Climate Change Data

Environmental Metrics

ESG Focus Areas

• Economic Performance
• Availability, Reliability, and Access to Electricity
• GHG and other Emissions
• Water
• Effluents and Waste
• Biodiversity
• Cyber-security
• Occupational Safety and Health
• AES Global Talent Management
• Impacts on Education and Living Standards in our Communities
• Disaster/Emergency Planning and Response
• Public Safety

Climate Goals & Targets

Supply Chain Management

Responsible Procurement

• AES Code of Conduct
• Procure to Pay Policy

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G4 (Core)

Certifications: ISO 9000, ISO 14001, OHSAS 18001

Third-party Assurance: Lloyd’s Register Quality Assurance Inc. (Limited assurance for GHG emissions and EHS data)

Environmental Metrics

ESG Focus Areas

• Financial Excellence
• Operational Excellence
• Environmental Performance
• Stakeholder Engagement
• Our People

Environmental Achievements

• Scope 1 emissions stayed below the 2014 target of 100 million metric tons
• 23 emissions reduction projects in ten countries were completed, resulting in estimated annual CO2e savings of 17,819 metric tonnes
• AES businesses recycled and reused over 1.6 billion m3 of water
• Increased CCP recycling and reuse by 8.1 percent since 2011

Social Achievements

• Safest year on record with no AES people fatalities
• Many of our companies achieved top quartile place to work rankings, and this year AES Corporate ranked as a top workplace in a survey conducted by The Washington Post
• All of the programs’ donations and sponsorships benefited more than 600,000 people directly and more than 24 million people indirectly
• In 2014, six of our businesses across four SBUs were recognized as a Great Place to Work from the Great Place to Work Institute

Governance Achievements

• AES was recognized as one of the World’s Most Ethical Companies by the Ethisphere Institute
• AES was named to the Dow Jones Sustainability Index (DJSI) for North America for the first time ever
• Announced a doubling of our dividend, with an intended growth rate of 10% per year

Climate Goals & Targets

Environmental Challenges

• Second year of drought along the Eastern Pacific Rim from California to Chile, which affected the results of some of our businesses
• Weakening of commodities and foreign currencies and negative investor sentiment towards exposure to countries outside the United States
• One contractor fatality and a number of serious incidents
• Dry hydrological conditions across a few markets in Latin America and reliability challenges at our generation businesses in the Philippines and the United States as well as our utilities in Brazil

Mitigation Strategies

• Operational improvements, accelerated cost savings and capital allocation decisions, including share repurchases and debt prepayments
• Mitigation plans implemented to address unplanned outages
• Proactive programs to improve reliability and customer satisfaction
• Implementation of diverse emission reduction projects through process improvements and equipment replacements

Supply Chain Management

Responsible Procurement

• Safety requirements, environmental guiding principles and supplier diversity objectives

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Guidelines, version 4.0

Certifications: ISO 14001 (67% of AES operating businesses)

Third-party Assurance: Lloyd’s Register Quality Assurance Inc. (LRQA) (limited assurance for air emissions and LTI data)

Awards & Recognition

• Project Finance International (PFI) Asia Best Practice Award for Mong Duong II

Environmental Metrics

ESG Focus Areas

• Financial Excellence
• Operational Excellence
• Environmental Performance
• Stakeholder Engagement
• Our People

Environmental Achievements

• Reduced direct GHG emissions (Scope 1) from 70,339 thousand MT in 2015 to 63,497 thousand MT in 2017.
• Increased CCPs recycled/reused from 33.9% in 2015 to 38.2% in 2017.
• Acquired or advanced the development of more than 2.3 GW of renewable generation in the United States, Brazil, and Mexico.

Social Achievements

• Zero fatalities for AES people in 2017.
• 35% decrease in Lost Time Incident (LTI) cases in 2017.
• Developed over 100 community-oriented investment programs in 2017.

Governance Achievements

• Eletropaulo transitioned its listing to Novo Mercado, a segment with high corporate governance standards.
• Regular communication with investors via various channels (earnings presentations, website, calls, etc.).
• Global Cybersecurity program implemented and regularly assessed.

Climate Goals & Targets

Environmental Challenges

• External factors impacting customer satisfaction in El Salvador (reduction of electricity subsidy and increased generation costs).
• Public fatal incidents due to contact with distribution infrastructure (27 in 2017).

