Enphase Energy, Inc.

Environmental,
Social, andGovernance Report
2021

E N VI R O N M E N TA L , S O C I A L, A N D G O VE R N A N C E R E P O R T 2021

1

Enphase Energy, Inc.

Environmental,
Social, andGovernance Report2021

2

Contents
A Letter from our President and CEO

4

About Us

6

Enphase in numbers

7

Our purpose

8

Our core values

9

Our technology

10Enphase culture playbook

12

Financial sustainability

14

Our financial performance

15

Environment

16E1. Global environmental policy

17

E2. Climate change strategy

19

E3. Clean energy production

21

E4. Emissions and energy

22E5. Energy efficency

24

E6. Product lifecycle and waste management25

People26

P1. Company demographics

27

P2. Health and wellness

28

P3. Diversity, equity, inclusion

29

P4. Talent

32

P5. Human rights and responsible supply chain

34

P6. Global occupational health and safety

38

Society40

S1. Enphase corporate social responsibility initiatives

41

S2. Enphase grid services

44

S3. Enphase backup report

46

S4. Enphase innovation

48

S5. Promoting clean energy policy

50

Corporate governance52

G1. ESG governance and leadership

53

G2. Business ethics and compliance56

G3. Risk management

57

G4. Cybersecurity and data privacy

58

Appendix

60

Carbon and emissions calculation methodology

61

GRI and SASB index

62

Contributing to the UN Sustainable Development Goals

64

About this report

66

Forward looking statements and other important legal information

67

GAAP to non-GAAP reconciliation

68

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A Letter from our
President and CEO
I am pleased to share our 2021 Environmental, Social, and Governance (ESG) report,
where we discuss ongoing efforts to realize Enphase’s purpose of advancing a sustainable
future for all. Since the publication of our inaugural ESG report in 2020, we have madestrides in measuring our carbon footprint, cultivating a diverse and inclusive workplace,and raising awareness of ESG issues across the business. We are committed to building on
this foundation to establish long-term goals aligned with the needs of global sustainable
development, and I remain optimistic for what the future holds as we continue our ESG
journey.

Badri Kothandaraman
President and CEO“I am proud of our employees
around the world as they
continue to work tirelessly todevelop innovative products
and services for our customers.”

Since Enphase was founded in 2006, we have developed five key elements to ourvalue proposition: deliver products that are smart, simple, reliable, productive, andsafe. We understand the threat with climate change and have been creating clean
energy technologies needed to directly combat it, protect our environment, and enable
sustainable development. The future relies on universal access to clean, reliable, andaffordable energy. Our best-in-class energy management solutions include solar
generation, battery storage, electric vehicle (EV) charging, smart load control, and cloudbased monitoring and control.
Over the course of the past couple of years, we took steps to manage our businessthrough the challenges arising from the COVID-19 pandemic. Supporting our employees,
customers, partners, and communities was the topmost priority for us. I am proud of ouremployees around the world as they continue to work tirelessly to develop innovative
products and services for our customers. Our culture playbook provides both current andfuture employees with a blueprint of our purpose, our core values, and examples of how
we work together to achieve results within Enphase.
The lessons we learned over the past few years and our ability to see the bigger picture
helped us to enact transformative, sustainable growth. We remain the world’s leading
supplier of microinverter-based solar and battery systems. We have cumulatively shipped
more than 42 million microinverters, and more than 307 megawatt hours (MWh) of ourEnphase® Energy Systems,1 powered by Enphase IQ® Microinverters and IQ™ Batteries.
Approximately 12 gigawatts (GW) DC of Enphase microinverters have been installed insolar systems since inception, reducing 31 million metric tons of carbon dioxide equivalent(MT CO₂e) - the equivalent of providing energy to 3.9 million homes for one year.1
Sustainability is evident in every aspect of our operations − financial performance;
products and services; manufacturing; supplier, customer, and partner relationships;
employee relations; corporate social responsibility (CSR); and corporate governance.
As you read this report, you will see several examples of our operational excellence; ourability to incorporate environmental safeguards into our practices; the care we take in

All data as of December 31, 2021; estimate based on Enphase managed systems data grossed up for non-managed
systems based on cumulative sales records; CO2e calculations based on EPA GHG calculator

14hiring, training, and managing our global workforce; our commitment to expanding accessto clean energy through our CSR initiatives; and the accountability of our governance andleadership.
Our strategy is simple. We focus on making best-in-class home energy systems thatenable homeowners to make, use, save, and sell their own power. We are deeplycommitted to making these systems innovative, high-quality, and easy-to-use, helping
millions of people gain access to cleaner, affordable, and more reliable energy while
creating jobs and contributing towards a carbon-free future.

“Our company embraces theopportunity to create a future ofsustainable prosperity for all our
stakeholders, while reducing ourenvironmental footprint.”

There have been many large-scale power outages that left communities in the U.S.
without power for several days. The aging and overly-constrained grid has been struggling
to manage the devastating impact of extreme weather caused by grid outages. Our IQ™
Batteries, powered by solar energy, provide resilience in the face of natural disasters andgrid outages, ensuring that a home can be powered and delivering energy independence
and peace of mind. This clean, free, abundant source of energy can power lives andultimately help replace non-renewable energy altogether.
We started shipping our IQ8™ Microinverters to customers in North America in 2021.
IQ8 fundamentally changes the paradigm for solar technology, which otherwise
requires a grid connection to operate. IQ8 Microinverters can form a microgrid during a
power outage, using only sunlight, providing backup power even without a battery. For
homeowners who want battery backup, there are no sizing restrictions on pairing an
Enphase IQ Battery with IQ8 Microinverters. In addition, with the Sunlight Jump Start™
feature, IQ8 Microinverters can restart a home energy system using sunlight only after
prolonged grid outages that may result in a fully depleted battery. The innovation in IQ8
microinverters enables us to utilize the power of the sun better and provides increased
resilience to homeowners.
Enphase was founded on three commitments that still guide us today: innovation, quality,
and social responsibility. Our company embraces the opportunity to create a future ofsustainable prosperity for all our stakeholders, while reducing our environmental footprint.
We are making it possible for people to become producers and participants in a clean
energy future—when people and the planet need it most.
We appreciate your continued interest in our ESG efforts and thank our employees,
customers, partners, and shareholders for their dedication as we continue to embrace ourcore values.

Sincerely,

Badri Kothandaraman
President and CEO

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5About us

6Enphase in
numbers

2006

2,260

5,315

1.9

42+

300+

the year Enphase
was founded

millionsystems deployed in morethan 130 countries1

31

millionmetric tons of CO2eprevented from entering
the atmosphere, enough topower 3.9 million homes withenergy for one year2

3.5

billiongallons of gasoline
not consumed2

employees and key
contributors acrossour global offices1

millionmicroinverters
shipped1

12

43.4

installers
worldwide1

TWhof cumulative
shipments of
microinverters2

MWhof storage

1

GW DC

cumulative shipmentsof microinverters1

76

billionmiles not driven by anaverage gas-powered
passenger vehicle2

As of December 31, 2021
Estimate based on Enphase managed systems data as of December 31, 2021 grossed up for non-managed systems based on cumulative sales records; CO₂e
calculations based on EPA GHG calculator

1

2

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OurpurposeEnphase Energy has transformed the solar industry with our revolutionary microinverter
technology which enables sunlight to be a safe, reliable, resilient, and scalable source ofenergy to power our lives. Today, our intelligent microinverters work with virtually every
solar panel made, and when paired with our award-winning smart battery technology, we
engineer one of the industry’s best-performing clean energy systems.

“The Enphase® Energy Systemenables people to make, use,
save, sell, and own their power.”

The Enphase® Energy System enables people to make, use, save, sell, and own their power.
This includes our industry-leading app, which provides unprecedented data and control
in the palm of their hand. For the first time in the evolution of the centuries-old electricity
grid, people can get paid for the clean energy they produce and share with theircommunities - helping to build a new energy future that harnesses the sun. This clean,free, abundant source of energy can power our lives and ultimately help replace
non-renewable energy altogether.
Our purpose is advancing a sustainable future for all. If you see a home in the U.S. withsolar panels on it, there is a good chance it is an Enphase home. We’re making it possible
for people to become producers and participants in a clean energy future — when people
and the planet need it most.

System owners can view and control their Enphase® Energy System throughtheir mobile phone app
8Our corevaluesOur company values are reflected in the way we work
together, our performance, and how we are rewarded.

“We collaborate globally toachieve more together than we
can on our own.”

Customer firstIntegrity

We exist for our customers.

We tell the truth at all times, without
making excuses.

We listen to our customers and measure
our success based on their feedback.

We do what’s best for the company.

We take action to deliver the best
customer experience.

We take ownership of our behaviors
and results.

Innovation

Teamwork

We value innovation and recognize that it is
the cornerstone of our existence.

We appreciate and respect different
behavioral styles and perspectives.

We encourage appropriate risk-taking andchallenge the status quo to find solutions.

We collaborate globally to achieve
more together than we can on ourown.

We actively promote innovation throughcuriosity and continuous learning.

We actively work to break down silos.

Quality
We place safety and quality above
everything else.
We measure everything that matters anddrive continuous improvement.
We make the highest quality products.

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Ourtechnology
Enphase was founded on the deep-rooted belief that an AC-coupled distributed
architecture will always win in the long run on both cost and reliability. To build products
based on this architecture, we have developed core competencies in semiconductorbased power conversion, software-defined Internet of Things (IoT) systems, and an energy
management platform. Our homegrown high-speed digital ASIC, which is responsible forpower control and power line communication, forms the brain of our microinverters. The
microinverter, along with our battery, system controller, and cloud software form a true IoT
system. Our Ensemble™ technology energy management system manages energy flows
between the various distributed energy resources (DERs), the utility grid, and home loads,
all with the aim of delivering the most reliable solution at the lowest available energy cost.

ENPHASEC LO U DI Q M I C R O I N VE R T E R

UTILITY ME T E R

E V CH A R GERG EN ERATOR OR FUE L CE L L

M A I N LO A D C E N T E R

IQ SY ST E M CO NT R O L L E R
I Q BAT T E R Y

The AC-coupled Enphase® Energy System with all the
distributed energy resources

10

I Q L O A D C O N T R O LLE R

Start-up to industry leader
2006
Founded by Raghu Belur andMartin Fornage in California

2008
First microinverter-basedsolar system introduced

2011
One million microinverters shippedsince inception

2012
Listed on NASDAQ
under symbol ENPH

2014
Fourth-generation
technology introduced

2015
10 million microinverters
shipped since inception

2016
Sixth-generation
IQ™ technology

2017
AC Modules
Introduced

2018
Seventh-generation
IQ technology introduced

2019
One millionth microinverter-basedsolar system deployed

2020

2021

Started shipping IQTM Batteries
to customers in North America

Started shipping IQ8TM Microinverters
to customers in North America andmore than 42 million microinverters
shipped since inception
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Enphase
culture playbook
We abide by the Enphase culture playbook to define and socialize our purpose, corevalues, and relevant examples of how we collaborate to get results.
Culture playbook

We promote and reinforce
these five core values.

