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                                                                                                       A CLEAN ENERGY
                                                                                                       POWERING THE
                                                                                                       TRANSITION TO

                                                                                                                             ESB RESPONSIBLE BUSINESS
                                                                                                                             REPORT 2019
2   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                    ESB Sustainability Report 2019   3

                                                                                                                                      ESB'S CARBON INTENSITY
                                                                                       POWERING THE
                                                                                       TRANSITION TO A CLEAN                                              INTENSITY g/kWh

                                                                                       ENERGY FUTURE                                800

                                                                                       ESB is committed to leading the              700
                                                                                       transition to a reliable, affordable, low-   600   670g/C02kWh
                                                                                       carbon energy future. This is a future       500
                                                                                       powered by clean, sustainable electricity.                                 2019
                                                                                                                                    400                           406g/C02kWh
                                                                                       We are investing and innovating right
                                                                                       across our business to make this future a
                                                                                                                                                                                              2030 Target
                                                                                       reality.                                     200

                                                                                                                                      2005         2010    2015          2020          2025          2030

               ABOUT ESB
               ESB was established in 1927 as a statutory
               body under the Electricity (Supply) Act 1927.
               With a holding of 95.7%, ESB is majority owned
               by the Irish Government. The remaining 4.3%
               is held by the trustees of an Employee Share
               Ownership Plan. As a strong, diversified,
               vertically integrated utility, ESB operates
               across the electricity market, from generation
               through transmission and distribution, to
               supply of customers, with an expanding
               presence in Great Britain’s generation and
               supply markets. In addition, we extract further
               value at certain points along this chain by
               supplying gas and using our networks to carry
               fibre for telecommunications. ESB is a leading
               Irish utility with a regulated asset base (RAB)
               of approximately €10 billion (comprising ESB
               Networks €8.1 billion and NIE Networks €1.9
               billion), a 30% share of generation in the all-
               island market and a significant supply business
               supplying electricity and gas to approximately
               1.5 million customers throughout the island of
               Ireland and Great Britain. ESB will continue
               to grow the scale of its generation, trading
               and supply businesses so that it can continue
               to compete within the all-island competitive
               environment. ESB is focused on providing
               excellent customer service and maintaining its
               financial strength. As at 31 December 2019, ESB
               Group employed over 7,900 people.
4   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                                      ESB Sustainability Report 2019   5

                                                                                                                     ABOUT THIS REPORT
    CONTENTS                                                                                                         ESB’s purpose is to lead the transition to a reliable,
                                                                                                                     affordable, low-carbon energy future. This report
                                                                                                                                                                                           ESB'S FIRST IRISH OFFSHORE WIND FARMS                                                   01

                                                                                                                                                                                                                                                                                   BUSINESS OVERVIEW
                                                                                                                     explains ESB’s strategy and environment and
                                                                                                                     sustainability ambition in service to that purpose.
                                                                                                                     It also accounts for ESB’s environmental and
                                                                                                                     sustainability performance for the past year. It’s
                                                                                                                     intended audience is customers, investors, analysts,
                                        CHAPTER 1                                                                    policy makers, the public and other stakeholders,
                                        STRATEGY AND PERFORMANCE
                                        BUSINESS OVERVIEW                                                            internal and external to ESB Group and it is focused
                                        Welcome from Chief Executive                                1.1              on the sustainability issues of greatest concern to
                                        ESB at a Glance                                             1.2              these stakeholders.
                                        Highlights                                                  1.3
                                        Business Model                                              1.4              Our reporting is guided by the principles of
                                        Strategy and Progress                                       1.5              materiality, inclusiveness and responsiveness.
                                        Governance                                                  1.6              We use leading standards and methodologies for                                                                                                                02
                                        Materiality Approach                                        1.7                                                                                        Joint venture with Parkwind to develop wind farms at Oriel &
                                                                                                                     reporting, such as the Greenhouse Gas Protocol,

                                                                                                                                                                                                                                                                                   ECONOMIC PERFORMANCE
                                        Stakeholder Engagement                                      1.8                                                                                        Clogherhead
                                                                                                                     CDP and the Global Reporting Initiative (GRI).
                                        Associations and External Initiatives                       1.9              This report has been prepared in accordance with
                                                                                                                     the GRI Standards Core option and has been
                                        CHAPTER 2                                                                    independently assessed by DNV GL against this
                                        ECONOMIC PERFORMANCE                                                         option. A guide linking the disclosures in the report
                                        Introduction                                                2.1              to the relevant GRI indicators is presented in the
                                        Investing for the Future                                    2.2              report appendices.
                                        Indirect Economic Impacts                                   2.3
                                        Pension Obligations                                         2.4
                                        Procurement Practices                                       2.5
                                                                                                                     SCOPE OF REPORT
                                                                                                                     This report covers the fiscal and calendar year
                                        CHAPTER 3                                                                    2019. This report pertains to the full activities of
                                                                                                                     ESB and its subsidiary companies, including NIE                                                                                                               03
                                        SOCIAL DISCLOSURES PERFORMANCE
                                        Occupational Health and Safety                              3.1              Networks, hereinafter referred to as ESB Group. It

                                                                                                                                                                                                                                                                               SOCIAL DISCLOSURES
                                        Public Safety                                               3.2              has been prepared in accordance with GRI global

                                        ESB People and Organisational Development                   3.3              standards for sustainability reporting, as well as the
                                        Community Engagement and CSR                                3.4              GRI Electric Utilities Sector Supplement. The report
                                        Customer Privacy                                            3.5              content is based on the output from a materiality
                                        Risk Management                                             3.6              process, including both operational and strategic
                                                                                                                     engagements with internal and external stakeholders.
                                        CHAPTER 4                                                                    The 2019 Sustainability Report meets our
                                        ENVIRONMENTAL TOPICS
                                                                                                                     commitment to report annually on our Sustainability                     Jim Dollard, Executive Director Generation and Trading (GT); Kate
                                        Energy Management                                           4.1
                                        Biodiversity                                                4.2
                                                                                                                     performance. Where scope boundaries pertain to                          Tuohy, GT Asset Development; Pat O’Doherty, ESB Chief Executive;
                                        Emissions                                                   4.3              specific material aspects of the business, these                        Richard Bruton, Minister for Communications, Climate Action and
                                        Effluents and Waste                                         4.4              are detailed in the specific sections of the report.                    Environment; Eric Antoons – Co-CEO Parkwind; Francois Van Leeuw,                      04
                                        Environmental Management                                    4.5              Readers of this report may also view the ESB Group                      Co-CEO Parkwind and Paul Lennon – GT Asset Development.

                                                                                                                                                                                                                                                                                   ENVIRONMENTAL TOPICS
                                        Water                                                       4.6              Annual Report 2019 https://www.esb.ie/investor-
                                        Energy Utility Sector Specific Disclosures                  4.7              relations/result-presentations-investor-updates .
                                                                                                                     Together these reports present a coherent picture
                                                                                                                     of ESB’s activities and explain how sustainability is
                                        CHAPTER 5                                                                    central to our corporate strategy. Accordingly ESB
                                        APPENDICES                                                                   Group is embedding environmental stewardship
                                        Independent GRI Standards Option Check                      5.1              and sustainability throughout our business. The
                                        ESB Green Bond 2019: Allocation and Impact Report 2019/20   5.2
                                                                                                                     alignment of our activities with the UN Sustainable
                                        GRI Standards Cross Referencing Table                       5.3
                                                                                                                     Development Goals is highlighted where relevant
                                        Glossary of Terms                                           5.4
                                                                                                                     throughout the report.


                                                                                                                          We welcome requests, comments and enquiries relating to this report
                                                                                                                          and to sustainability. Please email our mailbox: sustainability@esb.ie or our
                                                                                                                          Sustainability Coordinator: brian.gray@esb.ie
                                                                                                                          Twitter: @ESBGroup
                                                                                                                          LinkedIn: www.linkedin.com/company/esb
                                                                                                                          YouTube: www.youtube.com/user/ESBVideo
1.1 Chief Executive’s Review
1.2 Highlights
1.3 ESB at a Glance
1.4 Business Model
1.5 Strategy and Progress
1.6 Governance
1.7 Materiality Approach
1.8 Stakeholder Engagement
1.9 Associations and External Initiatives
8   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                                                                                       ESB Sustainability Report 2019    9

1.1 CHIEF EXECUTIVE’S REVIEW                                                                                                                                                                                                                                                                                                         01

                                                                                                                                                                                                                                                                                                                                     BUSINESS OVERVIEW
                                                                                                                                                                    required to meet future customer needs and                                                              invested €1,242 million including €340

