Centrais Eletricas Brasileiras S A : Annual Report 2023

Annual Report

Eletrobras 2023

Contents

Welcome

1. Eletrobras
2. Governance
3. Prosperity
4. People
5. Planet
6. Appendices

ANNUAL REPORT

2023

Contents

Welcome		3. Prosperity		Appendices
Foreword	04	Operating Performance	66	Assurance Report	168
Message from Management	06	Financial Performance	72	GRI Content Index	171
Material Topics	08	Commercialization	77	Credits	180
Stakeholder Relationship	13	Innovation and Technology	80
Highlights from 2023	15	Supply Chain Management	87

1. Eletrobras		4. People
Profile	20	Our Employees	90
Transformation Journey	26	Employee Attraction and Retention	93
Strategic Planning	28	Diversity and Inclusion	102
Sustainability Management	32	Worker Health, Safety and Well-Being	108
		Human Rights	115
2. Governance		Relations with Communities	118
Corporate Governance	40
Governance Structure	41	5. Planet
Ethics, Integrity and Compliance	48	Environmental Management	134
Risk Management	61	Climate Change	137
Government Relations	62	Water and Effluent Management	149
		Biodiversity and Ecosystem Services	156

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Contents

Welcome

• Foreword
• Message from Management
• Material Topics
• Stakeholder Relationship
• Highlights

4. People	Welcome
1. Eletrobras
2. Governance
3. Prosperity
5. Planet
6. Appendices

UHE PAI, II e III - Photo: André Schuler

ANNUAL REPORT

2023

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GRI 2-2

GRI 2-3

Contents

Welcome

• Foreword
• Message from Management
• Material Topics
• Stakeholder Relationship
• Highlights

1. Eletrobras
2. Governance
3. Prosperity
4. People
5. Planet
6. Appendices

ANNUAL REPORT

2023

Foreword

Welcome to Eletrobras 2023 Annual Report. Through this document, we reaffirm our commitment to sustainability and transparency, letting our stakeholders know how our strategy and management generated value between January 1st and December 31st, 2023.

For the first time in the history of Eletrobras, we are publishing a consolidated report with information from the holding company and the five subsidiaries (Eletrobras CGT Eletrosul, Furnas, Chesf, Eletronorte and Eletropar).

The content was constructed according to Eletrobras companies' sustainability framework, taking into account environmental, social and governance (ESG) factors, and organized into four main pillars: Governance, Prosperity, People and Planet.

The information is presented in accordance with the Global Reporting Initiative (GRI) standards, in addition to other global and sectoral standards and good practices for corporate sustainability reporting, including:

• International Integrated Reporting Council (IIRC) Integrated Reporting Framework;
• Stakeholder Capitalism Metrics, World Economic Forum
• Sustainable Development Goals (SDGs);
• Sustainability Accounting Standards Board (SASB) Guidelines;
• Recommendations from the Task Force on Climate- Related Financial Disclosures (TCFD);
• Principles of the United Nations (UN) Global Compact;
• Accounting Manual for the Electrical Sector of the Brazilian Electricity Regulatory Agency (Aneel).

We are members of the GRI Community, a global network for exchanging knowledge in sustainability reporting, which supports the evolution and updating of GRI guidelines.

How to read this Report?

Throughout the report, we use icons to indicate content related to the methodologies used.

• Throughout the text, we highlight GRI indicators reported in the content next to the chapter titles or at the end of each paragraph.
• In the introduction to each chapter, we show how its content relates to the 2030 Agenda SDGs prioritized by Eletrobras companies (learn more on page 36).
• In the introduction to each chapter, we show which Integrated Reporting Capital its content is related to (learn more on page 31).

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GRI 2-5

Contents

Welcome

• Foreword
• Message from Management
• Material Topics
• Stakeholder Relationship
• Highlights

1. Eletrobras
2. Governance
3. Prosperity
4. People
5. Planet
6. Appendices

ANNUAL REPORT

2023

The non-financial information in this report has been assured by an independent third-party (learn more on page 168) under the oversight of the as part of the document preparation process. Financial information has been assured in the Company's Financial Statements.

