2019 Sustainability Report 2019 Sustainability Report An Organization with a Mission .................................................................. 3 Financial Excellence .................................................................................... 6 Economic Performance and Investment Return on Capital Allocation ........... 6 Corporate Governance ................................................................................ 9 Executive Compensation ............................................................................. 10 Corporate Governance Practices ................................................................. 12 Operational Excellence ............................................................................. 13 Availability, Reliability and Access to Electricity ........................................... 13 Generation ............................................................................................... 14 Distribution ............................................................................................... 17 Energy Storage ........................................................................................ 18 Our Customers ........................................................................................ 19 Environmental Stewardship ...................................................................... 25 Climate Scenario Report ......................................................................... 26 Air Emissions ............................................................................................... 27 Direct Greenhouse Gas Emissions ......................................................... 28 Direct SO2, NOx, and Other non GHG Emissions .................................. 28 Indirect GHG Emissions .......................................................................... 29 Reduction of Air Emissions— Energy Efficiency for Our Customers ....... 30 ASPECT: Water ........................................................................................... 32 Risk Management .................................................................................... 33 Water Withdrawal and Discharge ............................................................ 33 ASPECT: Effluents and Byproducts ............................................................. 37 Coal Combustion Products Generation & Recycling ............................... 37 Non-Hazardous waste ............................................................................. 38 Hazardous Waste .................................................................................... 39 Spills & Environmental Incidents ............................................................. 40 ASPECT: Biodiversity .................................................................................. 40 Protecting Biodiversity and Restoring Habitats........................................ 42 Stakeholder Management .......................................................................... 44 Stakeholders ................................................................................................ 45 Impacts on Education and Living Standards in Our Communities ............... 48 Human Rights .............................................................................................. 51 Public Safety ................................................................................................ 52 Page | 1 2019 Sustainability Report Our People .................................................................................................. 54 Improving How We Work to Succeed and Better Serve Our People ....... 55 Global Talent Management .......................................................................... 55 ACE Academy for Talent Development ................................................... 56 Assessments and Career Planning ......................................................... 57 Experience and Exposure ....................................................................... 57 Trainee program ...................................................................................... 57 Global Diversity and Inclusion Program .................................................. 58 Rewarding Our People ............................................................................ 60 Great Place to Work ................................................................................ 60 AES Performance Excellence: Improving Lives by Improving the Business ................................................................................................................. 63 Occupational Health and Safety .................................................................. 64 Reactive Safety Performance .................................................................. 65 Proactive Safety Performance ................................................................. 67 Integration of contractors ......................................................................... 67 Safety Training, Committees and Recognition ........................................ 68 Health and Wellness Management .......................................................... 70 Cybersecurity ............................................................................................. 71 Disaster/Emergency Planning and Response ......................................... 73 Forward Looking - Information ................................................................. 75 Non-GAAP Financial Information ............................................................. 77 Index of Tables and Figures ...................................................................... 83 This is the 2019 Sustainability Report. Information contained in this report focuses on the company’s operations and performance in 2019. The report has been prepared in accordance with the recommendations of the Global Reporting Initiative Standards and includes Electric Utility Sector Disclosures. Other Specific Standard Disclosures are addressed in the “2019 AES Sustainability Report Supplement”. Page | 2 2019 Sustainability Report An Organization with a Mission Improve lives by accelerating a safer and greener energy future The AES Corporation (NYSE: AES) is a publicly traded Fortune 500 global power company founded in 1981, incorporated in Delaware and governed by a Board of Directors. The company’s headquarters are in Arlington, Virginia, United States (US). From our founding, The AES Corporation (AES) and our people have worked with one mission: providing customers with the energy they need, while having a positive impact on the stakeholders and communities we serve. Our work has always had a deeper purpose, which remains central to our business today. We are accelerating the evolution of the energy industry to improve people’s lives in a responsible, clean and sustainable way. Today, AES leads the industry through our deployment of renewable energy, utility-scale battery storage systems and cutting-edge digital technologies, including the use of data to make energy generation and usage more efficient. AES has invested in several companies that support our clean energy goals. Fluence, a collaboration between AES and Siemens, for example, is the world’s leading developer of battery energy storage systems. Employing both digital technology and data, sPower allows consumers and business to increase the efficiency of their energy use. And Uplight offers the most comprehensive suite of customer-facing solutions for electric and gas utilities to help improve their energy efficiency. Through our core businesses, investments, and partnerships, AES has committed to significantly lower our overall carbon footprint and reduce reliance of fossil fuels. We are well on our way toward our goal of reducing our coal-fired power generation to below 30 percent of total volume by the end of 2020, and we are committed to reducing that figure to less than 10 percent by the end of 2030. In addition, we remain on track to meet our goal of reducing our carbon intensity by 70 percent compared to our 2016 figures. Our purpose as a company starts from the inside. We continually seek to help our people find meaning in the work that they do and feel part of AES‘ larger mission to improve lives. Together with our customers, we continue to lead the transformation in the energy sector. We work each day to shift our power generation mix, deploying new technologies that provide cleaner and affordable electricity. We seek to do what is best in the communities that we serve. These commitments have guided us in the past and will continue to guide us into the future. Page | 3 2019 Sustainability Report Our values Safety First Highest Standards All Together In numbers1 market-oriented strategic business units (SBUs): US and Utilities; South 4 America; MCAC (Mexico, Central America and the Caribbean); and Eurasia 2 lines of business: Generation and Utilities countries: Argentina, Brazil, Bulgaria, Chile, Colombia, Dominican Republic, El 14 Salvador, India, Jordan, Mexico, Netherlands, Panama, United States, Vietnam 8,000 People gross MW in total revenue Utility companies 30,471 operation $10.2 B 6 MW under total assets owned million 3,009 construction $33.6 B & managed 2.5 customers Our leadership is recognized 1 Complete details of sectors served, type of businesses and customers by country according to EUSS Organizational Profile protocols (EU1, EU3, EU5), can be found in our 2019 Annual Report. (pages 16-53) Page | 4 2019 Sustainability