SSE is a leading generator of renewable electricity in the UK and Ireland and one of the largest electricity network companies in the UK. It is driven by a purpose to provide energy needed today while building a better world of energy for tomorrow. It develops, builds, operates, and invests in low-carbon electricity infrastructure in support of the transition to net zero, including onshore and offshore wind, hydro power, flexible thermal generation, electricity transmission and distribution networks, alongside providing energy products and services to customers. SSE's ambitions for the development of renewable energy now extend beyond the British Isles to carefully selected international markets, including Asia-Pacific, Europe, and North America.

UK-listed and headquartered in Perth, SSE is a major contributor to the economies in the UK and Ireland. It employs around 12,000 people and is real Living Wage and Fair Tax Mark accredited.

The Sustainability Report for the period 1 April 2022 to 31 March 2023 aims to provide enhanced disclosure of SSE policies, practice, and performance against is key economic, social, and environmental impacts and goals. On occasion the report refers to activities of joint ventures and in those instances, it is made clear this is the case.

Contents

Strategic introduction

Chief Executive's Statement

03

SSE's business model

04

An accelerated investment plan

05

The strategic hierarchy of sustainability within SSE

06

Ambition for 2030

07

Materiality review 2022/23: defining the issues that matter

08

Emerging trends

10

Driving better outcomes together

13

Enhanced climate action

A strategy to mitigate and adapt to climate change

17

Climate performance in 2022/23

18

SSE's performance against its Net zero Transition Plan

20

Directly impacting emission reductions

22

Influencing emissions reductions

25

Adapting to a climate changed world

27

The Net Zero Transition Report in summary

28

Providing affordable and clean energy

Delivering clean, affordable energy

32

Serving electricity distribution customers

34

Low-carbon solutions for energy customers

36

Investing in industry, innovation and infrastructure

Disciplined investment in the net zero transition

42

A central role for innovation

44

Stories in action

Throughout this report, SSE's sustainability policies, practice and performance are brought to life

through stories in action identified

with the following icons:

Right action.

Right now.

SSE plc Annual Report 2023

Engagement

Innovation

Partnering

Dilemma

in action

in action

in action

Alternative Performance Measures

SSE assesses the performance of the Group using a variety of performance measures. These

measures are not all defined under IFRS and are therefore termed 'non-GAAP' measures. A

reconciliation from these non-GAAP measures to the nearest prepared measure in accordance with

The SSE plc Sustainability Report 2023 is

IFRS is presented and described on pages 194 to 201 of SSE's Annual Report 2023. The Alternative

Performance Measures SSE uses might not be directly comparable with similarly titled measures

complemented by SSE's Annual Report 2023

used by other companies.

which can be found online at sse.com.

Directors' Statement on SSE plc's Selected Sustainability Data

definition of the entity's organisational boundaries, and applied

As the Directors of SSE plc "SSE" we confirm that we are solely

them consistently;

responsible for the preparation of SSE's selected sustainability data

•

presented information, including the reporting criteria, in a

including this Directors' Statement and for reporting the selected

manner that provides relevant, complete, reliable, unbiased/

sustainability data in accordance with the reporting criteria set out

neutral, comparable and understandable information;

on at sse.com/sustainability/policies-and-assurances.

•

reported the selected sustainability data in accordance with the

reporting criteria.

We confirm, to the best of our knowledge and belief, that we have:

•

designed, implemented and maintained internal controls and

processes over information relevant to the measurement,

Rachel McEwen

evaluation and preparation of selected sustainability data that is

Chief Sustainability Officer

free from material misstatement, whether due to fraud or error;