The contents were evaluated by business sustainability representatives from Eletrobras companies, who are responsible for coordinating the preparation of the annual report in accordance with internationally accepted standards, such as the Global Reporting Initiative (GRI) and International Integrated Reporting Council (IIRC). The final document was also submitted to the Strategy, Governance and Sustainability Committee and approved by the Executive Board and the Board of Directors. GRI 2-14

Enjoy your reading!

CONTACT GRI 2-3

If you have any questions or comments about the content disclosed herein, please contact our sustainability team:

[e-mail]

This report is in its 2nd edition as it contains adjustments and/or additional explanatory notes on page 146.

Delivering value

Throughout 2024, we will report a series of reports regarding our sustainability strategy and performance, with content that complements and deepens those presented in this annual report:

• Executive Summary, with the main highlights of the Annual Report.
• Indicator Booklet, reporting the GRI indicators of Eletrobras and SPEs.
• Thematic Booklet, deepening the reporting of our management and initiatives on specific topics such as
  Relationship with Communities and Biodiversity.
• SASB, TCFD, IFRS and Sustainable Finance reports, in compliance with other guidelines.
• SDG booklet.

You will be able to access these documents on the Sustainability page of Eletrobras Websitel.

Waterfall at CGH Cachoeira Branca - Photo: Vivianne Nunes

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Message from Management GRI 2-22

Contents

Welcome

• Foreword
• Message from Management
• Material Topics
• Stakeholder Relationship
• Highlights

1. Eletrobras
2. Governance
3. Prosperity
4. People
5. Planet
6. Appendices

ANNUAL REPORT

2023

2023 will be recorded as a period of great transformation at Eletrobras, during which we established the foundations that will support our growth in the coming decades. With this purpose, our Transformation Office conducted 75 initiatives, involving more than 400 professionals and making significant deliveries for the company.

We know we will witness major changes in the Brazilian energy sector, driven by the transition to a low-carbon economy, and we understand that we have a paramount role in this new scenario, generating and transmitting clean energy to thousands of people across the country, supporting our customers in their decarbonization journey and contributing to sustainable development.

To this end, we reviewed our strategic plan, reinforcing our position as a green major: global leader in value creation with infrastructure and renewable, low-emission solutions.

In this context, we publicly commit to zero net greenhouse gas emissions by 2030, following the Science Based Targets Initiative (SBTi) guidelines. In order to achieve this objective, we sold

the Candiota Thermal Power Plant, our last coal-fired generation asset, and continued studies for the sale of the gas-fired Thermoelectric Power Plants, which should make our matrix even cleaner from 2024 onwards.

During COP 28, in Dubai, we became ambassadors of the NetZero Ambition Movement, which aims to support companies in establishing ambitious emission reduction targets, and the Amazon Impact Movement, which aims to guarantee forest preservation by supporting the transition to a green economy in the region.

This year, we also approved the guidelines for the production of green hydrogen, with a focus on meeting the electrical demand of production chains, such as steelmaking, with clean, renewable energy. Our objective is to establish partnerships to increase the competitiveness of projects to produce this clean energy source.

The year was also marked by significant progress in the process of simplifying our corporate structure. The incorporation of Furnas was recently approved at the Extraordinary General Meeting, and we are awaiting the necessary approvals for

its implementation. It is worth highlighting the completion of important transactions, such as the acquisition of Retiro Baixo Energética and the consolidation of 100% of Teles Pires and Baguari.

2023 financial results showed the positive impact of increased transmission revenues, greater cost efficiency and capital discipline and the simplification of the company's administrative structure. Personnel, material, services and other expenses (PMSO) showed an 11% reduction compared to 2022. EBITDA grew 49% and totaled R$17 billion, and the annual net profit reached R$4.4 billion, a 21% increase compared to 2022.

With our increased investment capacity, we actively participated in Aneel's transmission auction calendar. In June, we won Lot 4, which provides for a 30- year concession over a 300-kilometer stretch, including licensing, construction and operation. Additionally, we invested R$1.62 billion in generation assets, in dam modernization, improvement and safety projects. These investments support the search for quality, safety and reliability of services. During 2023, we recorded a generation availability of 1,027 and transmission lines of 99.96%.

