RWE : Industry Associations Climate Review 2023

Industry Associations Climate Review 2023

Contents
Executive Summary	3
Positions on climate change and the energy transition	4
Engagement in industry associations	7
Assessment approach	9
Selection of associations	9
Assessment methodology	10
Results	11
Contact	13
References	14
Annex	16

This report was prepared in English only and was published in April 2024. It is available for download on www.rwe.com

Executive Summary

RWE attaches great importance to its involvement in associations and initiatives. We see many benefits in sharing and shaping positions. Furthermore, we are convinced that shaping a sustainable future requires close cooperation. Since 2020, we have published the results of our climate review for our associations. This is our fifth review, reassessing past associations and adding new groups as our methodology requires. A list of the associations we assessed in the past years is provided in the annex.

The effort we put into this assessment is worthwhile: It is important to us and our stakeholders that the associations share our views on the pressing issue of climate change. We check six key expectations against current public documents, no older than January 2021. These expectations include support for the landmark Paris climate agreement, but also other climate -related positions, such as support for climate science, a clear commitment to expanding renewable energy and phasing out fossil fuels in a timely manner, a position on green hydrogen as a future enabler for the decarbonisation of many sectors, a position that climate change needs a global response, and a commitment to a fair and just transition for those most vulnerable to climate change.

Using publicly available information, the associations were rated as aligned or misaligned based on an assessment of their positions and activities against our expectations. Overall, we consider the alignment of the associations to be high on the six criteria. We do not see any cases of misalignment in this assessment. We will continue to engage with all assessed associations, especially those where we would appreciate further or more explicit position- ing. This includes a monitoring of their alignment with our climate-related policy positions.

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As a leading global energy company, we step up for climate.

Positions on climate change and the energy transition

The IPCC's special report on the impacts of global warming of 1.5 °C states that if the rise in global temperature is to be limited to 1.5 °C, global emissions must be reduced by around 45 % from 2010 levels by 2030 and to net zero by 2050. Electricity is central to any plan to reach net zero as it accounts for nearly 40 % of energy emissions, the most of any sector. Rapid decarbonisation is needed, not just to address these emissions, but also to support the transition of other sectors to net zero.

RWE is well positioned to contribute to transforming the energy sector and the broader economy in all the areas discussed above. And that is precisely what we are doing, by investing billions of euros in wind power, photovoltaics, battery storage and green hydrogen, phasing out coal-based generation, building environmentally friendly backup capacities, and helping industrial customers optimise their

energy consumption. These activities make us a driving force in the energy transition and allow us to support the countries where we do business in their efforts to achieve climate protection targets.

Our commitment in this regard is reflected by our own ambitions: we want to be net zero by

2040 at the latest, ten years earlier than the EU. Not only does this apply to our direct greenhouse gas emissions (referred to as Scope 1), but it also covers the upstream and downstream value chain (Scope 2 and Scope 3). We have set ourselves ambitious goals for the current decade: by 2030, we want to reduce our emissions per kWh by 67 % for Scope 1 and 2 and absolute emissions by 42 % for Scope 3 compared to 2022. At the Paris Climate Conference in 2015, the global community committed to at best limiting the increase in average global temperatures to 1.5 degrees Celsius compared to pre-industrial levels. Our actions are in line with this target, we are currently undergoing validation by the independent Science Based Targets initiative.

As a leading global energy company, we step up for the climate. This is not only evident in our past performance and in our future targets but in our core positions for political climate action. For this report, we have put together core climate-related policy positions that guide the stance we take on specific policies in countries and regions. We used these positions as the basis for our review of the 22 associations in this report. By evolving our policy positions, and sharing these with industry associations and other stakeholders, we aim to increase collaboration around the climate policy frameworks needed to help the world to achieve net zero emissions by 2050.

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Our Core Positions on Climate

We stand behind the agreements of the Paris Climate Agreement and support ambitious national and international climate protection targets. The energy industry has a key role to play in achieving these goals.

