Materiality test
Each year, Alliander determines in a structured manner the topics to be included as a minimum in the annual report. A materiality test is used for this purpose.
The assessment of the material themes forms the basis for determining the content of the integrated annual report and takes place at an early stage of the reporting process. The materiality study is twofold: the stakeholder groups assess the relevance of various themes and we make an internal assessment of the impact of these themes on the company.
In 2016, the existing materiality analysis was recalibrated based on input from diverse sources, including stakeholder dialogue reports and a media scan. The shortlist of 56 socially significant topics as drawn up in 2015 served as the starting point. The materiality score from the previous reporting year was consistently taken on board in the weighting. Next, we gauged the nature and scale of the impact of each selected theme for Alliander and its stakeholders. This list of topics was also submitted to and discussed with the stakeholder panel.
The outcomes from the roundtable session with stakeholders and the materiality of each topic were discussed with the Management Board. It was concluded that the topics stakeholders had identified as important largely corresponded with the key themes that Alliander is pursuing. The topics identified as most material to our stakeholders remained unchanged compared to the annual report 2015. However, there were some minor changes in the ranking of significance. Stakeholders also assigned higher rankings to Development & Training and Investment Policy. The 15 most relevant themes served as our guideline in the process of determining the content of the annual report and are extensively dealt with in the stakeholder chapters.
The process in 5 steps
After going through the entire Materiality Test in 2015, we performed a recalibration for the Annual Report 2016 based on the process below.
Step 1: Identification of relevant aspects and themes
The first step consisted of drawing up a list of socially significant themes that are relevant to the organisation. The guideline here was the list of aspects as contained in the GRI G-4 guidelines and the Electric Utilities Sector Supplement. The list is updated annually and, in addition to the GRI aspects, comprises material themes from the previous year, topics put forward by stakeholders and topics for which we have set internal performance indicators. The overview of themes for 2015 was the starting point for the Annual Report 2016.
Stakeholder relevance
Based on a digital survey in 2015, the stakeholders assessed the socially significant themes on relevance. This stakeholder input led to the selection of the fifteen most relevant themes. The results of the survey were classified according to stakeholder group. The stakeholder groups closest to the organisation (customers, employees and shareholders) were given a weighting of 2, while the other stakeholder groups (suppliers, knowledge institutions, public authorities and investors) were given a weighting of 1. The results of this digital survey were given added substance and colour during stakeholder dialogues with a group of stakeholder representatives. The result was an overview in which the most relevant themes from the stakeholder perspective are prioritised.
Impact for Alliander
Next, we determined the indicative impact of the fifteen most relevant themes on the organisation in 2016. The extent of the impact was assessed internally and then broadly validated within the organisation by relevant experts. The impact model as applied within this method consists of three aspects:
Negative impact: how great is the impact on Alliander if the organisation does not perform well on the theme;
Positive impact: how great is the impact on Alliander if the organisation performs well on the theme;
Probability: what is the probability of these positive or negative impacts occurring, and within what time horizon.
The impact analysis provides insight into the opportunities and risks for the organisation as well as the priority that should be given to addressing the topic.
Step 2: Weighting and comparison with 2015
For the materiality test, Alliander applies a weighted average over several years. Apart from being more reliable and less sensitive to hypes and measurement errors, this approach also serves to highlight trends in the materiality of the themes.
