Letter to Shareholders and Stakeholders

Dear Shareholders and Stakeholders,
the Iren Group has integrated the principles of sustainability into its growth strategy to the point of making them the guiding star for its future development.
The natural landing place of the plan to integrate ESG criteria - Economic, Environmental and Social - into the life of the company is represented by the decision to unite in this letter the presentation of the results of both the Annual Report 2020 and the Sustainability Report 2020 with the aim of ensuring an integrated reading for all the Group's stakeholders.

Attention to the principles of sustainability and the important path of growth and efficiency achieved in recent years have allowed the Group to face an extraordinary year like 2020, marked by the Covid-19 pandemic, with extreme flexibility. In just a few weeks, Iren has been able to rethink its approach to work and to the provision of essential services, ensuring full operational continuity to 4.6 million Italians in the areas in which it operates.

The ability to adapt to a new scenario and the resilience demonstrated, together with the dedication and sense of responsibility of our employees, are the most valuable result that 2020 has brought to the Iren Group.

In fact, 2020 testified to the extraordinary ability to adapt, the economic and financial solidity and the managerial and industrial excellence achieved by our Group in recent years. A stability which enables us to also tackle emergency situations, like the one we are experiencing in this historical moment and which imposes on each of us the search for new horizons and new strategies.

In 2020 the Group turned 10 years old, celebrated by a new visual identity and a new logo that will accompany the Group's growth throughout Italy in the coming years. In these 10 years, Iren has established itself as one of the most important national multi-utilities, serving more than 440 municipalities for a total of more than 4.6 million inhabitants, attesting itself as the 2nd multi-utility both for regions covered by the services and for number of clients served, and as the 1st Italian multi-utility for growth in employees, which have reached more than 8,650, with a continuous and constant upward trend over the last five years.

These figures are a snapshot of a Group that, even today, expresses a national dimension that requires us to think and act as a large company in the country while maintaining, and if possible further strengthening, our deep roots in our reference territories.

A growth that has also included two important extraordinary operations, for approximately € 200 million, such as the acquisition of the companies of the former Environment Division of UNIECO and of I.BLU, realities that have allowed the Group to further strengthen its position in the Environment sector and to become the first operator in the plastics chain in Italy, highlighting, once again, the national perimeter assumed by Iren.

The energy transition - a subject to which the new Draghi government has chosen with foresight to entrust a dedicated Ministry - is significantly changing our business. We will be increasingly called upon to respond to the challenges of our time such as climate change, infrastructure obsolescence, security, energy transition, resource consumption, mobility, integrated services, investment attraction and competitiveness.

Thanks to our assets and the path of growth in terms of skills and size that we have undertaken, we are ready to play a leading role in the sector and, to this end, we have started to design our future with the Industrial Plan to 2025 which foresees the growth of the Group throughout the country and the affirmation of Iren's leadership in sustainability through the development of the "multicircle economy", our long-term industrial vision focused on the conscious and efficient use of resources in all areas of business.

A decisive and enabling factor in the Group's further development will be the € 3.7 billion of investments planned over the next five years, € 2.1 billion of which will be allocated to the multicircle economy, which applies the concept of circular economy to all our businesses: from the production of energy from renewable sources to the waste cycle, from the management of water resources to green mobility, because it is strongly ingrained in our DNA.

With the multicircle economy, the Group wants to take the circular economy to a new level, linking energy production, energy efficiency, the waste cycle and water resource management. The objective is to multiply the value created, in all the areas in which Iren is present: in the territories served, the Group boasts a percentage of differentiated waste collection of 69.3% compared to a national average of 61.3%, an average of water network losses that are more than 10 percentage points lower than the national average and every year it avoids the emission of 2.7 million tonnes of CO₂.

The Group contributes to the reduction of pollution with the national leadership in district heating and with 3/4 of energy production from green or high efficiency sources; to the development of electric mobility with the electrification of the corporate fleet, shared mobility solutions and the creation of the enabling infrastructure; energy saving with the maintenance and requalification of buildings through the development of efficiency solutions; innovation and digitalization, for which 300 million euros of investments are earmarked over the next 5 years, with particular attention to the Corporate Venture Capital project that sees us as the first multi-utility in supporting innovative start-ups in the cleantech sector.

The above shows how sustainability permeates Iren's actions in all the businesses in which it operates. Sustainability that goes well beyond the commitment on the environmental front but integrates ESG criteria into the life of the company, as demonstrated by 99% of employees with permanent or apprenticeship contracts, 88% of them involved in training activities, the presence of more than 2,000 women in the Group and a strong focus on gender equality, as also recognised by inclusion in the Bloomberg Gender Equality Index.

And again, to all our stakeholders: 180 thousand people involved in Eduiren sustainability education projects, 53 projects carried out by Iren's sustainability Local Committees, 60% of the value of orders placed with local suppliers, proof of the constant attention paid to the areas in which we operate.

Iren Group wants to progress within an internationally recognized framework and guidelines, such as those of the United Nations Global Compact, to which it renews in 2021 its commitment to respect its fundamental principles, and the Sustainable Development Goals of the 2030 Agenda.

The results achieved in 2020 confirm the growth path of the Group, which closed the year with revenues of € 3.7 billion, EBITDA of € 927 million, up 1.1% compared with last year, and Group net profit of € 235 million, in line with last year. Of particular note is the figure for investments, which grew by 30.7% compared to 2019 and amounted to € 685 million, of which € 350 million were allocated to projects related to the multicircle economy, which made it possible to achieve the planned strategic objectives, to support the economies and induced activities of the territories severely affected by the pandemic and to propose Iren with a leading role in the post-emergency recovery programme that will involve the country.

The efficient management of the Group in terms of size and economic-financial indicators, the development of skills and quality in services, the utmost attention to sustainability and care for internal resources and clients, are the key factors that have enabled us to achieve the results we are presenting for the approval of the Shareholders, proposing to the Shareholders' Meeting a dividend of 9.5 c€ per share, up 2.7% compared to 2019.

To all the women and men of Iren Group, also on behalf of the Board of Directors, a thanks for their expertise and commitment shown every day in their work, which have led to our achieving these results. Thank you, today more than ever, for the dedication and responsibility with which you have and are continuing to guarantee the supply of essential services for our community, especially in this difficult scenario, with efficiency as always and with innovative methods compared to the past and, in many cases, reconciling family life and work. We would like to thank our Shareholders and Stakeholders for the encouragement they provide us in pursuing sustainable development and the members of the Board of Directors and the Board of Statutory Auditors for their decisive contribution to the growth of the Company.