• Global warming is one of the greatest risks to humanity and must be stopped. To this end, global greenhouse gas emissions must be brought into line with a 1.5 °C path as quickly as possible.
• The basis for understanding the consequences of climate change and necessary measures are the reports of the Intergovernmental Panel on Climate Change (IPCC).
• In order to achieve the climate goals, it is first and foremost necessary to reduce greenhouse gas emissions. Only unavoidable emissions should be offset with high- quality offsets.

We see the rapid expansion of renewable energies, fair competition, and technological progress as key to the success of the energy transition. The phaseout of fossil power generation must be carried out responsibly.

• In the future, electricity generation must be renewable. That is the only way to re- place fossil fuels as quickly as possible but also in a responsible manner. In order to safely achieve the expansion targets, renewable energies need a hedge against market price fluctuations during the ramp-up phase.
• Hydrogen is a crucial building block for decarbonising sectors and areas for which there are no options for decarbonisation via a climate-neutral power supply.
• A stable regulatory environment and a level playing field for the generation of elec- tricity and hydrogen are needed.
• The development of the hydrogen economy must be flanked both by regulation and by promoting the use of climate-friendly hydrogen. In the long term, green hydro- gen in particular must be used.

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We are convinced that the transition to a climate-neutral economy is an opportunity if prosperity is preserved in this mammoth task and no one is left behind.

• The energy sector and industry, in particular, must work together to find a solution for achieving the climate goals. Climate protection must be open to technology and non-discriminatory. Open social discourse is needed instead of ideological reserva- tions.
• Climate protection is a global task to which everyone must contribute - consider- ing their respective capabilities. For example, the phaseout of fossil fuels must be carried out in a socially acceptable manner and with support for the employees af- fected. Moreover, climate protection must not be carried out at the expense of the weakest in society.

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Engagement in industry associations

We are convinced that RWE has a significant role to play for sustainable development. In 2019 we have announced our new purpose that puts this thinking into the core of our busi- ness: Our energy for a sustainable life. As the associations we are a part of shape the regulatory landscape, we believe they should be aligned with our purpose to facilitate a joint effort in creating a sustainable future. RWE is member of a large number of associations. This includes both group level memberships of RWE AG and memberships of operating companies such as RWE Power, RWE Generation, RWE Supply & Trading and RWE Renewables. Industry associations contribute to the development of well-informed and transparent discussions amongst a broad range of stakeholders, including the members of the respective association, political stakeholders such as government officials and members of parlia- ments, non-governmental organizations (NGOs), the financial community, academic bodies and the wider public. Industry associations thus offer the opportunity to jointly engage with stakeholders in order to, among other things, make sure our views on specific topics are heard, foster a common understanding of issues, share our expertise and best practices with our peers and with the wider industry, contribute to the development of standards and align cooperation and support for important projects.

We are convinced that industry associations and think tanks must be a force to accelerate ambition and action to achieve common targets. They offer internal and public formats for

exchanging ideas on positions and are therefore indispensable for our company. Our key memberships in associations are directed towards strategic objectives and relate to current and future activities of the RWE Group. We expect that all these associations share basic principles for collaboration- this includes a clear commitment to science and facts and support for a coherent position on climate -related issues. We understand that positions taken on

any topic by an industry association are often a compromise or majority view, arrived at through their individual decision-making processes, with the potential for differing views among their membership. If we see major or persistent deviations from the principles that guide us, this triggers further engagement and actions.

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We expect that all our

associations share

basic principles for col-

laboration

We consider several factors when joining and reviewing our memberships, including:

• Alignment with business purpose, focus areas and activity,
• Value to RWE's business or the implications of not being involved,
• Ability for RWE to influence the association's positioning,
• Presence of appropriate arrangements with respect to anti-trust and competition law,
• Financial and time commitments.

