Values, principles, standards and code of conduct

Our values

GRI 102-16, GRI 102-17, GRI 102-19, GRI 102-20, GRI 102-26, GRI 102-32, GRI 102-33

For 50Hertz, a business activity that is successful in the long run, is achieved by acting in the best interest of the company as well as in the interest of society. This is reflected in the company vision "A successful energy transition - for a sustainable world". 50Hertz has made it its mission to make the energy transition possible. The company has set itself five strategic goals in order to fulfill this task to the highest possible standard. It is for this reason that 50Hertz wants to stabalise security of supply at its peak, running in parallel with expanding the transmission grid in line with demand, achieving a competitive and sustainable result, further improving the efficiency, and adopting avalue-based corporate culture with a strong focus on occupational safety. The sometimes opposing objectives and interests of 50Hertz and its stakeholders are to be reconciled as much as possible. We aim for the maximum possible transparency, which is has been embodied in this report.

50Hertz has expressed its commitment to responsible corporate management in its sustainability principles and corporate charter. These state that the company acts as per the ten principles of the UN Global Compact in the areas of human rights, labor standards, environmental protection and, anti-corruption. In April 2017, 50Hertz intergrated themselves into this global coalition of values and has been involved in the German Global Compact network ever since. Employees also have access to corporate documentation that includes all applicable directives, guidelines and manuals, work instructions, process manuals and, work agreements. The company charter and guidelines specify what is meant by and expected within correct business conduct and make it clear that all employees comply with the law. These principles result in organizational measures that are contractual, and apply to all staff across the board.

Under the overall responsibility of the Managing Director Finance, the Corporate Development department has defined a sustainability concept and a roadmap of measures for the continuous expansion of sustainability reporting. The Communication & Policy department continues to define the reporting processes.

The importance of the continuous expansion of sustainability management is illustrated by the inclusion in the annual business plan,which is valid for five years. As part of the sustainability strategy, targets, indicators and, measures are systematically developed and reviewed and consequently secured in the corporate strategy. A company-wide committee at senior management level (CSR Board) oversees this from the development of measures to reporting, and is later officiated by the Chief Financial Officer and the Chief Human Resources Officer. The CSR Board convenes twice a year to agree on targets and processes.

The implementation of individual measures and the recording of key figures is the responsibility of various departments, units and teams within company. The CSR core team meets every three months to deliberate this. Those responsible for data provide key figures on the central transparency management platform in a comprehensible manner throughout the company. Sustainability risks are discussed and evaluated with the management in the quarterly updated risk analysis and, at an annual risk conference. Additionally, certified management systems such as ISO 45001 in the field of health and safety at work and ISO 27001 in information security management, or internal management systems based on recognized standards such as environmental management (according to ISO 14001) and early public acceptance (according to VDI 7000) are used in CSR core areas.

Governance

GRI 419-1

Through various agreements, the operational management of the Eurogrid GmbH group was delegated to the management of 50Hertz.
The management of 50Hertz consisted of three members in the 2019 financial year: Dr Frank Golletz (interim CEO and Technical Director), Dr Dirk Biermann (Managing Director Markets and System Operations) and Marco Nix (Managing Director Finances). Labour Director Sylvia Borcherding and Chief Digital Officer Michael von Roeder completed the extended management team. The Supervisory Board had appointed Dr. Frank Golletz as interim CEO in February in addition to his duties as Technical Director, after Boris Schucht (former Chairman of the Management Board) had left the company. As of December 1, 2019, the position of Chief Executive Officer was normally assigned to Stefan Kapferer.

50Hertz is always up to date and remains compliant with applicable law. The business activities are subject to numerous national and European legal regulations. In the future, the Climate Protection Act passed in October 2019 will have a further influence on business activities.

The company charter and guidelines on preventing corruption setout 50Hertz's understanding of correct ethical conduct and make it clear that the company complies with the law and does not tolerate corruption. These principles flow into organisational measures that are binding throughout company.

