Our impact and value creation

As a network company, Alliander plays a significant role in the prosperity and wellbeing of millions of people. We work every day to secure a reliable and affordable energy supply that is accessible to everyone on equal terms.

Our ambition

Alliander has reported on its social impacts since 2015. We work continuously to improve the impact model and our social impacts. Our activities have many and varied social impacts on our surroundings: on the economic development of regions and stakeholders, on greenhouse gas emissions, on knowledge development and on the wellbeing of employees. We want to increase our positive impact, for instance by improving the wellbeing of customers and making the energy system more sustainable. In addition, we seek to minimise our negative impact, such as greenhouse gas emissions and waste.

Impact measurement

Impact measurement enables us to paint a balanced and quantitative picture of the significance of our activities. Through the insight gained in this manner, we gain a more accurate idea of our social performance and the extent to which we achieve our objectives. Internally, we increase our insight for better decision-making; externally, we demonstrate the social added value of our choices. Transparency about our impact allows stakeholders to gain a better understanding of our contribution to social developments. And it enables us to make better decisions about projects and activities.

Why quantify impact?

A reliable, affordable and sustainable energy supply is of great social and economic significance. For this reason, our choices for today and the future must be made with great care. Alliander plays various roles, including that of network operator, employer and responsible corporate citizen. In all these roles, we can make a meaningful contribution to society. When assessing the social contribution of activities, our main focus is currently on inputs (costs) and outputs (direct consequences). Impact measurements are performed to quantify and monetise the resulting effects. The main impacts concern economic value, prosperity, wellbeing, the environment and employment. Impact measurements also cast light on the interrelationships between impacts and on the levers we can pull to increase our beneficial contribution to society. Finally, impact measurements also give us greater insight into our contribution to the global Sustainable Development Goals. In this way, we make a direct contribution to better reporting on the progress made on the most important challenges in the world. We concentrate on ‘affordable and clean energy’ (SDG 7), ‘decent work and economic growth’ (SDG 8), ‘sustainable cities and communities’ (SDG 11) and ‘responsible consumption and production’ (SDG 12).

Value creation

To determine our social impacts, we have mapped out our value chain in the chart below. We try to quantify the social effects and our impact in a single unit wherever possible (euros). The online version of the annual report contains a connectivity matrix where the interrelationship with our value creation process can be viewed interactively.

Our steps in impact measurement

Alliander has quantified and reported on social impacts for several years now. One thing we do, for instance, is measure the significance of Alliander’s activities and projects. Examples are the smart meter roll-out and the digitisation of electricity grids. Last year, we examined our impact on the wellbeing of employees and carried out two impact analyses at project level. In 2018, we further improved the impact model and brought it more into line with our strategy. We are now better able to determine what our contribution is to the wellbeing of households in particular. The larger-scale effects of energy feed-in into our networks and the contribution of heating networks to consumer wellbeing was quantified and monetised for the first time. The outcomes have been included under the heading ‘Manufactured capital’. The effects today are still modest, but will increase in the future.
In 2018, we also further analysed and monetised the impact of circular principles on our materials costs, waste and carbon emissions. Recycling and reuse of our materials contribute towards a more efficient and cleaner economy. The calculation is included under the heading ‘Natural capital’. 

Sector model

More and more organisations are opting to calculate their social impact at project and organisation level. This increases their insight into their impact on society and helps them make better choices. There is a great need for more alignment of calculation methods and assumptions, both at national and international level. This would improve the reliability and sector-wide recognition of calculations. As such, it would help us to ‘manage for social value’. Dutch infrastructure companies now also extensively share knowledge on underlying principles and aims. In 2018, Alliander, together with a number of network and infrastructure companies, laid the foundation for a sector model for impact measurements in the infrastructure and energy sector. In cooperation with CSR Netherlands, a qualitative description, or narrative, was drawn up about impact measurement. In describing the most important areas of impact for the national infrastructure sector as a whole, this narrative provides a firm basis for the further development of joint infrastructure impact measurements.

