GREEN BOND REPORT 2019

MARCH 2020

INTRODUCTION

ERG S.p.A. (hereinafter "ERG") placed on April 11th 2019 its inaugural green bond ("ERG Green Bond 2019") in accordance with the "Green Bond Principles" set up by an independent secretariat hosted by ICMA ("International Capital Market Association"). ERG Green Bond is listed on Luxembourg Stock Exchange (ISIN XS1981060624) for a total amount of Euro 500 million, with a maturity date falling on 11 April 2025.

1. OVERVIEW OF ERG AND COMMITMENTS TOWARDS SUSTAINABILITY

As a leading European producer of electricity from renewable energy sources, ERG is committed to achieve its sustainable development targets and contribute to address major climate change challenges. ERG has 80 years of experience in the energy sector and has recently completed its transformation from a leading Italian oil company to a leading European operator in the production of energy from renewable sources.

The five-year Business Plan (2018-2022) calls for approximately EUR 1.7 billion in investments in order to increase the installed capacity by roughly 850 MW. The 2018-2022 Business Plan1 , focused on a continuous development of plants producing energy from renewable sources, sets targets on three main sustainability areas:

Tackling Climate Change, with particular focus on SDG 9 (Industry, innovation and infrastructure), SDG 12 (responsible consumption and production), SDG 7 (affordable and clean energy) through:

avoiding 15 Mt of CO2 emissions thanks to the production of energy from renewable sources;
reducing the group's carbon index of electricity generated by 14%;
a continuous effort on extracting value from ERG technologies (i.e. technological improvement of assets).

People enhancing (SDG 4 quality education, SDG 8 decent work and economic growth) through:

new leadership model;
skills development.

Sustainable thinking, sustainable acting (SDG 8 decent work and economic growth, SDG 12 responsible consumption and production, SDG 13 climate action), through:

CDP (Carbon Disclosure Project) reporting2 ;
Integration of HSE certification in compliance with the Group Organisation's Model;
Consolidation of relationships with communities;
Technological development.

¹ https://www.erg.eu/en/investor-relations/business-plan

² https://www.cdp.net/en

The theme of sustainability, at the core of the Group's business principles, is headed by the ERG's Chief Executive Officer supported by the Sustainability Committee, the Sustainability Department and the CSR Working Groups.

The Sustainability Committee, chaired by the Chairman of the Board of Directors and composed of the Executive Vice President, the Chief Executive Officer and all the top managers3 , is in charge of:

defining sustainability guidelines of the Group and promoting the implementation of consistent corporate social responsibility practices;
approving, monitoring and evaluating sustainability objectives and priority areas for CSR actions; and
approving the materiality analysis, timing and modalities for the drafting of the "Consolidated Non-Financial Statement" (DNF) and CSR initiatives.

2. ERG GREEN BOND FRAMEWORK

Previously to the issuance and in order to increase transparency of the ERG Green Bond 2019, ERG has published the "Green Bond Framework"4 , that was established in accordance with the Green Bond Principles 2018 published by the ICMA (International Capital Market Association). Within the framework, the categories related to eligible projects are aligned with the Sustainable Development Goals of the United Nations. In particular, ERG Green Bond supports projects that have positive environmental impact and that contribute to UN SDG 7 Goal (affordable and clean energy) by increasing the renewable energy produced and avoiding CO2 emissions.

Terms in capital letters have the same meaning as ascribed to them in the Green Bond Framework.

3. ERG GREEN BOND 2019 USE OF PROCEEDS

The net issuance proceeds have been used to refinance renewable energy projects, solar and wind power generation facilities that are already in the ERG portfolio.

As eligible category, all the selected projects are renewable power generation facilities, both new and existing renewable installations. The eligibility criteria for the allocated proceeds are:

affordable and Clean Energy made by Wind Power Generation plants;
affordable and Clean Energy made by Solar Power Generation plants.

In the case of Wind Power Generation facilities, the selected wind farms are located in different European countries (France, German and Poland) with a commercial operation date or an acquisition date not earlier than February 2016. All the selected plants have been constructed according to EU and national legislation that requires specific environmental and

³ Top managers being members of the Sustainability Committee are: Chief Operating Officer, Chief Business Development and M&A Officer, Chief Public Affairs & Communication Officer, Corporate General Manager & CFO, General Counsel, Chief Engineering Development Officer, Head of Human Capital & ICT, Head of Institutional Affairs

⁴ The ERG Green Bond Framework is available at https://www.erg.eu/documents/10181/388347/ERG+Green+Bond+Framework+2019

social screening before receiving a building permit. The French and German ERG subsidiaries will be certified according to Environmental and Health & Safety standards within the end of 2020. The Polish power plants are managed and operated by turbine suppliers that operate according to an integrated management system (quality, environmental and Health & Safety). In case of Solar Power Generation, the selected plants are located in Italy, and have been acquired by ERG during the years 2018 and 2019, in accordance to the ERG Green Bond Framework.