                                                                                                         in the Oriel project off the coast of Dundalk
                                                                                                         with our partners in Parkwind and we are
                                                                                                                                                                    inform future network planning and investment
                                                                                                                                                                    decisions. During the year, ESB Networks
                                                                                                                                                                    made its submission on Price Review 5
                                                                                                                                                                                                                                   How successful has ESB
                                                                                                                                                                                                                                   been in keeping up with
                                                                                                                                                                                                                                          customer expectation
                                                                                                                                                                                                                                                                            million in renewables as we continue to lead
                                                                                                                                                                                                                                                                            the transition to low-carbon generation. The
                                                                                                                                                                                                                                                                            dividend for 2019 amounted to €88 million,
                                                                                                         developing further onshore projects in the                 to the Regulator which includes                                by  leveraging     the potential of      bringing the total dividends paid over the
                                                                                                         Republic of Ireland (ROI) at Clogherhead,                  provision to support the delivery                                  new    technologies?                 past decade to over €1.2 billion.
                                                                                                         and Kilmichael Point - all of which build on               of the Irish Government's               Networks made its             ESB collaborates with
                                                                                                         our investment in the Galloper
                                                                                                         offshore wind farm (UK)
                                                                                                                                                                    Climate Action Plan.                   submission on Price
                                                                                                                                                                                                        Review 5 to the Regulator
                                                                                                                                                                                                                                            industry, academia and
                                                                                                                                                                                                                                             start-ups to identify and      Q     Is ESB investing in talent as
                                                                                                                                                                                                                                                                                  well as in technology?
                                                                                                         in 2018. We also
                                                                                                         invested significantly
                                                                                                         in onshore wind farms
                                                                                                                                                                    Q      How is ESB
                                                                                                                                                                           adapting its
                                                                                                                                                                    customer offering in
                                                                                                                                                                                                         which includes provision
                                                                                                                                                                                                        to support the delivery of
                                                                                                                                                                                                          the Irish Government's
                                                                                                                                                                                                                                             deploy new technologies to
                                                                                                                                                                                                                                             improve efficiency and meet
                                                                                                                                                                                                                                            customers' needs. During
                                                                                                                                                                                                                                                                            We recognise that a high-performance
                                                                                                                                                                                                                                                                            culture requires an engaged and agile
                                                                                                                                                                                                                                                                            workforce and a supportive work                          02
                                                                                                         in ROI at Oweninny            launched Ireland’s           response to changing                   Climate Action Plan.           the year, we embarked on          environment that values diversity and

                                                                                                                                                                                                                                                                                                                                     ECONOMIC PERFORMANCE
                                                                                                         in Mayo, which we               first corporate            energy needs?                                                      pilot projects with five finalists   inclusion. This year, we recruited 77
                                                                                                         completed in 2019,                Green Bond               Customers will play a critical role in                        from Free Electrons, an accelerator       graduates and 86 apprentices across a
                                                                                                         and in Grousemount                                         the electricity system of the future and we            programme co-founded by ESB with other           range of disciplines and backgrounds, and
                                                                                                         in Co.Kerry, which will                                    have therefore implemented new structures to           energy companies, which targets start-ups        provided extensive training and development
                                                                                                         be completed by the start of Q2                            support customer-centric product development           operating in the energy sector. We are also      opportunities for our existing employees.
                                                                                                         2020.                                                      for both business and residential markets.             incubating new commercial propositions in        We also developed new volunteering
                                                                             Pat O’Doherty                                                                          During the year, we continued to build our             our offsite Innovation Hub, where we fast        opportunities for our employees through
                 If we can aid                                               Chief Executive
            the electrification of                                                                         In 2019 we announced the closure, by                     portfolio and pipeline of products and services        track new ideas in a start-up environment.       our Generation Tomorrow sponsorship
           heat and transport , and                                                                        the end of 2020, of our two remaining                    to help customers manage their energy use                                                               programme, which empowers young people
          remove carbon from the
       production of electricity, then
        electricity becomes a hugely
                                                     Pat O’Doherty discusses progress
                                                     against the Brighter Future Strategy
                                                                                                           peat-fired power stations, which will
                                                                                                           further reduce our carbon emissions. Over
                                                                                                           seven decades, peat has been part of
                                                                                                                                                                    more efficiently and reduce their carbon
                                                                                                                                                                    footprint. These included new green tariffs, a
                                                                                                                                                                    home charging installation service and home
                                                                                                                                                                                                                                   What progress is ESB making
                                                                                                                                                                                                                                   in addressing environmental
                                                                                                                                                                                                                                  safety    concerns raised
                                                                                                                                                                                                                                                                            through STEAM (Science, Technology,
                                                                                                                                                                                                                                                                            Engineering, Arts and Mathematics)
                                                                                                                                                                                                                                                                            education and learning.
                                                     in 2019 and looks forward to the year
          transformative force, the                                                                        our generation fuel mix and its cessation                retrofit supports. The new Brighter Together           during     the  year    regarding legacy

                                                                                                                                                                                                                                                                                                                                 SOCIAL DISCLOSURES
          catalyst for a low carbon                  ahead.
                                                                                                           has significant implications for local                   advertising campaign to promote this suite of          infrastructure?
                                                                                                                                                                                                                                                                            Q     What are the major challenges

                                                                                                           communities. Also, during the year, we                   products went live in December. With €10               ESB has an ongoing programme of                        facing ESB in the year ahead?

                                                     Q      What progress have you
                                                            made during the year?
                                                                                                             reconfigured the operation of Moneypoint
                                                                                                                    coal station in order to secure its
                                                                                                                                                                    million support from the Government Climate
                                                                                                                                                                    Action Fund, our eCars division began a €20
                                                                                                                                                                                                                           maintenance and investment to ensure
                                                                                                                                                                                                                           that its legacy infrastructure meets
                                                                                                                                                                                                                                                                            The increasing need for climate action
                                                                                                                                                                                                                                                                            presents new opportunities for ESB to build

Q   What were the biggest
    developments affecting ESB in
                                                      ESB’s new organisational
                                                      structure has focused on
                                                                                                    Each of
                                                                                                our business
                                                                                                                       commercial viability in the short
                                                                                                                          term in the context of reduced
                                                                                                                                                                    million upgrade of the national electric vehicle
                                                                                                                                                                    (EV) charging infrastructure. In Great Britain
                                                                                                                                                                                                                           applicable safety and environmental
                                                                                                                                                                                                                           standards. We have invested significantly
                                                                                                                                                                                                                                                                            on its core areas of expertise in the areas
                                                                                                                                                                                                                                                                            of renewable generation, smart networks,
                                                      driving transformational              units has a unique             running due to the impact of             (GB), we opened a new office in Manchester to          in the replacement of switch gear and            electric heating, transport and innovative
2019 was a watershed year for energy and              change across every area of          but interrelated role           increasing renewables and                serve our growing customer base there and we           fluid-filled cables in recent years and          customer offerings. However, it also
climate change, particularly in Ireland where         our business during 2019.             in making this [the            carbon pricing. In line with             completed the roll-out of electric vehicle (EV)        although considerable progress has been          presents challenges in terms of managing
government policy and public sentiment                We successfully launched               transition to low-            Government policy, we will               infrastructure for the London Taxi Fleet. Our          made, we recognise the need for further          legacy infrastructure, securing community
combined to significantly accelerate the pace         Ireland’s first corporate               carbon] a reality.          not generate electricity from             Smart Energy Services business consolidated            improvement. This will be a central part         support for new infrastructure and engaging

                                                                                                                                                                                                                                                                                                                                     ENVIRONMENTAL TOPICS
and urgency of the transition to a low-carbon         Green Bond, and have                                             coal beyond 2025.                            its position as a leading energy services              of our 2020 transformation programme.            citizens to ensure the electricity system is
energy system. It is widely accepted at a             invested significantly in low-carbon                                                                          provider to businesses securing a contract to          Safety and environmental responsibility are      built around the future low-carbon energy
policy level that electricity will play a critical
role in the low-carbon energy system of the
future. This has big implications for all parts of
                                                      technologies and solutions, including new
                                                      low-carbon and renewable generation, smarter,
                                                      more resilient networks, and new products and
                                                                                                         Q meet
                                                                                                                 What is ESB doing to prepare
                                                                                                                 the electricity networks to
                                                                                                                   future customer needs?
                                                                                                                                                                    design and deliver heat pump and combined
                                                                                                                                                                    heat and power (CHP) installations for what will
                                                                                                                                                                    be the largest and most sustainable commercial
                                                                                                                                                                                                                           priorities at every level of the organisation
                                                                                                                                                                                                                           and we continue to encourage an
                                                                                                                                                                                                                           open reporting culture to identify and
                                                                                                                                                                                                                                                                            needs of all our customers, while at the
                                                                                                                                                                                                                                                                            same time ensuring that ESB has the people
                                                                                                                                                                                                                                                                            and financial capability to deliver our own
ESB, by way of both challenge                         services to support our customers.                   We continue to invest and innovate                       greenhouses in GB.                                     appropriately address issues as they arise.      growth ambitions. While challenging, the
and opportunity.                                                                                           in our ROI and Northern Ireland (NI)                                                                                                                             transformation of the energy sector that is

Q     How has this impacted the
      delivery of ESB’s strategy?
                                                            How is ESB managing the
                                                            transition away from coal and
                                                                                                           networks businesses to increase the level
                                                                                                           of automation and resilience, to meet
                                                                                                           growing demand and to facilitate significant
                                                                                                                                                                    ESB Networks continued to improve
                                                                                                                                                                    digital services for customers,
                                                                                                                                                                    and commenced the roll-out of
                                                                                                                                                                                                                “Safety                   QHow was
                                                                                                                                                                                                                                           ESB’s financial
                                                                                                                                                                                                                                        performance      in 2019?
                                                                                                                                                                                                                                                                            happening before our very eyes is exciting
                                                                                                                                                                                                                                                                            and I believe that ESB is in a strong position
                                                                                                                                                                                                                                                                            to take advantage of the many opportunities
Our strategy is fully aligned with emerging           In 2019, we continued to increase volumes            increases in customers' own distributed                  the National Smart Metering                                           Following a challenging           that lie ahead.
                                                                                                                                                                                                            environmental                                                                                                            05
policies around low-carbon energy and                 of electricity generated from low-carbon             energy assets. ESB                                       programme which will see over                                           couple of years, ESB
is anchored to our purpose of creating                and renewable sources, while reducing our            Networks is working with                                 2 million meters upgraded
                                                                                                                                                                                                          responsibility are                 achieved an improved

