03/06/2022

To our stakeholders:

I am pleased to confirm that ACWA Power reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to sharing this information with our stakeholders using our primary channels of communication.

Sincerely yours,

Paddy Padmanathan
Chief Executive Officer

Our commitment to human rights is clearly stated in our Code of Conduct & Ethics Policy, which puts emphasis on treating employees, and individuals in the communities in which we operate and throughout our supply chain, with dignity and respect.
Our commitment towards Human Rights extends to all our stakeholders, including our suppliers. Where we don't have managerial control, we expect and require compliance with our policy. We regularly review and update our policies and procedures proactively to identify, address and respond to unfavorable human rights issues with which we are possibly involved.
Among the broader human rights issues identified, we consider the following as crucial and non- negotiable:
• Providing access to grievance mechanisms
• Supporting access to water and sanitation
• Preventing child labor, modern slavery, forced labor and human trafficking
• Ensuring a decent living wage and income
• Ensuring safety and health
• Empowering and supporting women
We are dedicated to complying with the pertinent laws and implement controls wherever we operate. Where national law and international human rights standards differ, we adopt the higher standard.

Additionally, ACWA Power is also committed to protecting workers from workplace harassment, including physical, verbal, sexual or psychological harassment, abuse or threats. As such, ACWA Power does not tolerate any form of discrimination, harassment, or violence in the workplace and has implemented measures to ensure it maintains a working environment that encourages mutual respect and promotes respectful relationships between employees.

Our Code of Conduct & Ethics Policy prohibits harassment in any manner or form, and as such, all reported or suspected occurrences of harassment/bullying is promptly and thoroughly investigated. Where harassment is determined to have occurred, we immediately take appropriate disciplinary or corrective action. We do not permit any acts of retaliation against anyone who files harassment complaints or cooperates in any harassment investigation and we have a whistleblowing procedure in place. We ensure that integrity and transparency extends to implementing an efficient and confidential whistleblowing program, which enables any employee or third party to report concerns through dedicated channels. A dedicated Compliance line provides a mechanism for the confidential and anonymous submission of concerns through an independent third party, Ethics Point, which is accessible at any time.

Employee training on human rights policies or procedures:
To help fostering awareness on the Code of Conduct and Ethics, we have developed two mandatory e-learning modules, Making Ethical Decisions and Code of Ethics Policy, which offer guidance in an interactive and engaging way to help employees gain a better understanding of the guidelines and practices set out in the Code and adhere to the highest ethical standards, including on Human Right.
Employee training on Human Rights: 100% of our employees and Management Committee are to complete the following trainings, which cover Human rights: “Making Ethical Decisions” and “Code of Ethics”

Firm stance against any form of forced labour
ACWA Power does not tolerate any form of modern slavery, forced labour or human trafficking in any part of its business or supply chain. Specifically:
i. ACWA Power will not employ children that falls into the definition as stipulated by ILO (International Labour Organization) Convention, notwithstanding any national law or local regulation.
ii. ACWA Power ensures that its Employees are of legal working age for their position and complies with local laws for youth employment or student work, such as internships or apprenticeships.
iii. ACWA Power is strictly against all forms of exploitation of children. The Company does not provide employment to children before they have reached the legal age to have completed their compulsory education, as defined by the relevant authorities.
iv. ACWA Power expects its business partners and associates to have and uphold similar standards and abide by country-governing laws in countries wherein they operate. Should violation of these principles become known to ACWA Power and not be remediated, ACWA Power will take serious action as deemed necessary.
v. It is the responsibility of local management and People department to implement and ensure compliance with this Policy at all ACWA Power operations and facilities.
vi. ACWA Power and its Employees do not tolerate, engage in, or support human trafficking, forced labour or modern slavery of any kind through ACWA Power’s activities, including in its supply chain, or assist ACWA Power’s clients or any other party in doing so.
vii. ACWA Power respects its Employees’ rights to agree to terms and conditions of employment voluntarily without coercion, and freely terminate their employment on appropriate notice.

