ERG — Environmental & Social Information 2018

Jul 2, 2018

ITALIANSUSTAINABILITY DAY 2018

MILAN, 2 JULY 2018

DISCLAIMER

This document contains certain forward-looking information that is subject to ^a number of factors that may influence the accuracy of the statements and the projections upon which the statements are based.

There can be non assurance that the projections or forecasts will ultimately prove to be accurate; accordingly, the Company makes no representation or warranty as to the accuracy of such information or the likelihood that the Company will perform as projected.

AGENDA

• A successful industrial transformation
• 2018-2022 Business Plan
• A focus on sustainability
• ERG in a nutshell at 31.12.2017
• Appendix

A SUCCESSFUL INDUSTRIAL TRANSFORMATION

2008-2018: INDUSTRIAL REPOSITIONING

ERG INDUSTRIAL TRANSFORMATION

Renewable diversification financed through oil-linked disposals and strong cash generation

(1) It refers to M&A and organic growth CAPEX

(2) It includes dividends to be paid in May 2018 (ca. €171mn with ordinary DPS at €0.75/sh and extraordinary DPS at €0.4)

(3) 2018 includes TotalErg Disposal whose closing took place on January 10, 2018 with a partial cash-in of €85mn in 2017, and ForVEI acquisition (EV €337mn) whose closing took place on January 12, 2018

INVESTEDCAPITAL FULLY ROTATED TO RENEWABLES

From Oil to Renewables

(1) It includes TotalErg Disposal whose closing took place on January 10, 2018 with a partial cash-in of €85mn in 2017, and ForVEI acquisition whose closing took place on January 12, 2018

2016-2017 CSR RESULTS

Tackling climate change

• Avoided CO2: 3mtons/year, 10mtons since 2006
• Carbon Index: down 32% in the last 3 years
• 88% of energy consumptions covered by Green energy
• Continuous efficiency improvement of our plants
• Full exit from oil, technological diversification with PV

People enhancing

• • Continuous training: 97% of employees attended training courses, about 6.6 day/empl.
• • Human Capital Coverage: +1% since 2016
• • Cooperation with universities and local community

Sustainable thinking sustainable acting

• • CDP reporting: ERG rated A- (B in 2016)
• -ERM process implemented
• -Anticorruption Policy adopted
• • Integration of HSE certifications according to ONE Company Model
• -Open innovation.

EU LEADINGRENEWABLE IPP, GREEN ENERGY MAKER

(1) It includes also Vent D'Est wind farm (16.25MW), whose closing took place on March 22, 2018 (2) It refers to the recent acquisition of ForVEI, whose closing took place on January 12, 2018, plus 1MW at ISAB Energy Solare consolidated as of January 1, 2018(3) It refers to Romania, Bulgaria and Poland

ENERGY MANAGEMENT AS A KEY SUCCESS FACTOR

Production 2017: ≃7TWhTotal Energy Portfolio including Hedging: ≃12TWh

2018 expected PAR @YtDay down 50% thanks to hedging strategy

ERG CHANGE MANAGEMENT APPROACHFLEXIBLE MINDSET

•Organizational changes always consistent with business model (from "Multi Energy" to "IPP green")

• •Synergies between staff & lines
• •Flexible mindset to cope with a changing business environment

: A LEAN ORGANIZATIONWHERE LEVERS MATCH ACCOUNTABILITY

A STRONG FOCUS ON HUMAN CAPITAL DEVELOPMENT

2018-2022 BUSINESS PLAN

ERG 2018-2022 STRATEGIC OPTIONS

ERG 2018-2022 CAPACITY EVOLUTIONTHREE MAIN CLUSTERS TO GROW

A SOLID PIPELINE TO SUSTAINGROWTH

Pipeline creates the basis for a sustainable long termgrowth

REPOWERING & REBLADING

Repowering & Reblading as a way to exploit asset base with new technologies and extend its technical life Flexible investment plan potentially upgradable

M&A TO SUPPORT ERG GROWTH IN KEY COUNTRIES

• •Opportunistic approach to consolidate leading positions in the core countries
• •Short term growth approach to support greenfield

