Opinion of the Alliander stakeholder panel
As in previous years, Alliander convened a stakeholder panel to review its annual report. We are pleased to have been given this opportunity to use our expertise and backgrounds to provide feedback on the draft annual report at an early stage, which we believe will enable Alliander to gear the report more closely to the wishes and needs of the stakeholders and society in general.
Alliander’s role in the energy transition
During our discussions, we were given an extensive introduction to the most significant challenges facing Alliander, after which we spoke at length about the challenging role Alliander has in facilitating the energy transition. Alliander is an organisation with a complex task to perform. The Netherlands is in transition, the energy system is in transition and so is Alliander. Developments in the outside world have put energy at the forefront of everyone’s mind. But to make the energy transition a success, investments in the networks alone are not enough; we are well aware that a different perspective, a more flexible system and more flexible behaviour are also needed. Alliander has a major, changing and increasingly proactive role to play in this societal issue. Alongside all the fine ambitions to accelerate the process, we feel we should point out that customers currently want to go faster than the system can deliver. We are curious to know where Alliander wants to go with this, which concrete steps will be taken, and what this means for customers and the speed of the energy transition.
Clarifying the cost of the energy transition to society will help in this regard. This is already happening at the local and provincial levels, but not always nationally. No actor has stepped up at the macro level. We understand that this is a role which up to now has been far removed from the network operators’ day-to-day activities, but who else should do it? The discussion about this and the draft report make it clear that Alliander and the other network operators are increasingly taking on this role and are having more of an impact. We are pleased to see this.
The information in the draft report provides very extensive information about developments, activities, results and challenges. Nonetheless, we would like to see a change of perspective in the tone: there is much talk of bottlenecks and difficulties, but they often also provide a unique opportunity, no matter how complex it may be. In this sense, 2022 was also the year of the mandate and of opportunities. We have read about the internal solutions-oriented mindset in the draft report: “How can it be done?” Our challenge to Alliander is to describe the themes in its annual report more from that perspective and to be more proactive in setting the course. Customers, suppliers and public authorities want to hear from network operators how they see the energy system in 2030, 2040 and 2050. This could be something to reflect on in the annual report.
The role of sustainability and impact in the annual report
Apart from discussing Alliander’s role, we also talked specifically about the sustainability of activities and the organisation’s impact on society. For many years, Alliander has been one of the frontrunners when it comes to measuring and reporting on the ESG impact. The common terminology and CO2 price the Dutch infrastructure operators have developed for this is something we very much welcome. In the view of the panel, impact deserves to be linked more explicitly with the other topics. The annual report will gain cogency if the monetised impact of activities is included in the account from the beginning. And certainly if Alliander can demonstrate that it promotes value creation and that thinking in terms of value is embedded in the organisation.
The information about EU taxonomy is too technical and is still too isolated. Because this is the first time it is being reported, some context would be helpful to explain the EU taxonomy, its purpose, and why Alliander sees it as a useful way of creating a ‘consistent’ European language for sustainability. Who is Alliander writing this report for? It would be better to demonstrate how Alliander – on the basis of its evolving role – complies with EU taxonomy, how it has value for society and what its vision is. This would make the report an exciting, comprehensive story.
Another thing the panel feels is missing in the report is the theme of a ‘Just Transition’ and the social consequences the energy transition will have for those at the bottom of the economic ladder in society. This ties in with the alleged differences between urban and rural communities. We are aware that Alliander’s room for manoeuvre is limited here, but we recommend broadly keeping it on the agenda. It would also be good to see how the ESG governance at Alliander has worked. Furthermore, the stakeholder panel is interested in how the ESG governance is set up.
Other recommendations from the panel
Use visual elements in reporting
We recommend guiding readers of the report through Alliander’s narrative. The reading guide at the beginning of the report contains technical information which does not help in this regard. Consider moving these texts to an appendix. The report would benefit from more visual elements in other sections: the panel would like to see more images and stories in the report.
Focus on diversity
The stakeholder panel feels that the focus on diversity – the key to being future-proof – could be more comprehensive and more refined. This could be done through photos, but also by additionally embracing SDG 5: Gender Equality.
Doing more than is compulsory
We appreciate the steps Alliander is taking to make the report more transparent, but the information is still defensive on a number of points. An example of this is the way Scope 3 supply chain emissions are reported. Stakeholders, and investors in particular, would prefer to know where you go further than what is required by the legislator. What is your vision and what is compulsory?
Significance of results
Alliander reports many results of activities, but it is often unclear what these results signify. Is the organisation on course? Are things going better than expected? Why did something succeed or why did it not? The relationship between results, objectives and activities could be more explicit. Make sure that figures are in line with what your partners and those in the sector communicate. These vary in some places.