•

established objective reporting criteria for preparing and

For and on behalf of the Board of Directors of SSE plc

presenting the selected sustainability data, including clear

15 June 2023

Embedding sustainable supply chain practices

46

Increased renewables ambition and growth

49

A transmission network critical to net zero

52

Powering communities to net zero

54

A strategic role for flexible low-carbon thermal generation

56

Committed to decent work and economic growth

Powering a just transition

61

Sharing the benefits from net zero

62

Guaranteeing fair work

66

Investing in a workforce for net zero

67

Building an inclusive workforce

71

Valuing employee voice

74

Providing a safe and secure workplace

75

Protecting and restoring the natural environment

Effective environment strategy, management and governance

81

Understanding nature impacts and dependencies

82

Enhancing the natural environment

84

Responsible consumption and production

86

Governance report

Governance and accountability

90

Sustainability-linked Executive remuneration

92

Managing sustainability-related risks

93

Performance and disclosures

ESG ratings and indices performance

95

SASB Standards Disclosure

96

SSE plc Sustainability Report 2023

1

Strategic introduction

Year in summary

Absolute scope 1 and 2 GHG emissions (MtCO2e)

Scope 1 GHG intensity of electricity generated

Climate

254gCO2e/kWh

Action

6.2

6.5

Strategic introduction

Right action, taken in the right way

2021/22: 259gCO2e/kWh

7.6

2020/21

2021/22

2022/23

Renewable generation output (TWh)*

Networks customers on Priority Services Register

Providing

2021/22

768,104

Affordable

10.2

10.2

853,416

and Clean

9.5

770,844

Energy

2020/21

Providing energy is a purpose that SSE, and its predecessor organisations, has been fulfilling for 80 years. This year marks the anniversary of the 1943 Hydro Development Act, a pioneering piece of public policy that connected people in the North of Scotland to the electricity grid for the very first time. SSE's purpose today is to provide the energy needed in the UK, Ireland and, increasingly, elsewhere in the world but now with every tonne of damaging greenhouse emissions removed from the process.

Open and transparent disclosures This Sustainability Report complements a dedicated section within the SSE Annual Report 2023 and material social and environmental impacts are integrated throughout the Directors' and Financial Reports that are part of that document too. A single-issuereport on Inclusion and Diversity provides stakeholders with enhanced information about our I&D strategies and a Net Zero Transition Report digests all climate

2020/21

2021/22

2022/23

2022/23

Coupled with the urgent climate imperative, the energy security concerns raised by the Russian invasion of Ukraine makes an overwhelming

supply chain capacity. The increasing significance of these two issues is reflected within this report.

information for the benefit of climate- focused stakeholders, and is subject to an advisory vote at the Annual General Meeting in July.

Industry,

Adjusted investment and capital expenditure

Spent on research and innovation projects (£m)

case for the swiftest, most orderly, and just transition we can possibly achieve. With SSE's enhanced capital investment programme squarely focused on

Ten years of enhanced social impact SSE became a real Living Wage employer a decade ago, at a time when it was a fledgling movement. Now, one

SSE also provides regular, standalone disclosure reports through the year on biodiversity, the just transition, and many

Innovation and Infrastructure

Decent

Work and

Economic

Growth

£10.8m

£2.2bn

2021/22: £12m

2021/22

Contribution to UK and

SSE's UK median gender pay gap (%)

Irish GDP

2020/21

18.3

£6.04bn

2021/22

18.0

/€429m

15.3

2021/22: £5.82bn/€438m 2022/23

£2.8bn

2022/23

Total Recordable Injury Rate per 100,000 hours worked (employees and contractors)

0.14

0.17

0.19

2020/21

2021/22

2022/23

accelerating renewables, reinforcing networks and providing vital system flexibility, we are delivering the right action, right now.

Our strategy is tackling climate change, providing greater energy security and addressing concerns about affordability. But we are acutely aware that our actions need to be sustainable for nature and people. That is why, when taking the right action, right now, we strive to do it in the right way too.

Focusing on what matters

Any credible sustainability plan must be founded on a regular assessment of the organisation's most material social and environmental impacts. This year,

person in every nine working in the UK is covered by a commitment to the real Living Wage. I like to think SSE has played its part in normalising the notion that everyone who works deserves to earn an income that prevents them from being in poverty.

