Centrica PLC

We want and need governments, regulators and policymakers to work with us to deliver the necessary changes that'll be needed to achieve our climate change goals, and specifically help us get our customers to net zero in a way that's affordable and fair. We engage responsibly with key decision makers on issues we believe are critical for shaping the energy landscape our customers need. [...] The outcome from the key engagements, stated above, are fed back to the Board through the appropriate forum.

### Policy engagement

Whilst we've followed these processes and principles for many years, we've not publicly outlined our commitment on climate change. So going forwards, we will:

- Conduct all direct advocacy with governments, regulators and policymakers in line with our climate goals and those of the Paris Agreement, to enable a just transition and achieve net zero by 2050

- Assess indirect advocacy through the positions and activities of trade associations we're members of, against our climate goals and those of the Paris Agreement, to deliver a just transition and get to net zero by 2050

We'll also enhance current annual disclosures to transparently set out our material activities relating to both direct and indirect climate-related advocacy. As part of this, we'll analyse alignment with our climate goals and those of the Paris Agreement, and highlight any actions we took where misalignment was identified.

The Board has overall accountability for the Company's approach to responding to and mitigating climate change across our operations and activities, which consequently encompasses our Climate Transition Plan. In addition to reviewing strategic and financial planning to ensure integration of climate considerations in the transition to net zero, the Board oversees progress against climate targets and Climate Ambitions whilst ensuring related risks and opportunities are effectively managed. [...] The Safety, Environment and Sustainability Committee (SESC) are primarily responsible for supporting the Board in overseeing climate change matters at the three meetings that occur throughout the year. This is supported by a deep dive on climate change at least annually. SESC review and provide external and independent input to management when assessing proposals whilst monitoring progress towards our net zero targets and Climate Transition Plan dashboard. They also provide recommendations to the Board for development of our targets and Climate Ambitions, as well as across our annual reporting which includes our Climate Transition Plan as well as TCFD. SESC additionally monitors stakeholder views on climate change alongside evolving reporting and policy requirements. [...] The Audit and Risk Committee (ARC) aids the Board in reviewing stated matters quarterly. The ARC therefore reviews risk and mitigations related to Principal Risks which includes those related to climate change, whilst overseeing and informing Group audits, financial statements and non-financial disclosures. [...] The Remuneration Committee (REMCO) supports the Board by managing remuneration arrangements. At the four meetings held across the year, they ensure Executive Directors and other employees are appropriately rewarded across financial and non-financial matters, with the Climate Transition Plan considered within these arrangements (see page 86). [...] The Nominations Committee is responsible for ensuring that the Board and its Committees have the appropriate balance of skills, knowledge and experience including in relation to climate change, to effectively lead the Company. This is achieved through a formal appointment procedure, an effective succession planning process, reviewing Board composition and skills, and assessing Board training requirements (see page 86).

We now have a repository on Centrica.com showing all of the advocacy we undertake. You'll see what we're talking about with governments, and we'll report as well about how those dependencies evolve and whether they're going to be headwinds or tailwinds for our targets.

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]To better manage risks and opportunities related to climate change, Centrica actively contributes to the development of public policy by engaging key stakeholders which include government and regulators in the UK, Republic of Ireland, EU, US, Canada and Norway. We ensure our engagements on policy across the business are consistent with our overall approach to climate change and Group strategy by having dedicated policy groups that develop detailed policy positions which are collated and taken to the CEO / executive via a regular, typically monthly, policy and engagement meeting for review and approval. The CEO therefore has ultimate ownership and sets the company's position on public policy for key issues like climate change which filters out into the business, and ensures we have a consistent and established policy position on climate change across our global geographies. These policy positions are also socialised with the board.

Our key climate change policies are agreed internally through our regular policy and engagement meetings in support of our wider business strategy. Policy positions support the delivery of our net zero targets, for both our own operation and our customers emissions, and are designed to be Paris aligned. Where Centrica wish to join a trade body we evaluate whether any of their stated positions contradict any of the stated climate policies materially in a manner which we believe would hamper decarbonisation efforts. Any contradiction is then evaluated to determine whether we should join, engage, or not become members.

