Risk Appetite
The EDP Group operates across diverse businesses and geographies, making risk-taking an inherent part of its activity, both as a threat and an opportunity. In this context, the group explicitly and implicitly establishes its risk appetite with its stakeholders, at Corporate and Platform/ Region level, through a series of mechanisms:
- Business Plan: Approved periodically by the Executive Board of Directors, outlining strategic guidelines for 3–5 years;
- Investment Assessment: Rigorous evaluation of investment/divestment risks by Regions, validated by the Executive Board of Directors and Investment Committee;
- Risk Management Policies: Establishing methodologies, guidelines, and exposure limits for key risks;
- Risk Maps: Periodic, quantitative analysis of individual and aggregate exposures to identify and prevent excessive risk at a Group level;
- Risk Reports: Regular monitoring of current and emerging risks, comparing exposures to limits, and reporting to governance bodies;
- Risk Appetite Framework: Approved by the Executive Board of Directors, outlining the level of Risk EDP is willing to take to execute the defined strategy. The Risk Appetite Framework is structured around three pillars:
- Governance Model: Defines roles and responsibilities;
- Risk Appetite Statement: Formal statements with indicators and thresholds, maintaining a controlled risk profile is strategic; and
- Monitoring & Follow-up: Reporting of exposure to the defined indicators and action plans for the ones beyond the thresholds.
| Balanced Business | Solid Financials | ESG Excellence | Operational Excellence |
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| Controlled risk renewable energy company, with a strong long-term contracting profile and geographical diversification | Credible business plan with sound financials, aiming for a solid balance sheet and sustainable growth | Build a future-proof organization adherent to key ESG principles | Prudent operational risk management, following best-practices and assuring business continuity |
| Geographical concentration | Rating | Environment | Development/ construction of physical assets |
| Business segments | Dividends | Social | |
| Growth delivery | Liquidity | Governance | Availability and integrity of physical assets and energy losses |
| Regulated / LT contracted | Financial market risk | ||
| ST energy market positioning | Credit & Counterparty | Security, confidentiality, integrity and availability of systems | |
| Regulatory monitoring | Investment Plan Execution | ||
| Social liabilities |
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1st Level Declaration |
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2nd Level Declaration |
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KRI (Objective) |
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Balanced business
Controlled risk renewable energy company, with a strong long-term contracting profile and geographical diversification
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GEOGRAPHICAL CONCENTRATION Geographical diversification and focus on geographies/markets with reduced country risk |
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Max % of EBITDA in a given geography/emerging country (<50% in Iberia; <20% in Brazil) Max % of EBITDA in all emerging countries Max. secured MWs (ownership) in countries with limited experience |
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BUSINESS SEGMENTS Diversified portfolio across the value chain with a strong growth focus in medium to long-term viable renewable generation and grids |
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Max % of EBITDA generated by a given technology Min % of EBITDA from Grids |
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Growth delivery On-schedule project delivery and secure equipment in line with Business Plan targets |
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Min % of MWs secured vs target (BP/BU) in Y and Y+1 % of main equipment MWs secured vs total target MWs in Y & Y+1, by technology |
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REGULATED/LONG TERM CONTRACTED Activity focused mainly in regulated or long-term contracted operations |
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Min % EBITDA from regulated / LT contracted activities (without hedges) Min % of contracted generation (incl. LT PPAs/public schemes) for Y+1 Weighted average of years of contracted generation |
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SHORT TERM ENERGY MARKET POSITION Controlled short-medium term energy market risk and limited proprietary trading exposure |
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Max Portfolio Value at Risk Min Net Position in Iberia (coverage of ≈70-80% for hydro and ≈80-90% for wind and solar) |
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REGULATORY MONITORING Foresight of possible high impacting regulatory/political changes in current portfolio and potential new geographies |
Max Expected Loss of Regulatory Risk |
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Solid financials
Credible business plan with sound financials, aiming for a solid balance sheet and sustainable growth |
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RATING Alignment between business and financial profiles to target a solid Investment Grade |
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Min Long-Term Rating (BBB target) Min Funds from Operations/Net Debt (>20%) |
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DIVIDENDS Predictability and sustainability of dividend policy as a fundamental element of the shareholders’ value proposition |
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Max Net Income Recurring @Risk |
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LIQUIDITY Maintenance of liquidity reserves enough to cover cash needs in short-medium term in times of stress |
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Min Survival Period (coverage > 100%) |
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FINANCIAL MARKET RISK Proactive management of the exposure to financial markets, namely FX and Interest Rate, controlling the impacts on the business activity. Investments are financed in local currency if possible |
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Max P95% Net Investment Loss - Foreign Exchange Max % Floating Rate Debt in EUR and USD Min Duration of Group Debt in EUR and USD |
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CREDIT & COUNTERPARTY Controlled exposure to credit & counterparty risk, favouring higher rated counterparties |
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Max Expected Portfolio Loss Max Exposure to non-Investment Grade Counterparties Max Concentration of counterparty exposure |
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IMPLEMENTATION PLAN EXECUTION Investment in projects with an attractive risk adjusted profitability, limited market exposure and short time to cash |
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Min IRR P90 / WACC (1x) |
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SOCIAL LIABILITIES Full coverage of funded social liabilities, through a diversified asset portfolio of limited duration gap, with new pension plans as defined contribution |
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Min Funded Pension Coverage Ratio Max V@R of the Assets-Liabilities Position |
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ESG Excellence
Build a future-proof organization adherent to key ESG principles |
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ENVIRONMENT Leading the energy transition to create superior value accounting for climate change resilience and limiting the environmental impact of the group activities |
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Min Percentage of Renewable Generation (93% in 2026) |
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SOCIAL People-oriented way-of-working, with zero tolerance for non-compliance with safety measures, assuring Human and Labour Rights, attracting and retaining diverse top talent, and empowering communities |
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Max Rate of Work Accidents Max Work-Related Fatalities (target of 0 fatal accidents) Min % workers that answered favourably to the question “I intend to stay with EDP for at least the next 12 months” in the Climate survey
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GOVERNANCE Maintain the highest standards of ethical behaviour, transparency and accountability, with zero tolerance to corruption and to any other illicit behaviour or non-compliance with laws and/or regulations, and continuously work towards the enhancement of our governance practices for the benefit of our stakeholders |
Expected loss of passive legal contingencies w/ economic significance Max % High Integrity Risk Counterparties Leading Position in the DJSI Index |
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Operational excellence
Prudent operational risk management, following best-practices and assuring business continuity |
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DEVELOPMENT/CONSTRUCTION OF PHYSICAL ASSETS Excellence in project management, limiting risk of CAPEX deviation and COD delays, allowing the fulfilment of the Investment plan |
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Max CAPEX Weighted Deviation |
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AVAILABILITY AND INTEGRITY OF PHYSICAL ASSETS AND ENERGY LOSSES Prudent O&M and security of physical assets, complemented with insurance and contingency and recovery planning, guarantying limited operational losses, outstanding quality of service and assets availability. Control of technical and non-technical losses in electrical grid through adequate tech, maintenance, operation and fraud anticipation processes |
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Max Losses of EDP in insurable incidents Max % of Insurance claims / total premium paid for the last yearly insurance cycle Min TEA deviation vs BU. YTD |
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SECURITY, CONFIDENTIALITY, INTEGRITY AND AVAILABILITY OF SYSTEMS Prudent management, targeted maintenance, security and availability of IT and OT systems and related services, ensuring resiliency capability under abnormal/disruptive situations |
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Percentage of employees who submitted data in global social engineering campaigns Min Bitsight Security Performance Rating |