In recent years, we have focused on the principles of a just, or fair, transition to net zero. Experienced or perceived injustice as the economy undertakes its almighty transition to net zero, will be counterproductive. It will undermine the very case for climate action that so many are working towards. More simply, the case for a just transition supports our climate action.

others. This comprehensive approach to disclosure is driven by a belief that openness and transparency builds trust with stakeholders, and the process of scrutiny and accountability is a powerful agent for performance improvement too.

As with all of SSE's sustainability disclosures, feedback and further engagement is warmly welcomed. Please get in touch with sustainability@sse.com.

Alistair Phillips-Davies

Chief Executive

16 June 2023

Total water abstracted (exc. hydro generation) (million m3)

Proportion of SSE's waste

recycled

Environment

65%

779

2021/22

731

2022/23

2021/22: 59%

a comprehensive and independent assessment of a variety of sustainability issues was undertaken, concluding that SSE's focus on climate change, sustainable energy generation and reliable and affordable energy remain, as we would expect, our defining sustainability impacts. Interestingly,

a further two highly material issues were identified, on skills availability and

The skills and expertise of those working in declining high-carbon industries are valuable. Delivering SSE's investment plan will require the capability and commitment of many more than the 12,000 highly capable people who currently work for SSE, so our just transition plan deliberately seeks to attract people from the high-carbon sector to work with us.

2

SSE plc Sustainability Report 2023

*(inc. pumped storage, biomass and constrained off wind in GB)

SSE plc Sustainability Report 2023

3

Strategic introduction

SSE's business model

An accelerated investment plan

OU R P URPOSE

To provide energy needed today while building a better world of energy for tomorrow.

OU R S TRATEG Y

OUR VISION

To be a leading energy company in a net zero world.

SSE's enhanced investment plan, NZAP Plus, is a platform to maximise stakeholder value into the 2030s.

In May 2023, 18 months after its initial launch, SSE's Net Zero Acceleration Programme (NZAP) was revised to reflect the increased opportunities created as the world pursues net zero. The new 'NZAP Plus' includes investment of £18bn over the five years to 2027, compared to £12.5bn over the five years to 2026 through the original NZAP, and features revised growth targets to 2027 for SSE Renewables, SSEN Transmission and SSEN Distribution.

Balanced capital investment in upgraded, fully-funded plan...

Develop

Build

Operate

CO2

The Net Zero Acceleration Programme Plus

Invest

£18bn

Renewables

~40%

Energy Networks

~50%

Sharper focus on climate solutions Supporting SSE's 2030 Goals with around 90% expected to be invested in renewables and networks, the substantial majority of the NZAP Plus is focused on climate solutions that are aligned to a 1.5°C pathway and also aligned to the Technical Screening Criteria of the EU Taxonomy.

To create value for shareholders and society in a sustainable way by developing, building, operating and investing in the electricity infrastructure and businesses needed in the transition to net zero.

Renewables 40% Thermal and other 10%

Transmission 30% Distribution 20%

Medium-term targets

Long-term targets

O U R G OALS

SSE's 2030 Goals, aligned

Cut carbon intensity by

Enable low-carbon generation and

  • delivering accelerated growth at attractive returns out to 2027…
  • with 2030 Goals aligned to four UN SDGs …

See page 22 for SSE's progress against these

to the UN's SDGs, provide important milestones on the journey to net zero.

80%

Increase Renewable energy output fivefold

demand

Champion a fair and just energy transition

Renewables

Net capacity

>9GW

Pipeline

>15GW

Electricity networks

Total increase in Regulated Asset Value of SSEN Transmission and Distribution

~14%

  • enhanced 2032 growth targets in the NZAP Plus …

Net installed renewables capacity

>16GW

Net low-carbon flexible thermal

FY22

FY27

FY22

FY27

>9GW

£14-16bn

>2GW

OU R VALUES

Safety

Service

Efficiency

All of this is

If it's not safe

We are a company that

We focus on

we don't do it.

customers can rely on.

what matters.

underpinned by a set

of core values designed

Sustainability

Excellence

Teamwork

to guide decisions and

We do things

We continually

We work together,

to add

improve the way

respect each other

actions in SSE.

long-term value.

we do things.

and make a difference.

