollution control equipment. This makes water a vital resource to Talen’s operations. Talen withdrawals 99.88% of its water from surface water sources such as rivers, lakes, and the sea, purchases 0.12% from utilities or municipalities, and withdrawals 0.01% from ground water sources. Most water withdrawn is discharged back to the source or to wastewater treatment facilities after use, while 5.96% of withdrawn water is consumed. Talen also attempts to minimize its impact on freshwater sources where possible. For example, Talen’s Barney Davis and Nueces Bay facilities use seawater for cooling to minimize withdrawals from freshwater Description of water resources in South Texas, even though using seawater increases capital and O&M costs relative to the use of freshwater. management risks and Talen has twelve plants that are located in regions of low water stress in accordance with WRI Water Risk Atlas data. These plants account for 99.35% of all water withdrawals. IF-EU-140a.3 discussion of strategies Talen has three plants that are located in a region with High Water Stress. Newark Bay and Elmwood Park are capacity units with low annual run times and water consumption, and in early and practices to mitigate those 2021, Elmwood Park was retired from PJM. Laredo is a 177 MW simple-cycle gas turbine serving the ERCOT market. The facility has implemented best practices to efficiently save water and risks reduce water loss. Untreated river water is withdrawn from the Rio Grande River and routed through the plant's Cooling Tower system. Treated water is purchased from the City of Laredo to supply NOX emission reduction equipment, and water demand is dependent on unit operation. Overall water usage at each of Talen’s plants is impacted by a variety of factors such as starting and stopping of units, the mode in which units are operated, equipment cycling based on load demand, and routine system maintenance. To reduce overall use, some of Talen’s plants recycle water and reuse it between systems, and many of the company’s plants also use evaporative cooling towers and use reclaimed wastewater for certain processes. Additionally, Talen’s plants implement routine checks to maintain system integrity and prevent leaks and water waste, and the company remains committed to finding ways to use water in a responsible manner. SASB Table 2020 ESG REPORT
Coal Ash Management
SASB Code Metric Company Response
Metric Tons % Recycled Fly Ash 94,823 35% Gypsum 107,476 68% Amount of coal combustion Bottom ash 33,505 11% residuals (CCR) generated, IF-EU-150a.1 percentage Other 6,825 0% recycled Total CCRs Generated 242,630 45%
In addition to the 45% of CCR that was recycled for beneficial reuse after being produce in 2020, an additional 196,542 metric tons of fly ash was harvested from impoundments at Talen’s Brunner Island and Montour power plants for beneficial reuse in cement manufacturing.
Total number of coal Talen currently owns and/or operates 34 Coal Combustion Residuals (CCR) impoundments, 8 of which are not subject to regulation and do not require assessments or integrity ratings, and combustion residual (CCR) 4 of which are incised. All of the 22 remaining impoundments have a satisfactory structural integrity rating and are classified as follows by the Federal Emergency Management Agency’s impoundments, (FEMA) Hazard Potential Classification System for Dams: 8 High, 11 Significant, 3 Low. IF-EU-150a.2 broken down by hazard potential classification and structural integrity assessment Talen complies with US EPA CCR requirements, as well as state-level CCR regulations and agreements in Maryland, Montana, and Pennsylvania. CCR compliance documents are publicly available on Talen’s website for those impoundments subject to the Federal CCR Rule. SASB Table 2020 ESG REPORT
Energy Affordability
SASB Code Metric Company Response
Residential N/A
Average retail electric rate for (1) Commercial $0.056 per kWh IF-EU-240a.1 residential, (2) commercial, and Industrial $0.043 per kWh (3) industrial customers
Talen has Commercial and Industrial customers in Delaware, Maryland, Montana, New Jersey, Ohio, Pennsylvania, and Washington D.C. Talen does not serve residential customers.
