About this report
The Alliander annual report provides an account of our activities from 1 January 2017 to 31 December 2017. Key to our integrated reporting are an open dialogue with stakeholders, transparency and the impact of our activities on society. The annual report was published on 22 February 2018.
Structure of the report
The 2017 annual report is mainly structured according to our largest stakeholder groups. This approach corresponds with Alliander's governance model, which is geared to these groups:
Stakeholder dialogue is the basis
We maintain an ongoing dialogue with our stakeholders: customers, employees, shareholders, public authorities, investors and others. The dialogue was intensified in 2016 and continued in the form of a consultation round with 160 municipalities and four provinces in 2017. The vigorous dialogue with our stakeholders keeps us in touch with trends in society, the expectations regarding Alliander and how we can work together to achieve a smooth and swift energy transition at the lowest possible costs to society. We also regularly share thoughts and ideas with our stakeholders, and seek feedback on proposed policy choices and decisions.
Stakeholders
Materiality of our stakeholders
Each year we ask our stakeholders to tell us what aspects they consider important for inclusion in the annual report. The fifteen highest-scoring aspects were elaborated in more detail. These form the basis of the annual report. To find out how these aspects are linked to, for instance, Alliander's strategy, simply visit our online annual report and click on an aspect in the illustration below. You will then receive an explanation of the selected aspect, its relationship with our strategy and the results achieved in 2017. The complete materiality chart can be found at Other information.
Materiality chart
1 Reliability of supply
Input and relationships relevant for theme
Stakeholder expectation
Continuous supply of energy is of great social importance. Interruptions have a direct impact on the interests of our stakeholders. Customers want immediate information about interruptions, as well as an indication of the estimated outage time.
Our long-term objective
We aim for a consistently low electricity outage duration of at most 21 minutes per year.
Contribution from Alliander
We work daily to secure a continuous energy supply, both now and in preparation for the future. We invested Euro 666 million in the quality of our networks to increase their reliability. Our outage duration was 20.9 minutes in 2017.
Relationship with strategy
Reliability
Risks
Safety, Availability of technical staff in labour market, Insufficient long-term regulatory focus, Required competences, Facilitation of energy transition, Cybercrime
Stakeholder information
2 Safe and healthy working practices
Input and relationships relevant for theme
Stakeholder expectation
Safe working practices are vital for all stakeholders. Employees expect a working environment where they can concentrate and work safely. Customers expect us to guarantee their safety during the performance of our work.
Our long-term objective
Everyone safely home! That is Alliander's safety ambition. The objective is an LTIF (lost time injury frequency) of 2.0 or lower. In addition, Alliander promotes a culture where safety comes first. This culture can be described as: "Alliander wants to find out which safety rules are considered important, listen and learn, and take responsibility. The responsibility for safety and regulatory compliance mainly rests with the senior management. Safety is a top-of-mind concern and that is appreciated".
Contribution from Alliander
Last year we performed a large-scale safety audit to see whether safety is well-organised and anchored in our organisation. We also investigated the exposure to hazardous substances. In 2017, Alliander enjoyed a long period without any accidents leading to absenteeism. This helped Alliander to achieve its lowest-ever LTIF score at 1.4.
Relationship with strategy
Reliability
Risks
Safety
Stakeholder information
3 Innovation
Input and relationships relevant for theme
Stakeholder expectation
The energy transition comprises a shift away from fossil energy generation towards local renewable energy sources, thereby promoting the transition to a more sustainable society. Customers expect flexible and reliable networks, enabling them to feed in energy whenever they want.
Our long-term objective
Technical and economic developments make new solutions both feasible and necessary. Alliander wants to do its bit by facilitating the energy transition.
Contribution from Alliander
The energy transition demands new and smart applications for the energy networks. Alliander invests in these smart technologies to facilitate the transition to a sustainable society, while continuing to guarantee reliability of supply. In 2017, the amount of solar energy that customers fed into our network increased strongly. We also helped customers with local storage and made improvements to achieve better network management. And we engaged in innovative business activities to explore new markets.
