ESG Evaluation SP Global (5)

ESG Evaluation Sustainable Practices. Sustainable Returns.

Investor demand for 昀椀nancially material Environmental Social and Governance (ESG) information is growing rapidly. Now, more than ever, investors understand dif昀椀culties for investors utilizing this critical S&P Global Ratings launched the ESG the value of integrating ESG factors into information to analyze what it means for the Evaluation: a forward looking, long-term their investment decisions to mitigate future and gain a competitive edge. opinion of an company’s ability to effectively risks and uncover opportunities. But the In 2019, to help harmonize disparate ESG manage future risks and opportunities. lack of consistency, engagement, and information and enable companies and their In 2020, we extended our product to a forward view of the majority of ESG investors to better understand the ESG include banks and insurance companies. information providers result in widespread risks and opportunities on their horizons,

“ The ESG Evaluation is thoughtful, data-driven yet embedded in a strong and deep understanding of the credit. It’s very powerful to highlight this has been drafted from the standpoint of an analyst who has had access to management and knows the business. The consideration of Preparedness is key because it helps us understand how the bank is prepared to bridge a transition to 2030 to 2040 to 2050. Michael Eberhardt, Director, BlackRock

ESG Evaluation The ESG Evaluation is a forward-looking opinion of ability to manage future ESG risks and opportunities. With a company’s permission, the ESG Evaluation uses responses from the S&P Global Corporate Sustainability Assessment (CSA) Environmental, Social, And Governance Evaluation and is further supported by deeper engagement between the Ratings’ Analysts, NextEra Energy Inc. company/bank management and a board member. Each ESG Evaluation Summary Analytical contacts Corinne Bendersky +44-7816-149424 comprises two inputs: the ESG Pro昀椀le and Preparedness opinion. NextEra Energy Inc. (NEE) is a large diversified energy holding company corinne.bendersky@ spglobal.com headquartered in Juno Beach, Fla. that generates, transmits, distributes, and sells power to retail and wholesale customers in North America. In 2020, NEE generated Gabe Grosberg revenue of $18 billion and S&P Global Ratings-adjusted EBITDA of around $10 billion. +1-212-438-6043 gabe.grosberg @ NEE operates as a regulated utility (about 70% EBITDA), and engages in competitive spglobal.com generation (about 20%), proprietary trading (about 5%), and natural gas exploration Thomas Englerth and production (about 5%). Through its regulated utility subsidiary, Florida Power & +1-212-438-0341 Light (FPL, which as a result of the January 2021 merger now subsumes Gulf Power thomas.englerth@ Co.) it provides electric services to about 11 million people throughout most of spglobal.com Florida. Next Era Energy Resources, its competitive generation business, develops, Beverly Gantt constructs, and operates long-term contracted assets with an emphasis on +1-212-438-1696 renewables, electric transmission, and battery storage across North America. beverly.gantt@ spglobal.com NEE’s ESG Evaluation score of 86 reflects its best-in-class preparedness for Caitlin Harris disruptive forces in the industry, which it is well equipped to capitalize on given its +1-415-317-5014 large scale and extensive clean energy expertise. It also reflects a long-term strategy caitlin.harris @ that drives systemic environmental benefits across industries. While NEE is exposed spglobal.com to environmental risks, notably GHG emissions, it has been more proactive than peers in decarbonizing its fleet and vastly expanding its renewable capacity. But NEE, along with the industry, continues to face long-term challenges over nuclear waste. Despite rapid growth, NEE has been able to maintain affordable rates and above- average reliability levels, which support leading customer engagement practices. The industry also faces other social risks, such as safety and an aging workforce, though NEE has been more effective mitigating these issues than peers. NEE’s governance benefits from its U.S. presence and an effective code and values framework premised on integrity and linked to sustainability goals. We believe the combined CEO- chairman role is not in line with international best practices but is somewhat offset by high board engagement and a track record of effective oversight. ESG Profile Score Preparedness Opinion ESG Evaluation 72 /100 (Scoring Impact) Best in class (+ 14) E S G 86/100 0 20 40 60 80 100 Company-specific attainable and actual scores A higher score indicates better sustainability S&P Global Ratings || Environmental, Social, and Governance (ESG) Evaluation This product is not a credit rating April 6, 2021 1 (Displaying 1 of 11 pages.) View the full report here >