Typical monthly electric bill for residential customers for (1) IF-EU-240a.2 Category is not applicable. Talen does not serve residential customers. 500 kWh and (2) 1,000 kWh of electricity delivered per month
Number of residential customer electric disconnections for IF-EU-240a.3 Category is not applicable. Talen does not serve residential customers. nonpayment, percentage reconnected within 30 days
Talen operates in competitive retail electricity markets which allow customers to choose a retail electricity provider and plan that fits their needs. Talen purchases electricity from wholesale power markets to sells to its customers. Approximately 75% of Talen’s retail customers are under fixed-price products (one in which the customer’s price is generally fixed throughout the Discussion of impact of external contract’s term), which help insulate customers from external factors that impact market prices. factors on customer affordability IF-EU-240a.4 of electricity, including the Customers who choose a variable rate product (one in which the customer price changes with the market price of electricity throughout the contract’s term) can be negatively or positively economic conditions of the impacted by unexpected factors that impact market supply and demand, and therefore prices, such as weather events and regulatory changes. For example, a majority of Talen’s retail service territory customers are in the PJM market and PJM utilizes a competitive capacity auction to ensure grid reliability by securing the predicted amount of capacity needed to meet demand three years in the future. This competitive auction sets the future price of the capacity component of the market price of electricity, which impacts the future electricity costs for Talen’s variable rate customers. SASB Table 2020 ESG REPORT
Workforce Health & Safety
SASB Code Metric Company Response
1 (1) Total recordable incident rate 0.34 1 Calculated by multiplying number of recordable events by 200,000 and dividing by total hours worked; includes employees and (TRIR) contractors
(2) Fatality rate 0.00
IF-EU-320a.1
In 2020, Talen enhanced internal health and safety reporting and worked towards greater standardization by providing additional guidance on the classification of near miss incidents. (3) Near miss frequency rate Near misses are tracked internally and employees are encouraged to report both near miss (NMFR) incidents and good catches. However, due to these changes regarding classification, Talen is unable to provide an accurate full year near miss rate that captures the proper standardization that has been implemented. SASB Table 2020 ESG REPORT
End-Use Efficiency & Demand
SASB Code Metric Company Response
Percentage of electric utility revenues from rate structures Category is not applicable. Talen operates as an Independent Power Producer and retail IF-EU-420a.1 that (1) are decoupled and electricity provider in competitive markets. (2) contain a lost revenue adjustment mechanism (LRAM)
Percentage of electric load Category is not applicable. Talen operates as an Independent Power Producer and retail IF-EU-420a.2 served by smart grid technology electricity provider in competitive markets.
Customer electricity savings Category is not applicable. Talen operates as an Independent Power Producer and retail IF-EU-420a.3 from efficiency measures, electricity provider in competitive markets, and does not provide such programs to retail by market customers. SASB Table 2020 ESG REPORT
Nuclear Safety & Emergency Management
SASB Code Metric Company Response
Total number of nuclear power Reactor Unit Action Matrix Column Current Regulatory Oversight units, broken down by U.S. IF-EU-540a.1 Susquehanna 1 Licensee Response Baseline Inspection Nuclear Regulatory Commission Susquehanna 2 Licensee Response Baseline Inspection (NRC) Action Matrix Column
Talen’s Susquehanna Steam Electric Station (SSES) has governance structures in place to define roles, responsibilities, and accountabilities at all levels of the organization. Oversight comes in the form of CEO monitoring and oversight at the station, charter implementation of the Nuclear Oversight Committee (NOC) of the Board of Directors, and through feedback from the Nuclear Safety Review Board (NSRB) and Nuclear Advisors. The Nuclear Oversight Committee (NOC) reports to the Talen Board of Directors and advises and assists in the fulfillment of the Board’s responsibilities to ensure healthy governance and oversight is in place, to enable safe and reliable nuclear energy production, and provides oversight of operational safety. The NOC is comprised of members of Talen’s Executive Committee, with the CEO acting as the Chairman. The Nuclear Safety Review Board (NSRB) is an external review committee responsible for providing a comprehensive and independent oversight of Susquehanna related activities pertaining to operational safety and compliance with regulatory requirements. The NSRB is established as a review, audit, and advisory group, whose function is to verify independently that Susquehanna is being tested, operated and maintained in accordance