Underpinning all of this is 'Our Approach to Political Involvement, which supports Our Code, and sets out the parameters for the companies political involvement.

Does your organization have a public commitment or position statement to conduct your engagement activities in line with the goals of the Paris Agreement?[…]Yes

IndustryAssociationsand ClimatePolicy: 2023 Reporton Our Memberships and Alignment

Industry Associations and Climate Policy: 2023 Report on Our Memberships and Alignment

1. Summary

Centrica leverages its influential position to promote positive policy outcomes on key issues such as achieving net zero. The purpose of this review is to enhance the transparency of our indirect advocacy and reinforce the governance framework.

We participate in many trade associations. We consider these relationships to be essential for advancing our growth objectives as well as our capacity to reach net zero, by using the associations' collective influence or by exchanging knowledge and expertise. We acknowledge that each trade association engages in advocacy on matters that are relevant to their members, and this may encompass a wide range of views and topics. We have tried to account for this in our assessment. However, we are committed to ensuring that each association that represents Centrica, engages in advocacy that is consistent with the goals of the Paris Agreement.

This is Centrica's first annual update of our trade associations review. We did not find any evidence of misalignment between our trade associations and the Paris Agreement. A total of 28 associations were "Strongly Aligned", while four were "Aligned". As per our action plan, we will maintain membership with these associations as we continue to advocate for positive climate policy through them. If we find evidence of misalignment in the future, we are committed to taking appropriate action through engagement and if necessary, reevaluating our relationship.

As corporate advocacy of industry associations is increasingly scrutinised, we plan to conduct a full assessment and report on an annual basis. In addition to this, since last year, we have been implementing our new membership process by including a Parisalignment assessment before any new membership can be approved. This has resulted in three new members being approved within year.

We recognise that engagement and influence are crucial for achieving net zero, and we urge Trade Associations to disclose their advocacy activities on behalf of their members and their main stakeholders (such as investors), and to persist in advocating for policies that are not aligned with the Paris Agreement.

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IndustryAssociationsand ClimatePolicy: 2023 Reporton Our Memberships and Alignment

2. Methodology

2.a Process

The following steps describe how we conduct this review:

1. Scope

- Ensure new memberships are recorded in the main register - Use the scoping rules to select the associations to evaluate

4. Action and Communication

- Implement any appropriate actions - Communicate results with associations and publish

5. Ongoing onboarding & monitoring

- Evaluate alignment with Paris Agreement before affiliating with new trade groups, with sign off from the Corporate Affairs Director

2. Alignment Assessment

- Conduct internal assessment - Review the results with experts

3. Engagement & Approval

- Engage relationship owner if needed - Seek approval from Group Chief Executive

2.b Scoping

We include all corporate memberships that require payment in our analysis. However, we exclude any associations that Centrica

employees joined as individuals. For example, Institute of Environmental Management and Assessment.

We also eliminated associations that are not likely to have a stance on climate issues as "Not Applied" (see appendix). For example, Step Change in Safety.

In 2023, 32 out of 34 associations were considered in-scope and assessed (see Appendix for exclusions).

2.c Assessment

We have amended our assessment approach this year to better address and consider the diverse and broad business activities that our trade associations represent. We have applied the assessment criteria at a suitable level for each association based on their focus and their impact on the energy transition.

The assessment is based on three main elements:

1. Alignment with the Paris Agreement: we have evaluated the position of each association on the Paris Agreement, which aims to limit global warming to well below 2°C, and preferably to 1.5°C, compared to pre-industrial levels.

2. Alignment with Centrica's Climate Policy Positions: we have a set of climate-relevant policy positions that we consider essential for achieving the Paris Agreement, and we expect our associations to support them. You can find them [here]. We have done the following steps for each association: a. Identified the policy areas that are relevant for the association and that require strong and public disclosure. b. Assessed their public advocacy on these policy areas.

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IndustryAssociationsand ClimatePolicy: 2023 Reporton Our Memberships and Alignment

3. We have assessed the level of influence that each association has on the energy transition, and determined how much evidence we need to see to consider them aligned.