Six pillars of our culture
Pillars that are aligned to our purpose and values.

Our core values
High performance
Recruiting and retaining the best
Openness and transparency
Accountability and execution
Learning organization

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Financial
sustainability

78%

increased revenue in 2021

$1.4 billion
revenue in 2021

10.4 million
microinverters shipped in 2021

40.7%

non-GAAP gross margin in 2021

Our solid financial performance enables us to advance our long-term commitment tosustainability. In 2021, our revenue increased 78% to $1.4 billion, from $774.4 million
in 2020. We shipped 10.4 million microinverters in 2021, compared to 6.8 million
microinverters in 2020. Our non-GAAP gross margin in 2021 was 40.7%1 compared
to 40.1%1 in 2020, primarily due to disciplined pricing and cost management, despite
inflation.
We have a very strong balance sheet that we believe will allow us to capitalize on future
opportunities. We exited 2021 with $1.0 billion in cash, cash equivalents, and marketablesecurities. In March 2021, we successfully completed the issuance of approximately $1.2
billion in green convertible notes (the Green Bond Notes).
As part of the Green Bond Notes offering, we established a Green Financing Frameworkthat reinforces our commitment to our planet and our communities. In 2021, we allocateda portion of the proceeds of the Green Bond Notes to finance a variety of environmentally
impactful projects as summarized in the table below, which included research anddevelopment (R&D) for new products, capital expenditures to increase our manufacturing
capabilities to support our global product portfolio, the cost of goods sold, and increased
headcount. We intend to allocate the remaining funds during 2022. The terms of thiscapital raise were some of the most favorable to an issuer in history, and we were
bestowed with an ESG Award and a Structured Equity Award from IFR in February 2022.

Green Bond Notes allocations

Eligible category
Renewable energy

Amount allocatedto date ($000,000)$754.14

Eco-efficient production technologies$88.11and processes

1

Total allocated$842.25

Net proceeds from Green Bond Notes$1,188.44

Proceeds remaining to be allocated$346.19

See GAAP to non-GAAP reconciliation in the Appendix for a reconciliation of our most comparable U.S. GAAP measures to our non-GAAP measures

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Our financial
performance
Our focus on operational excellence has been important for our solid financial foundation.
We had a record year in 2021 for profitability. We also generated a record $352.0 million in
cash flow from operations in 2021, compared to $216.3 million in 2020.
We introduced our 35-15-20 baseline financial model at our Investor Day in 2019. 35-1520 stands for 35% gross margin, 15% operating expenses, and 20% operating income,all as a percentage of revenue on a non-GAAP basis. In 2021 our actual results wereapproximately 41-16-25, beating the baseline financial model in terms of gross marginand operating income. Our 2021 GAAP net income was $145.4 million, resulting in diluted
earnings per share of $1.02. Non-GAAP net income was $340.3 million, resulting in diluted
earnings per share of $2.41.1“Our focus on operational
excellence has been importantfor our solid financial
foundation.”

Quarterly revenue by year

Quarterly gross margin % by year

$450.0$412.745.0%$400.041.1%$351.5$350.0$316.1$301.8$300.0$205.5$100.0

35.0%

40.2%
40.2%
37.3%

34.1%

33.5%

$210.0$180.1$178.530.0%$134.1$125.5$150.0

40.8%
41.0%

40.8%
39.6%

36.2%

$264.8$250.0$200.0

39.5%

40.0%

$100.2

25.0%

$50.0
$0.0

Q1

Q2

Q3

20.0%

Q4

Quarterly operating expenses % by year

Q1

Q4

30.0%
25.0%

25.0%

26.6%
25.7%

20.7%

16.4%

14.5%
13.9%

Q1

16.6%
16.3%
13.9%

Q2

27.3%
24.9%

23.7%

18.9%
17.3%

15.0%

20.0%
16.8%

24.4%
24.5%

24.4%

22.3%

20.0%

22.3%

10.0%

Q3

Quarterly operating income % by year

30.0%

15.0%

Q2

11.3%

16.5%
12.9%
12.4%

Q3

Q4

10.0%
5.0%
0.0%

Q1

Q2

Q3

2019

Q4

2020

2021

Quarterly revenue by year is in millions; Gross Margin, Operating Expenses and Operating Income are as a percentage of revenue.
All numbers reflected other than revenue are on a non-GAAP basis. Refer to Appendix for reconciliation of our most comparable U.S. GAAP measures toour non-GAAP measures
1

See GAAP to non-GAAP reconciliation in the Appendix for a reconciliation of our most comparable U.S. GAAP measures to our non-GAAP measures

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Environment
Our best-in-class energy management
solutions include solar generation, battery
storage, electric vehicle (EV) charging,smart load control, and cloud-based
monitoring and control. While our products
and services directly address the urgent
challenges presented by climate change
and the transition to a low-carbon economy,
we appreciate that our ability to continue
to do so rests in attending to, and taking
accountability for, environmental impacts
across the entire value chain.

16E1. Global
environmental policy
Environmental management system (EMS)
Enphase strives to achieve exceptional environmental performance, and 100% of ourfacilities are ISO 14001:2015 certified. Our EMS is continually improved to align withbusiness strategy, promote positive environmental impacts, and minimize adverse ones.
Through the EMS we proactively assess environmental risks and opportunities, define key
performance indicators (KPIs) and targets, and evaluate progress toward environmental
goals.

“Enphase strives to achieve
exceptional environmental
performance, and 100% of ourfacilities are ISO 14001:2015
certified.”

Auditing program
Our environmental audit program includes periodic and complete evaluations of our
product development and R&D centers. Audits include air and water quality, waste
management practices, spill prevention and control, hazardous materials management,
and employee awareness.

Supplier expectations
Enphase works with suppliers who share our commitment to environmental stewardship.
Suppliers are screened on specific criteria including the presence of an environmental
policy, EMS or EMAS certification, RoHs and REACH compliance, conflict minerals
reporting, as well as human rights and labor policies.

Legal compliance
Enphase complies in the areas where we operate with all applicable environmental,
health, and safety laws, as well as all pertinent industry codes and standards, and we
expect our suppliers, partners, and customers to comply with all applicable environmental
laws and regulations as well.

Empowering employees
Employees at all levels actively participate in environmental goal-setting
processes, allowing for important insights and innovation to be realized across thecompany. Employee bonuses are also tied to progress toward environmental-related
goals, helping to ensure objectives are met.

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Reporting and stakeholder consultation
We transparently report our environmental performance in line with prevailingsustainability reporting frameworks on an annual basis. Stakeholders such as local
communities, suppliers and contractors, government agencies, and other organizations
focused on protecting the environment are allies and collaborators, and their priorities
and feedback regarding our environmental performance are considered when assessing
our environmental performance.

Product lifecycle stewardship
Our products are designed to be safe for the environment and their intended use. All
hazardous waste generated across our operations is disposed of properly or recycled,
and we comply with all applicable laws and directives regarding hazardous waste where
we operate, including WEEE, RoHs, REACH, and the EU batteries directive. We support
pollution prevention programs and use materials and energy efficiently to conserve
natural resources, including measuring emissions and developing an emissions reduction
regime.

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E2. Climatechange strategy
At Enphase, we have understood the climate change threat from the beginning andhave been creating clean energy technologies needed to directly combat it, protect ourenvironment, and enable sustainable development. We recognize our ability to do so rests
on our capacity to understand, anticipate, and successfully navigate various types ofclimate risk. We align our risk assessment and climate strategy with the recommendationsof the Taskforce for Climate-Related Financial Disclosures (TCFD) and emerging climaterisk disclosure recommendations from the International Financial Reporting Standards(IFRS) Foundation.

Governance“Our strategy is advancing
solutions to meet any numberof climate risk mitigation
opportunities – solar energy
equipment, battery storage,
EV charging, smart load
management, and integration
with grid modernization efforts.”

Our Board of Directors (Board) oversees climate risks and opportunities. Our products
and services mitigate climate change, so the Board’s actions in guiding strategy andassessing risks address a myriad of climate risks.
The Nominating and Corporate Governance and Audit Committees of the Board oversee
the overall ESG program, which includes an annual update from the executive ESG teamon climate risks, efforts, goals, and performance against targets.

Strategy
Our strategy is advancing solutions to meet any number of climate risk mitigation
opportunities – solar energy equipment, battery storage, EV charging, smart load
management, and integration with grid modernization efforts.
We plan to broaden our climate strategy to include a defined approach and roadmap
for reducing our carbon footprint and reliance on non-renewable energy as a hedge
against uncertainty in carbon markets, to enhance operational efficiency, and to support
renewable energy deployments.

Risk management
We are currently developing scenario-based climate risk assessments over short-,
medium-, and long-term time horizons and integrating results into existing enterprise risk
management (ERM) practices. This will allow us to anticipate potential climate risk to ourbusiness, understand strategic implications, and estimate financial impacts.
We intend to incorporate climate risk assessments into the annual ERM process, whichis reviewed by our senior management with oversight from the Audit Committee of theBoard.

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Metrics and targets“Efficient and reliablemicroinverters and batteries
deployed in the field can
produce more clean energy overa longer time horizon, directly
preventing harmful greenhousegas (GHG) emissions.”

We measure the success of our climate strategy by how well we grow our business.
Examples include the number of microinverters and batteries sold, new markets entered,market share captured, and kWh produced by the deployed microinverter fleet.
Our product development targets such as production cost, materials used, efficiency,
reliability, and power output directly support our climate strategy. Efficient and reliablemicroinverters and batteries can produce more clean energy over a longer time horizon,
directly preventing harmful greenhouse gas (GHG) emissions.
We are measuring and disclosing our emissions for the first time in this report and will
be using this process to inform a low-carbon transition approach for the business going
forward.