Welfare Management
ACWA Power engaged a third-party to design and implement a due diligence process to assess welfare management at construction projects. This was established as a pilot program in two of our plants, and covered a comprehensive assessment of welfare management, including labor rights and wellbeing, compliance with local regulations and other project specific requirements, internationally approved standards and/or good practices (e.g. International Finance Corporation standards).
The data acquired during the due diligence will be used to design the ACWA Power Welfare Management System for the development of future projects.

Our People
The safety of our people, our customers, partners, and communities remains our number one priority. It is the key focus of our central leadership as well as the cross-functional teams across the globe. Due to the pandemic, there have been significant changes in the way we work and protect our health and well-being.
We also continued to ensure the wellbeing of our people and to support their growth, updating several HR policies to improve performance, our people management processes and to ensure consistency and adherence to best practice.
We have built the element of wellness in our revised HR policies thus emphasizing on its importance. Wellness and Occupational health is now also a part of our medical insurance benefits.
We also strengthened our schemes to attract, retain and develop careers, to address the expectations of new hires and to build a high-performance workplace and culture.

Diversity and inclusion
Fostering a culture of diversity and inclusion is key to successfully achieving our ‘Lead the change’ strategy as we continue to expand across the world setting new benchmarks for success.
To achieve gender equality throughout the organization, we launched Women’s Initiative for Networking and Global Solutions (WINGS) – an initiative focusing on sustainable female empowerment and inclusion, while simultaneously ensuring that female leaders are given opportunities to progress.

Training and development
Employee development is essential in meeting the needs of a high performance driven culture. To achieve this, we offer employees a wide range of learning and development opportunities, which include online learning resources and interactive learning experiences designed to increase personal and professional effectiveness.
Lastly, we focus on developing the next generation of leaders through the Leadership Development Programme (LDP) and the Executive Managing Officer (EMO) Accelerator, a new programme designed to ready high caliber in-house talent for leadership roles at project company level.

In 2021, our workforce consisted of 3920 employees in the 13 countries where we operate, with female employees comprising 6 percent of the total. In 2021, 8 percent of manager and director-level roles were occupied by female employees.
% of women in total workforce: 6%
% of managerial or director-level positions filled by women: 8%
We initiated the development of a clear localization strategy and remain dedicated to achieving our Saudization targets in the Kingdom, as well as other localization targets in our countries of operation. Our commitment to supporting local workforces was reflected in our employment of 2369 local employees, representing 60% percent of the total workforce.
% of total employees that are local nationals: 60%
% of total Directors/Managers that are local: 35%

Environmental management system and management of environmental impact and risk
ACWA Power is committed to operating with minimal environmental risk and impact, not only to safeguard the health and safety of our workforce and communities, but also to reduce our impact on the environment. We actively prioritize efficiency across our operations to ensure that any environmental impact and risk is managed responsibly.

Our emissions targets
We have set and publicly declared the target to reduce our portfolio’s specific GHG intensity by 50 percent by 2030, largely facilitated by a rapidly rising share of renewables generation capacity reaching a 50/50 greenbrown ratio by 2030. We are also committed to reaching net-zero emissions from our portfolio by 2050.
There have also been remarkably positive developments in relation to some of our fossil fuel-fired assets, which have contributed to our rapid drive towards decarbonization.

Sustainable Procurement
We consider the environmental, social and economic consequences of our procurement practices and raw material sourcing. Our Procurement Policy and the supporting procedures set out how the procurement process operates, its application standards and clarifies the roles and responsibilities of those involved in procurement. Additionally, the Policy extends to any third-party organizations spending ACWA Power funds, ensuring that any organizations with which we collaborate, such as contractors, also consider their environmental, social, and economic impact in their procurement practices.

Health, Safety, Security and Environment (HSSE)
Our Health, Safety, Security and Environmental system meets the International Finance Corporation (IFC)'s stringent guidelines.
During the feasibility assessment and development or acquisition phases for new assets, HSSE issues are identified and managed by undertaking HSSE due diligence assessments and then commissioning environmental & social impact assessments (ESIA) that are completed by independent consultants.