This approach guarantees that an association will not be penalised if they do not have a public policy stance on a specific topic that is not relevant to their activities. For instance, we would not require an association that only deals with heating and hot water to have a position on transport. This also puts more pressure on those associations that represent industries that have a significant role in the transition, such as high-emitting sectors. However, it ensures that the approach to Paris is coherent.

The assessment examined various official documents, such as policies, statements, submissions and publications, that expressed the formal positions of the associations.

Table 1: Alignment definitions

Alignment level Definition

Strongly aligned

Evidence of alignment with Paris and relevant key positions appropriate to materiality, with negligible evidence of misalignment. Or, where the primary purpose of the association is related to decarbonisation. Aligned As above, but either low level of disclosure or evidence surrounding support for Paris relative to materiality.

Misaligned Evidence of misalignment in the form of stated opposition to one or more of Centrica's key climate policies and/or Paris.

2.d Action planning

Table 2: Proposed actions in the instance of misalignment

Alignment level Actions

Strongly aligned

Maintain relationship and monitor advocacy. Relationship will be reviewed annually.

Aligned Maintain relationship, but actively engage and monitor advocacy. Relationship will be reviewed annually.

Misaligned Devise a tailored engagement approach with internal relationship owner to address perceived misalignment. Failure to respond appropriately to a confirmed misalignment will lead to a review of membership, up to and including termination.

2.e Annual review

This is the first annual update of our assessment, as we committed to last year. We have improved our method of evaluating our alignment, disclosed more details about our memberships (see Table 3 & 4), and added new memberships since 2022. We will maintain this annual frequency in the future, as we are aware of the changing market conditions.

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IndustryAssociationsand ClimatePolicy: 2023 Reporton Our Memberships and Alignment

3. Results

Table 3: Strongly aligned memberships.

Association Name

Aberdeen and Grampian Chamber of Commerce

Association for Decentralised Energy (ADE)

British Irish Chamber

British Vehicle Rental and Leasing Association (BVRLA)

Business in the Community (BITC)

Carbon Capture and Storage Association (CCSA)

Confederation of British Industry (CBI)

Decarbonised Gas Alliance (DGA)

Jurisdiction Rationale for membership

Scotland UK UK & Ireland UK The Aberdeen and Grampian Chamber of Commerce is an association focused on growing the Northeast Scottish economy through events, policy work, news platforms, research, training and international documentation services. The ADE represents the energy sector, with the aim to drive the decarbonisation of heat, champion the role of industry in the green transition and push for UK homes, places of work and public services to be energy efficient and smart. The British Irish Chamber is an association focused on engaging members from the UK and Ireland to maintain focus on the value of two-way trade between the nations. The BVRLA represents the UK vehicle rental, leasing, and fleet sectors, providing a voice for firms at a regional, national, and international level to policymakers. The BVRLA provides advisory services, responsible business and strategy management training, and access to industry data and research.

UK Europe UK UK BITC is a trade association that works with businesses to improve their corporate social responsibility credentials, offering advice and programmes tailored to meet their needs.

The CCSA represents the interests of companies involved in carbon capture, utilization, and storage (CCUS). The organization provides a platform for its members to collaborate with other experts, access the latest market intelligence, and benefit from unique access to key players in government. The CBI is a trade association that advocates for domestic businesses on national and international issues. They purpose is to drive positive change, speaking for businesses of all sizes and sectors across the whole economy ensuring sustainable growth for the benefit of society. DGA represents a network of organisations that aim to decarbonise the gas system and meet the UK's target of net zero climate emissions by promoting the use of decarbonized gas, biogases, hydrogen, and carbon capture, usage, and storage (CCUS) technologies.

