Organisational capitals

The functioning of any organisation is based on the use of capitals and their transformation. Organisational capitals are all the resources – tangible and intangible – available in an organisation, which it uses in its activities and which are increased, decreased or transformed as a result of its activities and results. It is important to bear in mind that value creation within the different capitals does not only include financial values and can have different dimensions.

Our capitals in the PGE Group include:

human capital
social capital
intellectual capital
financial capital
natural capital
production capital

The use of these capitals is closely linked to the business model and its changes described in more detail in the chapter Evolution of the business model. In a changing organisation, the scale of the use of individual organisational capitals and the results obtained with them will also evolve.

The contribution and effects (value created) are presented in the following PGE Group’ s value creation model in the 2030 perspective.

The transformation of the PGE itself will allow for the effective use of capitals with the changing environment

and thus effectively build the value not only of the organisation, but its value for the environment in which it operates.

Employees are PGE’s most valuable capital. It is thanks to their experience and involvement that we are able to build an organisation that combines social responsibility with business objectives.

PGE Group is a place for people with passion and motivation. Our ambition is to be the most effective energy group in Poland. This also entails the implementation of best practices in corporate governance as regards human capital management, support for business decisions and management of productivity as well as standardisation of support processes.

	2023	2022	2021
Number of employees	43 644	38 355	38 299
Share of female employees	19.80%	20.30%	20.20%
Share of male employees	80.20%	79.70%	79.80%

	2023	2022	2021
Employee benefits expenses	7 462	6 092	5 098
Total number of training hours completed	61 775	42 872	50 034
Total number of work-related accidents	198	130	160
Accident frequency rate¹	4.55	3.40	4.17
Accident seriousness indicator²	55.27	62.38	64.63

¹number of accidents/ number of employees * 1000
²total number of absent days of people injured at work / number of people injured at work (excluding victims of fatal accidents)

Transformation of capitals

Thanks to skillful and effective use of human capital, we are able to properly use our manufactured capital and increase our financial capital, which in turn is used to increase the productivity of human capital. Employee training and adapting their competences to the tasks allows us to increase human capital potential, although the Group is facing a big challenge in the form of adequate filling a generational gap. Appropriate use of human capital naturally contributes to growing and building up intellectual capital.
Capitals in new business model

Changing to a low-carbon and climate-neutral economy requires the diffusion of new skills. The value of skills in the area of modern services will increase. The competences of leaders related to change management will be more and more important. This requires further employee development focused on the renewable energy area and modern energy services, which requires a new quality of management. At the same time, demographic trends force productivity growth, automation and digitization.

For us, social capital means good relations with local communities in the areas where we operate. Caring for these relationships is also a principle enshrined in PGE Group’s Code of Ethics. The companies and branches of our Group are in many cases the largest workplaces in the regions.

PGE Group fosters local partnerships focused on development and cooperation. It makes every effort to be a good and responsible neighbour. Thanks to the resources we have at our disposal, we can become significantly involved in local life by supporting educational, sporting or cultural initiatives. The industry in which we operate is characterised by a long-term planning horizon, and social acceptance of our activities is an important component of business. We believe that only sustainability based on partnerships is possible in the long term.

Organisational culture based on dialogue with employees and the surroundings..
Update of the PGE Group’s Code of Ethics and the resulting Code of Conduct for Business Partners of PGE CG Companies. The changes to the codes take into account, among other things, the introduced policies on diversity and human rights, including those of the child. They more broadly address issues of sustainable development, occupational health and safety and environmental protection, including Circular Economy.
Since 2011, we have been supporting the development of local communities by conducting grant-making activities and original social programmes as part of the PGE Foundation. Among other things, we help by conducting philanthropic activities, organising and financing employee volunteering, projects to support primary school first graders – Energetyczny tornister (“Energetic Backpack”).
In 2023, PGE continued to carry out activities promoting consumer patriotism, responsible consumer attitudes and encouraging people to buy Polish products in the social campaign „Polish – I’m buying it!”.
PGE S.A.’s marketing activities, understood as sports and culture sponsoring and advertising activities, including image and sales ad campaigns, contributes to strengthening the position of the PGE brand.