Assessing ESG Pro昀椀le The ESG Pro昀椀le score summarizes S&P Global Ratings More than 40% of the ESG Pro昀椀le is driven by how In order to obtain an ESG Evaluation, companies opinion of the current-to-near-term effectiveness we apply our macro sector and regional analysis are invited to complete the S&P Global Corporate of the entity’s ability to manage its risk exposure to an entity. The ESG Risk Atlas consolidates our Sustainability Assessment (CSA). The responses and uncover opportunities relative to peers. The analytical sector knowledge and expertise and provided by a company in the CSA questionnaire ESG Pro昀椀le score combines S&P Global Ratings provides the foundation for our macro sector and are used by S&P Global Ratings’ analysts as a assessment of three Pro昀椀les: Environmental regional analysis, which makes the ESG Evaluation starting point for their comparative ESG analysis (30%), Social (30%), and Governance (40%). comparable cross-industry and cross-region. of the company. This is bolstered by information gleaned from direct discussions between the company and S&P Global Ratings analysts. Governance Risk Atlas Sector Risk Atlas The Risk Atlas ranks countries and regions on a scale of 1-6 for corporate governance, with a score closer to 1 representing relatively stronger standards.

ESG Factors: Entity-speci昀椀c scores assessed on a relative basis, against sector peers Environmental Social Governance Greenhouse Workforce Structure Gas Emissions & Diversity & Oversight Waste & Safety Code & Values Ability to adjust: factor weights, Pollution Management factor scores, and pro昀椀le scores. See page 13 for more information on the Key Sustainability Factors by sector. Water Use Customer Transparency Engagement & Reporting Land Use Communities Financial and operational risks

“Your reports bring in that sector and strategy aspect. The way you bucket stakeholder materiality under ESG really lines up with what stakeholders consider as material and important. Rahki Kumar, Senior Vice President, Sustainability Solutions, Liberty Mutual Insurance

Assessing Preparedness The Preparedness opinion is a qualitative view establish their awareness and assessment dimension to the Preparedness opinion, and of a company’s capacity to anticipate and of emerging trends and potential business highlights to investors how the company’s adapt to a variety of long-term disruptions. To disruptors, as well as associated long-term strategy is likely to deliver long-term value. develop the Preparedness opinion, S&P Global planning. Incorporating the views of board Ratings analysts meet with a company’s and management of a company’s top risks senior management and a board member to and its future direction both adds further Emerging & Strategic Risks Climate Change Fuel & Energy Water Scarcity Ecosystem Decline Deforestation Food Security Wealth Distribution Urbanization Material Resource Scarcity Cyber Security Childhood Obesity Ageing & Wellbeing

“The Preparedness Opinion is particularly relevant to my risk lens. It builds on understanding the nexus between the organizational awareness journey of a company, its impact on culture and how it translates into what I call coherent, repeatable and veri昀椀able processes. Alessia Falsarone, Managing Director, Head of Sustainable Investing, Pinebridge Investments

Final ESG Score and Analysis Once S&P Global Ratings has determined the How Investors Can Use the ESG Evaluation How Companies Can Use the ESG Evaluation company’s ESG Pro昀椀le score and Preparedness opinion, they are combined to produce a relative – Enhances ESG analysis to understand future – Supports access to markets by demonstrating overall ESG Evaluation score on a 100-point scale. risks and opportunities as well as how prepared awareness of future risks & opportunities and Evaluated companies receive a report which details a company is to effectively manage them effectiveness of management’s long-term the analysis and delves into the rationale behind the – Acts as an aid to understand how management sustainability strategy scores. This report can be kept con昀椀dential to use as and the Board of Directors will use ESG to – Acts as an aid for company and/or their an internal strategy tool or shared with investors and support long term business strategy investors to benchmark stakeholders as companies see 昀椀t. ESG Evaluations – Can help inform stewardship engagement – Utilized as a tool to elevate communication and can be point-in-time assessments or monitored to build con昀椀dence by providing second opinion account for event-driven changes, providing timely – Score can be utilized as KPI for sustainability- analysis of new developments. linked 昀椀nancing or to build thematic portfolios. – Score can be utilized as KPI for sustainability- If requested, S&P Global Ratings may assess a linked 昀椀nancing company against TCFD disclosure standards. Environmental, social and governance evaluation analytical approach >