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Link to advocacy

https://www.agcc.co.uk/economicdevelopment/our-policy-priorities theade.co.uk/resources/publications https://www.britishirishchamber.com/polic y-and-advocacy/ https://www.bvrla.co.uk/industrycampaigns.html https://www.bitc.org.uk/reports/ https://www.ccsassociation.org/resources/ https://www.cbi.org.uk/ https://dgalliance.org/resources/

IndustryAssociationsand ClimatePolicy: 2023 Reporton Our Memberships and Alignment

Association Name

Danish Chamber of Commerce

Economic Social Research Institute (ESRI)

Electricity Association of Ireland (EAI)

Electricity Storage Network (ESN)

Energy UK

European Federation of Energy Traders (EFET)

Green Power Denmark

Heat Pump Federation (HPF)

Heating and Hot Water Industry Council (HHIC)

Hydrogen Energy Association

Jurisdiction Rationale for membership

Denmark Ireland Ireland UK UK Europe Denmark UK UK UK The Danish Chamber of Commerce is a trade association for companies within retail, service, IT, transport, tourism and health industries in Denmark. They act as chief negotiator for wages and working conditions for the majority of companies in Denmark.

The ESRI is a trade association which produces independent, high-quality research with the objective of informing policies that support a healthy economy and promote social progress. The EAI is a representative body for the Irish electricity industry, providing a source of expert advice on industry matters and works to enhance the reputation of the electricity industry and gas retail sector. They drive change through engagement with key policy, regulatory and technology stakeholders. The ESN is an industry group for grid-scale electricity storage in the UK, shaping policy agenda around issues affecting the deployment of electricity storage.

Energy UK represents the energy producers of the UK, working with the sector, government, regulators, and wider stakeholders to champion a sustainable UK energy industry.

The EFET represents members of the energy industry, working to build trust in power, gas and carbons markets across Europe, so that they may underpin a sustainable, efficient and secure energy supply and enable the transition to a carbon neutral economy.

Green Power Denmark is a Danish trade association for organisations that produce, distribute, trade and refine green electricity. Members help to deliver greener power to Denmark for a carbon neutral society.

The HPF provides a representative body for the whole heat pump sector, enhancing and consolidating political lobbying for UK energy policy development in support of the electrification of heating and cooling in the built environment. The HHIC is a UK-based member organization that is committed to effectively driving, supporting, and promoting the sustained growth of the UK domestic heating and hot water industry. The council provides a platform for its members to collaborate, access the latest market intelligence, and benefit from unique access to key players in government. Hydrogen Energy association is a leader in advocating for and accelerating the transition to Net Zero through the deployment of hydrogen solutions, positioning the UK at the forefront of Hydrogen globally.

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Link to advocacy

https://www.danskerhverv.dk/ https://www.esri.ie/publications https://www.eurelectric.org/publications/fu ll-list https://www.regen.co.uk/the-electricitystorage-network/ https://www.energyuk.org.uk/publications/category/reports/ https://www.efet.org/ Publications | Green Power Denmark https://www.hpf.org.uk/campaigns https://www.hhic.org.uk/ https://ukhea.co.uk/policy-shaping/

IndustryAssociationsand ClimatePolicy: 2023 Reporton Our Memberships and Alignment

Association Name

Hydrogen Europe

Hydrogen UK

International Emissions Trading Association (IETA)

Irish Business and Employers Confederation (IBEC)

Irish Green Building Council (IGBC)

North West Hydrogen Alliance (NWHA)

Renewable Energy Association (REA)

Renewable UK

Solar Energy UK

TechUK

Jurisdiction Rationale for membership

Hydrogen Europe represents European based companies and stakeholders Europe that are committed to hydrogen energy production. It is committed to enable the adoption of clean and reliable hydrogen.

Hydrogen UK represents companies across the entire hydrogen value chain UK working together to accelerate the deployment of hydrogen in the UK. The organization aims to accelerate the transition to a zero-carbon economy.

Global Ireland Ireland UK UK UK UK UK The IETA represents businesses committed to smart, well-designed and effective carbon markets to help achieve the goals of the Paris Agreement and reach net-zero emissions by 2050. IBEC aims to help build a better, sustainable future by influencing, supporting, and delivering for business success. As well as advocating government, policy makers and other key stakeholders nationally and internationally to shape business conditions and drive economic growth. IGBC provides a source of leadership for sustainability and quality in the built environment and provides a source of resources to companies transitioning their activities towards more sustainable practices. NWHA brings together the UK's most influential organizations, driving industrial decarbonisation and developing the region as the UK's primary hydrogen economy.

The REA represents all renewables industry in the UK, providing a platform for collaboration with other experts, access the latest market intelligence, and benefit from unique access to key players in government.