	2023	2022	2021
Taxes paid to central budget (PLN million)	13 887	3 897	5 437
Social security contributions (PLN million)	1 956	1 554	1 302
Taxes paid to local governments (voivodship, poviat and municipality budgets) (PLN million)	2 350	2 189	1 755
Customer satisfaction index (CSI) G tariff	89.1%	88.0%	89.6%
Customer satisfaction index (CSI) C1 tariff	84.3%	82.7%	84.3%

PGE’s volunteer projects in 2023 focused on environmental themes. In 2023, participants in the action: Forests Full of Energy planted a total of over 110 thousand trees in 21 locations in 12 provinces. Over 2 900 volunteers joined the work, including PGE Group employees, their families and invited guests. This is an original ecological initiative of PGE Dystrybucja power engineers, carried out since 2000 and developed by the employees of other PGE Group companies..
PGE Baltica employees together with 60 secondary school students cleaned the western beach in Ustka and the nearby forest. In autumn, PGE Volunteers carried out their annual cleaning of the shores of Lake Solina. Nearly 100 people took part in the project.
PGE Volunteers also engaged in work for cultural and sports institutions. In September 2023, a group of PGE Volunteers supported the organisers of the ‘Wawel is Yours’ festival in Cracow for 3 days with their work. PGE employees also carried out volunteer tasks during sports events organised by the Polish Speed Skating Association.
Energetyczny tornister (Energetic Backpack): this is a continuation of the campaign, which has been running for several years, to endow first-year students with school kits. Since 2016, the company has donated more than 2 000 school bags to first graders.
Protection of the white stork: for many years, our power engineers have been actively participating in activities supporting the protection of the white stork, primarily through the installation of platforms on low-voltage line poles, which provides conditions for the birds to stay safely in our distribution area. To date, around 29,500 such platforms have already been installed, 987 of which in 2023. Employees of PGE Dystrybucja also assist ornithologists in ringing young storks. In 2023 alone, 894 juveniles in 362 nests were ringed, and 9 storks were fitted with GPS devices to obtain their current locations and migration routes.
“Blood is not water – don’t be indifferent!’ is the slogan uniting all blood donation campaigns in the PGE Group. Throughout the year, the PGE Group’s power engineers donate blood both during cyclical campaigns, on festive occasions and in response to requests for help for specific individuals. Over 400 employees of the PGE Group are affiliated with seven clubs of voluntary blood donors.

Transformation of capitals

Social relations are a source of enterprise value creation. Thanks to social relations, production, intellectual, human and financial capital is built in the long-term. However, social capital also encompasses commitments, which we diligently satisfy through short-term deployment of financial capital. By promoting the right attitudes towards the natural environment in relations with our stakeholders, we contribute to a reduction in the use of natural capital.
Capitals in new business model

Relations with the environment will change along with changes in the Group’s activities, which are involved in new locations. At the same time, despite the planned separation of coal assets, PGE Group intends to remain operative in the regions undergoing transformation – by implementing investments there and supporting the process of social changes.

We use funds generated in the course of operating activities as well as equity and debt financing in order to develop the Group and create lasting value for shareholders and bondholders.

We use funds for organic growth and acquisitions.

	2023	2022	2021
Equity (PLN million)	46 874	54 383	48 291
Net debt (PLN million)	11 121	-2 656	4 228
Available/unused financing (PLN million)	5 692	3 817	1 958
Volume of allocated free CO2 allowances (million tonnes)	0.64	0.63	0.64
Regulatory asset base in Distribution (PLN million)	23 365	19 620	18 929
Capital expenditures (PLN million)	10 088	7 053	4 662

	2023	2022	2021
Sales revenue (PLN m)	95 964	73 435	52 730
EBITDA (PLN m)	10 028	8 657	9 535
EBITDA margin	10%	12%	18%
EBIT (PLN m)	-3 431	4 299	5 123
Net cash from operating activities (PLN m)	3 269	11 609	7 456
Net profit (PLN m)	-4 902	3 390	3 945
Earnings per share (PLN)	-2.23	1.56	2.12
Net debt/12 M EBITDA (x)	1.11	-0.31	0.44
Rating (Moody’s/Fitch)	Baa1/BBB+	Baa1/BBB+	Baa1/BBB+

Transformation of capitals

Financial stability is the basis for the proper use of other types of capital and its growth.

In 2023, by using financial capital through investments, we increased our production capital (by acquiring, among other things, PKP Energetyka Kolejowa, which owns railway network infrastructure throughout Poland), we supported human and social capital.