~4GW

£8.2bn

£12-14bn

Oshore wind

SSE ownership

Onshore wind

Minority interest

Hydro

Solar

Battery

Net networks RAV

>£20bn

Science-based carbon targets aligned to

1.5°C

  • and a Net Zero Transition Plan for net zero emissions on scopes 1 and 2 by 2040, and scope 3 by 2050 at the latest.

4

SSE plc Sustainability Report 2023

SSE plc Sustainability Report 2023

5

Strategic introduction

The strategic hierarchy of sustainability within SSE

SSE's purpose is to provide the energy that people need today whilst ensuring a better world of energy is built for tomorrow. The essential nature of its business activities mean it has a multitude of sustainability impacts. While the breadth and depth of SSE's economic, social and environmental impact is extensive and complex, a strategic hierarchy of sustainability provides simplicity and clarity.

Strategy driver '...creating value for shareholders and society...'

Framework to share value: aligned to UN's Sustainable Development Goals (SDGs)

SSE's 2030 Goals

Four core business goals linked to highly material SDGs

Ambition for 2030

SSE's 2030 Goals are four core business goals focused on addressing the challenge of climate change in a just and fair way.

Business goals with societal benefit

Aligned to the UN Sustainable Development Goals (SDGs) most material to SSE's business activities, the 2030 Goals place sustainability firmly at the heart of SSE's business strategy. They provide a framework for the Company as it works towards its net zero ambitions, ensuring that as it does, it creates and shares value with its stakeholders along the way.

In 2022, SSE undertook a sustainability materiality assessment, supported by a third-party professional services firm, the results which reinforced the highly material nature of the 2030 Goals and the core issues they are focused on. For more information on the results of the materiality assessment, see pages 8 and 9.

Since 2019, SSE has aligned its business strategy to the UN's Sustainable Development Goals (SDGs), which provide the framework to guide the creation of shared value. Within this framework SSE has identified four SDGs which are highly material to the business, and to which it has linked its four core 2030 Goals.

Cut carbon

Increase renewable

intensity by 80%

energy output fivefold

SSE's 2030 Goals

Cut carbon

Increase renewable

Enable low-carbon

Champion a fair and

intensity by 80%

energy output fivefold

generation and demand

just energy transition

Enable low-carbon

Champion a fair and

generation and demand

just energy transition

Reduce Scope 1 carbon intensity by 80% by 2030, compared to 2017/18 levels to 61gCO2e/kWh

Build a renewable energy portfolio that generates at least 50TWh of renewable electricity a year by 2030.

Enable at least 20GW of renewable generation and facilitate around 2 million EVs and 1 million heat pumps on SSEN's electricity networks by 2030.

Be a global leader for the just transition to net zero, with a guarantee of fair work and commitment to paying fair tax and sharing economic value.

SSE's Environment Strategy

Linked to three further material SDGs

Resource used

Environmental management

Tracking progress against SSE's 2030 Goals

With updated 2030 Goals in early 2022 reflecting an accelerated decarbonisation pathway, financial year 2022/23 was marked as a year of delivery. Progress against each of its four 2030 Goals

is set out in detail at the start of the corresponding chapters of this report.

Accountability for progress

Reinforcing SSE's commitment to the achievement of its 2030 Goals, they have been used as a framework since 2019 to assess performance, which was linked to the performance based Annual Incentive Plan for Executive Directors until 2021/22. The updated Directors' Remuneration Policy, approved by shareholders at the

2022 AGM, has seen performance against these Goals now linked to the longer-term Performance Share Plan, which will vest for the first time in 2025. This is in recognition of the longer-term nature of SSE's sustainability ambitions. More information on sustainability incentives linked to Executive remuneration can be found on page 92 of this report.

6

SSE plc Sustainability Report 2023

SSE plc Sustainability Report 2023

7

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

SSE plc published this content on 15 June 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 June 2023 12:09:01 UTC.