with safety related and environmental requirements. The Susquehanna Nuclear Learning Center houses a full-scale Unit 1 control room simulator to train operators and familiarize engineers, technicians and developing leaders with plant operational fundamentals. The simulator was recently enhanced with a state-of-the-art simulation model, which is used around the clock to train operators on a range situations from of Description of efforts to manage normal plant operations to transient and accident response. The Learning Center also includes mechanical, electrical, and instrumentation labs which are equipped with hundreds of training nuclear safety and emergency aids to facilitate hands-on training. IF-EU-540a.2 preparedness SSES, like every U.S. nuclear plant, is required by law to develop and periodically test an on-site comprehensive emergency response plan and ensure that off-site plans are readily available. These plans are approved by the Nuclear Regulatory Commission (NRC) and the Federal Emergency Management Agency (FEMA). Local, state and national officials are included in the plans and in periodic exercises. The Susquehanna nuclear power plant has a large emergency response network consisting of 27 municipalities, county and state governments, school districts, hospitals, fire companies, ambulance and emergency medical services, and federal agencies. SSES has an Employee Concerns Program (ECP) that establishes procedures for reporting and resolving concerns raised by individuals about nuclear safety and the general work environment. As part of this program, every individual working in support of Susquehanna is expected to bring forth any nuclear safety concern that they may have regarding the design, operation, or maintenance of the Susquehanna Station. The ECP allows for reporting through a corrective action process electronically or via hard copy, phone, or office visit, as well as anonymously. As determined by the event reported, the corrective action process includes an evaluation of conditions identified and corrective actions needed, which helps to identify safety incidents and their causes. Additionally, all personnel are required to immediately report all safety-related incidents including illness/ injury, near misses, first aid events, and property damage through established Talen procedures. All employees, contractors, vendors, and site visitors are responsible for immediately reporting all incidents to their Supervisor, and SSES has stop work criteria established that are imbedded in various department procedures. Once a stop work has been identified, a plan must be developed to correct the issue and safely determine a path to continue. Prior to resumption of work, a supervisor or manager that is “one step removed” must review and concur with the plan to continue work. SASB Table 2020 ESG REPORT
Grid Resiliency
SASB Code Metric Company Response
Talen takes non-compliance with physical and cybersecurity threats seriously and has various measure in place to mitigate threats. The company aligns with the National Institute Number of incidents of non- of Standards and Technology (NIST) Framework, and Talen’s Cyber Security Policy, IT compliance with physical and/ Compliance Policy, and Data Classification and Handling Policy provide guidance and IF-EU-550a.1 or cybersecurity standards or expectations for employees. Talen also works to ensure compliance with the North American regulations Electric Reliability Corporation (NERC) and Nuclear Regulatory Commission (NRC). Since 2018, the number of NRC non-cited violations Talen revived annually dropped by 79%, while the number of NERC violations Talen revived annually dropped by 60%.
(1) System Average Interruption Duration Index (SAIDI), (2) System Average Interruption IF-EU-550a.2 Frequency Index (SAIFI), and (3) Category is not applicable. Talen does not own or operate transmission or distribution lines. Customer Average Interruption Duration Index (CAIDI), inclusive of major event days SASB Table 2020 ESG REPORT
Activity Metrics
SASB Code Metric Company Response
Customer Type Number of Customers1
Number of: (1) residential, (2) Residential N/A IF-EU-000.A commercial, and (3) industrial Commercial 1,061 customers served Industrial 228
1 As of Dec 31, 2020
Total electricity delivered to: (1) Customer Type Megawatt hours (MWh) residential, (2) commercial, (3) Residential N/A IF-EU-000.B industrial, (4) all other retail customers, and (5) wholesale Commercial 6,423,879 customers Industrial 2,617,853
Length of transmission and IF-EU-000.C Category is not applicable. Talen does not own or operate transmission or distribution lines. distribution lines
Fuel Type MWh Generated1 Percentage Nuclear 17,991,913 58.90%
Total electricity generated, Natural Gas 7,709,398 25.24% percentage by major energy IF-EU-000.D Coal 4,839,868 15.84% source, percentage in regulated Oil 6,999 0.02% markets Total 30,548,178
1 Generated MWh sold after consumption for station use where applicable.
Total wholesale electricity IF-EU-000.E 9,041,732 wholesale MWh purchased for retail business in 2020 purchased