27. 6. 2019

CEZ Group Sustainability Report 2018

Dear Readers,

Responsible business practices are a topic that resonates more and more in Europe as well as in Czech society. It is becoming important to shareholders, financial investors, business partners, and the public in general. This also increases the importance of the report, the third edition of which you are reading, which provides an overview of what we managed to do in this respect in 2018. ČEZ follows a sustainable development strategy named “Energy for the Future,” which we presented for the first time two years ago.

CEZ Group Sustainability Report 2018This strategy reflects the principles applied by ČEZ to its activities on a long- term basis—especially a requirement for responsible business practices, an effort to use the best and latest technology, and a need to be a good neighbor and participate in the prosperity of our neighborhood. In this sense, the “Energy for the Future” is based on five fundamental priorities: ensure sustainable operation, be a good partner, bring useful solutions to customers, enable energy sector transformation, and start the engine of innovation. Under the first priority, we focus on enhancing the operation of our existing facilities, reducing energy intensity, improving facility efficiency, and advancing environmental friendliness.

In this respect, we are preparing intensively both for emission limits according to the Industrial Emissions Directive and for stricter limits according to BAT—Best Available Technique reference documents (BREF), which we already meet in advance for a number of parameters. For the next years, we are expecting shutting down our coal-fired units that have not received environmental upgrades, switching from coal to gas for some local heating plants, and gradually building a portfolio of renewables—for example, we currently operate Europe’s largest onshore wind farm. I would just like to point out that our power plants’ dust emissions have decreased by more than 98%, sulfur dioxide emissions by more than 97%, and nitrogen oxides emissions by 86% since 1990.

In distribution, we are working hard to switch to smart grids. We again managed to decrease the amount of grid losses in Czechia and other countries where we are a distributor. We strive to take environmentally friendly steps in accordance with current trends and social needs in generation, distribution, sales, and supporting activities. These include, for example, limited use of plastics, reduced water consumption, or tree planting. I would also like to emphasize that our business activities are based on adherence to a strict safety culture, which precedes all other aspects.

We also cooperate with sixty secondary schools and universities to share our expertise and experience. We organized 354 debates at schools under CEZ Group’s “World of Energy” learning program in 2018.

As for our priorities of “Be a Good Partner” and “Bring Useful Solutions to Customers,” I would like to highlight the activities of the CEZ Foundation, which is the biggest corporate donor in Czechia, following the motto “We Help Where We Operate.” I am particularly pleased by activities that our employees or the public get directly involved in. On “Giving Tuesday,” the international day of charitable giving, we became the biggest donor with our “Granting Wishes” collection. This is a collection for which employees propose specific people that need aid and other employees make financial contributions to grant their wishes.

I am also pleased that the number of people using our “EPP—Move to Help” sports/charitable application exceeded 400,000. The app thus ranks first in popularity among sports app users in Czechia on a long-term basis.

What I consider important is the KISMO project under which ČEZ Distribuce informs representatives of local authorities about states of disaster or increased failure rates, or the parallel initiative bezstavy.cz , launched in 2019 to inform customers during disasters.

We also address the issue of equal opportunity. We continually increase the number of women employed at ČEZ—last year, we were in the first round of Czech companies undergoing a gender audit.

7 Our “Enable Energy Sector Transformation” and “Start the Engine of Innovation” priorities are characterized by research and development, with CEZ Group companies’ operating expenses amounting to CZK 420 million. These concern investments in zero-emission energy, ČEZ Prodej’s and ČEZ ESCO’s energy services, electric mobility, and our clean-tech fund Inven Capital. We launched a number of new projects together with the Technology Agency of the Czech Republic and other institutions. The number of charging stations for electric vehicles keeps growing; we build one station a week on average. Our EPC (Energy Performance Contracting) projects for energy savings saved our customers CZK 215 million in 2018.

I am glad that while we work on introducing new modern technologies into power generation, distribution, and sales, we are also able to provide these technologies to our customers under the growing ESCO energy services segment.

I hope that you find reading our report inspirational.

Michaela Chaloupková
Member of the Board of Directors
Chief Administrative Officer
CEZ Group Sustainability Leader