Renewable UK represents wind, wave and tidal power industries, bringing together members from the energy industry to deliver a just transition to a net zero future. Solar Energy UK represents key players in solar energy across the value chain, collaborating to increase the UK solar capacity, influence and shape policy and drive market growth. TechUK is a membership organisation that brings together businesses deliver a better future for people, society, the economy, and the planet using technology. They shape policy, explore the applications of emerging technologies and identify where technology can power progress.

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Link to advocacy

https://hydrogeneurope.eu/policypriorities/position-papers/ https://hydrogen-uk.org/publications/ https://www.ieta.org/resources/papers/ https://www.ibec.ie/ https://www.igbc.ie/igbc-resources/ https://www.nwhydrogenalliance.co.uk/wh y-hydrogen/ https://www.r-e-a.net/our-resources/ https://www.renewableuk.com/ https://solarenergyuk.org/resources/ https://www.techuk.org/

IndustryAssociationsand ClimatePolicy: 2023 Reporton Our Memberships and Alignment

Table 4: Aligned memberships.

Trade association

Offshore Energies UK (OEUK)

International Association of Oil and Gas Producers (IOGP)

Emissions Trading Group (ETG)

Jurisdiction Rationale for membership

UK Global UK OEUK represents businesses operating in the UK continental shelf. They aim to create a prosperous UK that relies on domestic, low-cost energy that is generated securely and ethically. OEUK advocate for the long-term role of Gas in the energy mix. Given the uncertainty and diversity of views on how Gas can contribute to the net zero goal, we have assessed OEUK as "Aligned" with our climate policies.

The IOGP represents the petroleum industry and provides a forum where members can identify and share best practices to achieve improvements in health, safety, the environment, security, social responsibility, engineering, and operations. IOGP advocates for the O&G industry's role in the energy transition to a low carbon future. Since the long-term role of gas in achieving net zero remains contested, we have rated IOGP as "Aligned" with our climate policies.

The ETG is a trade association that represents and supports UK businesses covered by the UK emissions trading scheme and enables communication to take place between industry and the UK government. ETG advocates for its' members who struggle to meet the emission reduction targets with existing technologies. We have rated ETG as "Aligned" with our views because they share our goal of net zero.

National Association of Energy Services Companies (NAESCO)

NAESCO represents and promotes the energy efficiency industry in the energy marketplace and is dedicated to modernizing America's building infrastructure through performance NA contracting. Their climate-related disclosures are light: they have not publicly expressed their views on the Paris Agreement. We have contacted them through our relationship owner to request more information on their stance, and we assess them as "Aligned".

Appendix

A1. Associations de-scoped from assessment:

• Irish Information Security Forum (IISF) • Step Change in Safety

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Link to advocacy

Net Zero (oeuk.org.uk) Advocacy | IOGP Submissions Archives - UK Emissions Trading Group - ETG Home - National Association of Energy Service Companies | NAESCO

Review of our trade associations 2022 - Climate

1. Summary

Centrica utilises its position of influence to advocate for positive policy development on key issues such as getting to net zero. The aim of this review is to improve the transparency around our indirect advocacy and strengthen the surrounding governance.

We're a member of many trade associations. And we believe that these relationships are key because they help our company progress our growth ambitions as well as our ability to reach net zero, whether through utilising the associations' combined power of influence or by sharing knowledge and expertise. We recognise that each trade association engages in advocacy on matters that are important to their members, and this can often cover a broad spectrum of views. However, we're committed to ensure that each association that represents Centrica, engages in advocacy that's aligned with the goals of the Paris Agreement.

Our 2022 review found no evidence of misalignment between our trade associations and the Paris Agreement. A total of 24 associations were "Strongly Aligned", whilst two were "Aligned". We'll therefore maintain membership with these associations as we continue to advocate for positive climate policy. If we find evidence of misalignment in the future, we're committed to taking appropriate action through engagement and if necessary, re-evaluate our relationship.

This is Centrica's first detailed trade associations review. And we plan to conduct this assessment on an annual basis so that we can monitor the ongoing advocacy of our associations. In addition to this, we've increased governance around our new membership process by including a Paris-alignment assessment before any new membership can be approved.

