Responsible sourcing is a key aspect of our commitment to delivering clean, reliable, and affordable energy. Throughout the product lifecycle – from design to material sourcing, construction, and waste management – we diligently evaluate and manage all impacts, opportunities, and challenges. We focus on achieving sustainability by promoting circularity,
optimizing resource management, and enhancing overall efficiency.

We also prioritize suppliers and business partners who adhere to our comprehensive code of conduct and comply with ethical standards. We leverage procurement decisions to drive positive ESG improvements and ensure compliance with
human rights, fair labor practices, environmental protection, and anti-corruption policies throughout our supply chain.

During the early stages of our project development, we identify and assess all potential ESG risks, including impacts on biodiversity or the local community. As an example, with the help of experts, we evaluate the noise and shadow flicker
impacts of potential wind developments to ensure turbine layouts are suitable and effective and all necessary mitigations are in place.

Our selection criteria for newly developed projects include looking for sites that have low agricultural viability and are not located in protected or sensitive areas. Our Business Development teams also spend significant time with relevant stakeholders to ensure we understand all their requirements and concerns during the project’s development, construction, and operation.

Our M&A processes for newly acquired projects include vigorous ESG due diligence, where we assess past impacts and potential risks and plan effective mitigation strategies. Our M&A teams also conduct detailed assessments for all projects of interest and hold ESG discussions with relevant stakeholders.

The planning phase of our projects covers both development and acquisition. It plays a vital role in our ESG management, as even minor factors during the early stages can have significant impacts throughout a project’s lifecycle. Therefore, we use this phase to identify best-practice solutions, areas for improvement, and appropriate
control measures to ensure positive ESG outcomes.

Our engineering, procurement, and construction (EPC) team seeks to join the development process in the initial stages of each project before the ready-to-build (RTB) stage. Its involvement ensures the final project design utilizes circular
economy principles and avoids or minimizes adverse environmental and social impacts. These can include land-use conflicts, loss of access to natural resources, health and safety risks, clearing of natural habitats and vegetation, habitat fragmentation, noise, and biodiversity loss.

While integrating newly acquired projects, we aim to improve the working environment, cease any harmful vegetation control practices, and ensure that pollinator-friendly vegetation is maintained or planted. For example, since we acquired Karadzhalovo, we have built a new office for site personnel, initiated biodiversity monitoring, planted bee gardens, and opened the site for local beekeepers and shepherds. In addition, our business partners’ code of conduct and overall
compliance processes ensure professional and transparent project implementation and avoid unethical practices across the value chain.

The project management phase is where we have the greatest control and influence over ESG impacts. We prioritize the health, safety, and well-being of our employees, contractors, and partners by improving working conditions and providing equal opportunities for growth and development.
We also positively impact communities and the environment by investing in social and biodiversity projects that deliver long-term benefits to their surrounding regions. Detailed information about ESG projects we invested in throughout 2022 is available in the Responsible corporate citizen section of this report.

Our commitment to excellence also extends beyond our operations to encompass the entire supply chain. We take great care in selecting our suppliers and contractors, ensuring their practices and values align with our commitments to human rights, labor, health and safety, anti-corruption, and environmental sustainability.

At the end of 2022, we owned and operated 56 multi-technology renewable energy plants. As part of our growth strategy, and keeping with our aim to diversify our portfolio and enhance energy security for our customers and society, we aim to maintain a 100% renewable-powered fleet.

To support the green energy transition and increase the share of renewables across Central Europe, we carefully select and implement the most advanced technical solutions throughout the lifecycle of each project. These include our initial
equipment and material selections, operations and maintenance, and waste management and disposal, embracing the waste hierarchy principles of avoidance, minimization, reuse, and recycling.

We continuously work to improve plant energy yields and use natural resources more efficiently. Additionally, as part of our long-term business goals, we are refining and improving our Purchase Power Agreement (PPA) structures to become the preferred supplier of large industrial customers in Central Europe. In 2022, together with our partner Energie Steiermark, we signed our first PPA in Austria. The energy generated from the Gleinz project will help the Lenzing group decarbonize its energy consumption over the next 20 years.

We are also diversifying our asset portfolio by expanding wind production and adding battery storage capacity. These measures help us deliver maximum value to our customers, society, and the environment.