20

E3. Clean energy
production
During
2021

Since
2006

11.3

43.4

billionbillionkilowatt-hours (kWh)were generated byEnphase microinverters1

kilowatt-hours (kWh)were generated byEnphase microinverters2

831

millionmetric tons of carbon dioxide
equivalent (MT CO2e) wereprevented from entering theatmosphere¹

millionmetric tons of carbon dioxide
equivalent (MT CO2e) wereprevented from entering theatmosphere2

Estimate based on Enphase managed systems data for calendar year 2021 grossed up for non-managed systems based on
cumulative sales records; CO2e calculations based on EPA GHG calculator
2
Estimate based on Enphase managed systems data as of December 31, 2021 grossed up for non-managed systems based on
cumulative sales records; CO2e calculations based on EPA GHG calculator
1

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E4. Emissions
and energy
We completed our first GHG emissions inventory in 2021. The calculations drew on theguidance provided in the GHG Protocol Corporate Standard, covering direct (scopeone), electricity indirect (scope two), and business travel (scope three) categories. Given
that our products were produced by third-party contract manufacturers, and we did
not operate a company vehicle fleet, our scope one emissions for 2021 were considerednegligible. Our scope two emissions attributed to the energy usage among our facilities
were calculated by using a location-based method for electricity and heating acrossleased facilities.
We are continuing our characterization of scope two purchased electricity and heating to
identify opportunities to reduce our footprint by increasing the proportion of renewableenergy in our energy mix. We are also actively engaged with upstream and downstream
entities to map scope three impacts and discover opportunities for energy conservation
as we move forward.
A summary of our GHG inventory details can be found in the Appendix.
GHG emissions and intensity (2021)
Emissions type

Units

Direct + electricity indirect emissions(Scope 1 + Scope 2) (MT CO2e)9,240

Other indirect emissions(Scope 3) (MT CO2e)281

Total emissions (MT CO2e)

9,521

Scope 1 + 2 emissions intensity(MT CO2e/$M revenue)

6.99

Energy use and intensity (2021)
Energy type
Purchased electricity (kWh)*

12,560,067

Heating (kWh)**

1,801,127

Total energy consumption (kWh)14,361,194

Energy Intensity (kWh / $M revenue)

22

Units

*Does not account for renewable energy generated at the Petaluma, Calif. office**North America operations only

10,391

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E5. Energy
efficiency
Given our structure, opportunities for efficiency improvements and reductions inemissions and energy intensity exist across scopes two and three. We are working toquantify the impacts of energy efficiency efforts so we can make informed decisions onenergy reduction strategies and reduction targets, drawing on guidance provided in the
ISO 50001 standard. We have taken a number of measures to date to reduce our energy
intensity.

“We are working to quantify the
impacts of energy efficiency
efforts so we can make informed
decisions on energy reduction
strategies and targets, drawing
on guidance provided in the ISO
50001 standard.”

Shifting to
renewables

EV
Charger

Shifting the energy mix to renewables
across our leased facilities, including
installing photovoltaic (PV) systems on all
North America offices. Installing a 119KW
PV system for our Petaluma officeInstalling electric vehicle (EV) chargers at
our North American offices

LED light
fixtures

Education

Installing motion-sensing LED light
fixtures across all leased facilities

24

Launching employee campaigns to turnoff inactive equipment in our offices

Costsavings

Reduce data
consumption

Achieving cost savings through strategic
siting of contract manufacturing anddistribution facilities, which translates toscope three emissions reductions

Transitioning to the cloud and SAAS
applications for logistics, payroll, andmost internal processes to reduce ourdata center energy consumption

E6. Product lifecycle andwaste management
We understand our carbon footprint is embedded across the entire value chain fromraw material extraction to product end-of-life and are committed to reducing theadverse environmental impacts to the fullest extent possible. We continually seek
opportunities to reduce the inputs needed to build reliable, high-quality products;
integrate recycled materials where possible; and design equipment that can be
repurposed or recycled at the end of its designed lifespan. Designing products inthis manner spurs innovation and positions us to compete in the nascent circular
economy.

“We understand our carbon
footprint is embedded acrossthe entire value chain from raw
material extraction to productend-of-life and are committed
to reducing the adverse
environmental impacts to thefullest extent possible.”

We are committed to reducing and properly disposing of hazardous waste acrossall our operations. We focus significant efforts on residential, commercial, andindustrial battery disposal and recycling. Our recycling program covers e-waste andbatteries of all types which are recycled through licensed vendors to the point ofcomplete destruction, allowing for valuable components to be reused as material
inputs for new products. In addition, products evaluated in our testing centers
are disassembled and parts are collected for reuse. We design our batteries forlong-term duration to decrease battery waste, using lithium iron phosphate (LFP)
chemistry as the storage material.
We promote our company’s commitment to recycling and preventing products andmaterials ending up in landfills through our internal training and compliance withapplicable federal, state, and local regulations. Employees working in our R&D labs
undergo additional training annually to ensure they understand how to properly
dispose of any hazardous materials that are not eligible for our recycling programs.
Our efforts to educate our workforce have yielded positive results.
We conscientiously select supplies for our facilities that have a low environmental impact,
including those with reusable and compostable materials where possible. Across ourNorth America and New Zealand facilities, we have eliminated single-use cups and haveprovided employees with their own personal set of reusable dishware, utensils, and mugs
to use in cafeterias. We plan to implement similar strategies at our other global sites.

100%of e-waste generated acrossoperations in North America, India,
and New Zealand are recycled

100%of our facilities are
ISO 14001 certified

Compliancewith RoHs, REACH, and the
EU Battery Directive

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PeopleWe are building a community where
everyone feels valued and treated equally at
Enphase. We encourage employee wellbeing
by offering facilities and incentives. We
have laid the foundation for a robust talentmanagement program covering recruitment,
career progression pathways, and global
leadership development - empowering
employees, both new and existing, to reach
their full potential and find satisfaction in
their work.

26

P1. Company
demographics

Geographic headcount (%)
as of December 31, 2021

63.2%
India

24.8%

United States

1.9%

Netherlands

0.9%
China

0.8%

Mexico1.0%
France2.1%

Canada3.8%

0.4%

Brazil1.1%

New
Zealand

Australia

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P2. Healthand wellness
COVID-19
In 2021, we continued to assist our employees through the challeging times of the
COVID-19 pandemic. We adapted to this new “normal” with protocols and decisions madeby a dedicated task force that had regular communications with all employees. We offeredsupport and guidance to our employees with suspected COVID-19 cases. We continued
our adherence to working remotely as required or desired, social distancing, maskwearing, and temperature screening at all our offices in compliance with the local rules,
ordinances, and regulations.

Newly expanded workspaces and fitness center“In 2021, we continued ouradherence to working remotely,social distancing, mask-wearing,and temperature screening at all
our offices in compliance withthe local rules, ordinances, andregulations.”28

We encourage our employees to focus on their health and to take breaks. In 2021, weadded a 1,500 square foot break room at our headquarters in Fremont, California, which
offers: 1) healthy choice snacks and branded reusable water bottles containing purified
pH-balanced water through a clean water partnership; 2) multiple seating areas for
employee engagement; 3) the use of assorted entertainment, including a ping pongtable and related accessories. Standing desks were added in the corporate office space
to promote physical movement and ergonomics. We also built a fully-functioning 1,000
square foot employee gym, and employees may use private showers after a workout. Our
Fremont office is also near outdoor walking trails.

BurnAlong corporate wellness platformTo further our employees’ overall health, especially during a pandemic, we began apartnership with BurnAlong, a health and fitness company. This health and wellbeing
program provides each employee with a complimentary membership plus four family
and friend memberships. The course offerings range from beginner to advanced levels
and include a wide variety of activities such as yoga, meditation, cardiovascular fitness,dance, and weightlifting. There are also fun challenges for employees and their families,
allowing for healthy competition in areas unrelated to work.

P3. Diversity, equity,and inclusion“We are committed to filling
our talent pipeline with a rangeof candidates representing
a broad spectrum of cultural
backgrounds, work experience,and technical expertise.”

We are building a community where everyone feels valued and treated equally at Enphase.
As an Equal Opportunity Employer (EOE), we are committed to diversity and inclusion in
the workplace, and do not tolerate discrimination and harassment of any kind based on
race, color, sex, gender, gender expression, religion, sexual orientation, national origin,ancestry, disability, medical condition, genetic information, marital status, pregnancy,
military or veteran status, or any other protected characteristic as outlined by federal,state, or local laws. This policy applies to all employment practices within our organization,
including hiring, recruiting, promotion, termination, layoff, recall, leave of absence,compensation, benefits, training, and apprenticeship.
We have set a company goal to increase the number of females that are recruited andinterviewed, including at the manager level or higher. In addition, we set a goal to increase
the number of female candidates in the U.S. who are new college graduates.
We are committed to filling our talent pipeline with a range of candidates representing
a broad spectrum of cultural backgrounds, work experience, and technical expertise.
Enphase leverages diverse employee referral programs, seeks talent from specialized
conferences, such as the Grace Hopper Conference, and requires recruiting agencies tosupply a diverse slate of candidates for each job placement search. In addition, our talentacquisition department sponsors events and partners with diverse student organizations
on university campuses, makes certain all published job descriptions contain inclusive
language, and ensures that interview teams are broadly represented.

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Gender diversity (globally)
Workforce

Women

Total

Percentage(rounded)

Executives

5

34

15%

Managers

41

296

14%

Employees

300

1,930

16%

Total

346

2,260

15%

Employees

Percentage

Asian

118

21%

Black or African American

18

3.2%

Caucasian

334

59.5%

Hispanic or Latino

47

8.4%

Native American, Alaskan Native, Hawaiian
Native6

1.1%

Two or More Races

19

3.4%

Declined to disclose

19

3.4%

Total

561

100%

Ethnic diversity* (U.S.)
Ethnicity

Age diversity (globally)
Age Group

Employees

Percentage

Less than 30 Years of Age

1,120

49.6%

30-50 Years of Age

920

40.7%

More than 50 Years of Age

217

9.6%

Not Specified / Not Disclosed

3

0.1%

2,260

100%

Total

30

Enphase works with outside organizations to promote
diversity, equity, and inclusion in the workplace.

Women in Cleantech& Sustainability
In 2021, we launched a partnership with Women in Cleantech & Sustainability (WCTS),
an organization that fosters an influential network of professionals to further the roles ofwomen in growing the green economy and making a positive impact on the environment.
By joining WCTS, we are helping to shine a light on the need for more women in cleantech
and fostering support for clean energy with participation in events and mentorship
opportunities.

ParityPledge
In 2021, Enphase joined a significant number of established corporations by signing thecorporate “ParityPledge” in support of women and people of color in the workplace. The
pledge goal requires a commitment to interview and consider at least one qualified
woman and person of color for every open role, vice president and higher, including
c-suite and the Board.

CEO Action for
Diversity & Inclusion
In 2021, our CEO joined more than 2,000 other CEOs by signing the CEO Action for
Diversity & Inclusion pledge to act on supporting more inclusive workplaces. We pledged
to promote diversity in our leadership team and began to implement changes focusedon attracting more qualified and diverse talent into the company. We also pledged tomake positive changes in our hiring process, including rewriting job postings to appeal
to women, requiring that qualified diverse candidates must be interviewed for all new
executive-level and Board positions, and ensuring a diverse representation of interviewers
are always included in the process.

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P4. Talent
We are committed to attracting and developing a strong, diverse group of employees.
Our robust talent management includes global recruitment, career progression goals, andleadership development - empowering employees to reach their full potential and findsatisfaction in their work.

70-20-10 learning model
Our learning model is designed to enable 70 percent of knowledge from job-related
experiences, 20 percent from interactions with others, and 10 percent from formal
learning events. This model reinforces our belief that learning is not just a result offunctional responsibility as it goes beyond goes beyond formal training. Learning anddevelopment are therefore embedded into daily work, interactions, informal mentoring,and stretch assignments at Enphase.