a brighter future for the customers and               dependence on high carbon thermal plant. New         three communities                         ESB            over a multi-year programme       priorities at every level of financial performance
communities we serve by leading the                   partnerships with Coillte, Parkwind, EDF and         – Limerick, Dingle
                                                                                                                                         Networks      is working   to smart digital technology,       the organisation and we               in 2019 with EBITDA
transition to reliable, affordable, low-carbon        Equinor will enable us to significantly increase     and the Aran
                                                                                                                                       with   three   communities   paving the way for all suppliers    continue to encourage               of €1,372 million and           Pat O’Doherty, Chief Executive
                                                                                                                                      – Limerick, Dingle and the
energy. This presents a great growth                  our onshore and offshore wind portfolio to grow      Islands – to pilot                                       to develop new products               an open reporting               Operating Profit before           27 February 2020
                                                                                                                                       Aran Islands – to pilot ….
opportunity for the electricity sector while          earnings from renewables while also meeting          new network
                                                                                                                                       the network required to
                                                                                                                                                                    and services that will enable               culture                 exceptional items of €682
also playing a key role in addressing climate         carbon reduction targets. We are building a          and customer                                             customers to take more control of                               million. We are focused
                                                                                                                                        meet future customer
change. Each of our business units has a              portfolio of assets in the offshore wind sector.     technologies with a                                      their energy use.                                         on maintaining ESB's financial
unique but interrelated role in making this a         In 2019, we acquired a 50% stake in Neart na         view to gaining valuable                                                                                   strength to ensure we can deliver on our
reality.                                              Gaoithe in the North Sea. We acquired a stake        insights into the network                                                                                  Brighter Future strategy. During 2019 ESB
10   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                  ESB Sust
                                                                                                                                                                                                           Sustaainab ility Report 2019
                                                                                                                                                                                                                 inabil                   11

1.2 ESB AT A GLANCE                                                                                                                       1.3 HIGHLIGHTS                                                                                           01

                                                                                                                                                                                                                                                   BUSINESS OVERVIEW
                                                                                                                                              ENVIRONMENT                CUSTOMERS                 IRISH ECONOMY


                                                                                                                                                                                                                                                   ECONOMIC PERFORMANCE
                                                                                                                                                CO2 INTENSITY
                                                                                                                                                406GCO2/kWh -       ENDURING SAVINGS OF UP TO
                                                                                                                                            REDUCTION IN CARBON      8.5% FOR RESIDENTIAL ROI
                                                                                                                                             INTENSITY: 39% SINCE          CUSTOMERS                  OVER €1 BILLION
                                                                                                                                                BASELINE 2005                                         INVESTMENT IN
                                                                                                                                                                                      METERS       OVER €2
                                                                              NORTHERN                                                                                                             MILLION
                           GENERATION                                                                                                                                               INSTALLED
                                                                              IRELAND                                                                                                            DISBURSED                                         03
 BUSINESS                              ESB                                                         CUSTOMER           OTHER
                           AND TRADING                                        ELECTRICITY                                                                                                         ACROSS A
 SEGMENT                               NETWORKS                                                    SOLUTIONS          SEGMENTS

                                                                                                                                                                                                                                               SOCIAL DISCLOSURES
                           (GT)                                               NETWORKS                                                                                                            RANGE OF

                                                                              (NIE NETWORKS)                                                                                                    COMMUNITY
                                                                                                                       INNOVATION AND
                               ELECTRICITY                  ELECTRICITY TRANSMISSION                 ELECTRICITY
 DESCRIPTION                                                                                                          INTERNAL SERVICE
                               GENERATION                       AND DISTRIBUTION                       SUPPLY

                                                                                                                                                                        OVER 34,000 NEW
                                                                                                                                                                     CUSTOMER CONNECTIONS
 REVENUE                   €€1,518m €1,156m                                       €303m             €2,069m              €326m                      2.5TWh
                                                                                                                                                 RENEWABLES                                                                                        04
                                                                                                                                                  GENERATED            STAKEHOLDERS

                                                                                                                                                                                                                                                   ENVIRONMENTAL TOPICS
 EXPENDITURE**                 €198m                     €344m                      €61m              €59m                €20m

                                                                                                                           ROI, NI,
 REGIONS OF                                                                                            ROI, NI,
 OPERATIONS                                                                             NI
                                ROI, NI, GB                   ROI
                                                                                                                       EU, MIDDLE EAST,
                                                                                                                                                                                                  OVER 7,900 EMPLOYEES
                                                                                                                         ASIA, AFRICA
                              10 THERMAL
                                                         88 DEPOTS,
                           STATIONS, 8 HYDRO                                                                           41 OFFICES AND
                                                           YARDS,              15 DEPOTS, YARDS,      5 OFFICE
                              AND PUMPED
                                                        STORES AND                STORES AND        LOCATIONS IN
                                                                                                                       STORES ACROSS
                                                                                                                        ROI, NI, GB AND
                                                                                                                                                                          €500 MILLION
                              STATIONS, 24
                                                          VEHICLE                   OFFICES         ROI, NI AND GB
                                                                                                                      INTERNATIONALLY                                    IRELAND'S FIRST                                                           05
                              WINDFARMS                                                                                                                                CORPORATE PUBLIC

                                                                                                                                                                       GREEN BOND RAISED
 NUMBERS                           914                     3,490                    1,208               551               1,811
                             DEVELOPING A
                                  LOW                                                                 BRINGING
                                                                                                                        LEADING EDGE
                                CARBON                       BUILDING SMARTER MORE                 SUSTAINABLE AND
                                                                                                                      ENERGY SOLUTIONS         78MW NEW WIND                                      JUST UNDER €2 BILLION
                                                           RESILIENT NETWORKS. PUTTING
                                                           THE CUSTOMER IN CONTROL OF
                                                                                                                             TO               FARMS CONNECTED                                     CONTRIBUTION TO IRISH
                                                                                                                           ALL OUR
                            CLEANER POWER                 THEIR ENERGY. FACILITATING THE           SOLUTIONS TO ALL
                                 USING                     CONNECTION OF RENEWABLES.                     OUR
                                                                                                                       INNOVATING FOR
                             SUSTAINABLE                                                             CUSTOMERS
                                                                                                                         THE FUTURE
12   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                  ESB Sustainability Report 2019   13

Our Purpose is to 'Create a Brighter Future for the customers and communities we serve,
by leading the transition to reliable, affordable, low-carbon energy.'

 CAPITAL INPUTS                                                                                                                  SUPPLY                                                       OUTPUT
 Manufactured Capital                                                GENERATE                          TRANSMIT
 • 5,520 MW of generation capacity                                                                                               Supplying electricity,                                       Customers
 • Over 229,000 km of Network across                                 ESB develops, operates and        ESB builds, manages       gas and energy                                               • Customer satisfaction 84%
   ROI and NI                                                        trades the output of ESB’s        and maintains the         services to customers                                        • 34% market share
                                                                     electricity generation assets.    transmission and          in ROI, NI and GB.                                           • Enduring residential customer
 Financial Capital                                                   The portfolio consists of 5,520   distribution network                                                                     savings of up to 8.5%
 • A-credit rating                                                   MW of thermal and renewable       in ROI and NI – over                                                                   • 30% generation market share
 • Total net assets €3.9 billion                                     generation assets across ROI,     229,000 km of
 • Liquidity of €1.5 billion                                         NI and GB and a further 338       Network.                                                                               Shareholders
                                                                     MW under construction                                                                                                    • Dividend of €1.2 billion over the
 Intellectual Capital                                                                                                                                                                           last decade
 • Promotion of innovation                                                                                                                                                                    • Return on capital employed
 • Corporate governance Structure                                                                                                                                                               5.9%
                                                                                                                                                                                              • €1.4 billion EBITDA
 Human Capital
 • 7,974 employees                                                                                                                                                                            Irish Economy
 • Employee development programmes                                                                                                                                                            • Invested €1 billion
 • Safety transformation programme                                                                                                                                                            • Contributes €1.8 billion to the
                                                                                                                                                                                                 Irish economy
 Social and Responsible Capital                                                                                                                                                               • Over €2 million disbursed over
 • Over 1.5 million customers                                                                                                                                                                    a range of community based
 Natural Capital
 • 884 MW of renewable generation

          WE'RE                                   WE'RE                                 WE'RE           WE'RE                  PUT CUSTOMERS’         PRODUCE, CONNECT     DEVELOP ENERGY               GROW THE                   DELIVER A HIGH-
       COURAGEOUS                                 CARING                                DRIVEN         TRUSTED                  CURRENT AND                AND DELIVER     SERVICES TO MEET          BUSINESS WHILE            PERFORMANCE CULTURE
                                                                                                                              FUTURE NEEDS AT              CLEAN, SECURE   EVOLVING MARKET             MAINTAINING                 THAT SUPPORTS
                                                                                                                              THE CENTRE OF ALL           AND AFFORDABLE        NEEDS                ESB’S FINANCIAL               INNOVATION AND
                                                                                                                               OUR ACTIVITIES                 ENERGY                                    STRENGTH                   COLLABORATION
14    ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                                                                                                   ESB Sustainability Report 2019        15

1.5 STRATEGY AND PROGRESS                                                                                                                                                                                                                                                                                                                               01

                                                                                                                                                                                                                                                                                                                                                        BUSINESS OVERVIEW
ESB’s Brighter Future Strategy puts sustainability at the heart of our strategic objectives and our purpose as an organisation. With the ambition to 'Create a Brighter
Future for the customers and communities we serve, by leading the transition to reliable, affordable, low-carbon energy’, our progress during 2019 in putting this into
action has begun to deliver on that ambition. Aligning our activities and progress to the broader global efforts to deliver the Sustainable Development Goals, allows
ESB to demonstrate its contribution to the global purpose and climate action focus that underpins the SDGs.