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2. Methodology

2.a Process of review

To undertake this review and future reviews, we follow the below process:

1. Scoping

Establish scope of assessment

2. Assessment 3. Calibration

Alignment assessment: collate publicly available evidence and review associations against assessment criteria Internal review with relevant specialists to ensure fair and sensible accurate allocations

6. Action

Initiate action plan where necessary

5. Approval

Review results with senior sponsor (Group Chief Executive) in External Affairs meeting

7. Disclose

Share results with trade associations and publish report

4. Engagement

Where relevant, engage with internal relationship owner for additional information or confirmation of position

2.b Scoping

All paid corporate memberships are in scope. Any association that's signed up to by a Centrica employee for individual membership, are excluded. For example, Institute of Environmental Management and Assessment.

We also screened out associations who are unlikely to take a climate position as "Not Applied" (see appendix). For example, Step Change in Safety. This allows us to focus only on the trade bodies who might have influence on decarbonisation.

In 2022, this resulted in the assessment of 26 out of 29 associations.

2.c Assessment

Alignment has been assessed in relation to the Paris Agreement and Centrica's net zero goals. For the purposes of this review, Paris is defined as a goal to limit global warming to well below 2 degrees Celsius, and preferably to 1.5 degrees Celsius, compared to pre-industrial levels.

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Table 1: Alignment definitions

Alignment level Definition

Strongly aligned

Evidence of alignment with Paris and relevant key positions appropriate to materiality, with negligible evidence of misalignment. Or, where the primary purpose of the association is related to decarbonisation.

Aligned As above, but either low level of disclosure or evidence surrounding support for Paris relative to materiality.

Misaligned Evidence of misalignment in the form of stated opposition to one or more of Centrica's key climate policies and/or Paris.

2.d Action planning

Table 2: Proposed actions in the instance of misalignment

Alignment level Actions

Strongly aligned

Maintain relationship and monitor advocacy. Relationship will be reviewed annually.

Aligned Maintain relationship, but actively engage and monitor advocacy. Relationship will be reviewed annually.

Misaligned Devise a tailored engagement approach with internal relationship owner to address perceived misalignment. Failure to respond appropriately to a confirmed misalignment will lead to a review of membership, up to and including termination.

2.e Annual review

We plan to conduct an annual refresh of this analysis and reassess the alignment of all associations. We recognise how dynamic the market landscape is and as a result, the extent of advocacy that each trade association will engage in every year. The results of every review will be published on centrica.com and all our in-scope trade associations will be notified of the report.

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3. Results

Table 3: 2022 assessment results

Association Name Alignment

British Irish Chamber Strongly Aligned Business in the Community Strongly Aligned Electricity Association of Ireland Strongly Aligned Energy UK Strongly Aligned CBI Confederation of British Industry Strongly Aligned Association for Decentralised Energy Strongly Aligned European Federation of Energy Traders Strongly Aligned Solar Energy UK Strongly Aligned Economic Social Research Institute Strongly Aligned Irish Business and Employers Confederation Strongly Aligned Heating and Hot Water Industry Council Strongly Aligned Aberdeen and Grampian Chamber of Commerce Strongly Aligned TechUK Strongly Aligned Heat Pump Federation Strongly Aligned British Vehicle Rental and Leasing Association Strongly Aligned Marketing Society Strongly Aligned Irish Information Security Forum Strongly Aligned Step Change in Safety Strongly Aligned Hydrogen Ireland Strongly Aligned Irish Green Building Council Strongly Aligned Renewable UK Strongly Aligned Renewable Energy Association Strongly Aligned Making Hydrogen Happen Strongly Aligned Decarbonised Gas Alliance Strongly Aligned Carbon Capture and Storage Association Strongly Aligned North-West Hydrogen Alliance Strongly Aligned Hydrogen UK Strongly Aligned Offshore Energies UK Aligned International Association of Oil and Gas Producers Aligned

Appendix

A1. List of associations de-scoped from assessment:

• Marketing Society of Ireland • Irish Information Security Forum (IISF) • Step Change in Safety

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