Blended model of new employee onboarding“We are committed to attracting
and developing a strong, diverse
group of employees.”

We have built a world-class, scalable, and blended model for new employee onboarding.
New employees can learn about Enphase, its products, and business units at a self-pacedmode, anytime, anywhere. Additionally, new employees have “connect” sessions withlocal human resources and regional leaders to ensure face time with other team members
and company leadership, even during situations that make in-person interactions
prohibitive.

Enphase Learning Academy
In 2021, we built our learning wing, named Enphase Learning Academy. The Academy
utilizes EdCast’s Learning Experience Platform (LXP) and has a long-term goal of creatinga centralized learning hub for our employees. The LXP brings together internal, external,
formal, and informal sources of learning and knowledge in a simple, easy-to-use interface.
The platform uses artificial intelligence and machine learning to personalize the content,
driving an intuitive user experience for our employees.
Apart from self-paced learning, we offer tech talks on niche technical topics, webinars on
wellness and work-life balance, short management development modules, solar industry
orientation, and functional product and technical training programs.

Upskilling and reskilling for existing employees
The Enphase Learning Academy also offers a range of training programs for existing
employees focused on topics from leadership development and technology to risk andcompliance and business processes. We encourage our employees to evaluate theirabilities and identify development opportunities as part of their career goals.

32Benefits
We believe our employees are our most valuable asset. Providing a competitive benefit
package to them and their families is critical to ensuring their continued success withthe company. The physical, mental, and financial well-being of our employees is very
important to us, and we make a concerted effort to continue to provide a holistic benefit
offering.

Employee engagement“We encourage our employees
to evaluate their abilities
and identify development
opportunities as part of theircareer goals.”

We conduct an annual Employee Net Promoter Score (eNPS) and employee engagement
survey, with a goal of achieving at least a 30% eNPS score. This survey drives our
employee engagement plans and activities for the upcoming year. Each function andbusiness unit also prepares its own action plans for the year based on the survey results.
In 2019, we launched our “Culture Revitalization” plan, which includes facilitated“Unfreezing Workshops” conducted worldwide for all employees. These workshops
are intended to produce healthy, high-performance leaders, teams, and organizational
cultures. Due to the global health crisis in 2020 and 2021, our trained facilitators had topivot to “Virtual Unfreezing Workshops,” which we continue to offer quarterly so that new
employees can engage with the content.
We also introduced our Culture Playbook in 2019 that reflects our purpose and values,
and we continue to refine it annually each September. The current version, updated in
2021, can be found on the Enphase website.
Culture playbook

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P5. Human rights andresponsible supply chain
Our commitment to human rights
We acknowledge and take seriously our responsibility to protect, preserve, and promote
human rights around the world. As we expand our global reach and impact, the need forvigilance and due diligence regarding human rights issues throughout our operations will
grow, and we are committed to ensuring that the people and communities impacted byour business are able to live a life of liberty, dignity, and respect. Our internal codes andpolicies on human rights are rooted in established frameworks and conventions including:“We acknowledge and takeseriously our responsibility toprotect, preserve, and promote
human rights around the world.”

•
•
•
•
•

United Nations Declaration on Human Rights
The Code of Conduct of the Responsible Business Alliance (RBA)The United Nations Guiding Principles for Business and Human Rights (UNGPs)
OECD Guidelines for Multinational Enterprises
International Labour Organization (ILO) Declaration on Fundamental Principles andRights at Work

Beyond the fundamental rights defined in these instruments, we also consider accessto clean, reliable, and affordable energy as a basic human right and prerequisite forachieving the 2030 United Nations Sustainable Development Goals (UN SDGs). Access toenergy helps to reduce poverty, improve health, reduce inequality, and raise standards ofliving.

Business relationships
We seek to do business with those who share our values and commitment to humanrights and expect all business partners to abide by our codes of conduct. We promoteawareness and respect for human rights across the value chain, including the adoption oflegal contractual clauses and supplier screening measures. Grievance mechanisms areavailable, including the use of an anonymous third-party whistleblower hotline available,
when instances of non-compliance with the Enphase Energy Code of Conduct (Code of
Conduct) or our Supplier Code of Conduct are observed or reported. Corrective actions
are taken involving managers, executive sponsors, and the Audit Committee of the Board
when appropriate.
At minimum, we expect our business partners to uphold basic human rights pertaining
to minimum wage, maximum working hours, freedom of association and the right tocollective bargaining, corporal punishment and disciplinary practices, acceptable living
conditions, non-discrimination, and compliance with health and safety laws as defined indomestic and international conventions and frameworks.

34

Eradicating forced labor and human trafficking in
supply chains
We take the issues of slavery and human trafficking very seriously and will continue doing
our part by responsibly managing our supply chain to eradicate human trafficking andslavery.
As stated in Section 15 of our Supplier Code of Conduct our suppliers must not support,
promote, or engage in the practice of forced labor, child labor, slavery, or humantrafficking. The Supplier Code of Conduct requires our suppliers, its next tier suppliers,
and subcontractors to comply with all international standards and applicable laws
regarding slavery and human trafficking and to conduct due diligence of their operations
to verify compliance that the materials used in our products comply with laws regarding
human trafficking and slavery. Also see our California Transparency in Supply Chains
Disclosure.

Materials sourcing and conflict minerals
We are committed to following all materials guidance and environmental regulatorycompliance requirements in all the countries in which we operate and sell. We do notuse cobalt in our batteries as this mineral represents an increased risk of being sourced
from the Democratic Republic of the Congo (DRC) and other conflict-affected areas
associated with unfair labor practices. We expect our suppliers to source materials
and operate in a responsible manner consistent with the Organization for Economic
Cooperation and Development’s Due Diligence Guidance for Responsible Supply Chainsof Minerals from Conflict-Affected and High-Risk Areas. Our SEC conflict minerals
disclosure on responsible sourcing is updated annually on our website. For additional
information, please refer to our most recent conflict minerals report and conflict minerals
policy.

“We are committed to following
all materials guidance andenvironmental regulatorycompliance requirements inall the countries in which we
operate and sell.”

We expect our suppliers to acknowledge and agree to the following terms with respect toconflict minerals:• Acknowledge that Enphase is required to meet the requirements of the Dodd-Frank
Wall Street Reform and Consumer Protection Act• Agree to provide Enphase with conflict mineral content and country of origin
information on products supplied to Enphase• Agree to cooperate in Enphase or independent third-party auditing of supply chain andprocurement process, conflict mineral audits, and due diligence on its suppliers, and• Agree to collaborate with Enphase in developing a chain of custody for conflict minerals
in the supply chain and identifying and sourcing conflict-free sources for minerals used
in Enphase products.

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Supplier selection and auditing
The success of our products would not be possible without positive and long-lasting
relationships with suppliers and partners that share our values of quality, design, andsustainability. We work closely with all our contract manufacturers, from onboarding tocustomer delivery, to ensure that our products are made while adhering to the highest
ethical, environmental, and socially responsible standards.

“Potential suppliers are
rigorously screened for quality,
including performance on
environmental and social
factors.”

We provide a Supplier Quality Assurance Manual that outlines our expectations of new
and existing partners. We are committed to producing high quality, reliable, and costeffective products that are shipped on time, provide customer value, and conform tonational and international requirements. We, along with our customers demand andexpect defect-free products and services.
Potential suppliers are rigorously screened for quality, including performance on
environmental and social factors. We began incorporating environmental and social
factors in our supplier quality assessment surveys in 2020, and during 2021 we screened
42% of new suppliers for quality, including environmental and social criteria, and arepreparing to increase coverage to 100% of new suppliers over time. Our screening criteria
includes:••••Presence of certified ISO 9001 or ISO/TS 16949 Quality Management System (QMS)
Presence of certified ISO 14001 Environmental Management System (EMS)
Presence of environmental policy, andPublished REACH and RoHs compliance.

Due diligence and risk impact assessments
Enphase is committed to protecting human rights, enforcing fair labor practices,
and addressing the potential risks of forced labor, child labor, human trafficking, andslavery across our operations and supply chain. We are strengthening our processes
for assessing supply chain risk exposure, with director-level oversight of developing arisk impact assessment to monitor and report the impact to human rights which will bereported annually to the Board.

36

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P6. Global occupational
health and safety
Our Occupational Health and Safety (OH&S) approach and Injury and Illness Prevention
Program (IIPP) are overseen by our Global Head of Environmental Health and Safety. They
are designed to anticipate and prevent occupational illness and promote an injury-freeworkplace, while preparing a quick response to potential emergencies. We take a proactive
approach to health and safety management and are designing our systems on the guidance
provided in global standards such as ISO 14001 and ISO 45001. Our global senior leadershipis ultimately responsible for the safety and health commitments outlined below.

2021 Health and safety figures*“We take a proactive
approach to health and safety
management and are designing
our systems on the guidance
provided in global standards
such as ISO 14001 and ISO
45001.”

Year
Lost time incident rate (LTIR)0

Total recordable incident rate (TRIR)

0

Near-miss frequency rate (NMFR)**

0

Fatality rate0

* North America and New Zealand facilities only** New Zealand facility only

38

2021

We operate in a manner that protects the health and safety of our employees, visitors,
and communities. This is rooted in maintaining compliance with regulations and laws in
the areas that we operate. Beyond compliance, we will implement more stringent internalrequirements to protect our employees when existing regulations and laws may notaddress specific internal risks that we have identified.

Health and safety are critical considerations during the design of our products andprocesses. Through the development of a management system approach, we will
evaluate existing and potential hazards and risks and strive to eliminate them to prevent
occupational injuries and illnesses.

We openly communicate the opportunity for employees to participate in the developmentof health and safety programs and processes, including encouraging suggestions andrequesting insight regarding hazards, risks and concerns. We are proud of our health andsafety record, with zero recordable incidents over the last year in our North America and
New Zealand locations and are committed to tracking and reporting safety figures acrossall our global facilities.

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Society
We take seriously our responsibility to help
expand access to clean energy. We support
a more clean, reliable, and better-performing
grid, and we collaborate with a wide range ofstakeholders to advance policy outcomes insupport of clean energy across the world.

40

S1. Enphase corporatesocial responsibility initiatives
GRID Alternatives
We have been partnering with GRID Alternatives (GRID), a national non-profit leader,for over a decade. GRID’s mission is to build community-powered solutions to advanceeconomic and environmental justice through renewable energy. GRID works towards
this mission by handling solar installations and providing job training in low-income
communities. GRID has installed nearly 9,000 systems in low-income communities
across the United States using Enphase technology, which is the equivalent of morethan 33 megawatts (MW) of solar power. These homes in the aggregate can enjoy anestimated lifetime savings of more than $235 million and help prevent nearly 531,000 tonsof greenhouse gas emissions. Through our association, we have donated our industryleading microinverter products and our employees have volunteered more than 3,000
labor hours for the installation of solar on dozens of low-income homes and community
buildings over the past decade. GRID’s work has helped provide job trainees andvolunteers with more than 500,000 hours of solar education and training.