Relationship with strategy
Accessibility
Risks
Insufficient long-term regulatory focus, Privacy of energy data, Required competences, Facilitation of energy transition
Stakeholder information
4 Role of energy generation
Input and relationships relevant for theme
Stakeholder expectation
As we advance towards the new energy system, energy generation based on fluctuating sources such as solar and wind is becoming increasingly important. We are carrying out pilots together with other parties, including suppliers and users, to gain valuable practical experience in this area. Alliander wants to respond actively to the changing energy landscape and future developments. This includes embracing new technologies and solutions. Trials are in progress with various parties, such as in Rijsenhout. Customers expect us to help them make new energy choices.
Our long-term objective
We want to gain experience in order to realise the energy system of the future with the smartest solutions possible for our stakeholders. We do this by exploring new markets and encouraging market parties to pursue and implement sustainable innovations.
Contribution from Alliander
In 2017, we set up testbeds in various places such as Rijsenhout, where we are trying out and gaining experience with smart energy solutions, together with customers and other partners. We also engage in business activities in the field of electric mobility and help customers make responsible energy choices.
Relationship with strategy
Accessibility
Risks
Required competences, Insufficient long-term regulatory focus, Facilitation of energy transition
Stakeholder information
5 Smart networks and data technology
Input and relationships relevant for theme
Stakeholder expectation
The energy infrastructure must be capable of matching fluctuations in supply and demand for energy in a reliable manner. Smart networks and data technology help us to make targeted and effective investments in networks as well as to prevent outages and repair faults faster. Customers expect a network that enables them to feed in energy without any problem. They also expect us to make the network more reliable and transparent by means of innovative technology.
Our long-term objective
Alliander's objective is to realise 95% of its most important digitisation programmes within Alliander. The aim of these programmes is to construct intelligent networks and offer smart meters. This is included in Liander's activities plan.
Contribution from Alliander
We are working at various locations to make our energy networks smarter. These initiatives include the integration of smart technology into medium-voltage stations, the roll-out of a switching system for public lighting, the large-scale roll-out of smart meters and the implementation of ICT applications and sensors for managing the flexible flow of energy. Smart networks support a more efficient use of capacity and infrastructure, and are also more reliable. By expanding our smart energy networks, we are laying the groundwork for the digital services of the future. Unfortunately, we did not achieve our objective and must carefully assess how these efforts can be continued more effectively in the coming year.
Relationship with strategy
Accessibility, Reliability
Risks
Privacy of energy data, Cybercrime, Required competences
Stakeholder information
6 Regulation and tariffs
Input and relationships relevant for theme
Stakeholder expectation
Network operators charge costs to their customers. These tariffs are regulated and set by our regulator, the Authority for Consumers & Markets (ACM). Customers want to have a grip on their energy costs, as well as predictable network operation tariffs.
Our long-term objective
Continuously outperform the sector in terms of costs and operational excellence. In addition, Alliander wants to realise solid financial results.
Contribution from Alliander
In 2017, we devoted attention to cost reduction, adhered to a careful investment schedule and expenditure pattern, and closely monitored our position in the national benchmark of energy network operators. In addition, we worked on our strategy to keep the social costs for energy as low as possible, also in the future. In 2017, the network operation tariffs at Liander for our customers were comparable with those in the previous year. The tariffs would have been lower if they had not been taxed with sharply higher regional sufferance tax levies. Sufferance tax was abolished in 2017. Municipalities are no longer allowed to increase their tariffs and must reduce them to zero over the next 5 years. In 2022, the tariffs will no longer contain a sufferance tax component.
Relationship with strategy
Affordability
Risks
Insufficient long-term regulatory focus, Facilitation of energy transition
Stakeholder information
7 Safe infrastructure
Input and relationships relevant for theme
Stakeholder expectation
Customers expect us to ensure a safe infrastructure and to guarantee their safety during the performance of our work.
