Centrica : People & Planet Plan Report 2023

ENTER

OUR PEOPLE &

PLANET PLAN

UPDATE 2023

Supporting communities, our planet and each other

1	INTRODUCTION		OUR PLANET		OUR PEOPLE		OUR FOUNDATIONS		OUR GOVERNANCE

WHAT'S IN THIS REPORT?

INTRODUCTION

OUR PEOPLE & PLANET PLAN	2
CHIEF EXECUTIVE INTRODUCTION	3
OUR YEAR IN NUMBERS	5

OUR PLANET

PROGRESS AGAINST GOALS	6
OUR CLIMATE TRANSITION PLAN SUMMARY	13

OUR PEOPLE

PROGRESS AGAINST GOALS	15
CREATING GREENER & FAIRER COMMUNITIES	24

OUR FOUNDATIONS

CUSTOMERS, COLLEAGUES, COMMUNITIES, ENVIRONMENT 29

OUR GOVERNANCE

GOVERNANCE, SUSTAINABLE DEVELOPMENT GOALS, KPIs 34

2

INTRODUCTION

OUR PLANET

OUR PEOPLE

OUR FOUNDATIONS

OUR GOVERNANCE

OUR PEOPLE & PLANET PLAN

	Supporting communities, our planet and each other
PEOPLE		PLANET
Supporting every colleague		Supporting every customer
to be themselves to better		to live more sustainably
serve our customers
and communities

We want to:

• Create an engaged team that reflects the full diversity of the communities we serve by 2030(1)
• Recruit 3,500 apprentices and provide career development opportunities for under-represented groups by 2030 (2,000 apprentices by the end of 2025)

We want to:

• Help our customers be net zero by 2050
  (28% greenhouse gas intensity reduction by the end of 2030)
• Be a net zero business by 2045
  (40% greenhouse gas reduction by the end of 2034)

• Inspire colleagues to give 100,000 days to build inclusive communities by 2030
  (35,000 days by the end of 2025)

Doing business responsibly

Underpinned by strong foundations that ensure we act fairly and ethically - from customer service to human rights

1. All company and senior leaders to reflect latest 2021 Census data for working populations. This means 48% women, 18% ethnically diverse, 20% disability, 3% LGBTQ+ and 4% ex-service by 2030 (40% women, 16% ethnically diverse, 10% disability, 3% LGBTQ+ and 3% ex-service by the end of 2025).

3	INTRODUCTION		OUR PLANET		OUR PEOPLE

CHIEF EXECUTIVE

INTRODUCTION

I know that the last couple of years has been really tough for customers and communities, who have experienced a rollercoaster of unprecedented events - from COVID-19 and the war in Ukraine, to the cost of living crisis.

These events have contributed to more and more people struggling to pay for everyday essentials, which includes energy. I see it as our duty to do whatever we can to help people through difficult times. That's why over the last two years, we've invested in customer service teams and systems and voluntarily donated

£140 million to support people paying their energy bills

• this is more than any other energy company in the UK and Ireland, and complements the hundreds
  of millions of pounds we provide each year via wider support programmes like the Warm Home Discount and Energy Company Obligation. It's a lot of money but our business success has enabled us to do the right thing and be there for people when
  they've needed us most.

OUR FOUNDATIONS		OUR GOVERNANCE

That said, we didn't get everything right last year but what's important is that when things go wrong, we put them right and learn so that it doesn't happen again. Sadly, we got it wrong when some of our contractors were not treating our customers with the respect they deserved whilst installing prepayment meters under warrant early in 2023. We immediately apologised, suspended the installation of prepayment meters under warrant, and launched an investigation overseen by an independent third party. Whilst our investigation found no wide-ranging problems, it highlighted some isolated instances that fell short of the high standards of behaviour we expect. So we brought all related activity 'in house' and ensured that our policies, procedures and practices were updated to reflect the findings, which has contributed to the development of new industry rules to protect vulnerable customers.

4	INTRODUCTION		OUR PLANET		OUR PEOPLE		OUR FOUNDATIONS		OUR GOVERNANCE

I additionally see it as our duty to fight climate change because it's one of the biggest single threats facing society. Although we all know that getting to net zero won't be quick or easy, I believe it's the greatest single opportunity for Centrica. This is because as a uniquely integrated energy company, we're well-placed to drive the transition forward at every stage of the value chain - whether we're making, storing, moving and selling energy, or installing and mending related services and solutions.