Asset performance-related and technical issues with HSSE consequences are covered by ACWA Power’s minimum technical specifications which are applied to all projects and are based on ensuring compliance with local legislation and the WB/IFC EHS Guidelines.

At the start of construction, project-specific HSSE and social action plans are established as part of the implementation of the ESIA which is also a contractual obligation. ESIA compliance is monitored by both the project company’s and the corporate HSSE teams, who are supported by independent environmental consultants that conduct audits on the lenders’ behalf.

At an operational level, ACWA Power's O&M Business Unit has an integrated management system that covers HSSE and has been certified to the ISO and OHSAS standards since 2010. We perform an annual occupational health check-up for at risk operational employees covering a range of parameters, including lung tests and audio tests. All construction sites have access to on-site nurses and doctors, with remote sites having on-site ambulances and emergency response resources.

ACWA Power offers rewards programs to motivate stakeholders to abide by the company’s HSSE policies. They include recognition, bonuses and cash incentives for good performance and rewarding reporting of near-misses. We believe that incentives combined with a zero-tolerance enforcement of standards are instrumental in driving HSSE in action and fostering a safety culture across all of ACWA Power.

Emergency and critical health and safety incidents are reported through agreed channels within four hours to enable the deployment of formal emergency response plans. All incidents are followed up through formal investigations to identify root causes and lessons learned, the outcomes of which are shared. Incidents and noncompliance events are reported monthly. We conduct periodic management and performance audits which are followed by a detailed report of findings, conclusions and recommendations. These are then monitored and tracked until closure.

Environmental management system and management of environmental impact and risk
In 2021, we developed an Environmental and Social Management System manual, with guidelines on the key environmental and social aspects, to ensure consistency across all ACWA Power projects. This initiative supports our aim to ensure that our Environmental & Social Management Systems (ESMS) are standardized and aligned to give prospective lenders and regulators the assurance that project-level E&S management structures are sound and systematic.

Our emission inventory
More than a year ago, we announced our commitment to a specific GHG intensity reduction of 50 percent in our portfolio by 2030 from where it stood at the end of 2020. We believe we will achieve this target by focusing our investments on renewables and transitional low CO2 emitting assets, including capturing viable fuel-switch opportunities and increasing and optimizing the energy efficiency of our portfolio.
We monitor, measure and report, and will continue to do so, our portfolio’s absolute Scope 1 and 2 emissions and the emission intensity. While our targets are based on ACWA Power’s equity share in our projects, we will never lose sight of the total portfolio metrics and will continue to report them.
In conducting our emission calculations for 2021, we aligned with the most relevant internationally recognized GHG accounting and reporting standard for calculating and reporting emissions:
• GHG Protocol Corporate Accounting and Reporting Standard (WBCSD & WRI, 2004)
• GHG Protocol Scope 2 Guidance (WBCSD & WRI, 2015)
ACWA Power’s footprint is based on the equity share consolidation approach, including under Scope 1 & 2 emissions from assets based on the company’s share of equity.
ACWA Power’s 2021 carbon footprint covers all our operational assets globally, excluding offices, and includes applicable emission sources that account for more than 5 percent of the total emissions.
ACWA Power’s Scope 1 emissions include direct emissions from stationary fuel combustion from our assets. Fuels include natural gas, fuel oil, coal, and diesel. ACWA Power’s Scope 2 emissions include indirect emissions from grid supplied electricity consumption from our assets.