We continue to advance in building the future Eletrobras. Our vision is based on three pillars: customers, culture and safety, and responsible business performance. These are the foundations on which we will build an innovative, long-lasting, resilient, engaged company capable of delivering value to society and its shareholders.

We made progress in structuring the energy trading area, which now operates in the market in an integrated manner, with a focus on customer service. We reached a base of 271 end consumers, a 502% increase when compared to 2022. In a scenario of improving energy prices, such as the one currently emerging, the impact of these initiatives should be even more visible on the company's results.

With the purpose of scaling our efforts in R&D+I, we began to manage all of the company's innovation projects based on a single strategy integrated with other areas, with fast deliveries and portfolio management based on value generation potential. In this context, we created the Innovation Grid, a platform for connecting with the innovation ecosystem, with emphasis on the PowerUp module, an open innovation initiative aimed at startups.

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Contents

Welcome

• Foreword
• Message from Management
• Material Topics
• Stakeholder Relationship
• Highlights

1. Eletrobras
2. Governance
3. Prosperity
4. People
5. Planet
6. Appendices

ANNUAL REPORT

2023

Our commitment to incorporating the ESG vision into business decision-making is already materializing in the strengthening of relationships with communities

and indigenous peoples and in actions that contribute to local development. In total, we invested more than R$14 million in voluntary projects focused on traditional communities and R$1 million in emergency and institutional actions to carry out socio-environmental projects.

In order to advance the human rights agenda in the country, we began to lead the Human Rights Working Group (WG) for the Electrical and Energy Sector

of the UN Global Compact in Brazil, which has the participation of more than 30 companies of the sector.

We also strengthened our organizational structure with the creation of socio- environmental units in the areas of expansion, operations and in the recently created sustainability department, permeating the company's processes from project design to their decommissioning. For the seventh year in a row, we have linked ESG goals with the variable remuneration of our directors, managers and employees, including topics such as decarbonization, health and safety and social actions.

Our practices continue to be recognized by the market. We remain in the S&P Global Sustainability Yearbook 2024 for the 4th year in a row, we are in the

B3 Corporate Sustainability Index and we have advanced to the leadership category in the CDP Climate Change and Water Security dimensions.

We are guided by the nine SDGs of the UN 2030 Agenda prioritized by the company to guide its actions and by the ten Guiding Principles of the Global Compact, to which we have been signatories since 2006.

All of this is only possible thanks to a strong team. Therefore, we are committed to promoting the cultural transformation of Eletrobras and building an environment where our employees have continuous learning and development. The fundamental foundation for this is the health and safety of our team. This year, we centralized the management of this issue and launched programs to reinforce our commitment to the comprehensive health and safety of all employees, with a 8% reduction in the accident frequency rate. The document "Commitments for Life" provides 10 behavior rules that promote responsible and safe conduct.

Throughout 2023, we have been focused on engaging and renewing our team.

In this context, we began the second phase of the Voluntary Severance Plan, which covered about 2,500 people who were or could be retired. A total of 822 new employees joined the company, and at the same time, we launched our trainee program, which attracted more than 15 thousand candidates.

Reinforcing our commitment to ethics and integrity, this year we reviewed and launched the new Compliance Program, made up of a set of actions aimed at preventing, identifying and correcting any non-conformities. In this context, we expanded our integrity due diligence actions, which now include third parties with whom we have relationships or consider having relationships. A total of 858 third parties were evaluated, including suppliers, customers and sponsors.

We are confident that these transformations are essential for the company. There is a lot to do, but we are pleased to see that every day we move forward consistently with the vision that currently unites our Board of Directors and Executive Board.

We are grateful for the support, dedication and effort of our professionals, who remain steadfast in building the new Eletrobras. We are committed to being a safe company that maximizes the return of invested capital, pursues greater efficiency, greater returns for shareholders, customers and professionals and positively impacts society and the planet.

Vicente Falconi Campos

President of Eletrobras

Board of Directors

Ivan Monteiro

Eletrobras CEO

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GRI 3-1

GRI 3-1

GRI 3-1

Contents

Welcome

• Foreword
• Message from Management
• Material Topics
• Stakeholder Relationship
• Highlights

1. Eletrobras
2. Governance
3. Prosperity
4. People
5. Planet
6. Appendices

ANNUAL REPORT

2023

Material Topics

In order to report the information of greatest interest to our stakeholders, in 2023 we updated Eletrobras companies' materiality matrix, which highlights the most relevant topics for our performance and impact on economic, environmental, social and governance aspects.