                                                                                                                                                                                                                                  OWENINNY WIND                                                                                                         02
                                                                                                                                                                                                                                  FARM ENTERS

                                                                                                                                                                                                                                                                                                                                                        ECONOMIC PERFORMANCE
        RENEWABLE             ESB SIGNS LOW                    ESB NETWORKS GREW                     OVER 30,000               89 MW                     50%                                                                      COMMERCIAL                                            ESB NETWORKS
                                                                                                                                                                          PROGRESS AGAINST
       CONNECTIONS:           CARBON PLEDGE                    ITS REGULATED ASSET                     HOUSES               OWENNINEY              SHAREHOLDING
                                                                                                                                                                                                                                  OPERATION                                             FLEET BEGINS
       550 MW IN ROI,          COMMITTING                         BASE BY €0.2BN                     CONNECTED               WIND FARM               IN THE 448           STRATEGY FROM
                                                                                                                                                                                                                                  Oweninny, Phase 1, is an 89MW wind farm               TRANSITION TO EV
      BRINGING TOTAL           TO LESS THAN                     THROUGH DELIVERY                     DURING 2018           COMMISSIONED.             MW NEART             AROUND THE
       RENEWABLES               200gC02/kWh                      OF TRANSMISSION                                             338 MW IN              NA GAOITHE                                                                    joint venture with Board na Móna in Co. Mayo.
        (ALL ISLAND)                                             AND DISTRIBUTION                                          CONSTRUCTION              OFFSHORE
                               BY 2030 (50%                                                                                                                                                                                       Its 29 turbines will supply clean energy to           ESB Networks took delivery
     CONNECTED TO THE           REDUCTION)                         PROGRAMMES                                                                        WIND FARM            FACILITATING RENEWABLES                                 the equivalent of over 50,000 homes. The
       GRID TO 6.2GW                                                                                                                                    IN UK
                                                                                                                                                                                                                                                                                        of 70 Nissan ENV200 fully
                                  CARBON                                                                                                                                                                                          cross business ESB team is now looking to
                                 INTENSITY                                                                                                                                Knockanure underground cable. This new 22km                                                                   electric light vans which will be added to the fleet
                                                                                                                                                                                                                                  the development of Phase 2 of Oweninny
                                                                                                                                                                          length cable in north Kerry will allow the region to                                                          throughout 2019/2020 and are estimated to
                                                                         PRODUCE,                                                                                         utilise its abundant energy resources, will allow for                                                         offset 170 tonnes of carbon annually by phasing
                                                                       CONNECT AND                                                                                        future growth in demand, will increase the security                                                           out diesel in ESB Networks’ small van fleet. The
                                                                      DELIVER CLEAN,
                                                                        SECURE AND                                                                                        of supply for the South West region and further                                                               vehicles will be deployed nationally to replace
                                                                       AFFORDABLE                                                                                         support the development of the renewable energy                                                               small diesel equivalents working in the areas of                03
                                                                                                                                                                          sector.                                                                                                       metering and stores.

                                                                                                                                                                                                                                                                                                                                                    SOCIAL DISCLOSURES
           ELECTRIC                ELECTRIC                                                                                              ESB NETWORKS
            IRELAND                IRELAND                                                                                                SUCCESSFULLY
          CONTINUES             LAUNCHED ITS                                                                                          INSTALLED THE FIRST                                                                         NEW ESB ARCHIVES
         TO FOCUS ON             ALL ELECTRIC                                                                                         SMART METER IN 2019
           REDUCING              DISCOUNTED                                                                                           AND HAS CONTINUED
        DISCONNECTION             TARIFF FOR                                                                                             TO SAFELY RAMP                                                                           COMPLETE
          RATES, NOW           CUSTOMERS WITH                                                                                          UP DELIVERY WITH                                                                           The new ESB Archives building was
         BELOW 20 PER
                                 ALL ELECTRIC
                                    HOMES                                   OUR PURPOSE                                               OVER 15,000 METERS
                                                                                                                                        INSTALLED IN 2019
                                                                                                                                                                                                                                  completed in July 2019, to a BER A1 energy
                                                                        ESB’s purpose is to create                                                                        ESB ECARS                                               rating standard. The project, designed in house,
                                                                                                                                                                                                                                  provides an energy efficient all electric building,
                                                                          a brighter future for the                                                                       CELEBRATES 1OOTH
                                                                                                                                                                                                                                  including an array of roof mounted solar panels.
                                                                       customers and communities                                                                          RAPID CHARGER IN
                              PUT CUSTOMERS’                           we serve and we will do this                                                                       GB
                                                                                                                              DEVELOP ENERGY

                                                                                                                                                                                                                                                                                                                                                        ENVIRONMENTAL TOPICS
                               CURRENT AND                              by leading the transition to                                                                      ESB has rapidly expanded its
                               FUTURE NEEDS                                                                                     SERVICES TO
                                                                         reliable, affordable, low-                            MEET EVOLVING                              charge point networks in both
                               AT THE CENTRE
                                 OF ALL OUR                                    carbon energy                                   MARKET NEEDS
                                                                                                                                                                          London and Coventry City. Our rapid charge points
                                                                                                                                                                          provide CCS, CHAdeMO and Fact AC charging,
                                                                                                                                                                          that can charge an EV up to 80% in as little as 30

                              DELIVER A HIGH-                                                                        GROW THE
                               PERFORMANCE                                                                         BUSINESS WHILE
                               CULTURE THAT                                                                         MAINTAINING
                                 SUPPORTS                                                                          ESB’S FINANCIAL
                              INNOVATION AND                                                                         STRENGTH
                              COLLABORATION                                                                                                                                                                                                                                                                                                             05

                                                                                                                                                                          ESB INVESTS IN 50%
                                                                                                                                                                          STAKE OF NEART NA
                                                                                                                                                                          GAOITHE OFFSHORE
                                                                                                                                                                          WIND FARM

                                                                                                                                                                          ESB invested in a 50% stake in NnG offsore wind
                 ESB IS NATIONAL                   11 OF 83 APPRENTICESHIP                                                  ESB DELIVERED                                 farm project from EDF Renewables off the east
              SPONSOR OF BITC TIME                  STARTERS IN 2019 WERE                                                  EBITDA OF €1.4BN                               coast of Scotland. It will have a capacity of 450MW
               TO COUNT NUMERACY                            WOMEN                                                          IN 2019. CAPEX OF
              PROGRAMME, BUILDING                                                                                          €1.2BN WAS SPENT                               and will offset over 400,000 tonnes of CO2
               STEAM CAPABILITIES                                                                                         ON INCREASING ESB'S                             emissions annually once operational in 2023.
                 FOR THE FUTURE                                                                                                ASSET BASE
16   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                                                                                                                             ESB Sustainability Report 2019    17

1.6 GOVERNANCE                                                                                                                                                                                                                                                                                                                                                               01
                                                                                                                                                                                                                                                                    ESB BOARD

                                                                                                                                                                                                                                                                                                                                                                             BUSINESS OVERVIEW
                                                                                                                                                                                                          Responsible for the long-term success of ESB and for its overall judgement on matters of strategy, performance, resources and governance
ESB is committed to the highest standards of         ESB has adopted a Code of Ethics, which sets         to managing risk being defined by the ESB Risk
corporate governance to manage risk and support      out our approach to responsible and ethical          Policy and Governance Framework and a strong
sustainability and growth. ESB has put in place      business behaviour. The underlying principle         internal control framework. While the Board has
measures to comply with the Code of Practice         of The Code of Ethics is that employees              overall responsibility for the Group’s approach to                                                                CHIEF EXECUTIVE                                                            BOARD HEALTH,
                                                                                                                                                                                                                  Executive leadership of the Group’s business                                    SAFETY AND ENVIRONMENT
for the Governance of State Bodies (2016). In        best serve ESB by adhering to the highest            risk, the responsibility for supporting the Board’s
addition, ESB complies, (on a voluntary basis        standards of integrity, loyalty, respect, fairness   review of the effectiveness of internal controls and                                                                                                                                   To advise the Board on health, safety and
to the maximum extent possible as a statutory        and confidentiality and by meeting all legal and     risk management has been assigned to the Audit                                                                                                                                                    environment matters
                                                                                                                                                                                                                     EXECUTIVE DIRECTOR TEAM
corporation), with the UK Code of Corporate          regulatory requirements. The Code of Ethics is       and Risk Committee which played a key role in                                                               Leadership and control of the Group
Governance 2016 and the Irish Corporate              published on the ESB intranet. Group Internal        2019 in ensuring that appropriate governance
Governance Annex.                                    Audit investigates any reported breaches             and challenge around risk and assurance were
                                                     and provides updates to the Audit and Risk           embedded across the Group. The approach to                                                                                  ENVIRONMENT AND SUSTAINABILITY LEADERSHIP TEAM                                                                                         02
A revised UK Corporate Governance Code was           Committee:                                           risk is set out further in section 3.6 of this report                                                                      (ED GROUP PEOPLE AND ORGANISATIONAL DEVELOPMENT)