Value creation leveraging on strong M&A track record

(1) It includes ForVEI acquisition in Italy (89MW) for an EV of €337mn

INSTALLED CAPACITY EVOLUTION

Total Growth: ≃850

A solid growth path leveraging on greenfield, repowering and M&A

(1) 2017 Capacity net of Brockaghboy wind farm in UK (47.5MW)

GREEN ENERGY PRODUCTION

Total 2022 Expected Production: ≃10TWhTotal Energy Portfolio including hedging & other sales: ≃15TWh

Power from Nature with Wind, Water and Natural Gas, through a high efficiency cogeneration CCGT

2018-2022 CSR DRIVERS

Tackling climate change

• Avoided CO2: 15mtons
• Avoided TEP: 5m TEP
• Carbon Index: down 14%
• Continous efforts on extracting value from our technology
• Enhancing our integratedgeneration portfolio

People enhancing

• -New leadership model
• -Human Capital Coverage
• -Skills development

Sustainable thinking sustainable acting

• -CDP reporting
• • Integration of HSE certifications according to ONE Company Model
• • Consolidating relations with communities
• -Technological development

NEW LEADERSHIP MODEL

The Business Plan shows the direction, Skills help people find the way and Values give us strength, unity and stability

KPI IN THE PLAN PERIOD

A FOCUS ON SUSTAINABILITY

SUSTAINABILITY IN ERG

ERG Sustainability Policy

• •Adopted in 2015 (previously HSE Policy) to assess its engagement towards Stakeholders
• •The policy has been approved by the Sustainability Committee and signed by ERG Chairman

ERG STRICT CORPORATE GOVERNANCE MODEL

• • A strict financial discipline on investments (organic and M&A) through:
• Strategic Committee(EVP, CEO, CFO, 3 Board Members)
• Investment Committee (CEO, CFO, Management Team)
• • Strong risk management policy:
• new risk policy to ensure the hedging policy of the generation portfolio
• • Full Alignment of interests between Top Management and shareholders through:
• a launch of a new LTI compensation scheme subject to EGM approval fully based on shares

(1) Data as of December 31, 2017

(2) As of April 23, 2018, 5 Independent referring to both the Financial Consolidation Act and the Self-Discipline Code set out by the Italian Stock Exchange, and 2 Independent referring only to the Financial Consolidation Act.

(3) As of April 23, 2018.

(4) As of April 23, 2018, 2 Independent referring to both the Financial Consolidation Act and the Self-Discipline Code set out by the Italian Stock Exchange, and 1 Independent referring only to the Financial Consolidation Act.

ENTERPRISE RISK MANAGEMENT

Enterprise Risk Management (ERM) is responsible for:

• •identifying and assessing the Group's main risks and defining strategies to mitigate them
• •providing management dynamic risk mapping evolution
• •providing Management with key information to make risk-informed decisions
• •spreading over risk-aware culture across the Organization

ERG SUSTAINABILITY GOVERNANCE MODEL

The CEO is responsible for CSR.

Sustainability Committee:

• •composed by:
• Chairman
• -Executive Deputy Chairman
• -CEO
• Top management
• •duties:
• defining the Group's sustainability guidelines
• approving and evaluating sustainability objectives
• approving the CSR initiatives and DNF contents

REMUNERATION POLICY

LTI

MBOFixed

( ) h i l S I P M B O t- t t o r e r m n c e n v e a n s ho la S In ive P t- te t r rm ce n ns Ca Bo nu s p
M B O V E I H C L E S h Ca s
M B O P t a r a m e e r s ( 1) Gr E B T ou p d du l b In iv i O j ive E B I T D A, N F P, O P E X, t tc a ec s e. g. e	h W i t e g 3 0 % % 7 0

( ) i l L I P L T I P -t t o n g e r m n c e n v e a n s ive la Lo In P -te t ng rm ce n ns / f f la On O C us e
h l i L T I V e c e s fo ha S Pe r rm an ce re
L T I P t a r a m e e r s / d d la d f f la A j Cu E B I T D A C te te us m u on o us e	i h W t e g 1 0 0 %

(1) IAS pre-tax profit.

Avoided CO2 calculated using the gCO2/kWh conversion factor published by Terna in its annual reports and referred to the thermoelectric power output of each country.