Children’s Haven + Solar Austin
In 2021, we collaborated with Solar Austin in a project to provide an Enphase®
Energy System, powered by IQ® Microinverters and IQ™ Batteries, at The Children’s
Haven Association, a nonprofit organization that provides increased opportunities tounderprivileged children and families in the Austin community of Travis County, Texas.
Through the collaboration, our technology will provide Solar Austin with reliable andaffordable power, enabling them to deliver more services and act as a resilient hub for
their community.

Let’s MODWe partnered with Let’s MOD, formerly PolyUp, in 2021 to support its online programthat encourages kids to use innovation and science, technology, engineering, andmathematics (STEM) skills for problem solving. We helped Let’s MOD create a digital
library of energy management tools to encourage students to learn more about thesector. In addition, we supported a scholarship program for financially challenged
students interested in participating with this educational platform in India.

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YMCA Camp Cory
We partnered with Everybody Solar and Paradise Energy Solutions to help bring a solar
energy system to Camp Cory, a YMCA division camp in the state of New York that serves
youth, adults, families, and seniors. We donated our IQ® Microinverters to support the
project, which ultimately decreases the operating costs of the camp and allows it to serve
more children and families at the camp.

The Living Room ProjectIn 2021, we partnered with Taylor Energy to develop a large solar energy system for The
Living Room Project, a shelter that services over 1,200 women and children each year in
the Sonoma County region of California. The shelter provides housing, food, and outreachto those in need. The solar energy system, powered by Enphase IQ Microinverters, isprojected to save The Living Room Project more than $150,000.

Semper Cares
We partnered with leading California solar installer, Semper Solaris, to support thecompany’s Semper Cares Initiative. The initiative provides help to veterans and theirfamilies in need of energy independence and security. Enphase donated solar energy
system equipment to help complete the project and give back to the U.S. Military veterancommunity with more affordable and reliable power.

The Footprint Project
After the disaster of Hurricane Ida in 2021, we donated to The Footprint Project,supporting the construction of solar-powered microgrids in areas of New Orleans,Louisiana without power. The Footprint Project’s mission is to provide clean energy forcommunities in crisis. The organization was able to play a role in providing power to thosein need by using microgrids at community centers, hospitals, and other sites.

Solar in the regions
We partnered with RACV Solar, one of Australia’s oldest and most trusted member-basedorganizations, for its Solar in the Regions investment program. The initiative is designed
to improve safety for regional towns in Victoria by adapting community buildings andinstalling solar power and battery storage to give them a reliable power supply when
the grid goes down, such as during extreme weather events and bushfires. The first of
three Enphase systems to be donated was installed at Yea Showgrounds and Recreation
Reserve.

42BuildHer Collective
BuildHer Collective is an organization committed to supporting women to build andrenovate their own homes, focusing on promoting diversity and sustainability. We
partnered with RACV Solar, the solar installation arm of the RACV, to install solarwith donated equipment on a key project called BuildHer8, which includes two new,architecturally designed, all-electric homes in Fairfield, Victoria, Australia.

Stokes Bay Community Hall
We donated microinverters for the $1.3 million rebuilding of the Stokes Bay Community
Hall, destroyed by catastrophic Australian bushfires in 2020. Located on the northerncoast of Kangaroo Island, Stokes Bay has a population of more than 200 people, forwhom the 60-year-old hall is the heart of the community. The donation was made throughthe Enphase Giveawatt social impact program and in partnership with Adelaide-based
Enphase Platinum installer partner, Energy SA.

The S-Series Microinverter repurposing program
In partnership with Solar Lifeline in Southeast Queensland, Australia, we donatedmore than 300 S-Series microinverters to support the installation of solar systems forCleveland City Council’s low-income households and government housing programs inAustralia.

Stokes Bay Community Hall

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S2. Enphase grid
services
Adding value to customers and society withhome batteries
In 2021, for the first time, we offered customers with IQ™ Batteries the chance toparticipate and earn money in a grid services program. These programs, also known as“virtual power plants” (VPPs), create a network of home batteries that are managed byutilities and grid operators. The programs pay homeowners for the stored energy in theirhome batteries when the grid needs it the most. As a result, utilities do not need to turnto the kinds of expensive, polluting power plants that traditionally address peak power
demand. A stable grid, powered by sustainable energy, and extra money for homeowners— a win-win-win situation.

“A stable grid, powered bysustainable energy, and extra
money for homeowners — a winwin-win situation.”

In many grid services programs, customers can sign up, monitor, and control participation
using our Enphase App right from the palm of their hand. The incentives reduce the costof the home energy system and make home batteries more accessible and affordable tomore people. As these programs scale, we will have cleaner, more affordable, and morereliable energy for everyone.
We are now participating in four different grid services programs across the United States,with plans to expand in the coming years. The following describes three of the utility
programs launched in 2021.

Arizona Public Service
We teamed up with Arizona Public Service (APS) for the utility’s residential battery pilot
grid services program. The program offers homeowners with Enphase IQ Batteries in
APS’s service territory two ways to participate and earn money through one-time, upfront
incentives. Customers who sign up for the program and simply share their data with APS,
including basic information about them and their Enphase® Energy System, will earn $500
per installed kilowatt of battery capacity with a cap of $2,500 per home.
Alternatively, homeowners can enroll in the program, share their data with APS, and allow
the utility to use the stored energy from their batteries on demand. These customers may
be eligible to earn the same $500 per installed kilowatt of battery capacity (up to $2,500
per home), plus an additional one-time payment of up to $1,250, for a total maximum
incentive of $3,750 per home.

ConnectedSolutions
Enphase customers with IQ Batteries in select utilities across Connecticut,
Massachusetts, and Rhode Island can participate and earn money through theConnectedSolutions program, a utility-run incentive program to reduce electrical demandduring high-use periods.

44

Once an Enphase battery is commissioned, homeowners may be eligible to enroll theirbattery in the program. The utility will send a signal to the battery telling it to dischargeduring “peak demand events.” These events occur when the grid is stressed from highdemand and can be expected up to 60 times every year. Discharging energy during thesetimes helps stabilize the grid all while using clean, sustainable energy.
Participating in these peak demand events is 100% optional for homeowners. But themore they participate, and the more energy they make available, the more money they can
earn.

Hawaiian Electric
Hawaiian Electric’s Battery Bonus grid services program offers incentives to homeowners
who install a new IQ Battery on the island of Oahu. The first customers accepted by
the utility into the Battery Bonus program will be eligible to receive $850 per kW thatthey commit to make available to HECO during a fixed two-hour period each day — forexample, qualified new IQ Battery 10 owners may be eligible to earn up to $3,264.
Adding more battery capacity onto the grid will help manage the retirement of a coal plantand support Hawaii’s goal of 100 percent clean energy by 2045.

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S3. Enphasebackup report
Grid outage events
backed up by Enphase®
Energy Systems in 2021

53,942in total

4,495
per month147
per day46

Giving families peace of mind with home batteries
In 2021, we witnessed more large-scale power outages that left communities without power for days and even weeks at a time.
Our aging and overly constrained grid is struggling to deal with the increasingly devastating impacts of extreme weather causedby climate change.
With more than 300 MWh of home batteries deployed by the end of 2021, we are a leader in giving homeowners peace of mind
and energy security as they navigate uncertain times. Enphase IQ™ Batteries and IQ® microinverters can be paired together
to back up just the essentials or an entire home. We have even made it possible for homeowners to integrate existing home
generators and power through even longer, more severe power outages.

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S4. Enphaseinnovation
Supporting a more clean, reliable, andbetter performing grid
Enphase Energy and the U.S. Department of Energy
In 2021, the Biden Administration released a plan to produce almost half of the nation’s
electricity from solar energy by 2050 as part of its effort to decarbonize and modernize
the grid. The Solar Futures Study by the U.S. Department of Energy (DOE) included asignificant focus on the study of storage and advanced inverter technology as a catalyst
for supporting a more reliable, better-performing grid with significant renewable energy
deployment. We are proud to be supporting two DOE projects that received a total of $31
million in funding to support this research.
Universal Interoperability for Grid-Forming Inverters (UNIFI) Consortium
We are part of the UNIFI consortium, which was formed by the National Renewable Energy
Laboratory, the University of Washington, and the Electric Power Research Institute. UNIFI
brings together leading researchers, industry stakeholders, utilities, and system operators
to advance grid-forming inverter technology and has been awarded $25 million from the
DOE’s Solar Energy Technologies Office. UNIFI is focused on integrating these inverters
into electric grids at any scale to enable high penetration of inverter-based resources likesolar and battery storage.
We have a leadership role in the Consortium and will be leveraging its expertise andindustry-leading microinverter technology for research and development to support the
project. Ultimately, our systems will be part of a 20 MW demonstration project with selectutilities that will showcase the group’s efforts to create a more modern, smart, clean
energy grid for everyone.
GridBright and the University of Pittsburgh
We also support GridBright and the University of Pittsburgh on a research project toadvance the integration of local solar into the existing electrical grid by providing data andin-kind technical support. The project was awarded $6 million by the DOE.

48

Building the 21st Century Electricity System“We worked with industry
experts in 2021 to outline andadvocate for this transformed
future.”

The electricity system in the United States today stands at the threshold of a bottom-up
transformation, in which customers of all types become network participants, local energy
resources power electrification of buildings and transportation, and all communities enjoy
the resilience, economic, and health benefits of local clean energy. New technologies areoffering these possibilities just when we urgently need to change our energy practices tomeet the challenges of climate disruption.
We worked with industry experts in 2021 to outline and advocate for this transformed
future. In partnership with well-known electric power system reform and market design
expert, Lorenzo Kristov, we endorsed a white paper titled “Building the 21st Century
Electricity System.” The white paper sets forth the strategies and policies for moving to a
decarbonized, resilient, equitable, and customer-focused electric power system.
You can read the paper here:
Building the 21st century electricity system

Transmission
System Operator (TSO)

EnphaseCloud

Utility
Cloud

Local Distribution Area

Virtual Area

Virtual Area

Distribution
System Operator (DSO)

Virtual Area

Virtual Area

DERs

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49

S5. Promoting clean
energy policy
We collaborate with a wide range of stakeholders to advance policy outcomes in supportof clean energy across the world. Working with policymakers, public advocacy groups,
and industry partners, we help drive meaningful progress toward the fair valuation of local
solar and battery technology, while expanding access to more people.
In the U.S., we strengthened our leadership role by joining the Solar Energy Industry
Association’s Board of Directors, as well as taking on leadership positions in various
committees and subcommittees. We also joined the Board of Directors for the California
Solar and Storage Association, which represents the largest state-affiliated solar andbattery industry association in the US.

