Climate Change Risk Management

The ERG Group has launched a structured analysis on the impacts of climate change on its business since 2019, following the guidelines of the Task Force on Climate-Related Financial Disclosure (TCFD). ERG has progressively updated its analysis, moving from a qualitative approach to a quantitative one, expanding the geographic perimeter to include the new countries that have progressively entered the scope of consolidation, including Spain and the USA, and focusing only on the production of electricity from renewable sources (wind and solar), after exiting from the hydroelectric and thermoelectric sectors. The Group has adopted emissions scenarios developed by the Intergovernmental Panel on Climate Change (IPCC), one of the most accredited in the literature, considering five emissions scenarios (RCP: 8.5; 7.0; 4.5; 2.9; 1.9 and two transition scenarios: Below 2 Degree Scenario - B2DS - IEA and Sustainable Development Scenario - SDS). ERG then identified the variables with potential impacts on its business, classifying them into physical (acute and chronic) and transitory (regulatory, market, reputational and technological) events. The analysis highlighted both risks and opportunities, including the development of Renewable Energy Sources (RES).


Element
Governance
Strategy
Risk management
Metrics and targets


Step	Description
1	Identification of reference scenarios
2	Identification of variables to analyze
3	Identification of risks and opportunities
4	Identification of responsible business functions
5	Identification of management strategies

Climate Governance and Net Zero Strategy

Governance for Climate Change Management

ERG has a solid governance system for managing climate risks, integrated into the corporate strategy and outlined and monitored by the company’s top management (Board of Directors; Control, Risk & Sustainability Committee; ESG Committee).

Strategy

ERG operates in the renewable energy sector and has aligned its business model with the goals of the energy transition. To combat climate change and to adapt to physical risks, ERG has integrated its climate strategy into its ESG Plan and Business Strategy (less than five years’ time horizons) by adopting the following actions:

Selective and Flexible Growth ("Value over Volume" strategy): ERG focuses investments in assets and geographies that are resilient to physical risks. The Group prioritises projects under construction and those in repowering or hybridised form, which offer better adaptation to weather volatility and climate uncertainty.
Strategic plan that envisages a strategy for the development of RES that are 100% aligned with the EU Taxonomy.
Asset modernisation and efficiency programs (Repowering/Revamping) that make it possible to extract greater value from renewable sources (Wind & Solar).
Geographical and technological diversification to offset the negative impacts of climate change: With assets in Italy, France, Germany, UK, Poland, Romania, Bulgaria, Sweden, Spain, and the US, ERG spreads its physical climate risk exposure across multiple climatic zones. This portfolio approach reduces localised vulnerability to droughts, wind shortfalls, and extreme weather.
Digitalisation of Wind and Solar Assets: ERG is enhancing its monitoring and control capabilities across its renewable fleet through digitalisation. This allows real-time data collection, predictive maintenance, and early response to climate-related disruptions (e.g., storms, temperature extremes, irradiance shifts).
Development and construction of electrochemical storage facilities to increase the efficiency and resilience of transmission grids and enable an increasing share of energy from renewable sources in electricity systems
Use of PPAs and CfDs to Manage Climate-Induced Volatility: Long-term contracts (e.g., 20-year PPA with Google, 15-year CfD in the UK) are used to financially secure revenue against climate-related production fluctuations. These tools directly support adaptation by reducing financial exposure to variable generation.
Establishment of effective and lasting relationships with stakeholders.

ERG has an ESG Plan with the goal of becoming Net Zero by 2040.

Specifically, ERG has structured its decarbonization path into the following main phases:

Production and sale of 100% renewable energy (in place).
Exclusive consumption of 100% renewable energy by company plants and facilities (LTI target by 2026).
Decarbonization of the supply chain, supporting main suppliers on a path to emissions reduction, certified by the Science Based Targets initiative (SBTi) (in place).

Risk Management

ERG’s climate adaptation measures are embedded within its Enterprise Risk Management (ERM) framework and ESG planning. These are specifically designed to address the physical risks posed by climate change—such as extreme weather events and changing wind and solar patterns—which are highly relevant to ERG's geographically diversified renewable energy asset base.

Climate change represents a risk that can have economic and financial impacts on ERG’s business in the short, medium, and long term. Some of the main effects include:

Reduction in the availability of renewable resources.
Limitations or impediments to plant operations.
Increase in operating and maintenance (O&M) costs.
Increase in insurance and regulatory compliance costs.

ERG has therefore adopted a series of solutions both at structural level and in plant management.

Metrics and Targets

ERG uses key metrics to monitor progress on climate issues, including:

Reduction of CO₂ emissions, with Net Zero targets defined in line with international standards.
Share of renewable energy produced, with a target for growth in installed capacity.
Asset resilience to climate change, evaluated through scenario analyses in compliance with the Paris Agreement objectives.

Net Zero Target by 2040

The ERG Group is committed to achieving net-zero greenhouse gas emissions (Net Zero) by 2040.

Climate Change: Potential Impact table


Event	Solar PV	Wind	Battery
Rain/snow	Medium	Not relevant	Not relevant
Wind	Not relevant	Not relevant	Not relevant
Solar radiation	Not relevant	Not relevant	Not relevant
Sea level	Not relevant	Not relevant	Not relevant
Air temperature	Low	Not relevant	Low
River/sea temperature	Not relevant	Not relevant	Not relevant
Heat waves	Medium	Low	Medium
Flooding / heavy precipitation	Medium	Low	Medium
Heavy snow / icing	Medium	Medium	Low
Hail	High	Low	Low
Windstorm	Medium	High	Low
Wildfire	Low	Low	Low
Lightning	Low	Low	Low