                                                                                                                                                                                                                                                                                                                                                                             ECONOMIC PERFORMANCE
issued by the Financial Reporting Council (FRC)      https://www.esb.ie/who-we-are/corporate-             and in the Risk Report.                                                                                                             Leadership on sustainability and owners of sustainability strategy

in July 2018 and applies for periods commencing      governance/esbs-code-of-ethics-and-practice
on or after 1 January 2019. ESB completed                                                                 GOVERNANCE OF SUSTAINABILITY                                                                            BUSINESS UNIT ENVIRONMENT AND
a detailed review of the UK Code in 2019 in          HUMAN RIGHTS                                         The Board Committee on Health Safety and
                                                                                                                                                                                                                                                                                                     ENVIRONMENT AND
                                                                                                                                                                                                                     SUSTAINABILITY MANAGERS
                                                                                                                                                                                                                       Operational Owners of Environment and
                                                                                                                                                                                                                                                                                                  SUSTAINABILITY COMMITTEE
line with its “comply or explain” model and has      ESB respects human rights and expects all            Environment has oversight of environment                                                                                                                                                   (Chaired by ED Group People and
                                                                                                                                                                                                                         Sustainability at business unit level
implemented certain recommendations including        suppliers/contractors providing goods, services      and sustainability issues. The HSE Committee                                                                     Organisational Development)
                                                                                                                                                                                                                                                                                                       Organisational Development)
the establishment of a Cultural Dashboard report,    or works to ESB and/or on behalf of ESB to           monitors and tracks progress against
briefing the Board on the Stakeholder Mapping        conduct their business in an honest and ethical      environmental and sustainability targets and
and Engagement Plan, updated code of conduct
for Board members, carrying out a review of
                                                     manner, in accordance with all applicable laws,
                                                     and to respect internationally recognised human
                                                                                                          assesses the implications of environmental
                                                                                                          sustainability and climate issues for major             1.7 MATERIALITY APPROACH
the terms of reference of the Remuneration           rights. As the parent of a number of subsidiary      company plans and delivery of the company                                                                                                                                                                                                                          03
Committee and revising ESB's Whistleblowing          companies with significant operations in the UK,     strategy. The Committee meetings take place five
and Protected Disclosure policy to provide further   ESB has adopted a Policy on Modern Slavery           times a year and facilitate detailed consideration      ESB works in the very heart of every                                          and interests of our stakeholders is front and                     the most material topics are identified and form

                                                                                                                                                                                                                                                                                                                                                                         SOCIAL DISCLOSURES
guidance to employees on how to raise concerns.      with the aim of preventing opportunities for         of environment and sustainability matters on            community across Ireland. Being embedded                                      centre in delivering of our services and to help                   the bulk of the disclosures in this report, as per

Exceptions to compliance with the UK Code            modern slavery occurring within its business and     behalf of the Board.                                    in this way, brings a broad span of exposure                                  shape a brighter future. From the consolidated                     the materiality matrix below. Disclosures focus
are outlined on page 91 of the annual Report. In     supply chains. In accordance with the Act, ESB                                                               to and engagement with a wide range of                                        engagements and inputs into the various                            on the most material issues identified in the top
this way, ESB adheres in so far as is reasonably     publishes an Annual Statement setting out the        The Environment and Sustainability Leadership           stakeholders. In our purpose of creating                                      stakeholder channels and a formal stakeholder                      right quadrant. As robust reporting and data
applicable to listed company governance              steps that ESB has taken during the previous         Team is chaired by the Executive Director               a brighter future for the people we serve,                                    engagement process, we identify the most                           sets are established, disclosures will expand to
standards.                                           financial year to ensure that slavery and human      Group People and Organisational Development             we recognise that electricity is an enabler                                   material topics raised by these internal                           include other issues of importance within the
                                                     trafficking is not operating within either its own   and made up of senior managers from each                of societal and economic wellbeing and                                        and external stakeholders. The stakeholder                         matrix and newly emerging material issues.
ESB has put in place the appropriate measures        business or its supply chains. The most recent       business unit. The Environment and Sustainability       a pathway to a decarbonised society.                                          groupings that we engage with are detailed in
to comply with the State Code, which sets out        Annual Statement was published in June 2019.         Leadership Team is responsible for the overall          Understanding the expectations, concerns                                      section 1.8 of this report. From this process,
the governance framework established by the                                                               direction of Environment and Sustainability to
Government for the internal management and           Our procurement policies are available here:         deliver on the corporate strategy and for providing     MATERIALITY MATRIX 2019

                                                                                                                                                                                                                                                                                                                                                                             ENVIRONMENTAL TOPICS
the internal and external reporting relationships    https://www.esb.ie/who-we-are/procurement/           leadership on environment and sustainability in
of State Bodies. ESB has a robust process            procurement-policy                                   each business unit.
                                                                                                                                                                                                                                                                                          Access and Affordability                           Carbon Emissions
in place to confirm compliance with the state                                                                                                                                                      HIGH
code and a report on such compliance is made         DIVERSITY                                            The committee meets four times a year to
annually to the Audit and Risk Committee. A report   The Board, both for itself and the Group as a        review progress and overall group performance.                                                                                                                                Ethics, Trust and Reputation
                                                                                                                                                                                                                                  Security of Supply
confirming compliance is also issued annually to     whole, is fully committed to diversity as a key      The committee also oversees assurance on
the Minister for Communications, Climate Action      value, and an important factor in achieving ESB’s    environmental management through receiving                                                                                                                                            Business Ethics
                                                                                                                                                                                                                           Demand Side Management

                                                                                                                                                                    Importance to Stakeholders
and Environment (DCCAE) which confirms               business objectives. It is committed to achieving    reports from the Environment and Sustainability
compliance with the requirements of the State        the optimal balance of skills, experience and        Management Group, made up of the business                                                                                                                                             Data Security &                              Product Quality &
Code.                                                diversity among its members. In relation to Board    unit Sustainability and Environmental Co-
                                                                                                                                                                                                                                                                                               Customer Privacy                                   Safety
                                                     diversity, the Chairman of the Board, in assisting   ordinators and Managers. The Group meets                                               MEDIUM                                                                                                                                          Community
                                                                                                                                                                                                                                                                                                   Water                                                                     05
ESB values its reputation and maintaining best       the DCCAE in drawing up the specification for        monthly and tracks progress and debates
                                                                                                                                                                                                                                                                                              Renewables                   Environmental
practise governance arrangements is an important     Board appointments, has regard to the benefits       proposals and plans, agreeing on proposals

                                                                                                                                                                                                                                                                                                                           Management             Health & Safety
aspect of ESB business performance.                  of diversity on the Board, as provided for under     for consideration by the Environment and
                                                     the State Code of Practice guidelines and the        Sustainability Leadership Team.
  FULL DETAIL ON CORPORATE                           related “Guidelines on Appointments to State
  GOVERNANCE IN ESB IS                               Bodies”.
  AVAILABLE IN OUR 2018                                                                                                                                                                                                                                                                  Energy Management                   Staff Development
  ANNUAL REPORT;                                                                                                                                                                                                                                                                            & Efficiency
                            Risk management and reporting continues to be                                                                                                                                                                            MEDIUM                                                                        HIGH
                                                     a key area of focus for both the Board and the                                                                                                                                                                Importance to ESB
                                                     Audit and Risk Committee, with ESB’s approach
18   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                                                                                             ESB Sustainability Report 2019      19

1.8 STAKEHOLDER ENGAGEMENT                                                                                                                                            1.9 ASSOCIATIONS AND EXTERNAL INITIATIVES                                                                                                                                01

                                                                                                                                                                                                                                                                                                                                               BUSINESS OVERVIEW
                                                                                                                                                                      CHARTERS TO WHICH THE ORGANISATION SUBSCRIBES
As a business we generate and distribute                 community group and ranges in focus from                prioritise the issues emanating from the various     • Code of Practice for the Governance of State Bodies (2009)
electricity to homes, farms and businesses               national to community level interests. From the         external and internal stakeholder engagement         • Bettercoal Code (2015)
across Ireland. This means that we have                  consolidated engagements and inputs into the            channels and to formulate the issues output          • UK Corporate Governance Code (2012)
a strong and visible interface with every                various stakeholder channels and the formal             from these engagements into a list of                • Irish Corporate Governance Annex (2010)
community to which we provide electricity.               stakeholder engagement process outputs,                 prioritised material issues.                         • The Prompt Payment Code of Conduct (2014)
Stakeholder engagement is central to the                 members of the stakeholder management                                                                        • The Energy Engage Code (2014)
success of our business activities. Stakeholder          group, together with the Environment &                                                                       • E.DSO Sustainability Charter
engagement takes place at all levels, from               Sustainability Leadership Team hold a
the policy makers right down to the local                materiality workshop every two years to help                                                                 PRINCIPAL ASSOCIATIONS TO WHICH THE ORGANISATION BELONGS                                                                                                                 02
                                                                                                                                                                      ESB plays an active role in many associations, both at a board level and as an active member. Playing an active role in such external associations is central

                                                                                                                                                                                                                                                                                                                                               ECONOMIC PERFORMANCE
                                                                                                                                                                      to the development of key staff, the promotion of engineering skills, developing common approaches on national policy, promoting diversity and inclusion in
                                                                                                                                                                      society as well as policies consistent with national climate objectives.
 STAKEHOLDER GROUPING                    MEANS OF ENGAGEMENT                      SUBJECTS OF ENGAGEMENT                 KEY ISSUES                                   •   Association for Higher Education Access and Disability (AHEAD)
                                                                                                                                                                      •   Business In The Community (BITC) Ireland
                                                                                                                                                                      •   Bettercoal
 Ministers & Government Depts.           Policy meetings, consultations           Energy policy, regulatory              Energy policy, maintaining financial
 DCCAE, DfE, DAERA, DBEIS,                                                        consultation processes, strategy       strength                                     •   Business in the Community NI
 DEFRA, PER (New ERA), DTTAS                                                                                                                                          •   Chambers Ireland
 Market, Data and Transparency           Price reviews, regular meetings,         Compliance with licence and permit     Compliance planning, Delivery of work        •   Chartered Institute of Professional Development
 Regulatory Bodies (CRU, UR,             programme meetings                       conditions, price reviews, work        programmes, emission reduction plans,        •   CHAdeMO Association
 Ofgem, ComReg, Ofcom, DPC, ICO,                                                  programmes.                            consultations.                               •   Corporate Leadership Council
 SIPO)                                                                                                                                                                                                                                                                                                                                         03
                                                                                                                                                                      •   Confederation of British Industry (CBI)
 Networks Operators EirGrid, SONI,       Scheduled meetings, programme            Grid connections, work programmes,     Renewable energy, network stability,