Our emissions targets
There have also been remarkably positive developments in relation to some of our fossil fuel-fired assets, which have contributed to our rapid drive towards decarbonization.
In September 2021, we entered into an agreement for the sale of our shareholding in Shuqaiq Water and Electricity Company, an oil fired asset located in Saudi Arabia.
When completed, this sale will bring us closer to our targets of 50 percent reduction in the portfolio’s carbon intensity by 2030 and net zero emissions by 2050.
On 2 February 2022, the Dubai Electricity and Water Authority (DEWA), our coinvestor and offtaker in the Hassyan Clean Coal IPP announced the decision to convert the operation of this project from clean coal to natural gas. Aligning this project with the Dubai Clean Energy Strategy 2050 and Dubai’s carbon neutrality strategy to provide 100 percent of its energy production capacity from clean energy sources by 2050, this step continues to ensure Dubai’s energy supply security by maintaining a diversified energy mix. With operation on natural gas instead of coal, the project will avoid approximately 30 million tons of CO₂ emissions by 2030.
These actions augment ACWA Power’s commitment to decarbonize our portfolio and focus on renewables and transitional low CO₂ emitting assets with the objective of fulfilling the net-zero emissions target by year 2050.

Sustainable Procurement
Achievement of the CIPS Procurement Excellence Programme (PEP) Award
In 2021, ACWA Power partnered with the Chartered Institute of Procurement & Supply (CIPS) on the Procurement Excellence Programme to enhance and develop our procurement governance and to align with the CIPS Global Standard.
We underwent a 12-month assessment and evaluation to determine if our procurement and supply practices were up to global excellence standards, particularly following the pandemic, which had significantly impacted supply chains around the globe. The accreditation awarded to ACWA Power was a stamp of approval on supplier diversity, supplier relationship management, risk mitigation and sustainable procurement. We are the first power and water company in the region to achieve this PEP Standard, a globally- recognized award presented to organizations demonstrating excellence in their procurement and supply chain activities. The award drives regular improvements and value across supply chains and highlights procurement’s role as a fundamental component of an organization’s strategy and growth.

Health, safety, security and environment (HSSE)
The health, safety and wellbeing of our people, partners and communities is ACWA Power’s chief priority.
In 2021, we gave our corporate employees the flexibility to work from home, and in their home countries, but we made digital collaboration tools available to maintain efficiency and productivity. To enable people to manage changes to the way they lived and worked, we hosted more than 30 webinars with external experts on a range of issues, including mental health, fitness and stress management.

Our global emergency assistance program, in collaboration with ISOS, provided 24/7 confidential medical and travel support service to our people and their families.
We have built wellness into our revised HR policies and included wellness and occupational health in our medical insurance benefits.
In our quest for an excellent safety record, we introduced a Construction Project HSSE Management System Manual to ensure standardization and alignment of HSSE management across all ACWA Power construction projects. This document is intended to provide guidance at construction projects to ensure an effective, standard approach to HSSE performance management over the project’s complete life cycle.

Carrying out a Safety Culture Maturity Assessment
To further enhance HSSE management, we commissioned a third-party to conduct a Safety Culture Maturity Assessment throughout the organization, including stakeholders on our construction projects. This is the first exercise we have conducted to understand opinion on HSSE management and the current organizational culture. The Assessment will highlight good practices that we can build on, as well as areas for focus and improvement.
We also conducted a ‘Safety Climate Maturity Survey’ in BU O&M, using the Health & Safety Laboratory (HSL) UK’s online Safety Climate Tool (SCT) to measure workforce attitudes to HSSE and how it is perceived. A survey of views summarized our employees’ understanding and experience of safety culture and will enable ACWA Power to make targeted improvements to achieve safety excellence.

Enhancing Process Safety Maturity in 2021
A process safety management (PSM) system identifies potential hazards in day-to-day operations and puts measures in place to prevent major incidents occurring. To build greater awareness of process safety, and to ensure its effective implementation, we developed a process safety video and delivered training to O&M projects on PSM.
 

