5

EDP Group's strategy reflects its commitment to sustainable development, fully assuming the structuring role of energy in supporting more balanced growth models from a social and environmental point of view.

5. Sustainability

Our sustainability strategy is organized around four strategic axes, aligned with eight of the seventeen United Nations sustainable development goals.

  • 1. Generate Economic Value
  • 2. Develop our people
  • 3. Manage climate and environmental issues
  • 4. Improve Trust

In order to support the organization’s decision-making and strategy development process, EDP carries out a Materiality Analysis. This process assesses and prioritises the relevance of an issue for EDP and its stakeholders.

From this process, the material themes for EDP are obtained, which are the ones able to affect the value creation for the company in the short, medium and long term, and at the same time, are recognized as being important for the different EDP's stakeholders.

Sustainable Development Goals
  • Increase or Decrease Relevance to Business
  • Increase or Decrease Relevance to Society
  • Increase or Decrease Relevance to Business and Society
  • Maintained the position compared to the previous year
  • New Topic
Relevance to Society
High
Medium
Medium
High
Relevance to Business
  • Environmental Management

  • Community Engagement and Development

  • Communication and Transparency

  • Vulnerable Customers

  • Digital Transformation

  • Business Sustainability

  • Promotion of Renewable Energy

  • Climate Change

  • Energy Efficiency

  • Customer Service and Satisfaction

  • Health and Safety

  • Ethics and Human Rights

  • People Management

  • Corporate Governance

  • Research, Development and Innovation

  • Supplier Management

Environmental Management

Protection of the environment is an integral part of the Group’s Environmental Policy, reviewed in 2017. Under this policy, a number of general management commitments are undertaken, such as the prevention of pollution, and an emphasis is put on three strategic priorities: fighting climate change, protecting biodiversity and using natural resources sustainably, in particular water resources.

  • Variation 17/16
  • 2017
  • Environmental certification (ISO 14001)1
  • -3%
  • 88%
  • Recovered waste
  • -25%
  • 46%
  • Environmental fines
  • -34%
  • 19K€

1  Aggregated certification indicator due to assets with potential environmental impacts.

Corporate Governance

The company's governance valuates integrity, transparency, honesty, and leadership and example capacity, based on components such as strategy, culture, risk control and growth.

  • Variation 17/16
  • 2017
  • EBD Members
  • 0%
  • 8
  • GSB Members
  • 0%
  • 21
  • GSB Independent members
  • 0%
  • 11
Ethics and Human Rights

EDP has adopted the principles and values enshrined in the Universal Declaration of Human Rights and also the International Labour Organisation Conventions, the United Nations Global Compact and the Guiding Principles for Business of the Human Rights Council - Ruggie Framework. EDP’s responsibility is not confined to the organisational limits of the Group, but it also spreads to our suppliers and service providers in the ethical performance management objectives, particularly with regard to compliance, the fight against corruption and the promotion of Human Rights.

  • Variation 17/16
  • 2017
  • Ethical claims (total)1
  • 5%
  • 426
  • Claims before the Ethics Committee2
  • 171%
  • 141
  • Information security incidents
  • 137%
  • 1,624
  • Costs related to lobbying
  • 8%
  • 3.8M€

1  Entries registered in the complaint channels Ethics of EDP Group

2  The other claims were quickly and efficiently processed with the Business Units involved

Business Sustainability

Over the past years, EDP has integrated environmental and social issues in their business model and strategy by definition and deployment of corporate policies. Consistent with this approach of long-term value creation, EDP has a Corporate Governance model that meets the various stakeholders expectations.

  • Variation 17/16
  • 2017
  • Economic Value Generated
  • 8%
  • 17,234M€
  • Economic Value Distributed
  • 2%
  • 14,910M€
  • EBITDA
  • 6%
  • 3,990M€
  • Net profit attributable to EDP shareholders
  • 16%
  • 1,113M€
COMMUNICATION AND TRANSPARENCY

Information from the EDP Group is managed in a way that ensures its credibility vis-à-vis its clients and other stakeholders, namely through compliance with current legislation and regulations in the geographies in which it operates and a commitment to personal data confidentiality, protection and legitimacy.

  • Variation 17/16
  • 2017
  • Current tax
  • -78%
  • 178M€
  • Support from public authorities
  • -18%
  • 42M€
RESEARCH, DEVELOPMENT AND INNOVATION

The energy sector is undergoing profound change, and innovation is one of the key tools for sustained growth, which is why it is such a priority for both EDP and its stakeholders. Indeed, innovation ensures a more competitive market position, improved customer experience and significant cost savings.

  • Variation 17/16
  • 2017
  • Investment in RD+i
  • 78%
  • 65M€
  • Employees in RD+i
  • 3%
  • 105
DIGITAL TRANSFORMATION

The technological paradigm shift has completely altered consumer perceptions. Today, customers’ experiences with companies that are major global technology players or purely digital entities have an enormous influence on consumer expectations in other economic areas. The EDP Group has already started its cross-cutting digitization strategy.

  • Variation 17/16
  • 2017
  • Robotization
  • -
  • 184
  • Robotized hours/year
  • -
  • 196,792
  • Smart meters
  • 57%
  • 1,900,703
  • Clients with Re:dy
  • 69%
  • 9,973
SUPPLIER MANAGEMENT

The management of sustainability in the relationship with its suppliers is a strategic factor in EDP Group's activity. The management process privileges the construction of a relationship of trust with suppliers, based on a partnership approach based on principles of ethics, transparency and sustainability.

