Abu Dhabi National Oil For Distribution : Sustainability Report

CONTENTS

• 2 ABOUT THIS REPORT

• 4 2021 ESG HIGHLIGHTS

• 6 KEY MILESTONES ACHIEVED IN 2021

• 8 A NOTE FROM THE CHAIRPERSON

• 10 A NOTE FROM THE CEO

• 12 ABOUT ADNOC DISTRIBUTION

• 18 ADNOC DISTRIBUTION'S ESG AGENDA

• 24 OUR MATERIALITY

• 34 OUR ALIGNMENT TO ENSURE ESG LEADERSHIP

• 38 OUR CORPORATE GOVERNANCE

• 48 CLIMATE, EMISSIONS, AND ENERGY

• 60 LOCAL ENVIRONMENT

• 66 ECONOMIC & SOCIAL CONTRIBUTION

• 74 WORKFORCE DIVERSITY & DEVELOPMENT

• 84 HEALTH, SAFETY, & SECURITY

• 90 BUSINESS SUSTAINABILITY

• 102 ESG PERFORMANCE DATA

• 108 LOOKING FORWARD

• 110 GRI CONTENT INDEX

• 118 ABBREVIATIONS

ABOUT THIS REPORT1

WE ARE PLEASED TO PRESENT ADNOC DISTRIBUTION'S THIRD ANNUAL ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) REPORT.

This report aims to demonstrate our commitment towards disclosing transparent nonfinancial performance.

Through this report, we illustrate our ambitions, actions, and impacts along the 6 pillars of our Sustainability Strategic Framework.

Sustainability Strategic Framework Pillars:

The report further highlights the details of our accomplishments and insights derived from our continual stakeholder engagement processes.

1. 2-2 Entities included in the organization's sustainability reporting

2-3 Reporting period, frequency, and contact point

It covers ESG data for all ADNOC Distribution services and operations within the UAE, captured during the reporting cycle spanning January 1 - December 31, 2021.

OUR REPORTING FRAMEWORK

This report is aligned to the Global Reporting Initiative (GRI) Standards (see GRI Index for full details). As a proactive measure, we have aligned our report to GRI Standards 2021 disclosure requirements ahead of the effective implementation date on January 1, 2023. The report has been developed by taking into account GRI Reporting Principles of Accuracy, Balance, Clarity, Comparability, Completeness, Sustainability context, Timeliness and Verifiability.

Accuracy

Information provided in the report is consistent with ADNOC Distribution's ESG performance. The report adequately indicates data points that have been measured/estimated and highlights basis for calculations, if any.

Completeness

The report provides information to enable an assessment of ADNOC Distribution's material impacts during the reporting period.

Balance

The report is designed to present an unbiased and fair representation of our ESG performance during the reporting period.

Sustainability context

The report illustrates our strategy and impacts in relation to the United Nations Sustainable Development Goals (UN SDGs) and other relevant national and international Sustainable Development frameworks.

Clarity

The report has been developed in a comprehensive manner that is easy to understand, with clarity on disclosures provided in the GRI Content Index.

Timeliness

Our third annual ESG report is a testament to our dedication of providing timely ESG data to our stakeholders.

Comparability

The report presents our ESG performance over the last few years to enhance comparability. Methodologies used for data collection remain consistent.

Verifiability

Data provided in this report has been thoroughly reviewed and validated by the approving body of ADNOC Distribution.

The report also aligns with the Abu Dhabi Securities Exchange (ADX) ESG Guidelines, encompassing all material ESG Key Performance Indicators (KPIs). Furthermore, we have also aligned our overall Sustainability Strategic Framework to the United Nations Sustainability Development Goals (SDGs).

Our contact details

We acknowledge all our stakeholders who have supported us in the advancement of ADNOC Distribution's ESG performance. We welcome your feedback on this report which can be channeled through:[e-mail].

2021 ESG HIGHLIGHTS

SETTING A BENCHMARK FOR SERVICE EXCELLENCE IN THE UAE IS ADNOC DISTRIBUTION'S PRIDE. WE CONTINUE TO PERSEVERE AND REMAIN RESILIENT DESPITE GLOBAL DISRUPTIONS, AS WE PUT OUR EMPLOYEES, CUSTOMERS, COMMUNITIES, AND THE ENVIRONMENT AS OUR

TOP PRIORITIES.