                                                                                                                                                                                                                                                                                                                                           SOCIAL DISCLOSURES
                                                                                                                                                                      •   Diversity Charter of Ireland
 National Grid                           meetings                                 planning, renewable integration        security of supply

                                                                                                                                                                      •   European Distribution System Operators
                                                                                                                                                                      •   Electricity Association of Ireland (EAI)
 Industry NGOs (Eurelectric, EAI,        Consultation processes, information      National and EU energy policy,         Policy positions, climate action,            •   Electric Power Research Institute (EPRI)
 IWEA, IBEC, CBI, AEP, IETA,             meetings.                                climate action and sustainability      competitiveness, supply security
 Chambers Ireland, British Irish                                                  policy development, consultations.                                                  •   Energy Networks Association
 Chamber of Commerce, NI Chamber                                                                                                                                      •   Energy UK EV Task Force
 of Commerce, Dublin Chamber, Cork                                                                                                                                    •   Engineers Ireland
                                                                                                                                                                      •   Eurelectric
 Sustainability/Non industry NGOs        Scheduled meetings, focus groups,        Land access, work programmes,          Emission reduction, corporate                •   Institute of Engineering and Technology
 (BiTCI & NI, CDP, IIEA, IFA, Coillte)   member fora, surveys                     CR programme, performance              responsibility, renewable energy,
                                                                                  disclosures.                           planning                                     •   Institute of Directors
                                                                                                                                                                      •   Institute of Customer Service
 Environmental Authorities (NPWS,        Ongoing dialogue.                        Annual reporting, planning, safety     Water conservation, energy efficiency,       •   Irish Wind Energy Association (IWEA)
 UW, SEAI)                                                                                                               waste

                                                                                                                                                                                                                                                                                                                                               ENVIRONMENTAL TOPICS
                                                                                                                                                                      •   Irish Business and Employers Confederation (IBEC)
 Environmental and Safety                Licences, inspections, formal            Licence conditions and compliance,     Legal compliance.                            •   Irish Marketing Institute
 Regulators (EPA, NIEA, EA, HSA,         compliance reviews                       annual reporting, dealing with                                                      •   Low Carbon Vehicle Partnership
 HSENI, HSE, RSA)                                                                 breaches and complaints
                                                                                                                                                                      •   National Irish Safety Organisation (NISO)
 Engineering and Scientific              Industry for a, partnerships,            Technology, skills pool, research      Technical innovation, market disruption,     •   NI Chamber of Commerce
 Research (UCD, ERC, UL, TUD,            conferences, technical collaborations,   partnerships, technology               energy efficiency, availability of skills.   •   National Energy Action
 TCD, NUI, EPRI, SEAI, VGB, QUB,         ongoing dialogue                         deployment
                                                                                                                                                                      •   Open Charge Alliance
 Public representatives, local           Scheduled meetings, planning process,    Planning concerns, building            Community engagement, legal                  •   Society of the Irish Motor Industry
 authorities                             ongoing dialogue                         community support                      compliance
                                                                                                                                                                      •   The Society of Motor Manufacturers & Traders (SMMT)
 Ratings agencies                        Scheduled review meetings                Economic performance,                  Rating, ability to raise debt at             •   The Mediators Institute of Ireland.
                                                                                  Performance to Plan, Strategy,         competitive rates, financial performance.    •   Ulster Wildlife
                                                                                  Funding rounds, Growth programme
 Employees ESB Group of Unions           Team and one-to-one meetings,            Business performance, safe             Employee engagement, Recognition

                                         surveys.                                 working environment, fair              and reward, Development
                                                                                  employment and trading practices,
 Customers (Domestic, Commercial,        Social media, customer contact           Price, continuity and quality of       Energy price, disconnection policy,
 Industrial)                             centres, surveys, via business           supply, energy efficiency services,    energy efficiency
                                         development team                         disconnection policy.
20   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future   ESB Sustainability Report 2019   21


                                                                                                                                  BUSINESS OVERVIEW
                      CHAPTER 2                                                                                                   02

                                                                                                                                  ECONOMIC PERFORMANCE
                      ECONOMIC PERFORMANCE
                         2.1 Introduction
                         2.2 Investing for the Future
                         2.3 Indirect Economic Impacts
                         2.4 Pension Obligations
                         2.5 Procurement Practices

                                                                                                                              SOCIAL DISCLOSURES

                                                                                                                                  ENVIRONMENTAL TOPICS

22    ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                                                                                                     ESB Sustainability Report 2019            23

2.1 INTRODUCTION                                                                                                                                                             2.2 INVESTING FOR THE FUTURE (GRI 203-1)                                                                                                                                         01

                                                                                                                                                                                                                                                                                                                                                              BUSINESS OVERVIEW
In 2019 ESB delivered an improved financial performance                                    KEY FACTS AND FIGURES                                                             Capital expenditure totalled €1,242 million
                                                                                                                                                                             in 2019, an increase of €77 million on 2018.
                                                                                                                                                                                                                                   CAPITAL EXPENDITURE
following profit reductions in 2017 and 2018 which were
                                                                                             OPERATING PROFIT* €’M                                                           Capital investment in the networks businesses
both challenging years. As we continue the transition to a
                                                                                                                                                                             continued in 2019 with €735 million (59%
low carbon future ESB delivered Earnings before Interest,                          800                                                                                                                                             2019                     581                            424                         154         83
                                                                                                 682                                                                         of the total capital investment) invested in the
Tax, Depreciation and Amortisation (EBITDA) of €1,372                                                                                       597
                                                                                    600                                                                                      networks infrastructure in Republic of Ireland
million, Operating Profit before exceptional items of €682                                                                   490
                                                                                                                455                                                          (ROI) and Northern Ireland (NI) in line with
million and capital investment of €1,242 million. Our
                                                                                    400                                                                                      agreed regulatory programmes. Expenditure
gearing at the end of 2019 was at a relatively moderate
                                                                                                                                                                             in Generation and Trading in 2019 amounted
level of 57% and during 2019, ESB successfully issued                               200
                                                                                                                                                                             to €424 million (2018: €299 million). This
Ireland’s first corporate public Green Bond.                                                                                                                                                                                       2018                     590                         299                   171         105
                                                                                                                                                                             expenditure primarily related to the continued
Our 2019 performance reflects:                                                       0
                                                                                                2019           2018          2017          2016        2015                                                                                                                                                                                                   02
                                                                                                                                                                             investment in renewable generation including
• ESB Networks and NIE Networks continuing to deliver                                          €227 million

                                                                                                                                                                                                                                                                                                                                                              ECONOMIC PERFORMANCE
                                                                                                                                                                             €243 million in the 448 MW Neart na Gaoithe
  safe and reliable networks with significant capital and                                                                                                                    (GB) offshore windfarm and €97 million in the                 0          200          400          600        800                1000               1200           1400
                                                                                           * Before exceptional items. See Financial Review page 50.
  maintenance programmes in accordance with their                                                                                                                            114MW Grousemount wind farm in Co.Kerry,
                                                                                                                                                                                                                                          ■ ESB NETWORKS ■ GENERATION AND TRADING ■ NIE NETWORKS ■ OTHER SEGMENTS
  regulatory contracts;                                                                    EBITDA* €’M                                                                       which is expected to become fully operational
• Generation and Trading (GT), operating successfully in                           1,500         1,372                                     1,324       1,348                 by the start of Q2 2020. Capital investment of
  the first full year of the Integrated Single Electricity Market                                                                                                            €83 million in other segments includes various
                                                                                   1,200                       1,175
                                                                                                                                                                             group projects such as the redevelopment
  (I-SEM) and delivering continued growth in our renewable
                                                                                    900                                                                                      of the Fitzwilliam Street Head Office and IT                 ESB’s Green Bond will primarily
  portfolio (including further investment in offshore wind)
                                                                                                                                                                             systems (see figure Captial Expenditure).                      contribute to Climate Change
  with the 50% acquisition of the 448MW Neart na Gaoithe                            600
                                                                                                                                                                                                                                          Mitigation through the following
  project in GB;                                                                    300                                                                                                                                                   Eligible Green Project categories:
                                                                                                                                                                             In June 2019, following the launch of ESB’s
• Customer Solutions continuing to innovate and create value                                                                                                                 Green Bond Framework the previous month,
                                                                                                                                                                                                                                                                                                                  1. Climate
                                                                                      0                                                                                                                                                                                                                            Change
                                                                                                 2019          2018          2017
  for customers, including the application of enduring longterm                                                                            2016        2015
                                                                                                                                                                             the Group issued a EUR €500 million 11-year                                                                                          Mitigation
  savings to almost one million of its residential electricity and                             €197 million                                                                  Green Bond with a fixed coupon of 1.125%.                           RENEWABLE ENERGY                          6. Protection                                2. Climate
  gas customers.                                                                                                                                                             This was the first ever Irish corporate public                                                                 of healthy

                                                                                                                                                                                                                                                                                                                                                          SOCIAL DISCLOSURES
                                                                                                                                                                                                                                                                                           ecosystems                                   Adaptation
                                                                                                                                                                             Green Bond. The transaction was executed

                                                                                              TOTAL ASSETS €’M
2019 Operating Profit (before exceptional items) is                                                                                                                          following an extensive European roadshow,                           ENERGY EFFICIENCY
                                                                                                 14,159        13,304                                                                                                                                                                                            Environment
                                                                                  15,000                                                               13,157
up 50% on 2018, primarily reflecting improved energy                                                                          12,294        12,907                           involving more than 100 leading investors                                                                                            Objectives
                                                                                                                                                                                                                                                                                                                                    3. Sustainable
margins from our thermal gas plant, lower operating costs                         12,000                                                                                     and resulted in ESB’s lowest coupon for a                                                                      5. Pollution
                                                                                                                                                                                                                                                                                                                                        use and
reflecting reduced overhaul spend, higher revenues in our                                                                                                                    senior bond. There was strong participation                       CLEAN TRANSPORTATION
                                                                                                                                                                                                                                                                                            prevention                                  of water
                                                                                   9,000                                                                                                                                                                                                       control                               and marine
Customer Solutions business and foreign exchange.                                                                                                                            from socially responsible investors from a                                                                                          4. Transition         resources
                                                                                                                                                                                                                                                                                                                 to a circular
                                                                                   6,000                                                                                     diverse range of geographies, demonstrating                                                                                          economy,