All the selected facilities contribute to GHG emission reduction thanks to renewable energy production, and contribute to the reduction of global warming emissions by replacing carbonintensive energy sources.

4. PROCESS OF EVALUATION AND SELECTION

ERG's Sustainability Committee has been in charge of monitoring the selection and allocation process as per the eligibility criteria defined in the Use of Proceeds section (acting as Green Bond Committee) and has been responsible for the following:

• Reviewing and validating the selection of Eligible Green Projects in accordance with the defined Eligible Green Project Categories listed in the Use of Proceeds section.

During the Green Bond period the Sustainability Committee will also be responsible for:

Monitoring the Eligible Green Project portfolio during the life of the transaction. The Committee can decide to replace an Eligible Green Project if it no longer meets the eligibility criteria;
Monitoring any ESG controversy (such as controversies that may have a negative impact on local communities or the environment) that may affect ERG and is directly related to an Eligible Green Project. If the Sustainability Committee deems than an eligible project becomes the subject of a major ESG controversy, the Sustainability Committee, after proper evaluation, may decide to exclude and replace the Eligible Green Project;
Managing any future update to the Green Bond Framework.

5. MANAGEMENT OF PROCEEDS

In accordance with the ERG Green Bond Framework principles, the proceeds may be managed to finance projects under development or to refinance projects already in operation at the date of issue.

The net issuance proceeds of ERG Green Bond 2019 were used to refinance projects that are operating as of 31st December 2019. Considering that projects' costs were fully disbursed in the past, no separate management of proceeds is required. ERG is committed to performing an external assurance of the already invested capital5 in order to assure the correct use of proceeds in compliance with the ERG Green Bond Framework.

⁵ Invested capital allocated to Green Bond Proceeds will be net of the bank loans disbursed for the construction, development and acquisition of eligible green projects

6. REPORTING

The report will be provided annually and until full allocation. The reporting document hereof, being published for the first time, meets ERG's undertaking to report annually on the use of proceeds until full allocation. As of 31st December 2019, the net issuance proceeds of ERG Green Bond 2019 have been fully allocated.

The Report and its reporting criteria (allocation and impact, including relevant metrics), prepared in compliance with the ERG Green Bond Framework, has been examined and approved by the Sustainability Committee as of 11th March 2020.

The use of proceeds via a "Green Bond Report" will be publicly available on the ERG website.

External review – Second Party Opinion

The "Green Bond Principles" compliance was validated by an external advisor, Vigeo Eiris. This Second Party Opinion document is available on ERG's website6 . A summary of this opinion is presented here below:

"overall advanced ESG performance"

VIGEO EIRIS' OPINION

Vigeo Eiris is of the opinion that the Bond considered to be issued by ERG is aligned with the voluntary guidelines of the 2018 Green Bond Principles.

We express a reasonable assurance (our highest level of assurance) on the Issuer's commitments and on the Bond's contribution to sustainability.

Issuer: ERG displays an overall advanced ESG performance. The company's performance appears advanced in the Environmental and the Governance pillars and good in the Social pillar.
Issuance: We are of the opinion that the Bond is coherent with ERG strategic sustainability priorities and sector issues and contributes to achieving ERG sustainability commitments.

External review – Post issuance verification

An external independent auditor confirmed that the selected Eligible Green Projects and reporting metrics of ERG Green Bond are consistent with the Green Bond Framework. This Third Party Opinion made by External independent auditor on ERG Green Bond Report is attached to this document.

⁶ https://www.erg.eu/documents/10181/388347/ERG_Second+Party+Opinion

7. ALLOCATION SUMMARY

ERG Green Bond 2019 proceeds were fully allocated in the first year of the bond's life to refinance projects already operating, as detailed in the table "Allocation of proceeds".

7.1 Summary

41% of the proceeds of the ERG Green Bond 2019 (Eur 205 mn) were allocated to refinance the solar plants acquisitions occurred in January 2018 and February 2019.

59% of the proceeds of the ERG Green Bond 2019 (Eur 295 mn) were allocated to refinance the wind plants acquisitions and the wind plants construction, occurred since February 2016.

30% of the proceeds of the ERG Green Bond 2019 (Eur 150 mn) were allocated to refinance renewable energy plants acquired during 2019.

70% of the proceeds of the ERG Green Bond 2019 (Eur 350 mn) were allocated to refinance plants acquired or built during the years 2016-2018.