“We collaborate with a wide
range of stakeholders toadvance policy outcomes insupport of clean energy acrossthe world.”

We are a leading advocate for both the production tax credit for solar inverter
manufacturing, as well as the investment tax credit for solar and batteries. Our Chief
Operating Officer, Jeff McNeil, has presented alongside the United States Secretary ofEnergy, Jennifer Granholm, advocating for domestic manufacturing and clean energy
jobs. Investments in advanced energy can bolster U.S. manufacturing, create good jobs,
and expand business opportunities for companies in our industry.
In Australia, we actively participate in various working groups and elected committees
representing the distributed energy industry. These groups include Standards Australia,
Smart Energy Council, Clean Energy Council, Master Electricians Association, and more.
Through our local team, we are also participating in working groups and offering formal
submissions with key market bodies such as the Australian Energy Market Operator(AEMO), the Australian Energy Market Commission (AEMC), the Australian Energy
Regulator (AER), and the Electricity Networks Association (ENA). These advocacy efforts
aim to demonstrate what is possible with advanced energy management and remove
functionality to appropriately define the future energy network in Australia.

50Advancing local solutions

Illinois
We worked with industry stakeholders to help shape policy at the Illinois CommerceCommission aimed at assigning more value to behind-the-meter solar and batteries.
Through working sessions and official comment submissions, we helped advanceconversations to bring grid services programs to Illinois. Grid services will provide
additional value to homeowners that install solar and batteries, while reducing the needfor expensive and polluting fossil fuels across the state.

Washington
Working with the Washington Utilities and Transportation Commission and Puget Sound
Energy, we helped create additional value streams for local solar and batteries. This
industry-backed policy effort drove policymakers to allow behind-the-meter batteries
to export energy, creating clean energy VPPs that will help the state meet its renewableenergy goals.

Arizona
We are one of only three companies participating in the State’s “Bring Your Own Device”
battery program. We have led discussions with the Arizona Corporation Commission andArizona Public Service Company to advocate for the utility to implement new demand
response programs and a new distributed demand-side resource (DDSR) tariff that will
ultimately compensate homeowners for a multitude of services their behind-the-meter
solar and battery assets can bring to the grid in a simple and predictable way.

California
Starting in 2021, we collaborated with industry stakeholders to begin working with
policymakers across California to develop advanced energy policy that will shape
the state’s new grid services program aimed at preventing utility blackouts caused byweather-related surges in energy demand. The Emergency Load Reduction Program wascreated, which is a new “demand response” approach to help avoid rotating outages
during peak summer electricity usage periods. We continue to advocate for state officials
to modernize the way they measure home battery discharge, ensuring maximum value forhomeowners that provide critical support to the overall grid.

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Corporate
governanceWe regularly evaluate a myriad ofrisks associated with climate change,
governance, human rights, integrity,
employee satisfaction, finance, information
technology, and other business processes
to ensure a strong internal governance withclear communication. We participate in thedevelopment of policies and regulations
around the world as part of our core
governance principles.

52

G1. ESG governanceand leadership
Board oversight of ESG
The Board is presided over by a Lead Independent Director. We believe that having a
Lead Independent Director creates an environment that is more conducive to objective
evaluation and oversight of management’s performance, increasing management
accountability and improving the ability of the Board to monitor whether management’s
actions are in the best interests of our company and our stockholders.

“We appreciate the importanceof ESG risks and opportunities,
and the Board and its
committees are responsiblefor directing our overall ESG
strategy.”

Our governance framework is firmly rooted in risk management and compliance, which
serves as the foundation for additional voluntary sustainability and ESG efforts at
Enphase. We appreciate the importance of ESG risks and opportunities, and the Boardand its committees are responsible for directing our overall ESG strategy.
The Nominating and Corporate Governance Committee oversees ESG matters including
strategy, initiatives, and policies, communication with employees, investors, and otherinterested stakeholders. Our cross-functional ESG executive leadership team updates
the Nominating and Corporate Governance Committee on at least an annual basis on
emerging ESG trends, reporting and regulations, and assessment of strategic objectives
over the short-, medium-, and long-term on climate and emissions, diversity, human rights,
and other material ESG topics.
The Audit Committee annually identifies and assesses all key company risks and monitors
our risk mitigation efforts. The annual ERM program incorporates material ESG risk factors
and is reviewed formally by our management and executives with oversight from the Audit
Committee of the Board. This process includes reviewing potential financial impacts oftransition and physical climate risks outlined in the TCFD.
The Compensation Committee oversees matters related to human capital management,
including inclusion and diversity initiatives, leadership development and talentassessments. The Committee is also responsible for executive compensation and pay
metrics.
Additional information about the role of the Board and its various committees is available
in our Corporate Governance Guidelines.

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53

ESG management structure
Our cross-functional ESG executive team led by our General Counsel and the supporting
working groups manage and operationalize the ESG program across the company.
The ESG team is comprised of executive management representatives and meets atleast quarterly to review ESG risks and opportunities, develop ESG goals and targets,and allocate the necessary resources to achieve company-wide ESG objectives. The
supporting ESG working groups include senior leaders and key internal stakeholders
representing legal, investor relations, global policy and government affairs, facilities,
procurement, supply chain, manufacturing, human resources, compliance, and risk
management. Progress toward ESG goals and targets is incentivized through our quarterly
bonus system accessible to all employees and executives.

Enphase Energy Boardof Directors

Audit
Committee

Nominating &Corporate GovernanceCommittee

Enterprise Risk
Management (ERM)
Committee

ESG Executive
Leadership
Team

ESG
Working Group54

Board diversity and independence“We believe that our Board
should represent diversity ofthought, background, skill,
experience, and expertise.”

We take seriously our longstanding and continuing commitment to effectiveness in theboardroom. We believe that our Board should represent diversity of thought, background,skill, experience, and expertise. We recognize that enhancing demographic diversity
on the Board, through the representation of women and underrepresented groups,
encourages a thoughtful decision-making process that is important to effective corporate
governance. Consistent with our philosophy, we have codified a version of the Rooney
Rule in our Corporate Governance Guidelines, which states that, "the Nominating andCorporate Governance Committee will ensure each pool of qualified candidates for
additional or vacant Board positions from which Board nominees are chosen includes
candidates who bring racial and/or gender diversity." In 2020, we implemented thisprovision in our director search and as a result appointed our first female member, Jamie
Haenggi, to our Board. The composition of our seven-person board reflects a varietyof backgrounds, experiences, and tenures, and we continue to seek opportunities toenhance the diversity and effectiveness of our Board.

Gender diversity

1

6

FemaleMale

Demographic background

1

1

Asian

Hispanicor Latinx

3

2

White

Did not
disclose

Age diversity

1

3

between ages of
30–40

between ages of
41–55

1

2

between ages of
56–70

over the age of70

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55

G2. Business ethics
and compliance
Enphase Energy code of conduct
At Enphase, we believe that all people should be treated with dignity and respect.
The Code of Conduct applies to all officers, directors and employees, contractors,
and consultants. It provides general guidelines to ensure proper and ethical behavior,compliance with laws, and compliance with our standards, policies, and procedures.
We are committed to complying with all applicable laws and regulations everywhere we
operate.

Clawback policy
Our clawback policy applies to all employees and allows us to recover any incentivebased compensation that was paid based on erroneous financial information reported
under securities laws. Specifically, we may recoup any incentive compensation from any
employee if: (i) he or she engages in intentional misconduct pertaining to any financial
reporting policy; (ii) there is a material negative revision of a financial or operating
measure on the basis of which incentive compensation was awarded or paid to theemployee; or (iii) he or she engages in any fraud, theft, misappropriation, embezzlement or
dishonesty. Any recoupment will be made irrespective of whether the employee’s conduct
contributed to the need for the restatement and/or revision. For additional information,please refer to our 2022 Proxy Statement.

Supplier conduct
We choose business partners who share our mission and intend to only work with those
who agree that our shared success is based on acting ethically and lawfully. We expect
our business partners to adhere to our Supplier Code of Conduct, which includes (a)conducting business with high ethical standards; (b) complying with applicable laws;(c) supporting the human rights of workers and treat their employees with dignity; (d)adhering to anti-slavery and human trafficking principles; and (e) maintaining safe andhealthy working conditions.

Whistleblower policy
We take matters of ethics and integrity seriously at all levels of our organization andprovide an anonymous platform to report violations of the Code of Conduct. Concerns
may be reported anonymously through a third-party, independent whistleblower
service, available 24 hours a day, seven days a week, and are investigated promptly withthe highest degree of confidentiality. Retribution or retaliation against whistleblowers
is strictly prohibited, and employees are also empowered to report any suspicious orunethical activity directly to their manager, human resources, legal, or our Compliance
Officer. For additional information, please refer to our Code of Conduct.

56

G3. Risk
management
We regularly evaluate a myriad of risks associated with climate change, governance,
human rights, integrity, employee satisfaction, finance, information technology, and otherbusiness processes through our ERM program. Our ERM Committee annually identifies
and assesses all key company risks and monitors risk mitigation efforts.

“We collaborate with nationallabs, government agencies, anduniversity research groups todevelop innovative solutions
that enable more efficient andsustainable products.”

To determine risks year-over-year, the employee population is stratified. Select employees
representing various functions at all levels across all geographies and cost centers executive, operations, finance, sales, engineering, IT, etc. - respond to an extensive riskquestionnaire encompassing regulation, health and safety, human resources, integrity,and other factors.
The ERM program is designed to deliver knowledge sharing from our employees on
specific risk topics and to accumulate information on opportunities and actions to betaken by leadership. Risk events are assessed by cross functional employees each year.
Participants are given absolute assurance that their responses are anonymous andindividual survey responses are held in confidence. A robust methodology then combines
risk responses and evaluates risk likelihood, impact, and velocity to rank risks for priority
treatment by functional leaders. Top risks are identified for every business unit andpresented to our Board. We then work collectively to mitigate and address all top risks
affecting our company’s ability to meet its stated objectives.
We also track market and regulatory requirements that impact our business and play anactive role in the development of new standards for the solar industry. We collaborate
with national labs, government agencies, and university research groups to develop
innovative solutions that enable more efficient and sustainable products.

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57

G4. Cybersecurity
and data privacy
We believe that cybersecurity and privacy is a basic right that should apply globally,
regardless of where someone resides and what laws may apply, and whether they are an
employee, customer, or general consumer. This approach is part of our daily practices andin nearly everything we do, including new product features, management of data subject
access requests, how we treat our employees, and in our relationships with partners.

“We believe that cybersecurity
and privacy is a basic right thatshould apply globally, regardlessof where someone resides
and what laws may apply, andregardless of whether they
are an employee, customer, or
general consumer.”

