KGHM’s commitments to environment and climate

KGHM Polska Miedź S.A., as one of the world’s leaders in the production of copper and silver, intends to continuously and consciously develop its activities in accordance with the principles of sustainable development and responsible business, conducting its operations in a manner which takes into account both the impact of the organisation on the climate and the impact of climate change on the Company.

Being an ambitious participant in the green transformation, KGHM Polska Miedź S.A. undertakes obligations not only with respect to further development of the core business, but also to carry out a number of changes in the functioning of the Company aimed at demonstrating awareness of climate change and deepening communication in this respect with all stakeholders. The expression of this commitment is the adoption of the Climate Policy of KGHM Polska Miedź S.A. – a directional document, addressed to both external and internal stakeholders, whose purpose is to present the climate ambitions of KGHM Polska Miedź S.A. and to specify the necessary scope of process and organizational changes for their implementation and continuous improvement.

* The scope and focus of impact of the Climate Policy comprises the Parent Entity of the KGHM Group – KGHM Polska Miedź S.A. – which will subsequently expand its principles to the Group’s subsidiaries

Climate Policy of KGHM Polska Miedź S.A.

The Policy will serve as direct support in advancing the the UN’s⁴ Sustainable Development goals. Moreover, its implementation ensures the achievement of measurable benefits for the Company and its stakeholders.

Ensure access to affordable, reliable, sustainable and modern energy for all

Ensure sustainable consumption and production patterns

Take action for the sustainable development goals

* The Sustainable Development goals described in the final document of the UN summit „Transforming our world: the 2030 Agenda for Sustainable Development”, adopted by the United Nations General Assembly on 25 September 2015.

Thanks to the preparation and implementation
of the Climate Policy, KGHM will:

Once again demonstrate its far-reaching goal of reducing the Company’s carbon footprint

Strengthen its market position, achieving a potentially better positioning of its products

Comply with the latest standards set forth in the Warsaw Stock Exchange’s Best Practices for Listed Companies

Adapt to changes in the regulatory environment associated with the rise in energy prices and CO₂ emissions rights

Lead to the substantial decarbonisation of the entire Polish economy, as one of the most energy-intensive enterprises in the country

Be a response to the ever-increasing expections of the financial markets, shareholders and investors

Ensure further improvement in living and working conditions in those regions where it operates

Systematically enhance its ESG ratings

Identifying opportunities in the transformation to a low-emissions economy

KGHM, as one of the world’s largest copper producers, will have a substantial impact on the success of the transformation into a low-emissions economy, as is clear from the need to secure the anticipated increasing demand for copper, as a key component in a future, green economy

Reducing the Company’s emissions and its products’ carbon footprint will be one of its competitive advantages. It is therefore vital to set ambitious emissions reduction objectives and suport their achievement by dedicated processes within KGHM

KGHM will actively take advantage of the opportunities arising from the climate transformation, including benefits connected with dedicated EU funds

KGHM is adapting to changes in the regulatory environment and the associated obligations deriving from KGHM’s impact on the climate, as well as the impact of the climate on the Company

The actions being taken in connection with the Climate Policy and the obligations arising therefrom will be beneficial not only for KGHM’s surroundings, but will also have a substantial impact on building the Company’s long-term shareholder value

Inventorisation of key sources of greenhouse gas emissions

At the Parent Entity level, to be followed in turn at the Group level

Annual CO₂-equivalent emissions by KGHM Polska Miedź S.A. are around 3.3 mn tonnes, of which around 40% are Scope 1 and 60% are Scope 2 pursuant to GHG Protocol^*

In 2022 KGHM will conduct a full inventarisation of Scope 1 and Scope 2 emissions in its subsidiaries so as to publish complete information on Scope 1 and Scope 2 emissions for the entire organisation pursuant to GHG Protocol at the latest by mid-2023.

Moreover, KGHM will publish data on Scope 3 emissions by the Group at the latest in the first half of 2024

* Level of emissions calculated pursuant to the GHG Protocol standard, though this does not include the entire Group. KGHM Polska Miedź S.A. is the major emitter of greenhouse gases in the KGHM Group.

Climate neutrality by 2050

Achieving climate neutrality by 2050 is the overriding goal of the Climate Policy of KGHM Polska Miedź S.A. Intermediate goal – the reduction of total Scope 1 and Scope 2 emissions by 2030 by 30%*.

2030

emissions reduction by 30%
versus the base year 2020

2050

climate neutrality

Reduce indirect emissions (Scope 2):
1. Develop internal zero-emission and low emission sources
2. Improve energy efficiency in the production
  divisions and enhance the efficiency of
  technological processes
3. Purchase RES energy under PPA contracts
Gradually reduce direct emissions (Scope 1):
1. Admixture of hydrogen in technological
  processes
2. Initial implementation of electromobility
  projects

Reduction goals for the entire KGHM Group will be announced at the latest in the first half of 2023.

Total reduction of indirect emissions (Scope 2):
1. Power and heat solely from zero-emission
  sources (mainly conversion to internal zeroemission sources)
Maximum reduction of direct emissions (Scope 1):
1. Hydrogen technology
2. Electromobility
3. Implementation of advanced production
  technology
4. Utilisation of CCU and CCS technology*)
Potential offset of other emissions

Details regarding capital expenditures on actions to restrict greenhouse gas emissions will be included and announced as part of the Decarbonisation Program of the KGHM Group.

* Main goal in respect of Scope 1 and Scope 2 GHG emissions, assuming their maximum possible reduction. Reduction goals in reference to 2020 emissions.

Implementation of the Climate Policy of KGHM Polska Miedź S.A.

Adapting the Company’s operating principles to achieve its GHG emissions reduction targets and reflecting climate risk in its internal processes.

KGHM wants to be a major participant in the green transformation. This is reflected not only in the development of its primary activities, but also in the introduction of a variety of changes in the way the Company operates, aimed at demonstrating our awareness of climate change and strengthening our Communications in this regard with all of our stakeholders.

To ensure compliance with best market practice, KGHM will work towards the implementation of a climate reporting system based on the recommendations from 2017 of the Task Force on ClimateRelated Financial Disclosures („TCFD* Recomendations”)

The first step in the implementation of the new reporting system will be the preparation of corporate structures to meet the requirements of the TCFD Recomendations by implementing a variety of chages in KGHM Polska Miedź S.A.

The changes currently being planned will encompass the key business and management processes – in particular those connected with or impacting GHG emissions by KGHM.

* TCFD – Task Force on Climate-Related Financial Disclosures

Organisational and process changes in KGHM Polska Miedź S.A. To comply with the TCFD Recomendations

Changes aimed at the introduction of mechanisms for monitoring and supervising climate questions by KGHM’s management and supervisory staff, including the Management Board

Changes aimed at the introduction of mechanisms to reflect the climate question in the processes of updating, implementing and monitoring the Strategy

Changes aimed at the comprehensive integration of climate risk into the current system of Corporate Risk Management in KGHM Polska Miedź S.A.

Changes aimed at introducing a process of measuring emissions by the KGHM Group which is fully compliant with GHG Protocol, and at implementing preliminary indicators appropriate for monitoring improvements in the resilience of the business model of KGHM Polska Miedź S.A. to climate change

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