In terms of location, the proceeds were allocated in Italy (Eur 205 mn), France (Eur 180 mn), Germany (Eur 61 mn) and Poland (Eur 54 mn), proving the presence of ERG investment across Europe.

Tot Green Capex

Eligible Project ERG Solar Holding 1 (ForVei) Andromeda PV Former Dif Portfolio Former Impax Germany Portfolio Former Impax France Portfolio PE Melier PE Vallée du Torfou Valleé de L'AA2 (WP France 6) Les Moulin de Fruges (Polaris) Szydlowo (Hydro Investizye) Slupia (Blachy PruszyĘski E.) Eligible Category Renewable energy Renewable energy Renewable energy Renewable energy Renewable energy Renewable energy Renewable energy Renewable energy Renewable energy Renewable energy Eligibility Criteria Solar Power Generation plant Solar Power Generation plant Wind Power Generation plant Wind Power Generation plant Wind Power Generation plant Wind Power Generation plant Wind Power Generation plant Wind Power Generation plant Wind Power Generation plant Wind Power Generation plant Country Italy Italy Germany Germany France France France France Poland Poland Acquisition date January 2018 February 2019 May 2017 February 2016 February 2016 May ²⁰¹⁸ not relevant May ²⁰¹⁹ not relevant not relevant Date of entry in operation not relevant not relevant not relevant not relevant not relevant not relevant December ²⁰¹⁸ not relevant March 2016 February 2016 Total Capacity in MW 89 51 48 82 124 26 13 52 14 26 526 Production actual 2019 (MWh) 135.441 89.674 71.987 131.150 283.638 72.657 30.777 100.117 43.895 77.469 1.036.806 Emission Factor (g CO2 /kWh) 506 506 751 751 556 556 556 556 856 856 Environmental benefits 2019 (CO2 savings) - t CO2 ^e 68.533 45.375 54.062 98.494 157.703 40.398 17.112 55.665 37.574 66.313 641.229 Equity Participation % 100% 78,5% 100% 100% 100% 100% 100% 100% 100% 100% Green Bond Proceeds allocated (Eur mn) ¹⁰⁸ ⁹⁷ ¹⁵ ⁴⁶ ⁸⁹ ²² ¹⁵ ⁵⁴ ²⁰ ³⁴ ⁵⁰⁰

7.2 Allocation and Impact details at the project level

Reporting criteria:

Allocation: The amount of the "Green Bond 2019 Proceeds" have been approved by ERG Sustainability Committee on the meeting held on 3 December 2019. In case of third-party financing disbursed to projects to which ERG Green Bond 2019 proceeds have been allocated, ERG Green Bond 2019 Proceeds allocated have been calculated as the difference between the total costs capitalized as of 31 December 2018 and the amount of third-party financing disbursed to the specific project.

Impact: the quantity of CO2 avoided is determined according to ERG's sustainability reporting procedures, by multiplying actual production to the carbon factor per MWh, as extracted from TERNA reporting system as of 31 December 20197 .

Examples of projects financed

SOLAR PLAN PROJECT: ANDROMEDA PV

As representative of the eligible green project Solar power plant category, Andromeda PV is a Solar plant composed of two photovoltaic power facilities located at Montalto di Castro (Lazio region), with an overall installed capacity of 51.4 MW.

The plants are equipped with Sun Power technology and monoaxial tracker, and in 2019 recorded a total output of 90 GWh, corresponding to approximately 45 tons of avoided CO2 emissions.

WIND PLAN PROJECT: Vallè de l'Aa2

As representative of the eligible green project Wind power plant category, the wind farm built in Pas de Calais (France) named Vallè de l'AA2 has a total capacity of 13 MW and consists of 4 wind turbines of more than 3 MW each. The wind farm was set up and connected to the national electricity grid in December 2018.

In 2019, the wind farm recorded a total output of 31 GWh, corresponding to approximately 17 tons of avoided CO2 emissions.

⁷ Terna Reports as of 31 December 2019 refers to 2017 global production as per Enerdata sources. The indirect emissions are calculated on the basis of conversion factors related to the gross thermoelectric production of each country

KPMG S.p.A. Revisione e organizzazione contabile Piazza della Vittoria, 15 int. 11 16121 GENOVA GE Telefono +39 010 564992 Email [email protected] PEC [email protected]

Independent auditors' report on the Green Bond Report

To the board of directors of ERG S.p.A.