Emissions metrics
In 2021, the total (Scope 1 and 2) CO₂ emissions across all assets measured 70.5 million tons, within which ACWA Power’s share totalled 29 million tons.
Emissions of the total portfolio 2021
TOTAL CO₂ Emissions (Scope 1 and 2) 70,532
CO₂ emissions (TMT) - Scope 1 69,882
Scope 1 emissions for electricity production 60,063
Scope 1 emissions for water desalination (thermal desalination) 6,792
Scope 1 emissions for steam production 3027
CO₂ emissions (TMT) - Scope 2 651
Scope 2 emissions for electricity production 243
Scope 2 emissions for water desalination 408

Emissions from ACWA Power’s equity share of the portfolio 2021
TOTAL CO₂ Emissions (Scope 1 and 2) 28,987
CO₂ emissions (TMT) - Scope 1 28,578
Scope 1 emissions for electricity production 23,754
Scope 1 emissions for water desalination (thermal desalination) 1,827
Scope 1 emissions for steam production 2,997
CO₂ emissions (TMT) - Scope 2 409
Scope 2 emissions for electricity production 135
Scope 2 emissions for water desalination (RO) 274

Since 2021, we calculate the CO₂ emission intensity of our gross electricity generation by including Scope 1 and Scope 2 emissions from electricity production. We have calculated the CO₂ intensity figure retrospectively using this same approach for 2020 and 2019. We also calculate the CO2 emission intensity of Reverse Osmosis (RO) water desalination as well as of thermal water desalination.
ACWA Power CO₂ emission intensity of the total portfolio 2021
CO₂ intensity of gross electricity generation [tonCO2/MWh] 0.46
CO₂ intensity of RO water desalination (kgCO2/m3) 3.73
CO₂ intensity thermal water desalination (kgCO2/m3) 12.07

CO₂ emission intensity of ACWA Power’s equity share of the portfolio 2021
CO₂intensity of gross electricity generation [tonCO2/MWh] 0.49
CO₂ intensity of RO water desalination (kgCO2/m3) 4.11
CO₂ intensity thermal water desalination (kgCO2/m3) 12.96

The introduction of coal drives much of the emission increase in 2021. Since ACWA Power has made the decision to transition to a low-carbon and coal free portfolio, this increase is for the intervening period, provisional.
Breakdown of Scope 1 CO₂ emissions per fuel type. 2021
Natural gas 38,534,587
Electricity production 36,420,643
Water desalination 2,113,943
Heavy Fuel Oil 28,842,706
Electricity production 21,138,695
Water desalination 4,676,902
Steam production 3,027,109
Coal 2,462,010
Electricity production 2,462,010
Diesel 42,650

Water metrics
We continue to improve the measuring and reporting of our water performance by integrating internal reporting systems for water metrics.
Water and Effluents 2021
Water export [m3] 890,230,937
Sea water intake [m3] 15,210,258,604
Sea water discharge [m3] - estimate 13,972,263,195
Sweet / River water intake [m3] 7,522,278
Sweet / River water discharge [m3] 1,411,707
Specific electricity consumption for RO based water desalination [kWh/m3] 5.23

Waste metrics
ACWA Power implements an integrated waste management procedure to manage hazardous and non-hazardous waste to ensure minimal impact on the environment and to meet with local and international regulatory requirements. For ACWA Power, the ideal way to reduce the stress on disposal systems is to reduce the amount of waste that is produced, and as such the emphasis is on reduction, reuse, and recovery before disposal.
To develop our integrated waste management system, we identified the level or levels at which the highest values of individual and collective materials can be recovered, thereby saving material production, resource cost, and energy.
Waste Generated in 2021 Reused/Recycled Disposed
Hazardous waste (tonne) 246 2,435
Fly ash (tonne) 5,529 9,030
Non-hazardous waste (tonne) 110 6,133
Impact of spills on environment No Major Impact
Number of Spills 9
Quantity of spillage (m3) 5.85

HSSE metrics
The overall LTI rate decreased to 0.01 from 0.03, and incident rates decreased to 0.05 from 0.12, compared to 2020. This was achieved by adopting industry best practice, advanced monitoring tools like Synergi Life, compliance assurance programs (such as OHSE and process safety audits), sharing of lessons learned and ongoing HSSE training and development.