Financing of innovative projects allows us to increase PGE’s intellectual capital. At the same time, an adequate level of financial capital allows us to strive for the efficient use of natural capital, including biodiversity, climate, environmental protection and thus reduce the consumption of natural capital.
Capitals in new business model

The transformation of the business model – increasing the predictability of EBITDA and limiting the exposure to risks related to coal-based operations – will enable the Group to use green financing more widely. This will allow for the planning and implementation of economically effective sustainable investments building future, stable value in financial terms through the creation and purchase of new productive capital.

Fossil fuels are still the key fuels used to generate electricity and heat in our power stations and CHP plants. However, in line with our aspiration we will provide 100% energy from renewable sources by 2050.

We invest in technologies that make direct use of the forces of nature – wind, water and solar energy, which are converted into electricity in our RES installations. We strive to make efficient use of natural resources. Our priority is to reduce our environmental impact and protect the natural ecosystem..

In the PGE Group, we strive to use natural capital as efficiently as possible – one of our business segments is Circular Economy (GOZ). We manage the waste generated in the PGE Group’s power plants and combined heat and power plants from the production of electricity and heat (ash, slag, ash-slag mixtures and gypsum from flue gas desulphurisation plants). These wastes are used as full substances in other branches of the economy (cement industry, construction, road building, mining). In this way, we reduce the amount of end-of-life waste generated.

The dedicated GOZ segment is responsible for promoting, creating and implementing circular economy principles throughout the PGE Group and increasing the degree of utilisation of raw materials involved in energy generation processes. It is a response to the challenges of the Polish economy both in the long term and in the coming years as an important element of the transformation process. An effective GOZ model will enable an energy transition that fits into the national challenges of waste-free and environmentally friendly energy generation..

More about Circular Economy

	2023	2022	2021
Industrial resources of lignite (million tonnes)	738	782	837
Lignite extraction (million tonnes)	38.39	51.10	47.2
Use of hard coal (million tonnes)	9.42	10.74	11.98
Use of natural gas (million m³)	1 142.2	832.9	1 173.4
Use of biomass (million tonnes)	0.776	0.481	0.709
Use of renewable resources (water, wind, sun) – gross output	2.73	2.24	2.33
Water abstraction for production purposes (million m³)	27 250.8	23 343.2	26 529.1

	2023	2022	2021
CO₂ emissions (million tonnes)	56.95	70.01	70.75
NO_x emissions (tonnes)	39 329	50 337	52 818
SO₂ emissions (tonnes)	41 095	56 999	62 931
Particulate matter emissions (tonnes)	1 370	1 890	2 033
Quantity of hazardous waste¹ (tonnes)	7 159	7 017	6 168
Quantity of waste other than hazardous¹ (tonnes)	4 780 627	7 028 836	6 194 850

¹PGE GiEK, PGE Energia Odnawialna, PGE Dystrybucja and PGE EC.

Transformation of capitals

Natural resources are consumed in producing electricity and heat at our conventional and CHP plants, however providing reliable electricity and heat supplies, we work for the society and industries, thus strengthening social capital. Using natural capital in an effective manner, we are increasing our financial capital that is used for development and the strengthening of our other capitals.

We strive to use natural capital as efficiently as possible, so following the idea of a circular economy, we introduce combustion by-products and mining by-products into the economic cycle, which we try to manage as much as possible.
Capitals in new business model

In the target business model, PGE will use non-renewable natural capital to a lesser extent. The basis for the production activity will be the use of renewable wind and solar energy. We will also seek to increase the efficiency of raw material use through the development of circular economy.

We have the largest generation assets in Poland in the area of electricity and heat production.

At the same time, we are the only group in Poland with distribution networks throughout whole country, supplying the railway catenary network from 2023. This is the material basis of our business.