CLIMATE, EMISSIONS, AND ENERGY

Safety and Environmental Management Systems in accordance with International Standards

2,014 GJ Solar Energy generated and consumed, contributing to reduction in GHG emissions by 252 tCO2e

Rooftop solar PV panels on four service stations,

2 Service Stations

LEED certified

-11%

Emissions Intensity Ratio decreased by 11% to 7.2 tCO2e/Million AED

LOCALENVIRONMENT

AED 10.1 million invested in environmental related infrastructure, improvement initiatives, studies, risk mitigation and management projects

80%

of the water consumed in car wash operations recycled

Pilot Recycling Station available at one of our fuel station to recycle paper, cardboard and tires waste

Ongoing

Health, Safety and Environmental Impact Assessment and Environmental Impact Identification studies for critical assets

ECONOMIC AND SOCIAL CONTRIBUTION

Continued Investment in Country's Infrastructure with addition of 19 new stations, 20 new convenience stores and refurbishment of 50 convenience stores in the UAE. Furthermore, 40 new stations added in Saudi Arabia

61%

Incountry value contribution increased in 2021 compared to 40% in 2020

AED 20.9 billion Revenue

Increase in economic value generated by 30%

AED 81,000 contribution raised to help fight River Blindness Disease

AED 139,000 invested in CSR and related sponsorship initiatives

Al Ghadeer Project

To promote the craftswomen of

Al Ghadeer, a project established to help lowincome women in the field of sustainable crafts, offered free space in ADNOC Oasis Convenience Stores to promote and sell their handicrafts and products to the customers

67.2%

Emiratization rate

2.5%

Increase in number of Emirati women employed

686

Courses and trainings were conducted across a diverse range of topics and subjects

300+

high-potential UAE Nationals participated in 'Tomooh' leadership training program

HEALTH, SAFETY, AND SECURITY

100% Vaccinated

First fuel retailer globally to vaccinate 100% of its frontline employees

Zero Fatalities

Zero fatalities and zero catastrophic incidents despite challenges faced due to the COVID19 pandemic

Zero Injuries

Zero recordable work-related injuries

44 HSE Training Courses

HSE training courses delivered to over 5,900 employees

BUSINESS SUSTAINABILITY

Cash Flow

Predictable cash flow generation and strong balance sheet to grow in both domestic and international markets, elevate customer experience, invest in development of people and local communities as well as sustain attractive dividend payments to shareholders

26 million

Metric Standard Cubic Meters (MMSCM) of CNG sold, contributing to reduction in GHG emissions by 105 tCO2e

6 Energy Efficient Stations

'ADNOC On the GO' stations opened and launched the nextgeneration retail experience with fully autonomous, contactless and cashierless ADNOC Oasis store using AI technology

ISO 9001:2015 quality management systems

'A' Rating

Received in MSCI ESG Assessment

KEY MILESTONES ACHIEVED IN 2021 Q1 Q2 Opened four new stations and six new convenience stores in the UAE Opened eight new stations and eight new convenience stores in the UAE Refurbished 14 convenience stores in the UAE Refurbished 10 convenience stores in the UAE Signed definitive agreements to acquire 20 new stations in Saudi Arabia Received no-objection certificates from the Saudi General Authority for Competition (GAC) to acquire 35 stations in Saudi Arabia $10 million in like-for-like operating expenses savings in Q1 2021 $17 million in like-for-like operating expenses savings in H1 2021 First fuel retailer globally to vaccinate 100% of its frontline employees Launched new promotional campaigns, offering rewards members more deals and discounts New partners added to the ADNOC Rewards program Reiterated the 2021 dividend policy to pay $700 million dividends and amended the 2022 dividend policy to set min. $700 million dividends, payout of min. 75% of distributable profits after that remains unchanged Free float increased to 23% after successful placement of an additional 3% of ADNOC Distribution shares by ADNOC ADNOC Distribution shares were included in MSCI Emerging Market Index, further broadening the investor base and visibility amongst global investors 2021 6

Q3 Q4 Opened two new stations and two new convenience stores in the UAE Opened five new stations and four new convenience stores in the UAE Refurbished 11 convenience stores in the UAE Refurbished 15 convenience stores in the UAE Added three new stations in the KSA, taking the total network in Saudi Arabia to 5 Added 35 new stations in the KSA, taking the total network to 40, including its first station to fully showcase the company's modern fuel and retail $26 million in like-for-like operating expenses savings in 9M 2021 convenience offering with an integrated ADNOC Oasis store, car wash and lube change Added new distributors for ADNOC Voyager lubes, taking the total number of countries it is exported to 19 $41 million in like-for-like operating expenses savings in FY 2021 Launched a series of promotions including the Let's Go Shop and Win Raffle Expanded in the Dubai commercial fuel & lubricants market by signing several new agreements Crossed 1.2 million loyalty members under the ADNOC Rewards program, a 20% increase compared to the end of 2020 Expanded LPG delivery service with 30 new trucks added to the existing fleet of 17, with enhanced digital ordering of LPG cylinders ADNOC Distribution shares were included in FTSE Emerging Market Index, further broadening the investor base and strengthening its value proposition Launched the next-generation retail experience with fully autonomous, contactless and cashierless ADNOC Oasis store using AI technology ADNOC Distribution received a rating of 'A' in the MSCI ESG rating assessment Grew ADNOC Rewards program partnership network to a total of 67 external partners Environmental, Social & Governance Report 2021 |7