  • Variation 17/16
  • 2017
  • Suppliers
  • -1%
  • 16,832
  • Certified Critical Suppliers (Environment)
  • 0%
  • 30%
  • Certified Critical Suppliers (H&S)
  • -4%
  • 27%
  • Local purchases
  • 3%
  • 97%
CUSTOMER SERVICE AND SATISFACTION

The growing competitiveness in the energy and services supply market increasingly requires a stronger focus on the customer, especially on offer differentiation and the continuous improvement of the customer experience. In an era of smart networks and in a context where the customer is more proactive, demanding and technological, it becomes indispensable to evolve to an ever more digital interaction, to ensure their maximum satisfaction.

  • Variation 17/16
  • 2017
  • Electricity customers
  • 1%
  • 9.9 MILLION
  • Gas customers
  • 6%
  • 1.6 MILLION
  • Overall customers satisfaction
  • -4%
  • 74%
  • Supplementary energy services revenues1
  • 6%
  • 970M€

1  Include the following services: Energy Management, Maintenance and Operation, Property/Facility Management, Energy Supply and/or Equipment, Provision of Service (example: steam) and other

VULNERABLE CUSTOMERS

Customer vulnerability and energy inclusion are key concerns of EDP's sustainability agenda, as defined in its Sustainable Development Principles (2008), and are addressed through three priorities: Support for vulnerable customers; Access to Energy; Fair contractual practices.

  • Variation 17/16
  • 2017
  • Customers with social tariff
  • 1%
  • 880 THOUSAND
CLIMATE CHANGE

EDP recognises the profound impact of climate change on the future of humanity and supports the UN recommendation to limit global warming to 2% by 2050 as stipulated in the Paris Agreement. The energy sector, one of the biggest contributors to greenhouse gas emissions, will be decisive for the decarbonisation of the economy. The power sector will play a key role in this transition.

  • Variation 17/16
  • 2017
  • Global specific CO2 emissions
  • 23%
  • 334g/kWh
  • Direct CO2 emissions
  • 22%
  • 23,159ktCO2eq
PROMOTION OF RENEWABLE ENERGY

The production of electricity from renewable sources through investment in new wind, solar and hydro capacity, is the main growth strategy of EDP's business, and considered to be one of the most important topics for stakeholders.

  • Variation 17/16
  • 2017
  • Total installed capacity
  • 6%
  • 26,753MW
  • Renewable capacity
  • 3%
  • 74%
  • Gneration from renewable sources
  • -15%
  • 38,762GWh
  • Avoided CO2 emissions
  • -19%
  • 26,620ktCO2
ENERGY EFFICIENCY

Promoting energy efficiency improvement is a major priority both for EDP and for its stakeholders. Increasing the use of renewable energy sources is vital for strengthening electrification as a key instrument for the decarbonization of the economy, mainly in non-carbon markets.

  • Variation 17/16
  • 2017
  • Thermal efficiency
  • 1%
  • 46%
  • Electricity Distribution grid losses
  • 0%
  • 9.2%
  • Savings in energy efficiency services (customers)
  • 38%
  • 214GWh
  • Billing of Energy Efficiency Services
  • 44%
  • 134M€
COMMUNITY ENGAGEMENT AND DEVELOPMENT

The EDP Group undertakes Social Investment programmes and activities that combine the satisfaction of social needs and the central themes of each business, as a way of contributing to the sustainable development of the geographies in which it operates. The effective creation of value for society requires the company to target its social investment activities in a meaningful way, allowing it to capitalise on its strengths, its brand and its employees in order to maximise the impact on the beneficiaries.

  • Variation 17/16
  • 2017
  • Voluntary investment
  • 6%
  • 28.4M€
  • EDP time used in volunteering
  • 57%
  • 24,932
  • Beneficiary entities
  • 2%
  • 417
PEOPLE MANAGEMENT

People Management in the EDP Group focuses on creating favourable conditions for the contribution of employees to the success and sustainability of the business in an overarching way, across all Group companies. For this reason, the Group's Human Resources strategy, embodied in the Corporate People Plan, is designed in alignment with the Business Plan and seeks to develop and continually value all employees and their alignment with the company’s values and culture.

  • Variation 17/16
  • 2017
  • Employees
  • -3%
  • 11,657
  • Female employees
  • 0%
  • 24%
  • Engagement
  • 1%
  • 75%
  • Training hours
  • 21%
  • 473,078
HEALTH AND SAFETY

Health and Safety at work (H&S) are priorities in the EDP Group's relationship with all its employees, service providers, suppliers and customers. Both are essential factors for the premise of creating value for all stakeholders. For EDP, no work situation or urgency can justify endangering someone's life.

  • Variation 17/16
  • 2017
  • Safety Certification (OHSAS 18001)
  • 9%
  • 36%
  • Accidents 1
  • -32%
  • 128
  • Frequency rate (FR) 2
  • -32%
  • 2.03
  • Severity rate (SR) 3
  • -24%
  • 131

1  Accidents at the workplace in worktime and accidents on the way to or from work, with an absence of one or more calendar days and the fatal accidents.

2  Work accidents by a million worked hours.

3  Number of calendar days lost due to work accident by a million worked hours.