	2023	2022	2021
Number of lignite-based plants	2	2	2
Number of hard coal-based plants	3	3	3
Number of CHP plants	16	16	16
Number of wind farms	21	20	17
Number of hydro-power plants and pumped-storage plants	33	33	33
Number of photovoltaic plants	30	24	5
Installed electricity capacities at conventional assets (MWe)	15 432	15 460	15 460
Installed heating capacities (MWt)	7 088	7 766	7 685
Installed renewables capacities (MW)	1 229	1 177	1 070
Installed pumped storage capacities¹ (MW)	1 251	1 251	1 256
Number of distribution stations	105.7	96.6	96.0
Capacity of distribution stations (MVA)	42 015	33 475	32 956
Length of distribution lines (thousand km)	319.9	298.7	297.0

¹without pumped storage power plants with natural inflow

	2023	2022	2021
Net electricity production of conventional assets (TWh)	53.33	62.94	65.75
Net electricity production of renewables (TWh)	2.73	2.24	2.33
Net electricity production of pumped storage assets (TWh)	1.20	0.95	0.69
Distribution of electricity (TWh)	38.88	37.07	37.74
Production of heat (PJ)	50.25	52.79	56.77
Sale of heat (PJ)	49.03	51.28	55.07

Transformation of capitals

By implementing growth projects and acquiring new assets, we increase the Group’s production capital. This development takes up financial capital but in the long term these investments should contribute to increasing financial capital. We focus on effectiveness and using the best available technologies, thanks to which we constantly contribute to reducing the use of natural capital. We constantly increase the use of new technologies and and conduct research and development projects, building up competences within our intellectual capital.

In 2023, PGE became the owner of PGE Energetyka Kolejowa (formerly PKP Energetyka), which has exclusive rights to supply energy to the railway sector and to traction network maintenance services.
Capitals in new business model

After the carve-out of coal assets, the Group’s production capital will mostly be distribution network assets, as well as combined heat and power plants and renewable installations. With the further implementation of the Strategy, renewable capacities are to increase significantly while the production capital of the CHP plants will be transformed towards low-emission.

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Organisational capitals

Our capitals in the PGE Group include:

The contribution and effects (value created) are presented in the following PGE Group’ s value creation model in the 2030 perspective.

The transformation of the PGE itself will allow for the effective use of capitals with the changing environment

Employees are PGE’s most valuable capital. It is thanks to their experience and involvement that we are able to build an organisation that combines social responsibility with business objectives.

Transformation of capitals

Capitals in new business model

For us, social capital means good relations with local communities in the areas where we operate. Caring for these relationships is also a principle enshrined in PGE Group’s Code of Ethics. The companies and branches of our Group are in many cases the largest workplaces in the regions.

Transformation of capitals

Capitals in new business model

PGE Group’s business experience and brand’s position are values that enable us to maintain our market position and adapt to a changing world.

Transformation of capitals

Capitals in new business model

We use funds generated in the course of operating activities as well as equity and debt financing in order to develop the Group and create lasting value for shareholders and bondholders.

Transformation of capitals

Capitals in new business model

Fossil fuels are still the key fuels used to generate electricity and heat in our power stations and CHP plants. However, in line with our aspiration we will provide 100% energy from renewable sources by 2050.

Transformation of capitals

Capitals in new business model

We have the largest generation assets in Poland in the area of electricity and heat production.

Transformation of capitals

Capitals in new business model

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Next page

Previous page

Organisational capitals

Our capitals in the PGE Group include:

The contribution and effects (value created) are presented in the following PGE Group’ s value creation model in the 2030 perspective.

The transformation of the PGE itself will allow for the effective use of capitals with the changing environment

Employees are PGE’s most valuable capital. It is thanks to their experience and involvement that we are able to build an organisation that combines social responsibility with business objectives.

Contribution

2023 results

Our activities supporting the use of human capital

For us, social capital means good relations with local communities in the areas where we operate. Caring for these relationships is also a principle enshrined in PGE Group’s Code of Ethics. The companies and branches of our Group are in many cases the largest workplaces in the regions.

Contribution

2023 results

Our activities supporting the use of social capital

PGE Group’s business experience and brand’s position are values that enable us to maintain our market position and adapt to a changing world.

Contribution

2023 results

Our activities supporting the use of intellectual capital

We use funds generated in the course of operating activities as well as equity and debt financing in order to develop the Group and create lasting value for shareholders and bondholders.

Contribution

2023 results

Our activities supporting the use of financial capital

Fossil fuels are still the key fuels used to generate electricity and heat in our power stations and CHP plants. However, in line with our aspiration we will provide 100% energy from renewable sources by 2050.

Contribution

2023 results

Our activities supporting the use of natural capital

We have the largest generation assets in Poland in the area of electricity and heat production.

Contribution

2023 results

Our activities supporting the use of production capital