Arising from our announcement to close the midland                                 3,000                                                                                     confidence in ESB’s Brighter Future Strategy                                                                                            waste
                                                                                                                                                                                                                                                  GREEN BUILDINGS
peat stations at the end of 2020, the re-organisation                                                                                                                        and associated investment programme. A                                                                                             and recycling
of Moneypoint arising from reduced coal running and                                               2019          2018          2017           2016       2015                 dedicated Green Finance Committee has been
the closure of North Wall power station, an exceptional                                                                                                                      created to ensure compliance with the Green
                                                                                               €855 million                                                                                                                                                                                                                                                   04
charge for related severance and associated costs on                                                                                                                         Bond Framework and to oversee the allocation
                                                                                                                                                                                                                                   expenditure for ESB Networks for the coming         capital and maintenance programmes are

                                                                                                                                                                                                                                                                                                                                                              ENVIRONMENTAL TOPICS
these plants of €60 million has been made. In addition,                                                                                                                      of the net proceeds of this Green Bond to
                                                                                              NET DEBT €’M
                                                                                                                                                                             eligible projects that are sustainable and            five-year period. The ESB Board welcomed            delivered in accordance with these established
a further impairment charge of €34 million was made
                                                                                  6,000           5,239                                                                      socially responsible in areas such as renewable       the Regulator’s proposal that the submission        regulatory frameworks. ESB carefully and
against shareholder loans advanced to Tilbury Green
                                                                                                                4,915                                  4,975
                                                                                                                                                                             energy, energy efficiency, green buildings and        should provide for the resources and capability     continuously monitors all of these strategic
Power Holdings Limited (a waste wood to energy joint                              5,000                                       4,377         4,524
                                                                                                                                                                             clean transportation. For more information on         required to deliver on the National Climate         financial opportunities and challenges and
venture in GB).                                                                    4,000
                                                                                                                                                                             the disbusal of funds raised by the Green Bond,       Action Plan and ESB looks forward to working        takes prudent financial actions, including
                                                                                                                                                                             please refer to the Green Bond report in the          constructively with the Regulator to finalise the   management of the significant capital
ESB invested €1,242 million in capital expenditure in
                                                                                   2,000                                                                                                                                           proposal during 2020.                               programme, as appropriate, so as to enable
2019. Almost 60% of which was invested in our two                                                                                                                            Appendices, Chapter 5 of this report.
                                                                                   1,000                                                                                                                                                                                               the delivery of Strategy 2030 while maintaining
networks businesses in line with agreed regulated capital
                                                                                     0                                                                                       These public bond transactions enabled both           All infrastructure development is subject           ESB's financial strength. Please see also
programmes, including €64 million on Smart metering
                                                                                                  2019          2018          2017           2016       2015                                                                       to appropriate planning authority approval,         section 3.4, detailing further how we engage
roll out in ROI. As part of the transition to low-carbon                                                                                                                     the growth of ESB’s portfolio of renewable
generation ESB invested €340 million in renewable
                                                                                                 €474 million                                                                assets and the early repayment of a portion of        including the undertaking of Environmental          with communities around these investment
                                                                                                                                                                             ESB’s existing project finance debt                   Impact Assessments, as required. Operational        determinations.                                                        05
generation projects. Notwithstanding the exceptional
                                                                      GENERATION ALL-ISLAND MARKET SHARE                                  SUPPLY ALL-ISLAND MARKET SHARE                                                           procedures for works in and adjacent to
charge, as outlined above, ESB has delivered a strong

                                                                     70%                                        30%                                                          REGULATED INVESTMENT                                  SAC's or where particular environmental or          BOARD LEVEL OVERSIGHT
set of financial results in 2019, with Group EBITDA at                                                                                                                 34%
                                                                                                                                                                             ESB, Ireland’s leading energy utility, has a          biodiversity risks may be identified, are in        The Board has overall responsibility for risk
€1,372 million, a strong liquidity position of €1.5 billion
                                                                                                                                                                             stable business profile with over two thirds of its   place and subject to on-going review. Energy        management and internal control. The main
and credit ratings of A- or equivalent with Standard &                                                                         66%
                                                                                                                                                                             earnings and assets accounted for by regulated        infrastructure needs assessment is undertaken       financial risks faced by the Group related to
Poor’s and Moody’s (BBB+ standalone).
                                                                                                                                                                             electricity networks in Ireland under established     as part of the broader regulatory engagement        liquidity, foreign exchange, interest rates,
                                                                                                                                                                             and transparent regulatory frameworks.                process, which culminates with a price review       commodity price movements and operational
Revenue and other operating income before exceptional
                                                                                                                                                                             ESB Networks made its Price Review 5                  determination, incorporating specific asset         risk. Policies to protect the Group from these
items at €3,718 million has increased by €285 million
                                                                                                                                                                             (PR5) submission to the Commission for the            development programmes, which form the              risks, and other risk areas, such as credit risk,
compared to 2018 (€3,433 million). The increase is
                                                                                                                                                                             Regulation of Utilities in November. This is a        basis of investment programmes for our              are regularly reviewed, revised and approved
primarily driven by higher revenue in Customer Solutions
                                                                                                                                                                             very important process for the company, which         regulated assets, at the scale summarised           by the Board.
due to increased volumes and increased unit rates arising
                                                                            ■ OTHER POWER SUPPLIERS                                          ■ OTHER POWER PRODUCERS                                                               above. Within our networks' businesses the
from increased wholesale energy prices in 2018.                             ■ ESB
                                                                                                                                                                             will set the level of investment and operating
                                                                                                                                             ■ ESB
24    ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                          ESB Sustainability Report 2019   25

2.3 INDIRECT ECONOMIC IMPACTS                                                                                                                                                                                                                                             01

                                                                                                                                                                                                                                                                          BUSINESS OVERVIEW
     INVESTMENT                                                                             TAXES                                                                      SUPPORTING
     Investing over €1 billion per annum                                                    Annual payments across various                                             COMMUNITIES
     to facilitate a more sustainable                                                       headings                                                                   Seek to empower and enrich
     energy environment as well as                                                                                                                                     the lives of individuals and
     supporting economic growth                                                                                                                                        communities through the
     through providing, safe and reliable                                                      OVER €450 MILLION                                                       corporate social responsibility
     electricity supply to homes and                                                                                                                                   programme                                                                                          02

                                                                                                                                                                                                                                                                          ECONOMIC PERFORMANCE
                                                                                                                                                                           OVER €2 MILLION
            €1,242 MILLION


                                                                                                                                                                                                                                                                      SOCIAL DISCLOSURES

                                                                                                                                                                                                                                                                          ENVIRONMENTAL TOPICS
     EMPLOYMENT                                                    RETURN TO THE                             DEBT                  INDIRECT ECONOMIC IMPACTS (GRI203.2)                                                        RESIDENTIAL                                05
     Making a long-term commitment to                              SHAREHOLDER                               INVESTORS             Investments in the generation portfolio are focused on accelerating investment in           CUSTOMER

     employees, giving them the time to                            ESB targets an annual dividend of         Annual interest and   renewable energy to reduce the carbon intensity of the generation portfolio and             SATISFACTION
     build their skills and the opportunity                        40% of adjusted profits after tax         repayments            support the transition to reliable, affordable, low carbon energy. Investments in           Developing new and innovative
     to advance their careers.                                                                                                     the networks business in Republic of Ireland focused on the reinforcement and               products and services for
     Supporting jobs through contractor                                                                                            construction of new network infrastructure to facilitate the connection of renewables       customers aimed at improving
     and supplier service contracts                                 €88 MILLION FOR 2019                     €741 MILLION          and the diversification of electrification, whilst also committing significant investment   customer experience and
                                                                                                                                   to maintaining existing network. NIE Networks focused on the delivery of its network        empowerment
                                                                                                                                   investment plan under RP5 to achieve reliability of supply and ensure the safety of the
        163 APPRENTICES                                                                                                            network for customers, as well as continuing investment to facilitate the connection of                    84%
         AND GRADUATES                                                                                                             additional renewable generation and the replacement of customer meters.
        RECRUITED IN 2019
26   ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future                                                                                                                                                                                                                 ESB Sustainability Report 2019     27

2.4 PENSION OBLIGATIONS (GRI 201-3)                                                                                                                                                                                                                                                                                                               01