2018 impact at a glance

Alliander follows the ‘six capitals model’ of the International Integrated Reporting Council (IIRC). The illustration shows the relative size of Alliander’s social impact. In the model, we mainly quantify and monetise the impacts to which we can make the largest contribution and, accordingly, have the greatest influence on our selected SDGs. The model has been tweaked in some respects compared to the previous report. The contribution of heating transmission for consumers was calculated for the first time. This was prompted by the ongoing heating transition, our role in this context and the decreasing role of natural gas. Our efforts to promote circularity of commodities and materials has led to an adjustment and tweaking of natural capital. The calculation concerns the losses due to waste and the ecological costs in the production of procured materials. The model distinguishes between two types of impact. On the one hand, we have impacts that occur entirely due to the activities of Alliander: the impact of grid losses, our own emissions and the wellbeing of our employees. On the other hand, there are chain effects: impacts for which parties in the chain are jointly responsible. One example would be the impact of energy transmission on the wellbeing of consumers and emissions from the consumption of electricity, gas and heating.

Impact measurement results in 2018

The results of the impact calculation show the (approximate) size of our impacts for 38 indicators. The size of 22 indicators was calculated and expressed in monetary terms. For comparative figures, we refer to Comparative impact figures for 2018 and 2017 in the Other information chapter. For the other indicators, we made a qualitative description and an estimate based on external sources. We would note that, in all cases, the size referred to is relative, i.e. the impact may be small at group level but large at individual level, such as with an accident involving a person. 

Financial capital

Financial capital impacts indicate the funds flows of our stakeholders. The change for stakeholders is shown as incoming and outgoing cash flows. Regulated tariffs, other income and revenue give us the financial resources for investments in and maintenance of our energy networks. We thus withdraw capital from society to finance our activities. Through our role and position in the energy chain, we feed value back into society. We pay our suppliers for goods, services and assets. We generate work and income for other parties. Our employees receive a salary for their effort and time. On balance, our work stimulates the economy and generates long-term employment, income and prosperity.

Manufactured capital

The value for manufactured capital is made up of two components: the first consists of regulated tariffs for transmission and connection services as well as metering services for small users. These have been designated as exclusive statutory tasks of network operators. The second consists of the consumer surplus. i.e. the added value that customers are in theory prepared to pay above the price for a service or product. The prosperity value of energy transmission relates to all price elements in the energy chain, including taxes and the partly regulated prices for the supply and transmission of energy. The amounts shown as manufactured capital relate to the economic part of the energy value chain that is attributable to Alliander. The consumer surplus is currently the most common method for determining economic value, both for liberalised and regulated markets.

Energy transmission has a high prosperity value for society. Alliander’s share in the value for consumers amounted to €4.7 billion in 2018. The value has thus decreased compared to 2017 owing to a decline in the use of natural gas. More and more consumers are feeding renewable electricity into the network. Alliander calculated the impact of this feed-in for the first time in 2018. According to our calculation, consumer feed-in had a positive prosperity effect of €9 million. If a quarter of the households connected to Alliander had solar panels, this impact would grow to about €14 million per year. Alliander’s share in the value for business customers for electricity and gas transmission remained virtually unchanged. In 2018, we were confronted with a number of major power outages. The resulting substantial increase in our electricity outage duration caused a negative effect of €6 million. The impact of unregulated heating transmission on consumer wellbeing is modest. In 2018, the availability of heating led to an extra added value for consumers of €0.5 million.

Natural capital

On balance, the climate-related impact from our activities decreased from €352 million in 2017[1] to €331 million in 2018. This drop resulted from the decrease in the energy consumed by end users and the greening policy for our own carbon emissions. The monetised impact of our own carbon footprint came to €32 million in 2018, mainly due to our grid losses. For more details, see Our sustainability performance in the Shareholders and investors chapter. As in 2016/2017, the main negative impact was caused by our position in the Dutch energy chain, which still contains a large fossil-based generation component. By reducing the negative impact of carbon emissions, we make a long-term contribution to national and international climate commitments. 
At the same time, our core activities such as network management make inroads into scarce resources of our planet. We took stock of our contribution to materials circularity for the first time in 2018. The procurement of goods and materials and the extent of recycling and reuse are expressed in an ecological cost indicator for materials procurement. The indicator shows that our company runs up €20 million in ecological costs as a result of materials usage. This amount is strongly dampened by the extensive use of recyclable materials. Aluminium (3,400 tonnes) and iron (2,600 tonnes) account for the biggest volumes of our materials procurement. The large weight percentage of waste materials that is recycled or reused leads to a limited negative impact of €250,000 of waste-related ecological damage. Against this, there are environmental impacts that we do not quantify. These include the impact of constructing sustainable heating networks.

