Galp Energia SGPS S A : IMR 2023 - Sustainability Journey

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Part II - Sustainability Journey

1. Our decarbonisation journey_______________________________________________ 4
2. Biodiversity, Water, Circular Economy ____________________________________ 13
3. People, Communities, Human Rights ______________________________________ 20
4. Protect and empower our people _________________________________________ 26
5. Promote a value-adding, conscious business ______________________________ 31

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Sustainability Journey

Integrated Management Report 2023

Otelo Ruivo

Chief Sustainability Officer

We are advancing on our decarbonisation journey, integrating cleaner energy sources, and investing in the development of large-scaleprojects that will continue to reduce our carbon footprint and provide low or zero-carbonsolutions to our customers.

Sustainability is an intrinsic part of our organisational culture, a guiding principle of the actions and decisions we make, reinforcing long-termvalue creation in alignment with what is expected from Galp.

In this section, we address the five main pillars of our sustainability strategy. I invite you to explore these contents and learn more about our journeyand the results achieved for our ambitions.

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Galp's sustainability strategy is to continue to provide energy solutions that meet communities' needs while adding value for all stakeholders. We are committed to developing systems that offer affordable and reliable energy in an economically and environmentally sustainable manner.

This commitment is at the heart of our sustainability journey and will remain so for the future. We have a clear plan in place to progressively decarbonise our portfolio, actively participating in the ongoing energy transition.

In 2023, we continued this trajectory and worked to continuously articulate sustainability in our strategic thinking and investment decisions as well as in the way we engage and learn from the outside world.

The foundations of our Sustainability Roadmap direct our focus towards long-term priorities, ensuring objective and disciplined execution of environmental, social, and governance initiatives across all Business Units and Corporate Centre teams.

Sustainability Roadmap foundations

In 2022, Galp defined its key Sustainability Roadmap foundations, which guide the Company in terms of principles and actions.

This 'Part II - Sustainability Journey' is structured around these pillars and its ambitions are detailed throughout the document.

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Sustainability Journey

Integrated Management Report 2023

Sustainability Journey

This assessment aims to gauge the resilience of the Company's strategy to different climate scenarios and incorporate the most relevant associated risks in the risk management framework. The evolution of the main climate-related risks identified will be monitored in the future and the appropriate mitigation and adaptation measures defined and implemented.

The most recent review of the physical risks concluded that the organisation has a relatively low exposure to chronic physical risks. The most significant physical acute risks identified are extreme wind and rain events.

Although initial assessments have been made, the Company is implementing processes and tools that will allow us to improve physical and transition climate-related risk assessments. This will provide additional support for internal investments and other management decisions as well as prepare future disclosure.

Find out more about Galp's alignment with the TCFD recommendations (link here),including the Company's governance regarding climate related risks and opportunities.

Reduce and mitigate our GHG emissions

As part of its progress towards a low carbon future, the Company is focused on progressively reducing emissions from its operations and decarbonising its portfolio.

2030 targets

Galp has in place an ambitious but pragmatic energy transition strategy. The carbon intensity performance of Galp's current portfolio is already one of the lowest in the sector. Our upstream portfolio has a carbon intensity close to 50% lower than the industry average, according to International Association of Oil&Gas Producers (IOGP). Adding to this, the integration of renewables at Galp is currently over four times

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superior to the average of the peers, in relative terms based on hydrocarbons production.

With a pragmatic and realistic approach to the energy sector and a significant emission reduction plan already underway, Galp has the ambition to reduce its absolute operating emissions by 40% until 20301.

This target is based on the development of already identified projects and reflects the Company's current focus on reducing its carbon footprint, demonstrated through recent investment decisions on key projects like the first 100 MW electrolysers for green hydrogen production. Additionally, substantial investments in operational energy efficiency, electrification, and a robust commitment to renewable electricity generation will ensure the right direction towards further reducing our emissions and decarbonise our portfolio throughout the decade.

In addition, Galp defined two carbon intensity reduction targets which reflect its progress towards a lower carbon future, of the energy that we produce and of the energy that we sell to our customers, also with reference to 2017.

For more information on the carbon intensity metrics, please refer to our website.

1 This target considers 2017 as a baseline, as it marks the start of the diversification of our portfolio and commitment to the development of a transition strategy.

Carbon intensity methodologies and benchmarking

Galp acknowledges that communicating on carbon metrics and methodologies raises confidence and trust from stakeholders. Towards this goal, Galp believes there is a clear need to develop a common approach for the O&G sector.

Galp's carbon intensity use independent metrics that also include the exposure to indirect value chain emissions (scope 3). These are emissions over which Galp has limited direct control and are complex to manage. Furthermore, the current methodologies for measurement of these emissions consider diverse approaches for intensities' assessment and makes benchmarking extremely difficult, aspects which should be carefully considered when reflecting on our way forward or supporting effective portfolio decision-making processes.