In implementing this unified approach, we look to the world’s strictest laws, regulations,and rules, including the EU’s General Data Protection Regulation (GDPR), and California’s
Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA), while also staying
abreast of many other federal, state, and local laws and proposed laws. We adhere tothese stringent regulations in all processing of personal information, including collection,use, storage, retention, security, disclosure, and transfer. The details disclosed in our
privacy policy demonstrate our commitment and serve as a frequent source of truth forongoing business operations. We continue to review and update our privacy policy as ourbusiness evolves and expands.
We recognize that enterprise and product security is a backbone of sound privacy
practices. We have implemented a combination of organizational, technical, and physicalsafeguards designed to ensure the confidentiality, integrity, and accuracy of information,
including personal information. Our security programs include:• Enterprise-wide security initiatives designed to constantly adapt to the evolving threat
landscape• Cybersecurity Training and Awareness Program that includes new employee training,annual risk-relevant refresher trainings for all employees, quarterly penetration
exercises, just-in-time training assignments, and secure coding training for softwaredevelopers, and• Next-generation product architectures are designed specifically with security in mind
Our executive staff and Audit Committee are also engaged in periodic reporting andimprovement in our security posture.

58

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59

Appendix

60

Carbon and emissions
calculation methodology
Prevented metric tons of carbon dioxide equivalent (MT CO2e) figures are derived
from actual kilowatt-hour (kWh) production of our deployed microinverter fleet fromcompany inception through December 31, 2021 as recorded in our Enlighten™ monitoring
database, including a gross up factor of 1.2 to account for deployed systems which are
not monitored in the Enlighten database because the system owner has not chosen toconnect to the Enlighten system. The conversion of actual kWh production to carbon
dioxide equivalent figures was made using the Environmental Protection Agency (EPA)
Greenhouse Gas Equivalencies Calculator.
The GHG emissions inventory follows the guidance provided in the GHG Protocol
Corporate Standard, covering direct (scope one), electricity indirect (scope two),and business travel (scope three) categories. Our scope one emissions for 2021 areconsidered negligible given that our products are assembled by third-party contract
manufacturers and we do not operate a company vehicle fleet.
Our scope two emissions are calculated using a location-based method for electricity
and heat consumption across leased facilities, globally. Note that heat consumption
was only gathered for facilities located in North America for the 2021 GHG emissions
inventory. Electricity and heat consumption were converted to MT CO2e using emission
factor data provided in the Emissions Factors for Greenhouse Gas Inventories provided
by the U.S. EPA and information provided in the Emission Factors 2021 data set madeavailable by the International Energy Agency (IEA). Emissions calculations cover thoseemissions attributable to CO2, N2O, CH4 from electricity and heat generation, as well as
those resulting from transmission and distribution losses. Gases are converted to CO2e by
multiplying by their global warming potential (GWP), referencing default factors provided
by the Intergovernmental Panel on Climate Change (IPCC). Scope three emissions
attributable to business travel were provided by our third-party travel agency.

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61

GRI index
GRI Standard

Disclosure

Location

GRI 2: Generaldisclosures

2-1 Organizational details

See About Us section; Back cover

2-3 Reporting period, frequency, and contact point

2021, annually, ir@enphaseenergy.com

2-6 Activities, value chain and other business relationships

See About Us and Environment sections; See 2021 Report on Form 10-K
(Business Section)

2-7 Employees

See People Section

2-9 Governance structure and composition

See Corporate Governance Section; See 2022 Proxy Statement

2-10 Nomination and selection of the highest governance body

See Corporate Governance Section (Board Diversity and Independence);
See 2022 Proxy Statement

2-11 Chair of the highest governance body

See Corporate Governance Section (ESG Governance and Leadership); See2022 Proxy Statement

2-12 Role of the highest governance body in overseeing themanagement of impacts

See Corporate Governance Section (ESG Governance and Leadership); See2022 Proxy Statement

2-13 Delegation of responsibility for managing impacts

See Corporate Governance Section (ESG Governance and Leadership); See2022 Proxy Statement

2-14 Role of the highest governance body in sustainability reporting

See Corporate Governance Section (ESG Governance and Leadership)

2-15 Conflicts of interest

See 2022 Proxy Statement

2-17 Collective knowledge of the highest governance body

See Board of Directors information on Enphase company website

2-18 Evaluation of the performance of the highest governance bodySee 2022 Proxy Statement

2-19 Remuneration policies

See 2022 Proxy Statement

2-20 Process to determine remuneration

See 2022 Proxy Statement

2-22 Statement on sustainable development strategy

See 2022 CEO Letter

2-25 Processes to remediate negative impacts

See Enphase Code of Conduct

2-26 Mechanisms for seeking advice and raising concerns

See Corporate Governance Section (Business Ethics and Compliance)

2-27 Compliance with laws and regulations

See Enphase Code of Conduct

2-29 Approach to stakeholder engagementp. 66

2-30 Collective bargaining agreements

See 2021 Report on Form 10-K (Business Section)

GRI 3: Material topics

3-1 Process to determine material topics

p. 66

GRI 201: Economic
performance

201-1 Direct economic value generated and distributed

pp. 14-15

201-2 Financial implications and other risks and opportunities due toclimate change

See Climate Change Strategy Section, p. 19

GRI 203: Indirect
economic impacts

203-1 Infrastructure investments and services supported

pp. 40-51, 64-65

GRI 302: Energy

302-1 Energy consumption within the organization

p. 22302-3 Energy intensity

p. 22302-4 Reduction of energy consumption

p. 24

305-1 Direct (Scope 1) GHG emissions

p. 22305-2 Energy indirect (Scope 2) GHG emissions

p. 22305-3 Other indirect (Scope 3) GHG emissions

p. 22305-4 GHG emissions intensity

p. 22

305-5 Reduction of GHG emissions

pp. 22-24

306-1 Waste generation and significant waste-related impacts

p. 25306-2 Management of significant waste-related impacts

p. 25

GRI 305: Emissions

GRI 306: Waste

62

GRI Standard

Disclosure

Location

GRI 308: Supplierenvironmental
assessment

308-1 New suppliers that were screened using environmental criteria

p. 36308-2 Negative environmental impacts in the supply chain and actions
taken

pp. 34-36

403-1 Occupational health and safety management system

pp. 38-39

403-2 Hazard identification, risk assessment, and incident investigation

pp. 25, 38-39

403-4 Worker participation, consultation, and communication on
occupational health and safety

pp. 38-39

403-5 Worker training on occupational health and safety

pp. 38-39

403-6 Promotion of worker healthpp. 28-29

403-7 Prevention and mitigation of occupational health and safety
impacts directly linked by business relationships

pp. 38-39

403-8 Workers covered by an occupational health and safety
management system100%

403-9 Work-related injuries

pp. 38-39

403-10 Work-related ill healthpp. 38-39

404-2 Programs for upgrading employee skills and transition
assistance programs

pp. 32-33

404-3 Percentage of employees receiving regular performance andcareer development reviews

100%

405-1 Diversity of governance bodies and employees

pp. 30, 55

405-2 Ratio of basic salary and remuneration of women to men

p. 31

GRI 408: Child labor408-1 Operations and suppliers at significant risk for incidents of child laborpp. 34-36; Also see Enphase Code of Conduct

GRI 409: Forced orcompulsory labor409-1 Operations and suppliers at significant risk for incidents offorced or compulsory laborpp. 34-36; Also see Enphase Code of Conduct

GRI 414: SupplierSocial Assessment

414-1 New suppliers that were screened using social criteria

p. 36

GRI 416: Customer
health and safety

416-1 Assessment of the health and safety impacts of product andservice categories

p. 25

GRI 417: Marketingand Labeling417-2 Incidents of non-compliance concerning product and service
information and labelingZero417-3 Incidents of non-compliance concerning marketing
communications

Zero418-1 Substantiated complaints concerning breaches of customer
privacy and losses of customer data

Zero

GRI 403: Occupational health and safety

GRI 404: Training
and education

GRI 405: Diversity
and equal opportunity

GRI 418: Customer
Privacy

SASB index
Topic

Accounting Metrics

Code

Location

Hazardous Waste Management

Amount of hazardous waste generated

RR-ST-150a.1

2.24 metric tons RCRA andnon-RCRA (CA)

Number and aggregate quantity of reportable spills, quantity recovered

RR-ST-150a.2

Zero, n/a

Description of risks associated with integration of solar energy into existing energy
infrastructure and discussion of efforts to manage those risks

RR-ST-410a.1

pp. 44-51

Description of risks and opportunities associated with energy policy and its impact
on the integration of solar energy into existing energy infrastructure

RR-ST-410a.2

pp. 44-51

Product End-of-life Management

Description of approach and strategies to design products for high-value recycling

RR-ST-410b.4

p. 25

Materials Sourcing

Description of the management of risks associated with the use of critical materials

RR-ST-440a.1

pp. 34-36

Total Project Development Assets

Reporting currency

RR-ST-000.C

pp. 7-8, 14-15, 68-69

Management of Energy Infrastructure
Integration and Related Regulations

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Contributing to the UN Sustainable
Development Goals
GOAL

DESCRIPTION

End poverty in all its
forms everywhere

TA R G E T S

1,5

ENPHASE CONTRIBUTION

Enphase directly reduces exposure and vulnerability
to extreme climate events and other economic, social,and environmental shocks and disasters by deploying
renewable energy generation and management systems
across the globe. The renewable energy directly reduces
GHG emissions and mitigates climate risk.

Ensure healthy lives andpromote well-being for
all at all ages

3.9

Renewable energy generation and management
promotes environmental justice, good health, and wellbeing by avoiding the release of hazardous chemicals
and air, water, and soil pollution associated withtraditional forms of energy production.

Ensure inclusive andequitable quality educationand promote lifelong learning
opportunities for all

4.3, 4.4, 4.5

We promote technical and vocational education in the
renewable energy industry through our company learning
platform and non-profit partnerships. As our geographic
reach continues to grow, we will expand opportunities formen, women, and children to learn about the renewableenergy industry and create opportunities to contribute to
global deployment of renewable energy technologies.

Achieve gender equality
and empower all womenand girls

5.1, 5.2, 5.5

We do not tolerate discrimination in any form, including
against women. We are committed to eliminating humantrafficking, slavery, and any type of human rights abuses
across our supply chain. We have a woman on our Boardof Directors and women are represented in managerial
positions throughout the Company.

7.1, 7.2, 7.3, 7.a, 7.b

Access to reliable, affordable, and modern energy
services is what Enphase offers its customers. Enphasemicroinverters boast the highest levels of reliability, andour next generation off-grid solutions are paving theway for further access. As Enphase continues to growglobally and gain market share, it accelerates its positive
impact and contributes to the goal of increasing the
global renewable energy mix.

Ensure access to affordable,
reliable, sustainable, andmodern energy for all64Promote sustained, inclusive,and sustainable economic
growth, full and productive
employment and decent
work for all

8.2, 8.3, 8.7, 8.8

Through our work in deploying renewable energy systems inemerging markets, we are supporting economic growth indeveloping countries. We employ local leaders and attract
talent from local markets, helping to provide decent work
globally. We are committed to eradicating forced childlabor and ending modern slavery and human trafficking ofchildren, including the use of child soldiers.