To ensure we further seize this opportunity in the near term, we outlined our new Green Focused Investment Strategy in July. The strategy will see us ramp up our annual green investment to over 50% of capital over the next five years in security of supply and flexibility, renewable and low carbon generation, as well as customer offerings that advance the transition to net zero. This is a big step up from less than 5% of our capital invested in green taxonomy aligned projects back in 2019.

At the forefront of my priorities, is that we must create a fairer future when we generate a greener one. A key part of how we're achieving this is through our People & Planet Plan which was launched in 2021 and consists of five Group-wide goals that accelerate action on issues that matter deeply to our business and society, and where we're well-placed to make a big difference - from achieving net zero and creating the diverse and inclusive team we need to get there, to contributing to the communities we're all part of.

£4bn

EXPECTED COMMITMENT VIA OUR GREEN FOCUSED INVESTMENT STRATEGY 2023-28

In 2023, I'm pleased to say that we made really positive progress toward the majority of our goals but we're behind on others. This is partly because transformation takes time, and partly because we re-focused efforts to help customers and communities through the energy crisis which I mentioned earlier. Looking back over the year, some of my personal highlights in addition to our support for people struggling with their energy bills, has been our ability to unlock carbon and cost savings for customers via our new PeakSave offering, trebling our volunteering days in just one year, and being recognised in The Times Top 50 Employers for Gender Equality for the second year running. All of which you can read about and more, in this report.

So you can see that whilst we didn't get everything right in 2023, it was another strong year for Centrica. And we're on a solid footing to maintain the growth we've seen in recent years into 2024 and beyond, which will enable us to continue to contribute strongly to society and the economy. None of this would be possible without the hard work and dedication of my colleagues and for that, I'm forever grateful. Whilst I don't expect the road ahead to be easy, rest assured, we

will do our best to energise a greener and fairer future.

Chris O'Shea,

Group Chief Executive

5	INTRODUCTION		OUR PLANET		OUR PEOPLE		OUR FOUNDATIONS		OUR GOVERNANCE

OUR YEAR IN NUMBERS

70%

GREENHOUSE GAS

EMISSIONS CUT

from our operations over the last decade

13GW

Route-to-market service for renewables

£140m

VOLUNTARILY DONATED

to help customers with their energy bills during the energy crisis 2022-23

3,000 HEAT

PUMPS

delivered, making us a UK leader in heat pump installation

3X Annual increase in colleague volunteering as we achieve more than 7,200 days

	80%
	ZERO CARBON
~1,000	CONTENT
mix for customers
	of our electricity fuel
GOOD CAUSES
SUPPORTED
through donations
and fundraising

TOP RANKED EMPLOYER

including The Times Top 50 Employers for Gender Equality and the CCLA Mental Health Benchmark

165 APPRENTICES

welcomed to our team, with 14% of Smart Energy Apprentices being women which is much high than sector averages

7.7/10 IMPROVEMENT IN COLLEAGUE ENGAGEMENT

as we approach top quartile performance

6

INTRODUCTION

OUR PLANET

OUR PEOPLE

OUR FOUNDATIONS

OUR GOVERNANCE

OUR PLANET

Supporting every customer to live more sustainably

GOAL	Help our customers be net zero by 2050	7
1
GOAL	Be a net zero business by 2045	10
2
	Our Climate Transition Plan summary	13

7

INTRODUCTION

OUR PLANET

OUR PEOPLE

OUR FOUNDATIONS

OUR GOVERNANCE

GOAL	BY 2050, WE WANT TO:
1	HELP OUR CUSTOMERS BE NET ZERO(1)
(28% GHG intensity reduction by the end of 2030)

2023 PROGRESS

10% reduction

Key: Progress against goals  On track  Behind

1. Net zero goal measures the greenhouse gas (GHG) intensity of our customers' energy use including electricity and gas with a 2019 base year of 183gCO2e/kWh, normalised to reflect acquisitions and divestments in line with changes in Group customer base. Target aligned to the Paris Agreement and based on science to limit global warming, corresponding to a well below 2°C pathway initially and 1.5°C by mid-century.