Considering our portfolio options and the opportunities and challenges resulting from the energy market's dynamics across the wide and diverse activities included in our value chains, Galp may review the applicability of medium-term carbon intensity targets, which extend beyond our direct operations.

Nonetheless, the trajectory remains clear, as the integration of low carbon energies and the increased renewable power generation will be fundamental to preparing Galp to address future options and continue to decarbonise its portfolio and the energy it supplies, maintaining an alignment with society and EU targets.

Integrated Management Report 2023

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2050 net zero ambition in line with society

The current short and mid-term ambitions are the first and critical steps towards the ambition to be net zero by 2050, in line with society demand evolution. As the energy transition accelerates and society moves towards a lower carbon future, Galp will adapt its businesses accordingly and our investments and portfolio will mirror this progress. However, for longer time horizons, the level of uncertainty of the relevant variables is so high that it is not feasible to make realistic projections in terms of specific projects and related investments. This is especially pertinent given that it may not be technically and/or economically feasible at present to develop some of the low carbon solutions and technologies that will become available in the future.

Our energy mix will continue to change over time and Galp will remain committed to supplying affordable, reliable and sustainable energy to its customers.

Methane

The Company's methane emissions have a relatively low weight in its operational emissions (<1% of total scope 1 and 2 emissions in 2023) and are mostly associated with non-routine flaring in non-operated upstream assets.

Notwithstanding this, Galp aims to reduce methane emissions from its operated assets, which represent 23% of its overall methane emissions, in line with industry expectations.

All our carbon reduction ambitions are expressed on a CO2e basis which incorporates the full impact of methane emissions. Lastly, all the upstream operators of Galp's upstream production are signatories to the OGCI Methane Reduction Initiative and the Oil and Gas Methane Partnership (OGMP) 2.0.

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Acting on methane emissions

The Sines refinery is the asset operated by Galp where methane emissions are most relevant. As such, several measures have been put in place to mitigate these emissions over the years. The refinery has installed a flare recovery unit in one of its flares to reduce flaring and associated methane emissions, as well as a vapour recovery unit to minimise the emissions of diffuse volatile organic compounds (VOC) including methane from loading and unloading hydrocarbons.

Fugitive and diffuse emissions are also monitored and addressed by its annual LDAR (Leak Detection and Repair) Program. The refinery is developing a VOC management plan for the integrated management of all fugitive and diffuse emission reduction and monitoring initiatives of to further minimise operating VOC emissions.

2023 performance

During 2023, the Sines refinery was able to resume its normal energy consumption profile, and registered planned shutdowns to perform recurrent unit turnarounds, which led to a significant reduction of its operating emissions.

The commissioning of the Coral South FLNG concluded during the second half of 2023, and the asset is now operating in plateau conditions.

Overall, Galp's operating emissions (equity) were 13% lower than in the previous year and 30% lower in relation to the 2017 baseline.

The carbon intensity of the produced energy reduced 19% in relation to the 2017 baseline and 6% year-on-year, while the carbon intensity of the energy sold downstream decreased 4% from the baseline and 1% from the previous year. These results reflect the aforementioned decrease in absolute operating emissions, as well as increases in the production and sales of low-carbon energy, like renewable electricity and biofuels.

Galp's Carbon Footprint

Each year, Galp's carbon footprint (operational control) is compiled, based on internationally recognised methodologies and recommendations, and is monitored and verified by a third party.

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CO2e emissions - scopes 1, 2 and 3 (mtonCO2e)

1. Considers all emissions from Coral FLNG, including from activities classified as midstream related to the primary intent of producing gas liquids for sale as liquefaction, etc.
2. Excluding emissions from the Coral FLNG which are considered as midstream processes (e.g gas treatment, liquefaction, etc). 3 Net scope 3 emissions represent an estimate of life cycle emissions for the different value chains represented in Galp's sales of energy products where its own energy production is integrated and netted and 3rd party purchases are assumed to be the difference between energy sales/inputs and production.

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In 2023, Galp began defining a methodology to calculate and disclose the carbon footprint of its Renewables and New Businesses operations. The aim was to align the reporting of this business unit with that of the remaining businesses and continue to improve our emissions-related disclosure by extending it to the least carbon intensive part of our activities.

Moving towards low carbon solutions

Avoided emissions

Galp estimates the impact of several of its low carbon solutions by publishing a yearly estimate of the emissions avoided by their implementation. This estimate is calculated based on a reference scenario where these solutions and products would not have been implemented during the year they were sold or executed. In 2023, Galp avoided the emission of approximately 1,500 ktonCO2e through the integration and sales of biofuels for transportation purposes, the delivery of electricity for electric mobility, the production and sale of renewable electricity and the supply of decentralised energy production and energy efficiency services.