Build resilient infrastructure,promote inclusive andsustainable industrializationand foster innovation

9.2, 9.4, 9.5

Our core business contributes directly to the “adoption ofclean and environmentally sound technologies and industrial
processes.” We have expanded our manufacturing footprint
globally, accelerating our ability to upgrade infrastructure
to be more sustainable, particularly regarding clean andenvironmentally-sound renewable energy generation andmanagement technologies.

Reduce inequality within
and among countries

10.1, 10.2

We are creating opportunities for economic growth andsocial inclusion as we expand our operations across theworld. Over the past five years we have expanded ouroperations in India from 20 to over 1500 employees, and lookforward to our continued growth and impact in developing
countries.

Make cities and humansettlements inclusive, safe,
resilient, and sustainable

11.3

Sustainable urbanization is a priority for both residential
and small commercial applications of our products andservices. Additionally, we support this goal throughour long-standing philanthropic activities that help
to provide solar energy for low-income communities
through our partnership with GRID alternatives.

12.2, 12.4, 12.5,
12.6, 12.7, 12.8, 12.aAdvancing a sustainable future for all includes taking
responsibility for managing natural resources efficiently,
especially with respect to product life cycle and waste
streams. We are committed to environmental stewardship,
responsible resource use, and contributing to thedevelopment of a circular economy.

Ensure sustainableconsumption andproduction patterns

Take urgent action tocombat climate change
and its impacts

13.1

The Enphase® Energy System helps communities bemore resilient in the face of climate-related hazards
and natural-disasters through its grid-agnostic andenergy storage capabilities; allowing homeowners andbusinesses to stay safe and connected even when grid
services are interrupted or when there is extensive
damage to energy infrastructure due to natural disasters.

L , A N D G O VE R N A N C E R E P O R T 2021
E N VI R O N M E N TA LL,, S O C I A L,

65

About thisreportWe referenced the Sustainability Accounting Standards Board (SASB) to identify material
financial ESG metrics for the investor community and referenced the Global Reporting
Initiative (GRI) standards to report on additional material sustainability issues. We drew
upon subject matter expertise of our colleagues throughout Enphase to collect andorganize the content relative to the areas we identified for disclosure. Additionally, we
provided disclosures aligned with the four key themes of the Taskforce for FinancialRelated Climate Disclosure (TCFD). Lastly, we compared our activities to the United
Nations Sustainable Development Goals (SDGs) to assess and convey how we arecontributing to these important goals.
For specific information about this report or our sustainability program overall, pleasecontact us at ir@enphaseenergy.com. We intend to issue this report on an annual basis.
All information included in this report is for the twelve-month period ended December 31,
2021, unless otherwise stated.
References to “we,” “us,” “our,” “Enphase” or “Enphase Energy” throughout this reportpertain to Enphase Energy, Inc.

66

Forward-looking statements
and other important legal
information
This report and the materials or websites cross-referenced contain statements thatare aspirational or reflective of our views about our future performance that constitute“forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are generally identified through theinclusion of words such as “aim,” “anticipate,” “aspire,” “believe,” commit,” “endeavor,”“estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “seek,” “strive,” “target,”“projection,” “will,” and “work,” or similar statements or variations of such terms and othersimilar expressions. The forward-looking statements in this document and the materials
or websites cross-referenced concern our goals, progress or expectations with respect
to corporate responsibility, sustainability, employees, environmental matters, policy, andbusiness risks and opportunities. Forward-looking statements inherently involve risks anduncertainties that could cause actual results to differ materially from those predicted insuch statements. These statements are based on numerous assumptions that we believe
are reasonable, but are open to a wide range of uncertainties and business risks. In
addition, these statements may be based on standards for measuring progress that are
still developing, controls and processes that continue to evolve, and assumptions thatare subject to change in the future. Consequently, actual results may vary materially fromwhat is contained in a forward-looking statement.
For a further description of the risks and uncertainties that could cause actual results todiffer from those expressed in these forward-looking statements, as well as risks relating
to our business in general, see our Annual Report on Form 10-K filed with the Securities
and Exchange Commission (SEC) on February 11, 2022 and our subsequent periodic
reports filed with the SEC from time to time. Copies of these filings are available on the
Enphase website at http://investor.enphase.com/sec.cfm, or on the SEC website at www.
sec.gov. All forward-looking statements in this report are based on information currently
available to us, and we assume no obligation to update these forward-looking statements
in light of new informationor future events.
The information included in, and any issues identified as material for purposes of, thisdocument may not be considered material for SEC reporting purposes. In the context
of this report, the term “material” is distinct from, and should not be confused with,such term as defined for SEC reporting purposes. Website references and hyperlinks
throughout this document are provided for convenience only, and the content on thereferenced third-party websites is not incorporated by reference into this report, nor doesit constitute a part of this report. We assume no liability for the content contained on thereferenced third-party references. This report contains non-GAAP financial measuresrelating to our performance. You can find the reconciliation of these measures to the mostdirectly comparable GAAP financial measures on the next page.

E N VI R O N M E N TA L , S O C I A L, A N D G O VE R N A N C E R E P O R T 2021

67

GAAP to Non-GAAP reconciliation
Enphase Energy, Inc. reconciliation of Non-GAAP financial measures
In millions, except
percentages

Q1’19

Q2’19

Q3’19

Q4’19

Q1’20

Q2’20

Q3’20

Q4’20

FY’20

Q1’21

Q2’21

Q3’21

Q4’21

FY’21

Gross profit (GAAP)

$33.4

$45.3

$64.7

$77.9

$80.7

$48.4

$95.0

$121.9$346.0$122.9$127.8$140.4$163.3$554.4

Stock-based
compensation

0.2

0.4

0.5

0.5

0.6

1.3

1.2

0.5

3.7

1

1.1

2.9

2.4

7.4

Tariff refunds

-

-

-

-

-

-

(23.0)(15.9)(38.9)

-

-

-

-

-

Acquisition related
amortization

-

-

-

-

-

-

-

-

-

-

-

-

0.2

0.2

33.6

45.7

65.2

78.4

81.3

49.7

73.2

106.5

310.8

123.9

128.9

143.3

165.9

562

Gross margin (GAAP)

33.3%

33.8%

35.9%

37.1%

39.2%

38.5%

53.2%

46.0%

44.7%

40.7%

40.4%

39.9%

39.6%

40.1%

Stock-based
compensation

0.2%

0.3%

0.3%

0.2%

0.3%

1.1%

0.7%

0.2%

0.5%

0.4%

0.4%

0.9%

0.6%

0.6%

Tariff refunds

-%

-%

-%

-%

-%

-%

-12.9%-6.0%(5.1%)

-%

-%

-%

-%

-%

Acquisition related
amortization

-%

-%

-%

-%

-%

-%

-%

-%

-%

-%

-%

-%

-%

-%

33.5%

34.1%

36.2%

37.3%

39.5%

39.6%

41.0%

40.2%

40.1%

41.1%

40.8%

40.8%

40.2%

40.7%

Operating expenses(GAAP)

26.2

27.9

31

33.4

36

37.5

43.2

42.8

159.5

61.5

68.4

103.1

105.6

338.6

Stock-based
compensation

(3.0)

(4.2)

(5.0)

(5.6)

(6.9)

(11.0)(13.1)(7.8)(38.7)(13.8)(14.2)(44.2)(34.7)(106.9)Restructuring and asset
impairment charges

(0.4)

(0.7)

(0.5)

(1.1)

-

-

-

-

-

-

-

-

-

-

Acquisition related
expenses and amortization

(0.5)

(0.5)

(0.5)

(0.6)

(0.6)

(0.5)

(0.5)

(0.8)

(2.5)

(4.0)

(2.5)

(1.6)

(2.7)

(10.8)

Operating expenses(Non-GAAP)

22.3

22.5

25

26.1

28.5

26

29.6

34.2

118.3

43.7

51.7

57.3

68.2

220.9

Income from operations(GAAP)

7.1

17.4

33.7

44.4

44.7

10.9

51.8

79.1

186.4

61.4

59.4

37.3

57.7

215.8

Stock-based
compensation

3.3

4.6

5.5

6.2

7.5

12.3

14.4

8.3

42.5

14.8

15.3

47.1

37.1

114.3

Tariff refunds

-

-

-

-

-

-

(23.0)(15.9)(38.9)

-

-

-

-

-

Restructuring and asset
impairment charges

0.4

0.7

0.5

1.1

-

-

-

-

-

-

-

-

-

-

Acquisition related
expenses and amortization

0.5

0.5

0.5

0.6

0.6

0.5

0.5

0.9

2.5

4

2.5

1.6

2.9

11.0

Income from operations(Non-GAAP)

11.3

23.2

40.2

52.3

52.8

23.7

43.7

72.4

192.5

80.2

77.2

86

97.7

341.1

Gross profit (Non-GAAP)

Gross margin (Non-GAAP)68

Enphase Energy, Inc. reconciliation of Non-GAAP financial measures (continued)
In millions, except per share data

FY’21

Net income (GAAP)$145.4

Stock-based compensation

114.3

Acquisition related expenses and amortization

10.9

Non-cash interest

44.4

Loss on partial settlement of convertible notes

56.5

Non-GAAP income tax adjustment(31.2)Net income (Non-GAAP)$340.3

Net income per share, diluted (GAAP)$1.02

Stock-based compensation

0.81

Acquisition related expenses and amortization

0.08

Non-cash interest expense

0.32

Loss on partial settlement of convertible notes

0.40

Non-GAAP income tax adjustment(0.22)Net income per share, diluted (Non-GAAP) (1)$2.41

Shares used in per share calculation GAAP

142.9

Shares used in per shares calculation Non-GAAP (2)141.8

1. Calculation of non-GAAP diluted net income per share for the year ended December 31, 2021, excludes convertible notes due 2023 interest expense, net of tax of less than$0.1 million from non-GAAP net income.
2. Effect of dilutive in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where the Company
has GAAP net income. The Company excluded the in-the-money portion of convertible notes due 2024 totaling 0.8 million for the year ended December 31, 2021, from nonGAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock
upon any conversion of the notes due 2024. The Company excluded the in-the-money portion of convertible notes due 2025 totaling 0.9 million shares for the year ended
December 31, 2021, from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to theCompany’s common stock upon any conversion of the notes due 2025.

E N VI R O N M E N TA L , S O C I A L, A N D G O VE R N A N C E R E P O R T 2021

69©2022 Enphase Energy, Inc. All Rights Reserved.

Enphase Energy, Enphase, the E logo, IQ, IQ8, Enlighten, Ensemble, and other trademarks or service names are the trademarks ofEnphase Energy, Inc. Other names and marks used herein may be trademarks or services marks owned by third parties.

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