We have been engaged to perform a limited assurance engagement on the Eligible Projects and related Reporting Metrics data as of 31 December 2019 included in the Allocation Report, presented in the attached Green Bond Report 2019 - March 2020 (the "Allocation Report" and the "Green Bond Report") of ERG S.p.A. (the "company") prepared on the basis of the Green Bond Framework dated March 2019 (the "Framework") and available on the company's website, developed by the company in accordance with the Green Bond Principles 2018 issued by the International Capital Market Association - ICMA (the "Principles") and related to the Green Bond issued on 11 April 2019 (the "Green Bond").

Responsibilities of the company's directors for the report

The directors are responsible for the preparation of the Green Bond Report and of the Allocation Report included therein in accordance with the Framework, developed by the company in accordance with the Principles. In particular, the directors are responsible for the preparation of the Eligible Projects and related Reporting Metrics data included in the Allocation Report in accordance with the Framework.

The directors are also responsible for such internal control as they determine is necessary to enable the preparation of a Green Bond Report and of an Allocation Report included therein that are free from material misstatement, whether due to fraud or error. It also includes identifying the content of the Green Bond Report and of the Allocation Report included therein, selecting and applying policies, and making judgments and estimates that are reasonable in the circumstances.

Auditors' independence and quality control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our firm applies International Standard on Quality Control 1 (ISQC (Italia) 1) and, accordingly, maintains a system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

KPMG S p A, è una società per azioni di dirilto italiano e fa parte del network KPMG di entità indipendenti affiliate a KPMG International Cooperative ("KPMG International"), entità di dirilto svizzero,

Ancona Aosta Bari Bergamo Bologna Bolzano Brescia ia Como Firenze Genova Lecce Milano Napoli Novara Padova Palermo Parma Perugia Pescara Roma Torino Treviso Trieste Varese Verona

Società per azioni Capilale sociale Euro 10,345,200,00 i,v Registro Imprese Milano e Codice Fiscale N. 00709600159 R.E.A. Milano N. 512867
Partita IVA 00709600159 VAT number IT00709600159 Sede legale: Via Vittor Pisani, 25
20124 Milano MI ITALIA

ERG S.p.A. Independent auditors' report on the Green Bond Report 20 March 2020

Auditors' responsibility

Our responsibility is to express a conclusion, based on the procedures performed. about the Eligible Projects and related Reporting Metrics data included in the Allocation Report, presented in the Green Bond. We carried out our work in accordance with the criteria established by "International Standard on Assurance Engagements 3000 (Revised) - Assurance Engagements other than Audits or Reviews of Historical Financial Information" ("ISAE 3000 Revised"), issued by the International Auditing and Assurance Standards Board ("IAASB") applicable to limited assurance engagements. This standard requires that we plan and perform the engagement to obtain limited assurance about whether the Eligible Projects and related Reporting Metrics data included in the Allocation Report are from material misstatement. A limited assurance engagement is less in scope than a reasonable assurance engagement carried out in accordance with ISAE 3000 Revised, and consequently does not enable us to obtain assurance that we would become aware of all significant matters and events that might be identified in a reasonable assurance engagement.

The procedures we performed on the Eligible Projects and related Reporting Metrics data included in the Allocation Report are based on our professional judgement and include inquiries, primarily of the company's personnel responsible for the preparation of the information presented in the Allocation Report, supporting evidence, recalculations and other evidence gathering procedures, as deemed appropriate.

Specifically, we carried out the following main procedures:

| analyzing the second party opinion which addresses the compliance of the Green Bond to the voluntary guidelines of the Principles;
interviewing relevant staff at corporate and business level responsible for the Green Bond management and reporting;
interviewing relevant staff at corporate and business level responsible for providing and consolidating data related to Eligible Projects and related Reporting Metrics;
evaluating the design and implementation of the reporting processes and the controls regarding the Eligible Projects and related Reporting Metrics data;
evaluating a sample of internal and external documentation to determine whether data related to Eligible Projects and Reporting Metrics are supported by sufficient evidence in line with the Framework.

ERG S.p.A. Independent auditors' report on the Green Bond Report 20 March 2020

Conclusion

Based on the procedures performed, nothing has come to our attention that causes us to believe that the Eligible Projects and related Reporting Metrics data as of 31 December 2019 included in the Allocation Report, presented in the Green Bond Report - March 2020 of ERG S.p.A., are not prepared, in all material respects, in accordance with the Green Bond Framework dated March 2019.

Milan, 20 March 2020

KPMG S.p.A. C lisa Polighano Birector of Audit

ERG S.p.A.

Torre WTC via De Marini, 1 16149 Genoa Phone 01024011 Fax 0102401859 www.erg.eu

Share Capital EUR 15,032,000 fully paid R.E.A. Genoa n. 354265 Company Register Genoa and Fiscal Code 94040720107 VAT 10122410151

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ERG Environmental & Social Information 2020

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GREEN BOND REPORT 2019

INTRODUCTION