Tackling emissions in our businesses

Upstream

Galp's Upstream carbon efficiency

Galp's Upstream portfolio is characterized by its high efficiency and low carbon intensity. At c.9 kgCO2e/boe1, it is close to half of the industry's average of c. 18 kgCO2e/boe (IOGP average of 2022). This reflects the commitment to sustainability and energy efficiency in project design and operations. Our journey starts in project evaluation, where we fully incorporate the amount of carbon dioxide in the field into our investment decisions, focusing on developing assets with low carbon intensity.

Integrated Management Report 2023

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1. Our decarbonisation journey

Sustainability Journey

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of LNG. This gives Galp the option of purchasing LNG volumes whose liquefaction emissions have been captured.

• Carbon Capture Storage & Utilisation
  Galp is exploring a range of long-term pathways and options to mitigate, reduce and utilise CO2 beyond 2030. Although it is difficult, at this stage, to predict which technology or end-use the Company will prioritise, Galp is eager to transform this challenge into an opportunity. To this end, it is investigating storage options or ways to directly use CO2 in industries such as food and synthetic fuel production, particularly when paired with green hydrogen.
• Carbon offsets

Carbon offsets are not part of Galps shorter-term (2030) decarbonisation targets. They may, however, provide a useful tool for achieving Net Zero emissions by 2050 in line with globally recognised target setting standards.

Carbon offsets can also be important for our customers, who are increasingly concerned about their impact on climate and might therefore be interested in having Galp help them to offset the emissions from their fuel consumption until such time as they are replaced by viable low carbon intensity alternatives. To address these needs, Galp is implementing solutions that integrate offsets into its commercial offer. It is building capabilities and standards to manage carbon offsets and credits, from project development to trading, according to the best available recommendations to guarantee project quality and process reliability.

Commercial

Galp pioneered the supply of low-carbon fuels in Portugal in 2022 by providing SAF for aviation and HVO for maritime transport. In 2023, Galp took another important step towards decarbonising heavy road transport with the launch and commercialisation of "Gasóleo Renovável 100%"

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(renewable diesel). This is produced from residual feedstocks and can be used in combustion engines and diesel generators without the need for engine modifications. It allows a reduction of up to 90% of life cycle emissions compared to a fossil equivalent.

Galp also expanded its offer of sustainable products to lubricants with the Galp Bio Lubricants line, a suite of biodegradable, vegetable oil- based lubricants complying with a large spectrum of specifications, including Ecolabel. The advantages of biobased lubricants include high biodegradability, superior lubricity, good thermal properties, base stock renewability and an environmentally friendly nature.

• Galp Electric
  Galp Electric continued the accelerated growth of its public and private charging points network. These totalled more than 4,800 charging stations in Portugal and Spain, c. 25% of which are fast and ultra-fast charging stations. Sales of electricity for mobility increased to a total of 17 GWh and correspond to c. 13 ktons of avoided CO2 emissions compared to the same energy used on an ICE (internal combustion engine) vehicle, on a life-cycle basis.

EV powering at IKEA in Portugal

Galp partnered with IKEA to install c.280 charging points at IKEA stores around Portugal. This new infrastructure guarantees that 210 vehicles can charge a range of 100 kilometres simultaneously per hour in IKEA car parks. The Company continued to forge important collaborations that allow it to expand its public charging network and enable a reduction of emissions from partners.

• Galp decentralised solar solutions

Galp provides decentralised solar power production and storage solutions to B2B and B2C customers, in the residential, commercial, and industrial sectors using advanced technology to provide fit for purpose solutions and optimal results. In 2023, the Company added more than 6,000 installations in Portugal and Spain, surpassing a total of 10,000 installations in Iberia, with a total of c. 20 MW of solar panels. It also installed more than 700 batteries in its installations. This helps customers to improve self-sufficiency by combining power generation and storage as well as delivering extra yearly savings. The total electricity production from the c. 50 MW of equipment installed since 2020 is estimated to be c. 55.9 GWh and is thought to have avoided c. 5 kton CO2e during 2023, in comparison to the same amount of electricity purchased from the grid.

• Daloop
  Galp's innovative Software as a Service (SaaS) platform for managing ICE and EV fleets, charging infrastructure and their users continued growing. By 2023 it counted more than 2,700 vehicles and helped customers reduce costs while simultaneously avoiding c.1.5 kton CO2e emissions in comparison to normal, non-optimised operating conditions.

Renewables and New Businesses

Renewable electricity is a key driver of Galp's low-carbon energy growth. The Company started production in its first solar PV park in Portugal, at Alcoutim, and increased its installed capacity to 1.4 GWp in operation and generated c.2.3 TWh during 2023. This translates into c. 270 ktCO2e of avoided emissions compared to the production of an equivalent amount of electricity in the location where it was generated.

Aware of potential for generating offshore wind energy in Portugal, Galp explored opportunities for developing offshore wind capacity.

Integrated Management Report 2023

Index

Part II

1. 2. 3. 4. 5.

1. Our decarbonisation journey

Sustainability Journey