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: various stakeholder groups assess the relevance of different issues and we make an assessment of what the impact of these issues is on the company and on the wider world.
2021 Issues
Two issues have been added as a result of the reappraisal: ‘Work package completion’ and ‘Collaboration and dialogue with stakeholders’. The ‘Future-proof network’ issue is part of the ‘Facilitating the energy transition’ and ‘Work package completion’ issues.
In 2021, changes became apparent in how material issues affect stakeholders and Alliander. The ‘Work package completion’ issue is relevant to many stakeholders and the ‘Access to energy’ issue is also becoming increasingly relevant. The issues of ‘Climate change, energy usage and CO2’ and ‘Data security, privacy and cybersecurity’ received higher scores while the issue of ‘Socially responsible investment policy’ received lower scores. 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
A new materiality analysis was conducted in 2021 at an early stage in the reporting process. On the one hand the relevance of various issues was assessed from the point of view of the various stakeholder groups, and on the other hand the impact these issues have on the company was analysed in an internal assessment.
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. We investigated which current social issues could be relevant for Alliander using information derived from various sources and trend research. This led to some modifications to the list of issues compared to previous financial years.
Relevance to stakeholders
The relevance of the issues from the stakeholders’ perspective was determined by means of a digital questionnaire sent to a representative group of stakeholder representatives. Respondents returned their completed questionnaires and a number of qualitative interviews were conducted. This gave a representative picture of the material issues for our stakeholders. The result is a summary prioritising the issues having the most relevant impact from the point of view of the stakeholders.
Impact on Alliander
The extent and the impact of the issues were then determined by means of an impact assessment carried out previously. (The weighting factored in the materiality score from the preceding financial year.) 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. The information was collated to produce a draft materiality matrix. The outcomes of the questionnaire among stakeholders and the materiality matrix were discussed internally and made available to the Management Board. One of the conclusions was that the issues stakeholders considered important largely match the most important challenges Alliander is addressing.
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 linked to the GRI guidelines. This summary guides the composition of the information contained in this annual report. Alliander also has company-related indicators in place, which are likewise linked to the GRI information.
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 issues 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. Use was made of a data request (standard listing) for the quantitative data, which is part of the regularly scheduled internal data request. Wherever possible, this information is drawn from Alliander’s existing 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 is reviewed internally for the reporting process.
Restatements and mutations
The following topics in our social impact report have changed compared to our 2020 annual report.
Energy and CO2 data
We calculate the CO2 footprint, the energy usage during the year under review and the transmitted energy volumes based on actual data for transmitted energy volumes and accurate estimates. The electricity labels and the associated CO2 coefficients of the previous calendar year are also used. Adjustments are then made to the multi-year review, based on final data.
Reference: appendix, Other non-financial data - Energy and CO2.
Impact data
The attribution values were redetermined for 2021 using a revised method, which is explained in the Impact Analysis Accountability document included with this annual report. For comparison purposes the 2020 impacts have been recalculated using the 2021 attribution values.
Reference: appendix, Impact Analysis Accountability document.
Circularity KPI
The stated percentage of circularly sourced materials is calculated based on an updated method. The percentages submitted by the suppliers were assessed against validated recycled and recyclable percentages per material type. When raw material passports are used, the circularly sourced material is assessed at 40%. The combination of the updated method and market circumstances has led to a lower reported result. Reference: Objectives and performance table – Making the energy supply and our organisation sustainable.