Our long-term objective
Everyone safely home! That is Alliander's safety ambition. This applies both to our own people, and to the quality and reliability of our installations. That is why we continuously invest in the reliability of our infrastructure. Our focus here is on the top risk-mitigating projects, including 25 specifically identified projects.
Contribution from Alliander
In 2017, Alliander invested about € 800 million in the reinforcement, digitisation and maintenance of its networks. We completed 46% of our most important projects. Furthermore, our staff received calamity and incident response training in order to be well-prepared for unforeseen events that impact on, for instance, our infrastructure.
Relationship with strategy
Reliability
Risks
Safety, Availability of technical staff in labour market
Stakeholder information
8 Transparency
Input and relationships relevant for theme
Stakeholder expectation
Stakeholders request Alliander to be open about its intentions, operations, decision-making and dilemmas.
Our long-term objective
We aim to gain and retain a leading position in the Transparency Benchmark and apply GRI Standards. We conduct an active dialogue with a broad group of stakeholders and organise a stakeholder panel.
Contribution from Alliander
Alliander is a stakeholder-driven company and asks stakeholders for their feedback on plans. In the past year, Alliander ended in 2nd place in the Transparency Benchmark of the Ministry of Economic Affairs. This year, too, an external stakeholder panel provided extensive input for our annual report. Moreover, our annual report adheres to the latest GRI SRS guidelines. In 2017, we expanded our accounting initiatives to include continuous reporting. Online dialogues were conducted about various material themes, including the energy transition. We apply the principles of the revised Dutch Corporate Governance Code wherever relevant.
Relationship with strategy
Reliability, Affordability, Accessibility
Risks
None
Stakeholder information
9 Economic performance
Input and relationships relevant for theme
Stakeholder expectation
Stakeholders expect a clear picture of the value that Alliander realises and stable financial results.
Our long-term objective
We want to realise value for our stakeholders and contribute to a better society. We have set targets for our ratings, FFO/Net debt ratio and solvency and monitor their progress.
Contribution from Alliander
In 2017, we created sustainable value for our stakeholders. Salary increases under the collective labour agreement, investments in networks and buildings, procurement expenditures, employee volunteering, social sponsorship and dividend for providers of capital demonstrate our broad economic and social contribution.
Relationship with strategy
Affordability
Risks
Financial risks
Stakeholder information
10 Training and development
Input and relationships relevant for theme
Stakeholder expectation
Alliander is a company that works hard to promote training and development. Employees are actively encouraged to develop their professional and personal skills with a range of training and development opportunities. This includes safety courses wherever relevant.
Our long-term objective
Alliander needs well-equipped professionals who contribute to the energy issues of today and tomorrow.
Contribution from Alliander
To find solutions for the energy issues of today and tomorrow, we invest a lot. In technology and, above all, in our people. We offer excellent compensation and benefits. And we offer excellent training. To help our employees get the best out of themselves. That is good for them and good for the company. Our professionals work on challenging projects. So what gives them energy? Doing a meaningful job that really matters to society. We listen to our customers and invite them to come up with innovative and smart ideas. That way, we are able to deliver even better solutions for the energy issues of today and tomorrow.
Relationship with strategy
Accessibility, Reliability
Risks
Availability of technical staff in labour market, Required competences, Facilitation of energy transition, Safety
Stakeholder information
11 Customer satisfaction
Input and relationships relevant for theme
Stakeholder expectation
Customers count on excellent service, communication and handling of interruptions, questions and complaints. Municipalities and business customers expect a clear point of contact and that we deliver on our commitments.
Our long-term objective
Our consumer and business customer satisfaction ratings remain higher than the national benchmark of Dutch network operators.
Contribution from Alliander
We work daily to secure a continuous energy supply, both now and in preparation for the future. The quality of our services and communications vis-à-vis business customers and municipalities was improved. Our digital services were improved thanks to our 24/7 online accessibility and short response times. The website experience for consumers and business customers was also further enhanced. Our performance was above the benchmark for business customers, and just below the benchmark for consumers.