Mitigation Strategies

• Implementing mitigation measures based on investigations of public fatal incidents.
• Addressing challenges to customer satisfaction through improved communication and potentially addressing underlying issues.

Supply Chain Management

Responsible Procurement

• Clear policies, procedures, terms and conditions for suppliers.
• Alignment of suppliers with AES values and standards.

Climate-Related Risks & Opportunities

Opportunities

• Integration of renewables and energy storage.

Reporting Standards

Frameworks Used: GRI Guidelines, version 4.0

Certifications: ISO 14001 (more than 80% of workforce in businesses with ISO 14001 certified EMS)

Third-party Assurance: Lloyd’s Register Quality Assurance Inc. (LRQA) - limited assurance for air emissions, water, and CCP data

Sustainable Products & Innovation

• Advancion energy storage platform
• Fluence energy storage technology and services company (joint venture)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Renewable Energy
• Diversity & Inclusion
• Safety
• Community Engagement
• Governance
• Water Stewardship
• Biodiversity

Environmental Achievements

• Reduced CO2e emissions from portfolio due to emission reduction activities, coal unit conversion to gas, retirements and portfolio changes
• Retired or sold over 6.5 GW of coal, diesel and oil capacity from portfolio
• More than 14% of revenues came from renewable generation, products or services
• Over 70 percent of signed Power Purchase Agreements (PPA) backlog was from solar, wind and energy storage
• Avoided 175,000 tons of CO2 emissions in El Salvador through the Bosforo solar project
• Reduced water consumption by 21 percent since 2013 in Colombia
• Reduced discharge water from 117,000 gallons to 45,630 gallons per year at Alamitos power plant

Social Achievements

• Launched Global Diversity & Inclusion Program
• 90 percent of Executive Leadership Team are from traditionally underrepresented groups
• 21 percent of all management positions are held by women
• Implemented trainings that improved participants' skills and increased their employability in Chile (over 75% found permanent work)
• Provided access to electricity for the first time to over 78,000 families in rural El Salvador
• Benefited over 12,000 people through access to energy initiatives

Governance Achievements

• Upgraded to an investment grade rating for the first time in AES' history
• Issued Green Bonds in Brazil and Chile
• Independent Board (9 out of 10 directors are independent)
• Separation of CEO and Chairman roles
• Annual elections of Directors by majority vote

Climate Goals & Targets

Environmental Challenges

• Water availability is a critical risk factor for operations
• Potential for public safety incidents related to electrical infrastructure
• Cybersecurity threats to critical infrastructure
• Climate change impacts on operations (e.g., severe weather)
• Managing water consumption and withdrawals, especially freshwater in arid areas

Mitigation Strategies

• Improving consumption in cooling towers, rainwater collection, water recycling/reuse
• Implementing controls and preventive measures to mitigate public safety risks (security fencing, warning signs)
• Global cybersecurity program to reduce risk, improve cyber-hygiene, and protect privacy
• Emergency preparedness standards and Business Continuity Plans (BCPs)
• Proactive water risk management using WRI Aqueduct Global Water Tool and AES Environmental Impacts Assessment tool

Supply Chain Management

Responsible Procurement

• Published policies and guidelines (safety and environmental)

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather
• Hurricanes
• Storms
• Wildfires
• Low levels of wind or sunlight

Transition Risks

• Changes in government policies or tax incentives
• Changes in environmental laws

Opportunities

• Growth in renewable energy projects and energy storage projects

Reporting Standards

Frameworks Used: Global Reporting Initiative (GRI) Standards, Electric Utility Sector Disclosures

Certifications: ISO 55001 (AES Tietê), ISO 14001 (approx. 62% of AES locations), OHSAS 18001/ISO 45001 (approx. 62% of AES locations)

Third-party Assurance: Lloyd’s Register Quality Assurance Inc. (LRQA)

Sustainable Products & Innovation

• Green Blend and Extend offering
• Energy storage systems
• Smart Operations Centers

Awards & Recognition

• IJGlobal Latin America Deal of the Year (Mesa La Paz)
• Edison Electric Institute’s Edison Award
• EEI Emergency Recovery Award (DP&L)
• EEI Emergency Assistance Award (IPL)
• CSO50 award (Cybersecurity Awareness Program)