Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Social responsibility
• Governance

Environmental Achievements

• Reduced fuel consumption for traction purposes
• Increased share of electric traction in total transport (96%)
• Gradual reduction of diesel locomotives in service and modernization of existing ones
• Decommissioning of outdated solid fuel boiler plants and replacement with lower-emission alternatives
• Implementation of an Integrated Management System compliant with ISO 14001

Social Achievements

• Resolution of a collective dispute in 2023
• Implementation of employee support programs (mental health, preventive healthcare, work-life balance)
• Increased employee loyalty and efficiency
• Successful completion of inspections by state and industry authorities (PKP CARGO INTERNATIONAL)
• Implementation of the “Direction: Safety at Work” campaign
• Organization of the “PKP CARGO Running and Cycling Relay around the Earth”

Governance Achievements

• Implementation of the Code of Ethics and Anti-Corruption and Gift Policy at PKP CARGO S.A.
• Establishment of the Company Social Benefits Fund
• Regular meetings with trade unions
• Implementation of a system for cyclical evaluations of companies and management
• No cases of corruption in 2022

Climate Goals & Targets

Environmental Challenges

• Limited availability of coal in 2022
• Dust generation during coal transshipment (PKP CARGO INTERNATIONAL)
• Increased water use charges for four company sites due to insufficient investments in water and wastewater management
• Lack of data for complete carbon footprint calculation (Scope 3)

Mitigation Strategies

• Developed alternative sourcing strategies for coal (CARGOSPED Terminal Braniewo)
• Used fog cannons to reduce dust during transshipment (PKP CARGO INTERNATIONAL)
• Implementation of remediation work at two company locations
• Ongoing administrative proceedings for waste management permits
• Development of a methodology for calculating the carbon footprint (including Scope 3)

Supply Chain Management

Supplier Audits: Supplier Assessment Card used after each service

Responsible Procurement

• Procurement Bylaws
• Purchasing Instruction
• Code of Conduct with Suppliers (PKP CARGO CONNECT)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather phenomena (droughts, floods, fires)
• Chronic changes in average temperatures
• Rising water levels

Transition Risks

• Need to transition to a low-carbon economy
• Adaptation to climate change

Opportunities

• Increased interest in rail transport due to state aid and EU policies
• Development of energy-efficient and low-carbon transport
• Change in transport lending policy prioritizing rail transport

Reporting Standards

Frameworks Used: GRI Standards, TCFD recommendations

Certifications: ISO 9001:2015, ISO 45001:2018, ISO 14001:2015, ISO/IEC 27001:2017

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 3
• Goal 8
• Goal 9
• Goal 11
• Goal 12
• Goal 13

Detailed explanation of how initiatives contribute to each goal in the report

Sustainable Products & Innovation

• Modern electric locomotives
• Modernized freight wagons

Awards & Recognition

• Forbes Goal Diamond 2022 (PKP CARGO SERVICE)
• Rail Operator of the Year (PKP CARGO INTERNATIONAL HU Zrt.)

Environmental Metrics

ESG Focus Areas

• Climate change
• Pollution
• Human rights
• Workforce diversity
• Governance
• Supply chain management

Environmental Achievements

• Reduced Scope 1 and 2 GHG emissions by 14.1% (market-based) and 14.3% (location-based) year-over-year.
• 12.3% of total energy consumption from renewable sources.

Social Achievements

• Implemented Management by Objectives (MBO) system for Management Board members, including an ESG target.
• Launched Post-Accident Psychological Support Program.
• Implemented "Direction: Safety at Work" campaign.
• Launched "WIN" campaign promoting health and cancer prevention.
• Continued "Running-Friendly Company" program.
• Launched "Socially Responsible" project recognizing employee social engagement.
• Introduced Legal Advice hotline for employees.

Governance Achievements

• Established a Strategy and Sustainability Committee.
• Implemented a Management by Objectives (MBO) system with 20% of variable remuneration linked to ESG targets.
• Implemented an anonymous whistleblowing system.