In this cycle, we are based on the dual materiality methodology presented by GRI and the European Sustainability Reporting Guidelines (ESRG), which propose addressing both the topics that have the greatest impact on stakeholders and those that have a financial impact on the organization.

The methodology considered research into the company's external and internal scenarios, carried out in the following stages:

1. CAPITAL MARKET ANALYSIS

Study of the main sectoral themes

highlighted by capital market sustainability mechanisms and frameworks, such as Dow Jones Sustainability Index (DJSI), MSCI, RepRisk, Sustainalytics, ISS ESG, TCFD, GRI and SASB.

2. SECTOR ANALYSIS

Analysis of relevant topics for five companies considered references in sustainability in the sector.

3. FEEDBACK FROM STAKEHOLDERS

Online survey of 12 of the company's stakeholders, which had 960 participants.

4. FEEDBACK FROM EXECUTIVES

Interview with business executives and leaders.

5. SUSTAINABILITY COMMITTEE

Open consultation with

representatives of corporate

sustainability at Eletrobras, with 45

participants.

6. STRATEGIC PLAN

Survey of ESG themes prioritized in the guidelines and objectives of Eletrobras Strategic Plan.

The prioritized topics were evaluated and approved by the company's senior leadership, including the Executive Board and the Board of Directors.

Stakeholders consulted:

• Shareholders
• Managers
• Customers
• Professionals
• Government
• Partners
• Sponsors
• Suppliers
• Civil society representatives
• Service providers
• Residents of communities close to operations
• Members of other companies

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GRI 3-2

Contents

Welcome

• Foreword
• Message from Management
• Material Topics
• Stakeholder Relationship
• Highlights

1. Eletrobras
2. Governance
3. Prosperity
4. People
5. Planet
6. Appendices

ANNUAL REPORT

2023

As a result, we came up with a materiality matrix that prioritizes 10 topics considered material and two relevant topics. The topics are interconnected and transversal to the company's strategy, and their reporting is considered important to understand the impacts of our operations.

			5	4	2
					1
MATERIALITY		11	6		3
	8
FINANCIAL	10	9
			7
		12
		SOCIO-ENVIRONMENTAL IMPACT MATERIALITY

Material Topics

1. Worker health, safety and well-being

2. Climate change and energy transition

3. Biodiversity and ecosystem services

4. Community engagement

5. Ethics, integrity and compliance

6. Water resources management

7. Innovation and technology

8. Customer relationships

9. Employees attraction and retention

10. Government relations and advocacy

Relevant Topics

11. Diversity, inclusion and anti-discrimination

12. Tax strategy

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GRI 3-2

GRI 3-2

Contents

Welcome

Among the topics considered material in 2022, only Risk and Emergency Management and Human Rights are not part of the most recent matrix.However, the reporting of both topics is mandatory in the annual report according to the GRI and Integrated Reporting guidelines, and their contents are reported both in their own chapter and cross- sectionally, included in other topics covered.

Government relations and advocacy and Customer relations topics were included. Climate change and Energy transition and efficiency were combined into a single topic, aiming for a more complete management and reporting of the topic.

• Foreword
• Message from Management

LIMITS OF MATERIAL TOPICS

» Material Topics	DIMENSION		MATERIAL TOPIC	IMPACTED AUDIENCES	IMPACTED SDG	IMPACTED CAPITAL
» Stakeholder Relationship
			Internal
» Highlights
			Managers
1. Eletrobras				Employees
2. Governance				External
			Shareholders
3. Prosperity		Ethics, integrity and compliance	Customers
	Government
4. People				Partners
				Sponsors
5. Planet				Suppliers
				Communities
6. Appendices	GOVERNANCE			Competitors
			Society
				Internal
				Managers
		Government relations	Employees
			and advocacy	External
				Shareholders
				Government
				Society
	Manufactured	Financial	Human	Intellectual	Social	Natural
	Capital	Capital	Capital	Capital	Capital	Capital
ANNUAL REPORT							10
2023