ESG Evaluation: The Solution to Differentiate Your Company Communicate the long-term strategic plans of your Bring credibility to your strategy with an opinion company through direct and in-depth engagement powered by the knowledge and expertise of both our between Ratings’ Analysts, your management and Credit and Sustainable Finance Analysts Board Go beyond ratings based on public disclosure to Cut through the noise by giving your investors exactly enhance transparency and tell your holistic ESG story to what they are looking for with an Evaluation score and investors with a report that incorporates both public and analysis grounded in 昀椀nancially material ESG factors private information Use the detailed rationale provided in your ESG Utilize the Preparedness assessment to offer a Evaluation to frame your company’s sustainability forward-looking opinion of your company’s awareness messaging and build out your IR toolkit. and readiness for disruptive ESG risks and opportunities

Company Perspectives – ESG Evaluation “We found S&P Global Ratings ESG Evaluation “We now have a document that helps us frame our process to be well thought out, thorough message internally and externally to investors.” and complete.” Treasurer, Tideway Executive VP & CFO NextEra Energy, Inc “Our bankers advised us that they saw much “Our current 昀椀nancing is completely linked to value in being able to assess ESG investors the ESG Evaluation.” with a recent ESG Evaluation” CFO, Masmovil Ibercom S.A. VP, Investor Relations, American Water Works, Inc “You have helped us to establish a benchmark “You spent a lot of time with our team and Board that helps us to have more meaningful members. You did a great job in using all the discussions with our supply chain information available which made the quality of and customers.” the assessment a lot deeper.” EVP & General Counsel, Southwire Head of Sustainability, ING “It was a blessing when S&P launched their ESG Evaluation.” CFO, EP Infrastructure

Key Sustainability Factors ANALYTICAL CONTACTS The Key Sustainability Factors identify the most material environmental Financial Services Lai Ly Sustainable Finance Paris and social risks assessed in the ESG Evaluation. Our analysts assess the +33 1 4075 2597 ESG Evaluation lai.ly@ materiality of those risks across the industry’s value chain and re昀氀ect @spglobal.com Key Sustainability Factors Florence Devevey Sustainable Finance them in the weighting of the environmental and social factors. The Paris Submit Your Feedback +33 1 4075 2501 florence.devevey@ analysts also provide the quantitative indicators used to assess an entity’s Online | Email @spglobal.com Michael T Ferguson performance relative to its industry peers on each of those factors. Sustainable Finance New York +1 212 438 7670 michael.ferguson@ @spglobal.com View our Key Sustainability Factors by sector >

Meet the Sustainable Finance Analytical Team S&P Global Ratings Sustainable Finance team is comprised of analysts Meet the Team who specialize in ESG as well as those with a more traditional 昀椀nancial How the S&P Global Ratings Sustainable Finance and economic background. The Analysts’ mission is twofold: On team fits into the wider organization the one hand, to provide analytical expertise to S&P Global Ratings suite of Sustainable Finance Services, drawing on the relevant credit rating analysts for their company and sector expertise to strengthen the output. On the other hand, they are a center of excellence supporting credit rating analysts when ESG risks and opportunities are identi昀椀ed, understood and when material, embedded within credit ratings. The team is also actively involved in research, market engagement and sustainability-related industry working groups. Download the Brochure >

S&P Global Corporate Sustainability Assessment (CSA) The CSA is an annual evaluation of a company’s sustainability practices. The Sustainability In June 2020, S&P Global Ratings integrated the CSA into the ESG Yearbook 2022 Evaluation. Globally recognized as one of the most advanced ESG scoring Long-term sustainability risks methodologies available, the CSA has been identi昀椀ed as one of the require near-term action “highest quality” and most “useful” ESG assessments by sustainability professionals and investors*. All ESG Evaluations now bene昀椀t from the CSA, in order to allow users to better understand and prepare for the ever-evolving ESG risk landscape. The responses provided by a company in the CSA questionnaire are used by S&P Global Ratings’ analysts as a starting point for their comparative ESG analysis of the company. This is bolstered by information gleaned from direct discussions between the entity and S&P Global Ratings analysts. Read more about the CSA, its uses and bene昀椀ts here. Download the Sustainability Yearbook > *Source: 2019 SustainAbility Rate the Raters Report

Join the ESG discussion. For investors please contact: For issuers, intermediaries and Americas all others please contact: Visit www.spglobal.com/sustainable-昀椀nance Enrique Gutierrez Americas Email [email protected] +1-212-438-0328 Enrique Gutierrez Or contact your local S&P Global Ratings [email protected] +1-212-438-0328 Sustainability representative. 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