Business Model

The Light business model, supported by corporate governance and the Company’s business model, is related to electricity distribution, generation, sales, and service activities.

In carrying out our activities, we use a business model that has been structured into six capitals in line with the International Integrated Reporting Framework: Manufactured, Natural, Intellectual, Social & Relationship, and Financial. Those capitals, collectively, enable us to create value for all stakeholders and achieve superior results.

The chart below illustrates the ways Light creates stakeholder value through our business model.

Learn more in our Annual Report.

Corporate governance

Light’s Corporate Governance Manual sums up the mechanisms and practices set aside to meet the objectives of value creation for the company and its shareholders.

Corporate governance, one of the three pillars in ESG, describes the system by which organizations are managed and monitored to ensure healthy interaction is maintained between shareholders, the Board of Directors, the Executive Board, regulators, employees and other stakeholders. At Light, good governance practices help to ensure the short-, medium- and long-term sustainability of the business by securing access to funding, improving the quality of corporate management, creating value—including economic value—and enhancing Light’s reputation with society as a whole.

The guidelines and practices designed to ensure we achieve value creation goals for the company and our shareholders are outlined in the Light Corporate Governance Handbook.

Light’s current corporate Governance structure is Illustrated below:

Learn more about the composition, work, and characteristics of the members of Light’s Board of Directors, committees and Executive Management at Governance.

Learn more about our Corporate governance in our Annual Report.

Ethical conduct

Light’s relationships with stakeholders are governed by our Code of Ethics and Business Conduct. The Code outlines and formalizes the rights and duties that we observe in our relationships with governments, society, customers, shareholders, directors, employees, contractors, suppliers, unions, trade associations and other stakeholders.

The Light Code of Ethics & Business Conduct was built around our organizational ethos, which is underpinned by ethics, truth and transparency, but also drew important elements from our Compliance Program and inputs from the Ethics Committee. Concerns raised via our whistleblowing channels provide further inputs that help to keep the Code of Ethics up to date and aligned with Light’s ethics culture.

Learn more about Ethics and compliance at Light in the Code of Ethics and Corporate Conduct and in the Annual Report.

Strategy and Sustainability

Light’s commitment to sustainability dates back to 2005 when it joined the Novo Mercado of the former Bovespa (São Paulo stock exchange), currently known as B3. Since 2007, the Company has published sustainability reports based on the Global Reporting Initiative (GRI) standards and, as of 2009, periodically assesses its material topics. Since 2021, the Report is reviewed by Independent Auditor.

In addition to the GRI, the Company currently uses in its disclosures the integrated reporting model according to the guidelines of the International Integrated Reporting Council (IIRC) and Guidance CPC 09 – Integrated Reporting, approved by CVM Resolution #14 and equivalents of the Sustainability Accounting Standards Board (SASB) for energy distributors and generators. The climate strategy monitoring follows CDP standards.

In executing its strategy, Light relies on a well-structured, agile governance model that reflects our now-diversified ownership structure. The modes of participation by stakeholders— including shareholders, governments and regulators—in influencing Company strategy are described throughout the Annual Report, with examples including fora such as the General Meeting, the Consumer Board and public meetings.

As a signatory of the Global Compact, Light has pledged to support the Sustainable Development Goals (SDGs) announced in 2015 by the United Nations (UN), which define a set of global priorities and aspirations for 2030.

Of the 17 SDGs, 8 are strongly aligned with Light’s strategy:

The inter-linkages between the SDGs, our value chain and our business strategy are mapped out as part of periodic materiality exercises, in a process that demonstrates Light’s commitment to creating shared value.

Learn more about the inter-linkages between the SDGs and Light’s strategy in the Business Impact and Main indicators section and in our Annual Report.

Risk management

Light reviews the Risk Matrix annually to evaluate the controls that are in place, identify emerging risks and ensure that risk impacts and probabilities are measured for each process. In 2022, Light worked to automate the entire risk management and audit chain with the purpose of speeding up the internal capacity to anticipate risks through the systematic monitoring of events susceptible to fraud.

Completed in 2022, the Risk Management and Internal Controls (GRC) software addresses the different stages of risk management, enabling greater integration and faster communication between the risk area and other business areas of Light.

Five process steps are defined in the internal standard for Strategic Risk Management: identification, assessment, treatment, monitoring, and communication. This standard determines that the key monitoring indicators, the Key Risk Indicators (KRIs), are established along with the areas responsible for the mapped risks, recorded, and organized into dashboards, so the goals and targets achieved can be tracked.

Topics related to compliance and ESG are reviewed and cross-checked with the strategic risks to verify if they are in all the risks mapped at Light. By determination of the Risk Management Policy, this risk modality must be identified, assessed, treated, monitored and validated with the Executive Board and the Board of Directors and the Audit Committee every year or whenever necessary.

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