Goldman Sachs GS SUSTAIN: ESG of the Future Electric Utilities We take into account forecasts for 71 Electric Utilities in our analysis, the majority of which are based in Americas. Our survey comprises 71 Electric Utilities — 41 in Americas, 17 in Europe and 13 in Asia Pacific. In addition to those, we consider other eight publicly listed Electric Utilities based in China and India not covered by Goldman Sachs to provide a more accurate representation of GHG emisisons intensities in 2019 and 2020. Consistent with our colleagues Carbonomics work, we derive emissions intensity for Electric Utilities dividing amount of Scope 1 CO2-eq emitted (in grams) by the electricity generated (in kWh). Our estimates indicate a c.20% reduction in Scope 1 emissions intensity by 2025E vs. 2019 base. This is on a weighted average basis — using electricity generated as weights — for Electric Utilities covered in our analysis. Please see Exhibit 21 for more details. We note a flat profile in emissions intensity in 2020 vs. 2019, followed by a c.6% YoY reduction in 2021 — primarily attributable to US Electric Utilities declining intensities. Why we believe this will matter for investors. Electricity generation is a key area of focus for decarbonization efforts. We note a bullish outlook for zero-carbon generation assets (renewables), as described by our colleagues, as well as increased focus on nuclear — which can provided zero-carbon generation — as indicated by the recent proposals to include nuclear in the EU Taxonomy framework. Heightened by current geopolitical events and the inflationary environment for commodity prices, our Utilities teams expect an acceleration in renewables development to address concerns related to security of energy supply. This is of particular importance in Europe — the area most impacted by disruptions related to the Russia/Ukraine conflict — where policy initiatives such as REPowerEU outline pathways towards increased energy independence/flexibility in energy supply, electrification and acceleration in renewables developments. Investment Implications. We note that Utilities are modestly underweight in ESG funds (1% vs. respective benchmarks). We highlighted in our Investing in Green Capex and initial ESG of the Future reports that the range of ownership in ESG funds for Utilities is significantly wide, and we note ESG Improvers in the sector are generally more underweight than companies which already have high mix of Green R evenue/Capex. We continue to believe investors will reward Utilities that can successfully transition and decarbonize their generation fleet, and we continue to see further opportunities for greater appreciation among ESG investors.