In 2019, corporate governance was strengthened by taking on board a managerial position for compliance and internal control systems. Guidelines and internal control systems were further approved by the management team. The guideline sets out the objectives and binding standards for the effective and compliant design of internal control systems. Since 2010, 50Hertz has adopted these guidelines that regulate the whistleblower system and prescribes the establishment of an internal compliance committee and an external ombudsman. The Compliance Committee comprises one member from the Legal and Human Resources departments and the Compliance Coordinator. Once a year, the ombudsman informs the Compliance Committee in a written report about his use and the number of potential risks received. If the ombudsman passes on a justified tip to 50Hertz, the Compliance Committee is immediately summoned to deal with the case in hand and, if necessary, seek to take further internal action. The committee reports to the 50Hertz management annually, and on an ad hoc basis if required. 50Hertz is currently evaluating whether the existing system can be applied to other areas such as anti-discrimination and human rights due diligence. In 2019, the ombudsman received no indication of corruption. In the financial year 2019, no significant fines were imposed on 50Hertz with legal effect in connection with general business activities or with power line construction projects or operations. The reporting threshold for administrative offenses was set at 25,000 euros. On top of that, 50Hertz provides up to date training for all employees involved in the purchasing process on the topics of procurement basics, anti-corruption, and compliant behaviour. Since 2016, 23 training courses for 250 employees have been held across the company in various locations. For employees at management level, purchasing and project management, the training courses in the area of compliance and anti-corruption were completed in 2019. Further training courses are held if and when required, for example for new staff.

Political influence

GRI 102-16, GRI 415-1

Because legislative or regulatory activities have a major impact on 50Hertz's business activities, the company presents its positions transparently and publicly in the political process. The responsibility for this lays with the Communication & Policy department. This political communication is carried out responsibly and is exempt from donations to political parties. Ethical principles for the political petitioning were established. This guideline, which is binding throughout the company and has been approved by the management, regulates the procedures in the political environment. It sets out that 50Hertz does not make any donations to politicians, political parties or political institutions and when sponsoring, focusses its attention on appropriate consideration and balance. Responsibility for donations to party-related foundations and associations is rooted centrally in the Communication & Politics department. Coupled with specific training programmes, 50Hertz ensures that employees who are active in social and energy policy are guided by clearly defined principles in their communications and actions. What’s more, 50Hertz is registered in the EU Transparency Register and is bound by its Code of Conduct. In 2019, 50Hertz made no donations to politicians or political parties.

Anti-corruption

GRI 205-2

Since 2016, 23 training courses for 250 employees have been held across the company invarious locations. For employees at management level, purchasing and project management, the training courses in the area of compliance and anti-corruption were completed in 2019. Further training courses are held if and when required, for example for new staff.

Risk management

GRI 102-30, GRI 102-11

As part of systematic risk management, 50Hertz regularly surveys and assesses the following risk areas:

• Protection of life and limb
• Profit & loss
• Liquidity
• Reputation
• Security of supply.

50Hertz evidently aims to avoid risks to the company‘s continued existence, to reduce risk positions as much as possible - where feasible - and to optimise the risk/opportunity profile. A risk guideline sets out how risks are systematically identified, recorded, evaluated and monitored every quarter. A risk conference is held annually whereby all head of departments (second management level) as risk owners and the risk manager together with the management, discuss the most significant risks and risk-related issues. In the context of sustainability, various risks are assigned to the Environmental, Social and Governance (ESG) areas. These include risks relating to occupational safety, environmental protection and data security and transparency. 50Hertz is persistently developing its management of ESG risks. For example, the risk conference due to be held in February 2020 will for the first time address a separate cluster of these risks. 50Hertz plans to work with key areas of the company to assess possible climate impacts on its business activities based on long-term scenario guidelines. At the project management level, an integrated process for the integrated planning of schedule, budget and risk management was installed.

Security

G4-EUS-DMA Desaster/Emergency Planning and Response

As an operator of critical infrastructure, 50Hertz is obligated to ensure information security by the IT-SiG (IT-Sicherheitsgesetz/IT Security Act). Information must be processed, stored and communicated in such a way that the availability, confidentiality and integrity of the informationand the systems are effectively ensured.

The information security management system according to ISO 27001 was recertified in 2019. IT risks are systematically identified and administered using the established security process. In the year under review, there were no identified cyber attacks recorded at 50Hertz or damage caused by information security incidents.

Within the framework of the Basic Data Protection Regulation (DSGVO) and also with a view to future digitisation projects, the data protection management system (DSMS) was revised and the position of data protection manager was created. Together with the external data protection officer, they form the data protection team at 50Hertz and continuously work to develop the management system. This also included a training and awareness program for all internal and external employees. Direct contact persons in the departments responsible for data protection were given seperate, more robust training.

For 50Hertz, safety goes beyond the corporate boundaries. For example, crisis management and crisis communication with internal and external stakeholders are trained in regular crisis team exercises. Not only are the existing structures, processes and reporting channels reviewed and continuously improved, but also the skills of the crisis management team members and employees are intensively trained to effectively manage unforseen events under particular pressure and to make snap and effective decisions for crisis management. These and other measures are designed to continuously and holistically increase the resilience of 50Hertz. In addition to the training conceptfor all members of the crisis team, this also includes the review of theproperty protection concepts and further development of the generalcorporate security.