Step 3: GRI aspects with relevance for Alliander
High-materiality themes have been matched with the corresponding effects in the GRI guidelines. This overview is the yardstick for the composition of the accountability information in this annual report
GRI aspect | Alliander Theme | Description | Reference Chapter | |||
Safety and working conditions | Health & Safety | Working on gas and electricity infrastructure carries inherent risks (live parts, gas, possible presence of asbestos, etc). Safe incident-free working practices are vital for everyone involved. | Employees | |||
Safe infrastructure | Gas and electricity can cause risks. The safety of everyone involved is our highest priority. Incidents in the gas network and with grey cast-iron gas pipes re-emphasise the importance of our focus on safety. | Customers | ||||
Training and development | Technology and organisations are changing continuously and at a rapid pace. Working has become lifelong learning. | Employees | ||||
Product and Service | Regulation / tariff-setting | The network operator's cost level in relation to that of the sector forms the basis for the tariffs permitted by the Netherlands Authority for Consumers & Markets. This gives network operators scope, within certain margins, to set their own tariffs. After several years of tariff increases, a reduction is now being enforced. This has an impact on the available financial scope, including for investments. | Customers | |||
Customer satisfaction | Customers count on excellent service, communication and handling of interruptions and complaints.To what extent should we make customer satisfaction an operational priority? | Customers | ||||
Reliability of supply | Uninterrupted availability of energy is of vital importance to society. Interruptions have a direct impact on the interests of our stakeholders. How do we set up our capacity planning to ensure that the expansion and replacement of networks and installations is properly aligned with the needs of our customers and society? | Customers | ||||
Energy | Energy transition | The transition from fossil to renewable energy generation such as solar, wind or tide is one of the biggest societal challenges of today. What role can or should Alliander play in accelerating or facilitating this transition? | Customers | |||
Smart networks | The energy infrastructure for matching changes in energy supply, market relations and the changing energy demand efficiently and safely. | Customers | ||||
Role in energy generation | Renewable energy generation is increasingly becoming a matter for consumers and businesses. Network operators face many questions, such as to what extent should they prioritise renewable energy feed-in or generate their own renewable energy to help accelerate the energy transition. | Shareholders and investors | ||||
Emissions | Energy usage and CO2 | Alliander uses a lot of energy. The reduction of its own energy consumption in the networks, but also in the buildings and mobility is an important part of its commitment to make its operations sustainable and to help make the Netherlands more energy-efficient. | Shareholders and investors | |||
Supplier responsibility | Supply chain responsibility | Outsourcing, investments and production in other countries sometimes leads to an increased risk regarding the recognition and observance of fundamental human rights, safety and the environment. An organisation can involuntarily become involved in dubious practices such as child labour. In the Netherlands, too, a careful assessment is required to see whether the local expenditures detract from or contribute to society. The assessment of suppliers in the supply chain is part of sound CSR policy. | Shareholders and investors | |||
Public policy | Transparency | To what extent is Alliander willing, able or obliged to be open to society about its intentions, operations and decision-making? Are we transparent about subjects for which we need the cooperation of other parties (lobbying)? To what level of detail, and with what frequency, do we communicate and share information with whom? | Other information | |||
Economic performance | Economic performance | What contribution does Alliander make to its stakeholders by means of revenues, employee remuneration, donations and other social investments. How do we deal with retained earnings and payments to lenders and authorities? | Shareholders and investors | |||
Innovation | In view of the changing energy landscape and to be prepared for future developments, it is extremely important for us to be able to apply new technologies and solutions. Alliander has the ambition to play a prominent role in the energy transition. | Customers | ||||
Investment policy | How big is the impact on Alliander if the economy is not doing well? What will happen regarding the need to renew operating assets and build new housing? Can Alliander use its position to contribute to social solutions for the crisis? | Shareholders and investors |
Step 4: Materiality matrix
The combination of the relevance for stakeholders on the Y-axis and the impact of the themes on the organisation on the X-axis shows the theme's impact on the level of the organisation's social performance and thus the priority it has within the annual report. The materiality matrix provides a cross-section of the most material topics for Alliander's annual report.
Alliander subdivides the results of the materiality analysis into three categories.
Key themes
These are the 15 themes in the materiality matrix that are distinctive in the perception of a large group of stakeholders and for our performance. These themes are addressed at length in the annual report.
Corporate themes
These are themes that, viewed across a broad group of stakeholders, receive less priority. This concerns themes that are relevant to certain stakeholders for operational reasons or must be reported on for compliance purposes. They are dealt with to a limited extent in the annual report and explained further in the GRI Index if necessary.
Potential themes
These are themes to which most stakeholders currently assign less priority and that have a lower impact on the organisation. However, these themes may in future be given more weight and are being monitored and, where necessary, maintained by Alliander. For statutory reasons, some of these themes form part of the annual report or the explanation in the GRI Index.
Step 5: Implementation
The materiality of topics as determined by the Management Board provides the basis for the design, content and management of the annual reporting process. It is decided how the topics are worked out and how these are incorporated in the information-gathering process. Business units prepare the reporting process in cooperation with the responsible departments and set out the data validation and verification arrangements.
Further information on the reporting process can be found in 'About this report' and the GRI Index Table.