Organisational capitals

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.

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.

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.
• Adoption of PGE Group’s Code of Ethics and the resulting provisions in the Code of Conduct for PGE Group’s Business Partners and the Anti-corruption Policy.
• PGE Foundation was established by PGE Polska Grupa Energetyczna in 2011. For the past 10 years, by making donations and implementing our own and partner projects, we have been supporting social initiatives, carrying out tasks in the fields of science and education, health protection, culture and national heritage, as well as ecological and environmental activities. We also provide support to PGE Group employees and their immediate families.
• PGE S.A.’s marketing activities, understood as sports and culture sponsoring and advertising activities, including image and sales ad campaigns and other forms of brand promotion, contributes to strengthening the position of the PGE brand.

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.

Relations with the social 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.

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

In 2021, thanks to the use of financial capital, we increased our productive capital and supported human and social capital.

Financing of innovative projects allows us to increase PGE’s intellectual capital. At the same time, a sufficient level of financial capital allows us to effective use natural capital and thus reduce its use.

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 financing more widely. This will allow for the planning and implementation of economically effective investments building future, stable value in financial terms through the creation and purchase of new productive 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.

The systems and procedures used by us allow the organisation to function efficiently and conduct business effectively in the area of electricity and heat generation and distribution of electricity. Along with the changes happening in our surroundings, the role of research and development activities is becoming relatively greater than material values.

• We have introduced a model for developing and implementing new solutions for the management of high-risk undertakings. In 2021  we continued operations of PGE Ventures, Corporate Venture Capital funds, whose goal is to invest in start-ups. PGE Ventures is able to meet the capital needs of startups at all stages of development (from the seed phase, through the growth phase, to the expansion phase).
• The portfolio of projects includes, among others companies:
  • ConnectPoint – start-up reducing emission of CO₂
  • PySENSE – one of the most dynamically developing companies in the area of the modern communication technologies for the energy sector go.
• Our search for innovations is aligned with the idea of transformation towards circular economy.
• In 2021, work began on the construction of a Research and Development Centre for the Circular Economy, which will host projects focusing on the recovery and recycling of raw materials from decommissioned RES installations and more.

Intellectual capital is developed using financial capital. Skilful use of funds creates the Group’s competitive position in the future, allowing for further growth of financial capital or increase in the value of manufactured capital due to it being used more effectively. Growing the potential of intellectual capital also contributes to the development of the Group’s human capital.

The role of intellectual capital in the changing business environment is to consistently grow. For this reason, the Group’s Strategy provides for focusing on building an efficient and effective organization – digitization of operations, remote asset management and monitoring.

The organization will increasingly rely on Big Data and AI solutions, as well as on robotics, machine communication and distributed ledger technologies.

Lignite and hard coal are key fuels used to generate electricity and heat at our conventional and
CHP plants. Natural gas and biomass are also included in our fuel mix. Completing the fuel mix are natural gas and biomass. Increasingly, natural capital is being recycled as part of the circular economy.

We are investing in technologies that directly use the forces of nature – wind, water and sun energy, which are converted into electricity at our renewables installations. We strive to effectively use natural resources. Our priority is to limit negative environmental footprint and protect the natural ecosystem.

With a combination of its own lignite resources, generation assets and distribution networks, The PGE provides secure and reliable electricity supplies to more than 5 million customers throughout Poland, including households, businesses and institutions. This means that it supplies almost every third electricity consumer in Poland. The PGE is also the leader in district heating production.

We also utilise minerals associated with lignite deposits, which play an important role in sustainable supply chains for commodities and materials. These include limestone, lake chalk, sands, clays, flint cobbles and erratic boulders in the form of granitoids and other Scandinavian rocks. Management of associated minerals contributes to rational deposit management and protection of the earth’s surface.

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.

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 own the largest generation asset base in Poland in the area of electricity and heat production. At the same time, we are the second largest distributor of electricity in Poland, owning a substantial asset base for the transmission of electricity. This is the material foundation of our business.

Implementing growth projects and acquiring new assets, we increase the Group’s manufactured capital of the Group. 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 improve the existing ones, building up competences within our intellectual capital.

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