Relationship with strategy
Reliability
Risks
Required competences, Privacy of energy data, Facilitation of energy transition
Stakeholder information
12 Climate change, energy...
Input and relationships relevant for theme
Stakeholder expectation
Due to the changing climate, the sea level is rising and extreme weather situations such as storms and prolonged periods of drought or rainfall are becoming more frequent. Climate change is a global problem. Stakeholders expect an active climate policy aimed at lower emissions throughout the energy chain.
Our long-term objective
We aim to reduce our carbon emissions.
Contribution from Alliander
Alliander must prepare for situations that may jeopardise its operations. At the same time, Alliander has a large carbon footprint and is among the top 30 emitters of the Netherlands. These emissions contribute to climate change. It is important to this impact. We are carrying programmes to make our operations more sustainable.
Alliander has started various initiatives to reduce its carbon emissions, including the increased use of green energy through the procurement of Guarantees of Origin for renewable energy generated in the Netherlands. We are working within the Dutch network operator community to create a uniform standard for calculating our footprint. Our carbon emissions in 2017 were lower than in the year before.
Relationship with strategy
Accessibility, Affordability
Risks
Insufficient long-term regulatory focus
Stakeholder information
13 Investment policy
Input and relationships relevant for theme
Stakeholder expectation
Stakeholders expect a clear picture of the value that Alliander realises and stable financial results. Sustainable value creation is an increasing priority for them.
Our long-term objective
The key aim of our financial policy is to at least maintain a solid A rating profile. This is vital to implement our strategy and play a facilitating role in the energy transition.
Contribution from Alliander
In 2017, we created sustainable value for our stakeholders and retained our solid A rating. In the interests of our providers of capital, we seek to strike the right balance between an adequate shareholder return and the protection of bond holders and other providers of debt capital, while preserving the flexibility to invest and grow.
Relationship with strategy
Affordability
Risks
Financial risks
Stakeholder information
14 Supply chain responsibility
Input and relationships relevant for theme
Stakeholder expectation
With an annual procurement volume of about € 900 million, we are a major purchaser of products and services in the Netherlands. Stakeholders expect us, together with our suppliers, to ensure that our procurement is as sustainable as possible. If we can persuade our suppliers to take sustainability as seriously as we do ourselves, we can generate a significant positive impact through our supply chain.
Our long-term objective
We actively seek to improve our supply chain performance. This includes making plans with our suppliers to reduce CO2 emissions and promote responsible operations. Our objective is to purchase at least 71% of our procurement volume according to socially responsible procurement principles. In addition, all suppliers must meet the Alliander Code of Conduct.
Contribution from Alliander
As well as highlighting our compulsory Code of Conduct to all suppliers, we purchased 70.4% of our procurement volume on the basis of Socially Responsible Procurement (SRP) statements in 2017. These SRP statements help us to achieve our socially responsible procurement objective in the Netherlands and back up our sustainability efforts among our suppliers.
Relationship with strategy
Reliability, Affordability, Accessibility
Risks
None
Stakeholder information
15 Corporate governance and business ethics
Input and relationships relevant for theme
Stakeholder expectation
Stakeholders must be able to trust us to take their interests into consideration in a careful manner. Good corporate governance, adequate supervision and transparent accountability are essential to ensure stakeholders’ trust in management and supervision. Accordingly, management must act with integrity and transparency, and the Supervisory Board render account of its supervision. This is crucial in view of our vital role in society.
Our long-term objective
We continue to comply with applicable laws and regulations and anticipate regulatory changes in good time.
Contribution from Alliander
Adequate and effective supervision is performed by the Supervisory Board, based on clear guidelines. We comply with the Dutch Corporate Governance Code wherever possible and applicable. In doing so, we emphasise our responsibility for the social aspects of entrepreneurship.