Like last year, the stakeholder panel took time to reflect on a number of Alliander’s dilemmas. We recognise and endorse the topics discussed, which make it abundantly clear what a difficult role Alliander has to play and how limited its influence is in the regulated domain. This does not detract from the fact that we question whether some of what is presented is actually a dilemma. Although information is given on the issue of the ‘copper plate principle’, we expect the organisation to take a more persuasive position and consider the consequences of such a position in relation to the organisation’s objectives. We advise Alliander to let the details of the dilemmas speak for themselves.
A final word
Alliander’s reporting is of a high quality, as confirmed by its top-three listing for the Financieel Dagblad’s Sijthoff Prize last year. We hope that our contribution will help to retain this high level of transparency. We would like to thank Alliander for its positive attitude towards its stakeholders, for giving us the opportunity to give meaningful feedback on the draft version of the annual report and for the substantive dialogue with the Management Board.
On behalf of the stakeholder panel,
Anne-Jaap Deinum – Director of Federatie Elektrotechniek
Teresa Fogelberg – Sustainability leader, former deputy chief executive of GRI, Chair of Transparantie Benchmark, Impact Economy Foundation
Arthur Krebbers – Head of Corporate Climate & ESG Capital Markets, NatWest Markets
Harold Lever – Chair of research group Underground Networks, Bouwend Nederland
Harriët Tiemens – Director of Groene Metropoolregio Arnhem-Nijmegen
Yelly Weidenaar – Director of Talent naar de Top
The stakeholder panel
The stakeholder panel that assists us with the annual report forms part of our ongoing stakeholder dialogue. We shared a draft version of the 2022 annual report with the panel members in December. It was discussed during an online meeting held on 19 December 2022, attended by the CFO Walter Bien and the CTO Daan Schut. The feedback was used to improve this report, and will also serve to further enhance the quality of our reporting. The stakeholder panel is independent. Perhaps you, too, would like to talk to us about the annual report or the issues confronting Alliander. We are open to dialogue and also regularly organise roundtable sessions with our stakeholders. Please contact us on email@example.com.
Response from the Management Board
We have taken note of all the stakeholder panel’s reflections with great interest and have accordingly made alterations in a number of regards in the annual report.
Role of the energy system
Alliander aspires to be a co-designer of the energy system. As a public partner with vast knowledge of the energy system, we are well positioned to arrive at a timely and optimal organisation of the energy system in conjunction with our stakeholders. This cannot be done from a blueprint, but requires a vision of the contours of the energy system. In conjunction with the industry, we are for example looking regionally at which transition paths are possible and which of these are optimal, suboptimal or even very undesirable from an energy system perspective.
The extent to which Alliander complies with the taxonomy is described in great detail in the section headed ‘Creditworthy company’. The observation that we as Alliander could do more to integrate the new taxonomy is correct. We believe that it is a powerful instrument provided by the European Commission to steer the debate in society about the grey and the green economy. We have enhanced the information on the EU taxonomy. A considerable proportion of our investments is directly related to the energy transition, and these investments are increasing substantially in time and volume.
Social impact of the energy transition
The social effects of the energy transition have our constant attention. We see that they are a consequence of choices mostly made at the national and regional levels. Alliander is in favour of a just and inclusive energy transition, and we will explain how we fulfil our own responsibilities in this regard in more detail in 2023. We focus attention on energy poverty when discussing the topic of access to energy and in the section on impact.
The report has accordingly been improved in a number of places. We have added a few examples to the impact section by depicting specific information in the form of charts, such as the impact of circular procurement. We have also added visual elements to the section on the EU taxonomy to show the extent to which we comply with it.
We have reported more extensively on diversity than we did last year. We are aware that this information is still incommensurate with the effort we put in. We will take this on board for the 2023 reporting year. We will also investigate the suggestion about SDG 5.
Supply chain emissions
We are glad to hear that the stakeholder panel categorises Alliander as a pioneer when it comes to transparency. In our view, the norm is dictated not by the law, but by those things we consider to be appropriate for society or which should be solved or prevented. This is the reason why we have been voluntarily reporting on our impact on society since 2016. The stakeholder panel finds that we still have some way to go in terms of our scope 3 CO2 emissions. We have been reporting on this in detail in our annual report since 2021 and in 2023 we will work hard to find an appropriate pathway to reduce these emissions. This opens the door to closer involvement with the Science Based Target initiative.
We believe that we are explicit about what our goals and results are in our table of objectives and performance. In addition, every value creation section starts with a summary of the relevant indicators. We consider bottlenecks and setbacks in the section on dilemmas and lessons learned.