                                                                                                                                                                                                                                                                                                                                                  BUSINESS OVERVIEW
                                                                                                                                                                      ESB expects our suppliers/contractors of all tiers to comply with all applicable laws and to respective internationally recognised human rights. ESB’s Supplier
                                                                                                                                                                      Charter sets out the basic principles that all ESB suppliers, service providers and contractors are expected to comply with in relation to:
The Group companies operate various pension schemes in the Republic of Ireland and Northern Ireland, which are funded through payments to trustee                     ƒ Conduct of business
administered funds. All permanent staff are members of either the Defined Benefit Plan or another retirement plan.                                                    ƒ Health & Safety
                                                                                                                                                                      ƒ Environment (GRI308-1)
2.4.1 Pension schemes in the Republic of Ireland                                                                                                                      ƒ Ethics, Bribery & Anti-corruption
The Group operates two pension schemes, which are called the ESB Defined Benefit Pension Scheme and the ESB Defined Contribution Pension Scheme.                      ƒ Employment Standards and Modern Slavery.
Pensions for the majority of employees in the electricity business are funded through a contributory pension scheme called the ESB Defined Benefit
Pension Scheme. The fund is vested in Trustees nominated by ESB and its members for the sole benefit of employees and their dependants. The Scheme is                 ESB’s Requirements for Third Parties gives contractual effect to these expectations, and copies of these documents and other relevant ESB Procurement
registered as a Defined Benefit Scheme with the Pensions Authority.                                                                                                   Policies are publicly available on the ESB Group website; www.esb.ie/who-we-are/procurement
The regulations governing the Scheme stipulate the benefits that are to be provided and the contributions to be paid by both ESB and the contributing
members. Benefits payable are determined by reference to a Career Average Revalued Earnings (CARE) pension model for benefits earned after 1 January                  ESB’s Supply Chain supports its business operations across the value chain in generation, networks and supply - including its international activities. With                02
2012 (previously based on final salary). ESB has no legal obligation to increase contributions to maintain benefits in the event of a deficit and ESB’s rate of       an annual procurement spend (excluding fuel) of approximately €900m, we rely on a complex and diverse supply chain in order to provide the services

                                                                                                                                                                                                                                                                                                                                                  ECONOMIC PERFORMANCE
contribution cannot be altered without the agreement of ESB and approval of the Minister for Communications, Climate Action and Environment. Should an                necessary to meet our customer’s needs. Of this spend approximately 75% is sourced from suppliers within the Republic of Ireland & Northern Ireland, 13%
actuarial deficit arise in the future, ESB is obliged under the Scheme regulations to consult with the Superannuation Committee, the Trustees and the Scheme          from the UK, and 9% from other EU member states (GRI204-1). We currently have approximately 4600 Tier 1 suppliers, ranging from local SME’s & micro
Actuary to consider the necessity of submitting an amending Scheme for Ministerial approval.                                                                          companies to large multi-national corporations / contractors, with whom we placed over 40,000 purchase orders in 2019.

Under the 2010 Pensions Agreement (approved by employees in July 2010 and formally ratified by the Board of ESB on 20 October 2010), ESB agreed                       GRI 204-1: PROPORTION OF SPENDING ON LOCAL SUPPLIERS
to a once-off cash injection into the Scheme, payable over a number of years, which had an agreed valuation for actuarial purposes as at 1 January 2010               Location Name                                                                                                                                                     %
of €591.0 million. The fixed contribution rates for the employer and for employees were not changed. Under the Agreement membership of the Scheme                     UK, NI & Ireland                                                                                                                                               88%
has been closed to new joiners. The obligations to the Scheme reflected in ESB’s financial statements have been determined in accordance with IAS 19
Employee Benefits. Given that the Scheme is not a typical “balance of costs” Defined Benefit Scheme (where the employer is liable to pay the balance of              Contracts range from standard supply type arrangements for consumable items, such as tools & equipment to more complex service / works contracts for
                                                                                                                                                                     renewable generation, smart metering installation, networks substation & overhead/underground line construction & refurbishment, customer billing & metering
contributions required to fund benefits), the obligations to be reflected in the financial statements require the exercise of judgement. Should a deficit arise in
                                                                                                                                                                     services and financial & engineering related consultancy assignments. Where technical considerations allow, we favour the use of functional and performance-
the future, the Company, as noted above, is obliged to consult with the parties to the Scheme. However, ESB has no obligation to increase contributions to                                                                                                                                                                                        03
                                                                                                                                                                     based specifications, supported by International/European standards. All significant contracts are advertised in the Official Journal of the European Union.
maintain benefits in the event of a deficit and the Company does not intend that any further contributions, other than the normal on-going contributions and
the balance of the Company’s €591.0 million additional contribution (committed to as part of the 2010 Pensions Agreement), will be made. Therefore, ESB

                                                                                                                                                                                                                                                                                                                                              SOCIAL DISCLOSURES
                                                                                                                                                                     Many of these contracts by their nature are labour intensive and it is essential that suppliers maintain a strong culture of corporate responsibility, in addition to
has concluded that the financial statements should reflect its obligations to the Scheme, which consist of:

                                                                                                                                                                     good sustainable and environmental practices. During 2019 ESB conducted desktop assessments of over 400 suppliers for the potential of modern slavery /
a. any remaining amounts to be paid in relation to the once-off contribution agreed pursuant to the 2010 Agreement (€591.0 million in 2010 money to be               forced labour in their supply chains, in addition to conducting over 100 contractor employment standards audits on ESB sites in the Republic of Ireland during
   paid over a number of years);                                                                                                                                     2019 (GRI409-1).
b. pre-existing commitments relating to past service (the present value of the agreed contributions that relates to service prior to October 2010); and              Sustainability features are generally sought from tenderers where such features contribute to the delivery of ESB’s sustainability goals. Some notable
c. Past Voluntary Severance (VS) Programmes – in 2010 the Company recognised a future commitment in respect of staff who have left the Company                       procurements that included a strong sustainability remit in 2019, included:
   under past VS programmes. ESB will make pension contributions in respect of those staff and these are recognised at fair value.
                                                                                                                                                                     ƒ Mini-tenders for Wind Turbines for a number of high-profile renewable projects in ROI & UK
Ongoing contributions (up to 16.4%) are recognised in the income statement as incurred. Any unpaid amounts at year end are recognised as liabilities on the          ƒ ESB’s Integrated Facilities Management Framework Agreement, which placed a clear emphasis on the importance of using environmentally friendly
balance sheet.                                                                                                                                                         cleaning products, the need to reduce, re-use and re-cycle materials, and the requirement to work closely with supply chain partners of all tiers to supply
                                                                                                                                                                       environmentally friendly services
The ESB Defined Contribution Pension Scheme is a defined contribution scheme and contributions to the Scheme are accounted for on a defined                          ƒ ESB’s Shuttle Bus Tender to our temporary Head Office in Gateway sought information on how tenderers propose to adhere to emission standards and how
contribution basis with the employers’ contribution charged to income in the period the contributions become payable. The percentage of salary contributions           their respective telematics system monitors and reports on individual vehicle fuel efficiency.

                                                                                                                                                                                                                                                                                                                                                  ENVIRONMENTAL TOPICS
made by individual employees to the scheme are confidential between ESB and the individual employee.
                                                                                                                                                                     ESB’s aim is to ensure that sustainability is embedded across every business function including Procurement. In Procurement very significant elements of our
                                                                                                                                                                     business operations are transacted electronically, including the issue and receipt of tenders and purchase orders to our suppliers. ESB are also committed to
                                                                                                                                                                     complying with the terms of applicable late payments legislation and are signatories to the Prompt Payment Code of Conduct. ESB’s standard terms of payment

                                                                                                                                                                     are Nett Monthly Account. In recent years ESB has significantly increased the number of PDF invoices received from suppliers - 72% of all invoices received
                                                                                                                                                                     in 2019 were in PDF format. The key benefits for suppliers for submitting invoices in this way include, traceability and the ability to email queries to a dedicated
                                                                                                                                                                     mailbox for quick resolution. This is a no cost option to suppliers and means invoices can be processed much quicker. This also has a positive environmental
                                                                                                                                                                     impact due to the reduction in the submission of paper-based invoices, envelopes and associated postal costs.
 ESB’s Supply Chain is key to our business success and delivery of the Group’s Brighter Future Strategy. ESB’s procurement strategy is aligned to the
 delivery of these business objectives & sustainability goals.                                                                                                       2.5.1 Modern Slavery
                                                                                                                                                                     As an organisation that operates in the United Kingdom, ESB fully supports the aims of the UK Modern Slavery Act 2015 and has a zero-tolerance approach
 Competitive tendering is our standard procurement procedure, and all procurement processes are undertaken in a non-discriminatory, transparent and                  to modern slavery. In order to prevent acts of slavery and human trafficking from occurring within its business and supply chains ESB has taken a number
 proportionate manner. This process ensures equal treatment, non-discrimination, mutual recognition and freedom to provide services and establishment, in            of steps, including the adoption of a Policy on Modern Slavery, which is published on ESB’s website; https://www.esb.ie/who-we-are/procurement/                              05
 line with applicable procurement law, the Irish Government’s Code of Practice for the Governance of State Bodies and EU Treaty Principles.                          procurement-policy.

 It is custom and practice in ESB to conduct tender evaluations based on the total lifetime cost (LCC) of a product or service. ESB are increasingly using           ESB seeks at all times to comply with employment law applicable to the jurisdictions in which it operates and puts in place contractual arrangements with
 sophisticated LCC models to capture whole life costs when assessing major projects and equipment purchases. For example, tailored LCC’s are used to                 providers of agency staff requiring that they achieve the same level of compliance.
 evaluate the cost and efficiency of renewable generation tenders. For the purchase of vehicles, the total cost of ownership (fuel and Adblue), maintenance          Following on from its previous statements on the prevention of slavery and human trafficking, ESB has, during 2019, taken the following steps to prevent acts
 and emissions are assessed along with the upfront purchase cost. Similarly, a Total Cost of Ownership (TCO) model is used to assess the total cost of               of modern slavery from occurring within its supply chains:
 major items of equipment, which may include a range of cost inputs including purchase price, energy usage (load or otherwise) prototyping costs, type tests,
 installation costs, maintenance and end of life costs.                                                                                                              • Risk assessed all vendors with an annual spend of greater than €250,000 based on their geographical location & industry sector (415 vendors in total)
                                                                                                                                                                     • Issued questionnaires to vendors identified as being potentially high risk based on this assessment and the previous year’s review
                                                                                                                                                                     • Assessed these returns and identified three vendors for external audit
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