We are proud to once again present to you the report on PSE's impact on the economic, environmental and social development of our country. This is already the eighth social report our organisation has produced, and the sixth report which is integrated and published in an interactive version. The publication presents financial and non-financial data in an integrated manner, enhanced with calculations of the company's impact on the economy, the public finances, the society and the natural environment.

Impact reporting is a disclosure of complete, reliable and transparent data to stakeholders on the company's economic, market, social and environmental impact.
The information is compiled based on selected impact indicators, Global Reporting Initiative Standards (GRI) and our own standards, using the indicator calculation methods and taking into account the market situation.

The main objectives of this publication are to show the challenges faced by PSE and the entire power sector, especially those related to energy transformation, and to present the measures taken by the company to face these challenges, in particular with regard to implementing new and continuing the current strategic lines and initiatives. We also wanted to show the scale of the PSE's impact on the social and economic environment, to meet the expectations of stakeholders in terms of presenting the expected financial and non-financial issues, and to increase the transparency of our company.

In this report, we present issues relevant to our environment. They cover data from January 1, 2021 to December 31, 2021, and some selected aspects for 2022, allowing to present the current and complete picture of Polskie Sieci Elektroenergetyczne. There were no significant changes in the company's size, structure or form of ownership during the reporting period. The report does not include adjustments to information from the previous report.

As regards the indicators, we report data for 2020–2021, and even the data in a five-year perspective to show the trends that have occurred as a result of a number of changes that have taken place within the organisation, processes implemented and standards improved every year.

We have made a commitment to publish successive reports every year as integrated reports enhanced with impact indicators.

In accordance with the international guidelines, the issue selection process was conducted in three stages:

1. Identification

The identification of issues relevant to a sustainable development and to the areas of the company's impact on the environment was preceded by the following steps:

• an analysis of our company's responsibility towards the economy and market, the society and employees as well as the natural environment and climate,
• a review of global challenges for the power sector,
• an analysis of the reporting trends in foreign and domestic power companies,
• PSE's accepted standards for integrated reporting,
• a review of the previously reported issues,
• an analysis of key impact indicators, GRI indicators and PSE's own indicators,
• a review of documents defining the challenges for business in the context of sustainable development – Sustainable Development Objectives,
• an analysis of internal documents.

The analysis of internal strategic documents and internal consultations with the representatives of the PSE's organisational units made it possible to identify our stakeholder groups.

2. Prioritisation

The development of the report is one of the elements of the social dialog that PSE periodically conducts with its stakeholders based on the AA1000SES standard. The fifth dialog session was held on June 15, 2021 in an online format. Nearly 40 people attended the event. During the meeting, our partners assessed the way PSE operates and what is its impact on the environment; they also identified key issues that influenced the structure of this edition of the impact report. In the process of preparing the report, we also took into account the results of an additional online survey, which can be accessed from the Impact Report website.

Our stakeholders primarily include the following:

3. Validation

We also conducted a survey among the PSE managerial staff to identify what they consider key issues to be discussed in our company’s next Impact Report.

In the course of internal meetings and consultations with PSE’s organisational units, we confirmed the materiality matrix containing the key topics to be reported and the concept of the report structure.

Figure: Approach to the report structure

Based on the results of the stakeholder dialogue session and web-based surveys, as well as internal research and qualitative analysis, 17 key issues in 4 areas of responsibility were indicated:

• towards the market,
• at the workplace,
• towards the society,
• towards the natural environment.

The material issues that our company and its stakeholders believe should be included in the report are presented in a matrix.

Figure: Materiality matrix

Outside perspective ─ external stakeholders (dialog session and survey results),
Company’s` perspective ─ internal stakeholders (survey results and internal consultations).

Tab. Topics relevant to PSE and the environment

Key topics for PSE, including their impact boundaries considered in the report

Detailed issues presented in the report are based on the Strategy of Polskie Sieci Elektroenergetyczne adopted by the Management Board, reviewed by the Supervisory Board and approved by the General Meeting of Shareholders. The management approach was presented in accordance with the procedures of conduct described in PSE's corporate governance regulations and standards. All the published information presented in the report has been verified for consistency with the company's internal documents, and supervision of activities in particular areas is provided by the management. Strategic decisions are made at the Management Board level.

The report has been internally and externally reviewed. The PSE Capital Group Sustainable Development Team worked on the accuracy of the report, its content and compliance with the guidelines. The external review was conducted by an independent entity whose selection was approved by the Management Board.