860,000 homes

EQUIVALENT ANNUAL

EMISSIONS SAVED FROM

OUR ENERGY, SERVICES

AND SOLUTIONS

The biggest thing we can do to tackle climate change, is to help our customers use energy more sustainably. This is because around 90% of our total GHG emissions (scope 1, 2 and 3), come from the gas and electricity provided to customers (scope 3).

So in 2023, we provided energy, services and solutions that help cut the GHG intensity of the energy our customers use by 10% against the 2019 base year. Savings were predominantly driven by our renewable and low carbon energy tariffs alongside energy efficiency and optimisation solutions like air source heat pumps and Hive smart thermostat. This was up from the 6% reduction achieved in 2022 and was largely due to a rise in the zero carbon content of our reported electricity fuel mix, which improved by 5% to 80%.

80%

ZERO CARBON CONTENT OF OUR ELECTRICITY FUEL MIX VERSES THE UK NATIONAL AVERAGE OF 55%

8	INTRODUCTION		OUR PLANET		OUR PEOPLE		OUR FOUNDATIONS		OUR GOVERNANCE

In 2023, we continued to help our customers progress their journey to net zero by supporting them with measures to decarbonise power, heat and transport.

For example, we:

• introduced market-leading incentives that encourage the adoption of low carbon technologies
  - whether that's offering heat pump price and performance guarantees, or providing free electric vehicle (EV) charging for a year with the purchase of a Hive charger as well as providing the cheapest rate to charge an EV;
• delivered around 3,000 heat pumps for the able to pay market and via the Energy Company Obligation (ECO), which makes us a UK leader in the installation of heat pumps;
• cumulatively installed over 34,000 EV charging points since 2013 to help green the UK's transport system;
• continued to be one of the leading enablers of clean energy across Europe by providing a route-to-market for 13GW of renewables under our management - enough to power around 12 million homes; and
• launched PeakSave Sundays which has encouraged over 500,000 customers to shift their energy use away from peak demand reducing carbon and cost (see page 9).

SPOTLIGHT ON HIVE

In the last decade, our Hive smart thermostat has been helping people control their heating and hot water more easily, which includes from anywhere at anytime. This has enabled our 2 million smart thermostat users to avoid around 1 million tons of carbon emissions - that's the same amount of carbon generated by almost 700,000 return flights from London to New York. The smart thermostat has also been good for reducing energy bills, with collective savings totalling around £325 million.

Like many organisations, we purchased energy certificates such as Renewable Energy Guarantees of Origin and Nuclear Declarations, to back both our green and standard tariffs during the year. We're aware that the debate around the value of these certificates is evolving with recent research studies and broader expert opinion, identifying issues including the risk that certificates don't incentivise the building of renewable or zero carbon power generation that's needed for net zero. In 2024, we're therefore engaging a range of stakeholders on the issue and will use their views to inform whether certificates are right thing for our customers and our business. We'll provide an update on our approach later in the year.

In the meantime as set out in our Climate Transition Plan (see pages 13 to 14), we'll continue to help customers reduce their emissions by focusing on energy efficiency and optimisation services alongside low carbon technologies and cleaner energy.

9	INTRODUCTION		OUR PLANET		OUR PEOPLE

OUR STORIES

SECURING SAVINGS

WITH PEAKSAVE

Customers are shifting their electricity use to help save money and the planet.

When electricity is used it can have a big impact on the energy system, our wallet and the environment. This is because when demand for electricity is high, more fossil fuels are burned to make additional energy. And when demand for energy is low, more of it can come from renewable energy sources.

To provide a smarter solution to balancing these peaks and troughs, we've introduced PeakSave for customers who have a smart meter and want to get involved. This includes:

• PeakSave Sundays which offers half-price electricity from 11am to 4pm to encourage customers to use energy when demand is low; and
• PeakSave Winter which rewards customers for reducing electricity use for a short, pre-scheduled period when the national grid is under pressure.

PeakSavers participate by making simple changes to when they use electricity, with the most common shift in habits being when they cook, use the dishwasher or wash and tumble their clothes. As a result of these efforts, PeakSavers have so far saved a combined total of £13 million off their energy bills and shifted over 11,000MWh into Sundays.

OUR FOUNDATIONS		OUR GOVERNANCE

>500,000

PEAKSAVE CUSTOMERS

• It makes me aware of doing things in a different way. It saves money, and it's good for the grid and environment."

Kim, a customer signed up to PeakSave