(1) The drop of Carbon Index in 2010 was due to the entrance into service of the ERG Power plant which replaced the existing oil feeded power plants. (2) The drop of Carbon Index in 2014 was due to the sale of the ISAB Energy plant

INNOVATIONS AND START-UPS

• •Support to entrepreneurial initiatives
• •Special focus on technological start-ups
• •Embrace disruptive ideas for competitive advantage

CARBON DISCLOSURE PROJECT

SAFETY AND CERTIFICATIONS

Source: ERG 2017 disclosure on non-financial information

#SAFETYFIRST

• •informing
• •training
• •involving
• •monitoring

The CCGT plant and the Terni Hydroelectric Complex, in addition to holding ISO 14001 (environmental) and OHSAS 18001 (safety) certifications, obtained EMAS registration (Eco-Management and Audit Scheme) pursuant to European Regulation EC 1221/2009.

ERG PEOPLE & TRAINING

"We are not looking for Talented People but rather for the Talent hidden in each Person"

ERG Training in a nutshell

Every year all of our people are invited to design their own training path.

A managerial attitude is required from all the employees.

DATA BREAKDOWN ON PERSONNEL

• •In 2017 more than 10,000 students got acquainted with our CSR activities
• •Future generations training and education on environmental matters
• •Special attention to younger people supporting sport values

EDUCATIONAL PROGRAMS

INNOVATION & START-UPS

• •Support to entrepreneurial initiatives
• •Special focus on technological start-ups

• • Embrace disruptive ideas for competitive advantage

• • In 2017 more than 10,000 students got acquainted with our CSR activities

• • Future generations training and education on environmental matters
• • Special attention to younger people supporting sports values

CULTURE & KNOWLEDGE

• Promotion of important cultural events in the communities where we operate

…RECOGNIZED ALSOBY EXTERNAL INSTITUTIONS

ERG IN A NUTSHELL AS AT 31.12.2017

FINANCIAL AND OPERATING PERFORMANCE AS AT 31.12.2017

ERG SUSTAINABILITYAS AT 31.12.2017

ERG DISTRIBUTION OF ADDED VALUEAS AT 31.12.2017

	2017	2016	2015
Production value	1,065	1.041	958
Economic value distributed	[746]	[748]	(759)
Production costs	[450]	[463]	[484]
Compensation of personnel	[79]	$[76]$	$[71]$
Compensation of public administration	$[51]$	$[39]$	$[44]$
Compensation of debt capital (1)	[89]	[97]	[87]
Compensation of risk capital [2]	[75]	[71]	$[71]$
Compensation for the community	[2]	$[1]$	$[1]$
Economic value withheld by the Group	319	293	199
Amortisation and depreciation	252	254	171
Compensation of the company	67	39	28

APPENDIX

THE ECONOMIC RESPONSIBILITY: MAIN TARGETS

SDGs		Areas of commitment - 2016-2018	Status as at 31/12/2017
ider Jality	8 DECENT WORK AND	GOVERNANCE AND SUSTAINABILITY APPROACH
₹ . Duced Equalities	m ISTAINABLE CITT	Pursue the internal and external dissemination of the Group's principles expressed in the Code of Ethics and the Sustainability Policy.	Training on sustainability issues continued at schools in the areas where the company operates.
۳		Implement a new Enterprise Risk Management [ERM] system.	The Group's ERM methodology was implemented, risk assessment was performed, the Group's new risk management policy was defined; reporting system for the Control and Risk Committee and the Board of Directors was implemented.
IMATE ITION	PEACE, JUSTICI And Strong Institutions	Continuously update the 231 Models and Anti- Corruption Guidelines of the Group's companies and organise training sessions for personnel.	The 231 Model was updated for the Italian companies. ERG Group's Anti-Corruption System and Policy was approved.
		Expand and integrate the existing certifications in the field of environment, health, safety and sustainability.	The scope and opportunity analysis was carried out; the integration procedure for the existing certifications following the One Company project was defined.
ALITY JCATION		BUSINESS STRATEGY
		Consolidate the Group's business leadership in the production of electricity from renewable sources.	The increase in installed power continued thanks to new acquisitions and to the commissioning of the plant in Ireland.
		Support the Group's strategies through scouting activities, while identifying and assessing innovative technologies/new business opportunities.	Two pilot projects generated from the 2016 scouting activities are being implemented. The second cycle of scouting activities was started in 2017 with CDI labs.
		Enhance the partnerships with Universities, Foundations, think-tanks and Research Institutes.	Cooperation with Universities and associations to organise post- degree master courses (Master SAFE, Master Mager) continued.
. AN WATER D SANITATION AFFORDABLE A		OPTIMISATION AND ENERGY EFFICIENCY
		Meet the Group's needs with Green energy.	90% of the Group's electricity demands was served by electrical energy from renewable sources.
		Implement energy efficiency projects in the Group's plants and offices.	The micro-hydro plants downstream of the dams started operations.
			Low-consumption lighting systems were installed at plants.
		SUPPLIERS
		Consolidate a supplier qualification and assessment system, with particular attention to Health Safety Environment and Sustainability	The new supplier qualification platform was implemented. 50% of new suppliers qualified according to HSE parameters.