Two incidents resulted in the tragic loss of two people at our underconstruction projects. These fatalities were unfortunate and unacceptable low points of 2021. As a result, we have engaged an independent third party to conduct a rigorous, 360-degree review of our health & safety procedures, practices and systems at our construction projects.

We have also engaged a third-party to design and implement a due diligence process for assessing worker welfare management at construction projects.

ACWA Power Total (Operational + Construction) unit 2021
Hours worked Total 104 Million
Lost Time Incidents (LTI) Total 2
- LTI – employees Total 0
- LTI – contractors Total 2
- LTI rate Average rate 0.01
Recordable incidents rate (TRI) Total 26
Recordable incident rate (TRI) Average rate 0.05
Fatality Total 2
Operational Projects
Hours worked Total 13 Million
LTI – total Total 0
LTI – employees Total 0
LTI – contractors Total 0
LTI rate Average rate 0
Recordable incidents Total 12
Recordable incident rate Average rate 0.18
Fatality Total Total 0
Construction Projects
Hours worked Total 91 Million
LTI – total Total 2
LTI – employees Total 0
LTI – contractors Total 2
LTI rate Average rate 0.01
Recordable incidents Total 14
Recordable incident rate Average rate 0.03
Fatality Total 2
HEALTH AND SAFETY COMPLIANCE
Percentage of operations for which health and safety impacts are assessed Total 100%
Incidents of non-compliance with national/global health and safety regulations resulting in a fine or penalty Total Zero

ACWA Power has implemented a Code of Conduct and Ethics (the “Code”) which sets down key guidelines and compliance practices to be observed by all employees, wherever they are located or operate. The Code is a forward-looking document outlining the ethical responsibilities that will help grow our organisation, reputation and business. It aims to provide guidance on general conduct in order to maintain harmonious working relations within ACWA Power, with clients and other stakeholders, in line with the laws of the relevant jurisdiction, ACWA Power’s values, ethics and corporate policies.
Additionally, and supported by its Code of Conduct and Ethics, ACWA Power has in place formal processes to ensure compliance with all applicable domestic and foreign anti-money laundering, counter terrorist financing, anti-bribery and anticorruption laws and regulations.
Our policies in this regard help to meet the following objectives:
• Ensure that employees are aware of their obligations and the need to remain vigilant in the fight against bribery, corruption, money laundering and terrorist financing;
• Set out the scope, processes and controls required to mitigate any risk related to bribery, corruption, money laundering and terrorist financing within the Company;
• Set out the responsibilities of ACWA Power, and those who work for the Company, in observing and upholding our position on bribery, corruption, money laundering and terrorist financing;
• Provide information and guidance on how to recognize and deal with bribery, corruption, money laundering and terrorist financing related issues and assist stakeholders in reporting same

We have implemented a thorough Know Your Customer (KYC) process, so risk-based due diligence on third parties can be conducted before agreements are entered into. The process helps reduce potential risks such as fraud, corruption, bribery, money laundering and similar malpractices.
To help fostering awareness on the Code of Conduct and Ethics, we have developed two mandatory e-learning modules, Making Ethical Decisions and Code of Ethics Policy, which offer guidance in an interactive and engaging way to help employees gain a better understanding of the guidelines and practices set out in the Code and adhere to the highest ethical standards, including on Anti-Corruption. The objectives of these two eLearning courses are to gain a better understanding of the guidelines and practices set out in the Code and ensure all of us at ACWA Power adhere to the highest ethical standards

Employee training on Anti-Corruption: 100% of our employees and Management Committee are to complete the following trainings, which cover Anti-Corruption: “Making Ethical Decisions” and “Code of Ethics”, “Anti-Bribery and Anti-Corruption” and “Anti-Money Laundering and Counter Terrorist Financing”.
Total number and nature of incidents of corruption confirmed during the current year, but related to previous years: 0
Total number and nature of incidents of corruption confirmed during the current year, related to this year: 0