Materiality test
Each year, Alliander takes a structured approach to deciding what topics should be covered by the annual report as a minimum. To do this we use a materiality test. Assessment of the material issues forms the basis for the contents of the integrated annual report and takes place at an early stage in the reporting process. The materiality test depends on a dual assessment: on the one hand, various stakeholder groups assess the relevance of different themes and we, on the other hand, make an internal assessment of what the impact of these themes is on the business and on the wider world.
In 2020 we reassessed the issues based on desk research, specifically a media analysis, surveys among supply chain partners and peer organisations, and reviewing ESG ratings and sector reports. We also received input from stakeholders during the year. No new issues have been added or removed. The ‘Climate change, energy consumption and CO2’ issue emerged as being of greater importance for Alliander in 2020 than previously, while the ‘Workplace well-being’ issue has become slightly less so and fell just outside the Top 15 issues. ‘Promoting renewable energy generation’ became ‘Facilitating renewable energy generation’, and the issue of ‘Responsible investment policy’ became ‘Socially responsible investment policy’. In 2021, we will conduct a more extensive materiality test among stakeholders and reassess the impact of issues.
The results of the dialogues with stakeholders and the materiality test were then discussed with the Management Board. The conclusion was that the issues considered important by stakeholders are largely the same as the more important themes of concern to Alliander. Minor changes were made to the positioning of these topics. The fifteen most relevant issues were used as a guide in defining the content of the annual report, and they are covered at length in the stakeholder sections.
The process in five steps
In previous years, on several occasions we ran a full assessment to determine materiality. For the 2020 annual report, we reappraised the test using the following process.
Step 1: identification of relevant aspects and issues
The first step consisted in putting together a list of social issues that are relevant to the organisation, using the list of aspects included in the GRI Standards guidelines and the Electric Utilities Sector Supplement as a guideline. This list of issues is updated every other year and, in addition to the GRI aspects, contains material issues from the preceding year, topics suggested by stakeholders and topics that are the concern of internal management. The revision of the material issues carried out in 2018 was used as the basis for the 2019 and 2020 annual reports.
Relevance to stakeholders
In 2018, the social issues were rated for relevance on the basis of a digital poll conducted among the stakeholders. A reappraisal in 2018 saw Alliander review the relevance rating again. Based on this stakeholder input, the social issues were reappraised in 2020. The results of the reappraisal were grouped according to stakeholder group. The result is a summary prioritising the issues having the most relevant impact from the point of view of the stakeholders.
Impact on Alliander
An assessment was made in 2019 of all the social issues to determine the indicative impact they have. The magnitude of such impact was assessed internally and subsequently validated across the organisation by relevant experts. The impact model used for the purposes of this method is made up of three aspects. For each topic, we determined its relevance with respect to:
the economic, social, and economic impacts on the company
the estimated impact on our immediate surroundings
the relative magnitude of the impact.
The impact analysis provides insight into opportunities and threats for the organisation, as well as into the level of priority that should be assigned to tackling each specific subject.
Step 2: weighting and comparison with previous years
For materiality testing purposes, Alliander uses a weighted average over multiple years. Apart from the greater reliability afforded by this approach and the reduced sensitivity to hypes and measurement errors, the aim is to identify trends in the materiality of issues.
Step 3: GRI aspects of relevance to Alliander
Issues that rate high on the materiality scale are associated with the summary of aspects in the GRI guidelines. This summary guides the composition of the information contained in this annual report.
Step 4: materiality graph
The combination of the relevance of issues to stakeholders on the Y-axis and their impact on the organisation on the X-axis shows the impact of a particular issue on the organisation’s social performance and therefore the priority accorded to it within the annual report. The materiality graph thus frames the more material issues for Alliander’s annual report. Alliander groups the results of the materiality analysis into three categories:
Key issues
These are the 15 issues in the materiality matrix that stand out in the eyes of a large group of stakeholders and which have an impact on our organisation. They are covered at length in the annual report.
Business themes
These are the topics considered not to have such high priority by a large group of stakeholders. They are matters that are relevant to just a few stakeholders or are reported because of their relevance to operations or because of legal requirements. They are not treated at length in the annual report but further information is disclosed in the GRI Content Index where necessary.
Potential issues
These are topics currently receiving a lower priority rating from the majority of stakeholders and having a lesser impact on the organisation. It is, however, quite possible for these topics to gain weight in the future so we monitor developments and keep tabs on them as necessary. In the case of a number of them, they are nevertheless included in the annual report for legal reasons or form part of the GRI index disclosures.
Step 5: implementation
The materiality of topics decided by the Management Board provides the basis for the organisation of the contents and for the overall management of the reporting process. Decisions are taken as to how the topics should be elaborated and what needs to be included in the information that is collected. The various parts of the business prepare the reporting process in conjunction with the responsible departments and agreements are reached on the validation and verification of data. For further disclosures regarding the reporting process, see ‘About this report’ and the GRI Content Index.
Information & data collection
In the collection of information and data from society, a distinction is made between qualitative information and quantitative data. Descriptive information for the material issues was collected using a questionnaire. For the quantitative data, a ‘data request’ (standard inventory list), which is part of the regularly scheduled internal data request, was used. Wherever possible, the information is drawn from Alliander’s management and information systems. In addition, the company’s own sources were used. A system of internal measures, control and auditing assures the quality of routinely collected information; other information collected is reviewed internally for the reporting process.