THE ENVIRONMENTAL RESPONSIBILITY: MAIN TARGETS

UN SDGS		Areas of commitment - 2016-2018	Status as at 31/12/2017
6 GLEAN WATER	13 GLIMATE $\tilde{\mathcal{L}}$	EMISSIONS AND WASTE
$\overline{\mathbf{v}}$ $15$ ufe E		Avoid CO 2 emissions for 9,000 kt in the plan period, for a total of approx. 13 million t from entry into the renewable energy sector (baseline 2006).	2,901 kt avoided emissions during 2017, adding up to more than 10 Mt avoided since 2006.
			Continual reduction in the Group's energy production carbonisation factor: -32% over the last three years.
		Implement activities to protect biodiversity in areas which are particularly important from the environmental point of view, in the areas where our plants are located.	Support to the activities performed at the Oasis of Alviano (WWF). Bird monitoring in our wind farms.
		Consider suitable and efficient initiatives to increase the percentage of waste to be recycled.	A recovery procedure for the waste produced by the grate cleaners was implemented in our hydroelectric plants.

THE SOCIAL RESPONSIBILITY: MAIN TARGETS

UN SDGs	Areas of commitment - 2016-2018	Status as at 31/12/2017
8 DECENT WORK AND	SAFETY
	Consolidate the safety culture inside and outside the company, pursuing the goal for zero accidents caused by safety deficits in plants and offices.	Following the injuries in 2017, corrective actions were implemented to prevent the recurrence of similar events.
		A near-miss reporting system was promoted to increase prevention levels.
	Consolidate the system to check suppliers' performance.	Monitoring continued to be implemented: around 650 field safety checks
8 DECENT WORK AND QUALITY Education	PEOPLE
m	Facilitate the dissemination of ERG's culture and values through inclusion and awareness initiatives.	The onboarding and inclusion process for new colleagues was implemented.
10 REDUCED 8	Spread a self-empowerment culture to build and maintain professional and managerial skills.	In 2017, around 38,000 hours of training provided at an average of approximately 6.6 days per employee.
		97% of company staff took part in training courses.
	Favour the growth of a sustainability and green culture within the Group.	The first company volunteering day was organised for our Genoa employees.
	Consider the inclusion of CSR elements into the MB0/IQ system.	The MBO/IQ system included safety targets.
13 GLIMATE	COMMUNICATION
	Make contact with and inform the Group's	Implementation of Non-Financial Information reporting.
PEACE, JUSTICI And Strong	stakeholders in a complete, transparent and timely manner.	ERG received A- rating from CDP (improving the B rating achieved in 2016).
		Improvement in its Webranking and "CSR on line awards" position.
	Support the ESG rating companies which are interested in the ERG Group.	Ongoing support to ESG rating companies or Group investors on non-financial issues.
DECENT WORK AND 13 GLIMATE	COMMUNITY
5 m.	Contribute to the development of local communities through social responsibility	Activities were developed in local communities in keeping with Sustainability Policy principles.
	initiatives at a local level.	"A tutta Acqua!" and "Vai col Vento!" were our leading projects for students living in the communities where our plants are located.

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