Relationship with strategy
Reliability
Risks
None
Stakeholder information
Corporate governance
Integrated report
This is an integrated annual report incorporating financial, operational and corporate social responsibility (CSR) information. The underlying building blocks are:
The relevant provisions in the Dutch Civil Code
International Financial Reporting Standards (IFRS)
Revised Dutch Corporate Governance Code 2016
GRI SRS reporting guidelines ('comprehensive' option), Electric Utilities Sector Supplement
International Integrated Reporting Council (IIRC)
EU Directive on disclosure of non-financial information and diversity
Once the internal assessments have been performed, the draft report is sent to the Disclosure Committee, and the outcomes of the discussion are incorporated. The final draft version is submitted to and discussed in the Management Board. Comments are incorporated and this version is then adopted as the final version. The members of the Audit Committee of the Supervisory Board assess and adopt the final version of the integrated financial and social report. Any comments are incorporated in the final version.
The financial and non-financial information in the report has been consolidated for Alliander and the subsidiaries with a significant impact on the material aspects. Where information is not consolidated, this is explicitly stated. The report also includes information of other Alliander business units whose activities are mainly dedicated to the energy transition. The outcomes of the materiality analysis were the leading factor in the information-gathering process.
Transparency
Alliander operates in the complex dynamics of the rapidly-changing energy sector. Our stakeholders highly value transparency, and so do we. Our ambition is to remain a leader in transparent reporting. This is the first year that we apply the GRI Standards (Comprehensive option). As such, we apply with the Transparency Guideline and the revised Dutch Corporate Governance Code and the Decree on Corporate Governance 2009. In spring 2017, regulations for non-financial information entered into force through the 'Disclosure of Non-Financial Information Decree' ('Besluit bekendmaking niet-financiële informatie’) and the Disclosure of Diversity Policy Decree ('Besluit bekendmaking diversiteitsbeleid’). Alliander adheres to these regulations in this report. The Human Rights theme was found to be immaterial in the context of our operations. We report partly on bribery and corruption in the Corporate Governance chapter. The GRI Content Index with this report contains a reference or explanation for all themes that were found to be material.
Stakeholder Panel
In keeping with last year, a stakeholder panel read draft a version of the report. The panel provided valuable feedback that was incorporated in this version. In addition, a joint session with a panel of stakeholders was held on 19 January 2018 to discuss Alliander's role in the energy transition, the interrelationships between the subjects in this report (connectivity), the value of impact measurements and the effect of SDGs at an operational level. The full reflection of the stakeholder panel is contained in the report.
Stakeholder involvement in Alliander Annual Report
Sustainable Development Goals (SDGs)
The United Nations presented its sustainable development goals in 2015. Alliander explored which goals it could make the biggest contribution to. These can be found in the Sustainable Development Goals section. It is our ambition to give the SDGs a prominent place in our accountability information in the coming years. We want to be transparent about how and what we contribute to the attainment of these goals.
Continuous reporting
Our annual report highlights our performance and activities in the past year. Halfway through the year we also provide a summary of our year-to-date results, while our year plan looks ahead to the next year. Since 2017 we have expanded the reporting cycle to include monthly online reports (continuous reporting). The focus here is on our key energy transition results in such areas as solar and wind energy and the number of e-charging posts. In addition, we report our monthly KPI scores on, for instance, customer satisfaction, network outages and the roll-out of smart meters. You can view the dashboard on Alliander.com.
Invitation to stakeholders and readers
Alliander wants to continue its dialogue with stakeholders about the transition to the new energy system. We aim to involve partners at an early stage in the energy transition agenda to align their energy needs and with our efforts. We are also keen to form coalitions in order to tackle cross-sector labour market issues. Similarly, collaboration is vital in our strategy to give shape to the natural gas heating transition and to offer customers more choice and flexibility. If you have any ideas or want to give your views on themes such as the heating transition, a natural gas-free future or electric driving, please contact us on communicatie@alliander.com.
Finally, we invite readers of this report to ask questions, make comments and provide suggestions, also on communicatie@alliander.com.