Fortum Oyj : Sustainability Report 2023

Sustainability 2023

Sustainability at Fortum

Climate and resources

Personnel and society

Appendices

Fortum actively participated in the implementation of the new Finnish Transparency Register Act and developed a publicly available IT tool for stakeholder management, taken into use at Fortum in Finland, Sweden, Norway and Belgium.

Security of supply at Loviisa nuclear power plant at avery good level: load factor of

91.06%

is among the best in the world for pressurised water reactor power plants, and a new operating license granted for both units until the end of 2050.

Fortum established a Green Finance Framework,allowing the company to raise capital via green bonds and loans (Green Debt) to refinance and finance renewable energy and energy efficiency projects, and/or nuclear power projects.

Fortum's biodiversity footprint assessment finalised with GBS® tool*: main terrestrial corporate impacts are related to GHG emissions, land use and fuel procurement.

* Global Biodiversity Score®

Fortum's direct CO2 emissions decreased by

27%

due to, e.g., the decreased use of the Meri-Pori condensing power plant and success of the Espoo Clean Heat programme.

Completion rate of Fortum Management Safety and Security Leadership Programme was

100%

with over 400

trained managers.

Milestones for4The Espoo Clean Heat project: an industrial-scale electric boiler commissioned at Suomenoja power plant; an air-to-water heat pump plant producing district heating and cooling in Vermo; and a

225

-million-euro investment decision as part of a

4collaboration project with Microsoft.

During the renewal of Fortum's organisation, special attention was paid to the composition and diversity of leadership teams in terms of gender and nationality; females now account for

40.8%

of leaders.

Sustainability 2023

Sustainability at Fortum

Climate and resources

Personnel and society

Appendices

For Fortum, 2023 was a year of transformation and stabilisation. In March, we launched our new strategy, complemented with considerably enhanced environmental targets, indicating our continued ambition and commitment to climate action and biodiversity. Equally, we continue our focus on the health, safety and wellbeing of our people.

Decarbonising the power sector and the electrification of energy-intensive industries are fundamental next steps in the green transition and in limiting the global temperature increase to

1.5 °C. As one of the cleanest power generators in Europe, with industry expertise, we are in a unique position to deliver clean, reliable energy at scale and drive decarbonisation in industries.

Fortum is committed to reaching carbon neutrality by 2030 and to exiting coal by the end of 2027. In 2023, 98% of our power generation was already CO₂-free, and we continue to reduce our remaining emissions. In 2023, our direct CO₂ emissions decreased by 27%; one large contributor to the decrease was the progress made in the Espoo Clean Heat project. Together with the City of Espoo, where Fortum is headquartered, Fortum is facilitating a transformation that will result in carbon-neutral district heating by 2030 in the Espoo, Kauniainen and Kirkkonummi regions.

Furthermore, the license extension granted last year for the Loviisa nuclear power plant plays a significant role in ensuring low-carbon power also in the future.

Fighting climate change and protecting biodiversity go hand in hand. Based on the biodiversity footprint assessment completed with the Global Biodiversity Score® (GBS®) tool, Fortum's

main terrestrial corporate biodiversity impacts are related to greenhouse gas (GHG) emissions, land use, and fuel procurement. We continue to mitigate our biodiversity impacts in hydropower with multiple local initiatives both in Sweden and Finland, including restoring aquatic and terrestrial habitats, improving fish migration and strengthening migratory fish populations. We also continue to contribute to the development of the aquatic segment of the GBS® tool to measure hydropower's aquatic biodiversity impacts.

Besides reducing and mitigating our environmental impact, maintaining high-standard health and safety practices is essential

for Fortum. Excellence in safety is the foundation of our business and an absolute prerequisite for efficient and stable production.

We want to be a safe workplace for our employees, contractors, and service providers, and we continuously strive to improve

our safety performance. Unfortunately, 2023 was a clear disappointment in terms of the outcome for two key performance indicators (KPIs) for safety; Total Recordable Injury Frequency (TRIF) and Lost Time Injury Frequency (LTIF), both for own personnel and contractors. This underlines the importance

of continuing our safety improvement journey. Concrete improvement actions related to safety, such as developing safety leadership and culture, process safety, learning organisation and risk management, were implemented throughout 2023.

Safety has the continued focus of our leadership. Our commitment to safety is conveyed in the execution rate of our Management Safety and Security Leadership Programme and the Safety improvement plans, which reached 100% and 78%, respectively, both exceeding the set targets.

Besides keeping our employees safe, we aspire to be a responsible employer that offers a diverse and motivating work environment and invests in personnel development and wellbeing. As part of our new strategy, we re-organised ourselves internally, and special attention was paid to the composition and diversity of leadership teams in terms of gender and nationality, leading to an increase of female leaders. We also continued to focus on the mental wellbeing of our employees and highlighted resilience, stress management, the power of community and working together.

Climate change is one of the greatest challenges of our time. It is clear that an urgent transition from fossil fuels to clean energy is necessary to make an impact. Fortum's purpose "To power

a world where people, businesses and nature thrive together" shows our determination to work towards a world where there is a healthy balance between the wellbeing of people, the needs of societies, the success of businesses and the diversity of nature.

Markus Rauramo

President and CEO

Sustainability 2023

Sustainability at Fortum

Climate and resources

Personnel and society

Appendices

Sustainability 2023

Fortum's 2023 reporting entity

CEO's Business ReviewFinancialsGovernance

Notes:

• Fortum's TCFD report for 2023 is included in the chapter Climate, pages: 19-25, and in Financials 2023, pages: 18-21 and 44-45.
• Fortum's Non-Financial Information report is included in the Financials
  2023, pages: 8-14 and 18-36.
• To make this Sustainability Report fully web accessible, Fortum has aligned all its visuals with the
  Web Accessibility Directive, (EU) 2016/2102. This allows also people with disabilities to perceive, understand, and navigate through the report.