We regularly review our involvement in industry associations to assess the relevance of our participation versus our strategy and the achievements delivered through the organizations we have subscribed to.

Our RWE Code of Conduct sets out our expectations for working with our business partners. It requires our employees to clearly communi-

cate expectations to our partners, take the appropriate measures if expectations are not met, and report any indications that a business partner is not complying with their obli- gations. For years we have been reporting our most important memberships and our stance on politics in our annual Sustainability Report.

In addition, we apply all requirements concerning transparency: Since 2010, we have been entered in the European Union's transparency register and publish relevant information there. Since its establishment in 2022 we are also included in the transparency register of the German Parliament.

RWE's main contribution to the industry associations, it is a member of, relates both to the engagement in the associations working structures (Boards, Committees, Working Groups, Project Groups) as well as by paying membership fees which provide for the financial basis that allows the associations to perform their activities.

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Assessment approach

Selection of associations

RWE is a member of numerous industry associations that are active on national and international levels. For our assessment we focus on those associations that form positions in the energy and climate space. This selection provides important insights for our stakeholders and for RWE as we consider these associations as crucial in the framing of the climate discourse. We left aside all other associations that have different purposes. In that sense we continue with the approach we have set up in the first four reports on industry associations alignment.

Based on these criteria we have screened RWE memberships and have selected the associations that are part of this year's assessment. In some associations, RWE is member at various levels, such as regional and national level. In this case, we have only assessed the association on the highest level, as we

assume that regional subsidiaries' positions do not differ from overarching ones. In others, RWE has no direct membership but only through other associations. This holds true e.g., for Eurelectric or BDI. However, we also assess them since RWE employees are actively engaged in committees or other bodies of these associations.

In total we have identified 22 asso-

ciations from either the energy or climate spectrum that are assessed by RWE on their alignment with core RWE climate positions. In this assessment cycle we concentrate on associations with general and broad thematic spectrums, associations that represent conventional energies and associations in the hydrogen space. For a complete list of the asso- ciations, see Appendix. We reserve the right to modify that selection of associations until the final release date.

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Assessment methodology

RWE and its subsidiaries are member of numerous industry associations on national and international level. For this review, we have assessed their positions on six core expectations based on publicly stated policy and advocacy positions. These six core expectations are derived from our own core positions on climate. Our expectation is that associations, in which we participate,

• …support the Paris Climate Agreement
• …recognise the scientific findings of the IPCC (Intergovernmental Panel on Climate Change) - limiting the global temperature increase to 1.5 °C significantly reduces the negative consequences of climate change
• …see the key to achieving the climate targets in the expansion of renewable ener- gies. The use of fossil fuels must be responsibly phased out as soon as possible - especially in the energy sector
• …support green hydrogen to decarbonise activities that are difficult to electrify
• …see climate protection as a global task in which a level playing field - e.g., within the framework of a climate club, e.g., at G20 level - is essential
• …advocate social compensatory measures for those who are particularly burdened by the exit from fossil fuels and climate protection

For the assessment we have collected and analysed information on the positions of the as- sociations. This included primary data gathered for example from the associations' web- sites, including public statements, press releases and position papers. The review covers only positions and statements that have been published from 01 January 2021 onwards.

Internal auditors have categorized the associations based on their alignment level with the six criteria. These first assessments have been validated by another group of internal audi- tors. We used the following categories:

• Aligned: The association has taken a supportive stance on the criterion in a public statement. This can be either an explicit statement or a statement that implies align- ment within a reasonable degree.
• No position: The association had no public position on the criterion.
• Misaligned: The association is taking positions that are contrary to the criterion.

For this year's assessment, we set stricter rules for the statements we accepted. Statements that were not clear enough, not public or published before 2021 were not accepted. This resulted in us changing some associations criteria from 'aligned' to 'no position' compared to the last time they were assessed by us. We encourage all associations where this was the case to take a public stance on these criteria to update their position.

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