  • 1 Based on a recalculation in 2017 the amount of natural capital is adjusted to €352 million.

Human capital

On average, people who are in work tend to experience a greater sense of wellbeing than those who are unemployed. Alliander contributes to the wellbeing of employees by offering rewarding and fulfilling work. Work is not just about income. Immaterial factors matter too. In 2017, we calculated the wellbeing effect of having work for the first time. This concerns the direct non-financial benefits that employees derive from having paid work. The analysis shows that immaterial factors such as appreciation, contact with colleagues and customers, and the structuring effect of work represent a positive impact value of €106 million (2017: €108 million). We started measuring the value of immaterial factors of work some years ago and are seeing that these have a substantial long-term social effect. This comes on top of compensation and benefits, which are included in financial capital.

The analysis shows that the loss of wellbeing and happiness due to work-related accidents and sickness amounts to €1 million (2017: €950,000). This impact value is relatively small compared to the positive impact of having work. No major changes in the data occurred in 2018. Safety and prevention of work-related complaints are a constant priority for Alliander. As an employer, we always aim to make a positive contribution to the wellbeing of our employees.

Social capital

One important impact of an energy network operator is the contribution towards social cohesion in residential areas. High social cohesion ensures that local energy initiatives are broadly supported. In addition, participatory projects result in solutions that are better aligned with local needs. As decentralised generation increases, so will the importance of local projects. This change occurs at various levels. New parties are collaborating in innovative partnerships to set up local sustainability and energy-saving projects. Greater local involvement in energy issues is expected to galvanise new social interaction in other areas as well. Losses resulting from the unsecured exchange of privacy-sensitive information must be avoided in order to limit the risk of negative social impacts.

Intellectual capital

Alliander invests time and money in its network operations of the future: the digitisation of our networks, the use and application of data and new business and market models for the energy transition, and alternatives for natural gas. This creates intellectual capital for Alliander and its stakeholders. This capital comprises the stock of immaterial man-made goods. New open infrastructures for heating networks, for instance, not only enhance our own knowledge and expertise but also unlock new market opportunities for other businesses. The quantification and monetisation of intellectual capital calls for reliable historical data and informed choices. We intended to examine and explore this in further detail in 2018. Instead, however, we gave priority to the social impact cases for heating, circularity and energy feed-in. 

What have we learned?

Collaboration with our knowledge partners has produced new insights into the consequences of our activities. Reliable network management is a source of great and constant financial and economic value for Alliander. Our impacts on the wellbeing of customers through the management of heating networks have been quantified in more detail. We have learned that procurement of goods and materials in combination with data on waste and reuse form a good starting point to measure the impact of our results on the circular economy. We have thus identified variables that influence the impact of our actions on natural capital.

The impact measurements continuously force us to make robust assumptions about such aspects as expected carbon impacts. This is the way to deal with uncertainties that inevitably arise when making estimates of indirect and complex impacts. In 2018, we started to develop a sector model for impact calculations with a broader coalition of companies. 

Our plans for 2019

Alliander is continuing to improve its impact model in order to increase its positive social impact in the future. This aim reflects our growing role in districts and neighbourhoods where we work together with municipalities and housing associations to explore alternatives to residential and spatial heating. Together with other network operators, we are working out the details for a widely supported sector model. Thanks to this collaborative approach, the model can be developed faster and with more robust coefficients. We also want to use our impact model more to make better-informed choices as to new developments and investments.