Sustainability 2023

Sustainability at Fortum

Fortum's strategy - Power to renew

We support the UN Sustainable Development Goals

Sustainability priorities and targets Reporting principles

Business ethics and compliance Climate and resources Personnel and society Appendices

More ambitious environmental targets

Fortum's position as a leading Nordic clean energy company is now complemented by considerably enhanced environmental targets with the aim to be a leader in sustainability. Fortum has set a target to reach carbon neutrality (Scopes 1, 2, 3) by 2030 and will exit all coal-based generation by the end of

2027. In addition, Fortum has the following targets:

• Fortum commits to set emission reduction targets based on climate science (SBTi 1.5 °C).
• Mid-pointtargets for specific emissions: below
  20 g CO2/kWh for total energy production and below
  10 g CO2/kWh for power generation by 2028.
• No net loss of biodiversity (excluding any aquatic impacts) from existing and new operations (Scopes 1, 2) from
  2030 onwards. In addition, Fortum will reduce its negative dynamic terrestrial impacts in upstream Scope 3 by 50% by 2030 (base year 2021). Fortum will also continue local initiatives, especially in hydropower production, and is committed to participate in the development of
  a science-based methodology to assess the company's aquatic impacts.

Fortum is already taking steps to reach the new environmental targets; examples of these include the Loviisa nuclear plant lifetime extension, increasing the use of hydropower, and the ongoing decarbonisation projects in district heating.

Fortum's climate roadmap in line with SBTi 1.5 °C

1

0.5

0

Fortum supports the UN Sustainable Development Goals (SDGs). As one of the cleanest energy generators in Europe, we help societies to reach carbon neutrality and our customers to grow

Key UN Sustainable Development Goals for Fortum

Sustainability 2023

Sustainability at Fortum

Fortum's strategy - Power to renew

We support the UN Sustainable Development Goals

Sustainability priorities and targets Reporting principles

Business ethics and compliance Climate and resources Personnel and society Appendices

and decarbonise their processes in a reliable and profitable way in balance with nature.

Sustainable Development Goals and Fortum

The 4Sustainable Development Goals (SDGs) adopted by the United Nations in 2015 are global goals to solve economic, social and environmental challenges by 2030. The 17 goals have been set based on science and research, and they address global-level problems. Through the goals, the UN is calling for and inviting companies to take action to solve the challenges through innovations and collaboration.

We at Fortum want to do our part to promote the achievement of these goals in our own value chain. We take responsibility for and aim to prevent our adverse impacts related to the goals while also seeing business opportunities in them. Ten of the Sustainable Development Goals that are key for us are presented in the graphic. Through innovative products and services, we offer solutions for six of the goals, on the right in the graphic (Our opportunities). We are pursuing decarbonisation in the framework of our own operations, and we are driving decarbonisation in Nordic industries by partnering with strategic customers.

Our responsibilities are presented on the left in the graphic. From the social and societal perspectives, goals 5 and 8 are important to us, for our personnel, contractors, local communities and the entire supply chain. Because of our Corporate Social Responsibility (CSR) programme, goal 17 is also central to us. As for goal 15, we recognise the responsibility we have for our impacts on and dependencies related to ecosystems and biodiversity.

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Sustainability 2023

Sustainability at Fortum

Fortum's strategy - Power to renew

We support the UN Sustainable Development Goals

Sustainability priorities and targets Reporting principles

Business ethics and compliance Climate and resources Personnel and society Appendices

Sustainability priorities have been defined to support sustainable business. They also define the scope for corporate sustainability reporting. In our operations, we take into consideration climate and resource issues, as well as our impacts on personnel and society.

Sustainability targets are the driving force for achieving Fortum's goals and implementing corporate strategy. The targets aspire to be specific, measurable, time-bound and science- based whenever possible.

Sustainability priorities

Fortum's material sustainability topics include climate change, pollution, water, biodiversity and ecosystems, circular economy, our own workers, workers in the value chain, as well as how we do business.

During 2023, Fortum started preparations for the Corporate Sustainability Reporting Directive (CSRD), set by the EU. Starting from 2024 annual reporting, Fortum's sustainability reporting will be prepared following the CSRD requirements.

Sustainability targets

CLIMATE

• Emissions reduction aligned with SBTi 1.5 °C trajectory.
• Specific emissions at below 20 g CO2/kWh for total energy production and below 10 g CO2/kWh for power generation by 2028.
• Carbon neutrality by 2030 (all Scopes 1, 2 and 3).
• Coal-exitin Fortum's own operations by the end of 2027.

BIODIVERSITY

• No net loss of biodiversity from existing and new operations in Scopes 1 and 2 from 2030 onwards, excluding all aquatic impacts.

• 50% reduction in dynamic terrestrial impacts in upstream Scope 3 by 2030 compared to 2021.

• Commitment to continue local initiatives and participate in the development of a science-based methodology to assess the aquatic impacts of hydropower.

SAFETY*

• Total Recordable Injury Frequency (TRIF), for own personnel and contractors, <1.0 by the end of 2030.

• • No severe or fatal injuries.
  • 95% execution rate for the Management Safety and Security Leadership Programme.
  • 60% execution rate for Safety improvement plans.
• The updates for safety targets in 2024 are described in the chapter 4Occupational safety targets.