Climate Goals & Targets

Environmental Challenges

• Existing generation gap with a large percentage of workers nearing retirement age.
• Transition risk from rising CO2 emission costs.
• Increased fuel prices.
• Low wages compared to the market, leading to employee turnover risk.
• Risk of loss due to subcontractor restrictions on greenhouse gas emissions.
• Risk of strikes and shutdowns due to industrial disputes.

Mitigation Strategies

• Actively cooperating with 32 trade schools and rail technical secondary schools for talent acquisition.
• Participating in the Education and Career Day at the International Railway Fair TRAKO.
• Developing and implementing the PKP CARGO Group’s ESG Strategy for 2024-2028.
• Implementing a Management by Objectives (MBO) system with ESG targets.
• Developing and implementing a decarbonization plan by the end of 2028.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Code of Conduct with Suppliers
• Additional requirements included in purchasing procedures to screen contractors for observance of human rights and other sustainability requirements.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events that may temporarily disrupt transport operations.

Transition Risks

• Rising costs of CO2 emissions due to the inclusion of the rail sector in the ETS.

Opportunities

• Potential for a change in transport lending policy favoring rail transport.
• Increased customer awareness of climate change and the benefits of low-emission mobility.

Reporting Standards

Frameworks Used: CSRD, ESRS

Certifications: PN-EN ISO 14001:2015-09

Third-party Assurance: An external and independent auditor will review this report.

UN Sustainable Development Goals

• Goal 3
• Goal 4
• Goal 8
• Goal 9
• Goal 12
• Goal 13

Various initiatives contribute to these goals through employee well-being, training, economic growth, innovation, responsible consumption, and climate action.

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Decarbonization
• Resource Management
• Human Capital
• Renewable Energy
• Stakeholder Engagement
• Sustainable Service Offering
• Digitalization

Environmental Achievements

• Reduced CO₂ emissions from diesel traction from 88933.70 tCO₂e in 2021 to 83495.00 tCO₂e in 2022.
• Decommissioned 34 solid fuel boiler plants between 2018-2022.
• 90% of freight turnover in 2022 was done with electric locomotives.
• By the end of 2028, 100% of the Group's wagons in service will be equipped with brakes with ceramic brake blocks.

Social Achievements

• Employee turnover of 10% in 2022.
• Median total annual remuneration of all Group employees (excluding highest paid individuals) in 2022 was PLN 69,309.52.

Governance Achievements

• Implementing an anti-mobbing policy.
• Incorporating KPIs linked to the achievement of objectives based on sustainability principles in the bonus system.

Climate Goals & Targets

Environmental Challenges

• Stringent requirements of new regulations, including the CSRD.
• Meeting customer expectations regarding decarbonization.
• Raising external funding for ambitious investment plans.
• Dispersed and varied real estate portfolio with difficult access to energy and heating infrastructure.
• Managing the energy consumption model given the unique requirements of the rail transport market.
• Maintaining profitability and performance levels while implementing ESG initiatives.

Mitigation Strategies

• Integrating ESG criteria into rolling stock modernization and procurement.
• Phasing out diesel locomotives and investing in modern electric locomotives.
• Implementing IT tools to support carbon footprint calculations.
• Developing a decarbonization plan for the 2050 horizon.
• Analyzing real estate portfolio for green energy sources.
• Seeking external funding sources to support investments.
• Implementing a centralized management of social relations at the Group level.

Supply Chain Management

Responsible Procurement

• Adopting a Supplier Code of Conduct
• Implementing a policy for purchasing low-carbon raw materials and products
• Eliminating purchases of carbon-intensive raw materials and products by 2050

Climate-Related Risks & Opportunities

Transition Risks

• Regulatory changes (CSRD)
• Market shifts (increased demand for sustainable transport)

Opportunities

• Development of energy-efficient products and services
• Increased market share due to growing demand for sustainable transport

Reporting Standards

Frameworks Used: ESRS

UN Sustainable Development Goals

• 7
• 8
• 9
• 12
• 13

The ESG strategy aligns with several UN SDGs, focusing on affordable and clean energy, decent work and economic growth, industry, innovation and infrastructure, responsible consumption and production, and climate action.