RISK MANAGEMENT AND RESILIENCE RISK MANAGEMENT PROCESS

Enterprise Risk Management is an essential component of sustainable growth for the Sonnedix Group. Our focus on the identification, measurement, reporting and mitigation of risks through our risk management framework is increasingly important to Sonnedix as we grow and become more diversified and complex as a business.

We put risk assessment at the core of our leadership agenda and informed risk taking at the core of our decision making. The monitoring and management of enterprise risk remained prominently at the top of the agenda at the senior executive level throughout 2022. Our quarterly Risk Review Committee at the senior leadership level continued to further foster an enterprise-wide culture that supports appropriate risk awareness, review and management. The objective of the Risk Review meetings is to monitor the Group Corporate Risk Programme and identify, evaluate and mitigate risks across the Group.

The Risk Review Committee considers business critical risks within the following categories: tax and financial, insurance, compliance (ESG/HSE, ABC), legal, disputes, regulatory, supplier and cyber risks. The Committee also aims to anticipate key emerging risks and identify risks that are becoming more material and significant for our business. The outcomes of the review are then further presented and discussed at the Audit and Risk Committee, which assumes overall responsibility for risk oversight and management.

We recognise the connection between risk management and sustainability management. Our Enterprise Risk Management framework incorporates sustainability-related risks such as climate change, people and culture, regulatory and reputational, including community.

In 2022, we conducted our annual Enterprise Risk Management survey across the Board of Directors, the Senior Leadership Team and senior management, including ESG, to assess the likelihood and impact of key risks, along with the risk velocity (defined as speed to identify and remediate the risk in question) and appetite. As a result, the risk dashboard has been updated for new risks and key performance indicators to be monitored going forward.

Formal risk register provided to Board? Risk Appetite Statement adopted?

The Sonnedix Enterprise Risk Management framework continues to be effective in managing and reducing the exposure of our business and people to key risks. 2022 saw further focus and emphasis on climate-related risks which are further discussed in the Environment chapter.

% attendance for risk training

YES YES > 95%

Sonnedix established a dedicated regulatory engagement function in 2021. The aim was to ensure that the business is able to manage regulatory risks and the rapidly evolving regulatory landscape in the energy sector across all ten jurisdictions that Sonnedix operates in.

The department drives the definition of financial and commercial regulatory impacts in all Sonnedix jurisdictions that may materially impact current or future financial position, affect operations, cash flows, or the fundamental drivers of Sonnedix’s ability to deliver on the core commercial strategy in the long term – in either a positive or negative manner.

In addition to an internal Regulatory Change Management System, the Regulatory department oversees proactive strategic engagements externally at the institutional level, bringing forward Sonnedix’s values of commitment to the energy transition, and to sustainable and ethical practices with government departments and regulatory bodies, at national and supranational (EU) level.

The Board is regularly updated on any material regulatory risks and opportunities that arise, along with the constructive engagements that are undertaken to deliver policy and business objectives. 2022 was a year of unprecedented market and policy volatility, and the Regulatory department has contributed to manage the risk by setting up improved reporting and price assumption management.

In the course of 2022, the department has also led and delivered a series of Regulatory Roadshows, i.e. one of the key strategic initiatives to elevate regulatory engagement. These forums aim to establish high-profile institutional relationships, helping Sonnedix become a recognised and trusted advisor to policymakers to develop regulatory frameworks conducive to renewable energy investment and to maximise the local positive impact of our projects.

2023 is the year when regulatory engagement will be elevated further. Among other initiatives, a new workstream on institutional engagement at EU level has been established.