This integrated annual report describes TenneT's operational, financial and social performance in 2016. Stakeholder interests are crucial in defining the reporting scope, reflecting the importance of our role for the security of electricity supply in the Netherlands and Germany.
TenneT's integrated annual report 2015 was published 3 March 2016 and is available online.
We use the Integrated Reporting (IR) framework, as defined by the International Integrating Reporting Council (IIRC), as a basis for preparing this integrated report. This serves as an 'umbrella' for the report and allows us to be transparent about our impact as an organisation. The financial information in this report has been prepared in accordance with IFRS, as adopted by EU and complies with Title 9 of Book 2 of the Dutch Civil Code. The non-financial qualitative and quantitative information has been prepared In accordance with sustainability guidelines defined by the Global Reporting Initiative version 4 Core (GRI G4 core) and the sector supplement for our industry (G4 sector disclosures - electric utilities). The GRI table, as included on our corporate website, shows which GRI aspects are material to TenneT and refers to the section in the report that describes this aspect. Furthermore, and in accordance with the policy on state-owned companies ('Nota Deelnemingenbeleid Rijksoverheid 2013'), TenneT complies with the Dutch Corporate Governance Code, which is laid down in the Corporate Governance section of this report. Furthermore, our Integrated Annual Report complies with the European Directive on disclosure of non-financial and diversity information, which will become mandatory for our company starting with our annual report 2017.
This report is also an update on how we implement the 10 principles of the UNGC. We have endorsed these principles since 2015, not only to show her own commitment, but also to drive CSR performance in the value chain. The UNGC principles are the basis of our TenneT supplier code of conduct and mandatory for all suppliers. Suppliers that do not meet our standards, observed during a factory audit, are disqualified from our tender procedures.
Recently, the UN launched new Sustainable Development Goals (SDGs), which are world-wide accepted goals to drive sustainability. We have decided to combine our progress on the UNGC principles and our contribution to the SDG's in one overview. You can find this overview, as well the GRI table online on the CSR section our website.
Stakeholders and materiality
In accordance with the applied reporting principles, this integrated report only covers topics considered material to our organisation. TenneT uses the materiality principle to determine which subjects are included in the report and what activities of TenneT and its supply chain are taken into account. Reference is made to our corporate website (www.tennet.eu), where information that was not considered material for annual integrated reporting purposes can be found. We defined the material topics based on stakeholder interviews, combined with our own assessment of the economic, environmental and social impact. The outcome of this assessment can be found in the 'Stakeholder dialogue' chapter.
The fact that we report on selected topics does not mean we do not manage aspects that are not considered material to our business. Our activities and CSR policy are broader and are not limited to the outcome of the materiality analysis. For more detailed information go to the CSR section our website.
Data collection process
This integrated report covers the full year 2016 (i.e. 1 January 2016 to 31 December 2016). This includes all activities of TenneT and subsidiaries in which it holds a controlling interest (in general >50% voting interest). For example, our 50% share in BritNed and thus BritNed's activities are not included in our results. In 2016, we had no significant acquisitions or divestments that had impact on our non-financial data reporting. A complete overview of all the entities consolidated in this Integrated Annual Report can be found in disclosure note 7.4 of the consolidated financial statements.
For the majority of our figures our reporting focus is within our own operations, although we do take some aspects of the value chain into account in our carbon footprint and the LTIF. We recognise that reporting outside our gate (so called "value chain reporting"), provides a better overview of our impact. We therefore will investigate how we can take a next step of including additional value chain data in our carbon footprint next year. The reported data is obtained from financial and non-financial data management systems in our own operations. TenneT's Executive Board and senior management contributed to the report content and quantitative data. The key non-financial qualitative and quantitative data is included in the regular planning and control cycle and is reported internally at least once each quarter. The definitions and calculations used are disclosed in the 'abbreviations and definitions' section of this integrated report and in the CSR section of our corporate website.
The definitions and calculations used have been re-assessed based on, for instance, process improvements, further alignment within the Group and the materiality analysis. As a result, certain originally reported comparative figures have been re-classified to conform to the current year's presentation. In this report, we made a change to the scope of the numbers of employees, which is without the employees of Novec, also for the previous years.
The data for this report was measured. When no data was available, it was estimated. No uncertainties or inherent limitations to the data were identified as a result of measurement, estimation or calculation of data.
The financial statements included in this report are subject to independent external audit and TenneT's non-financial reporting is subject to an assurance review. These have both been conducted by our external auditor, EY Accountants LLP.
Management approach CSR
For TenneT, CSR covers a broad range of subjects, all aimed at creating a sustainable future for our internal and external stakeholders. Our CSR strategy covers three years, from 2015 to 2017 and therefore has not changed compared to last year. In 2017, we will work on our CSR mid-term plan for the period 2018-2021.
Based on input from stakeholders' and TenneT's own perspective, we identified four CSR pillars: markets, society, environment and employees. The material topics are categorised within these four pillars. The progress on each material topic is reported in the corresponding chapters of this annual report.
The CSR mid-term plan 2015-2017, discussed and agreed by the Executive Board and Supervisory Board, describes the ambition level for each material topic based on the CSR maturity ladder (defensive, responsible, strategic and transformative). To ensure progress each project defined in the CSR action plan 2016 is owned by a responsible senior manager and the CSR policy advisor, who reports to the senior manager Corporate Control. We have established a CSR board, which monitors progress on the CSR mid-term plan and advises the Executive Board on the integration of CSR into the business. The CSR board, which meets quarterly, is chaired by the CFO and includes senior managers from Asset Management, Large Projects, Communication, Public Affairs and Finance.
In 2016, the CSR board decided to take more responsibility with respect to commitment to nature, to have a pilot with solar panels on one of our substations and to include a true value pilot in our annual report. Additionally, since 2016 the CSR board plays a more significant role in the selection of projects included in our green financing portfolio.
It is TenneT's ambition to be among the best performing TSOs in CSR in Western Europe and we continuously look for innovations and opportunities to improve our CSR performance. We benchmark ourselves against our peers using external assessment processes, such as the Transparency Benchmark (NL), Oekom, Sustainalytics and Vigeo. Our ambition is to be within the top 25 of the Transparency Benchmark, which supports our ambition in CSR reporting and within the top 25% for the other ratings, which supports our ambition with respect to CSR substantive issues. In 2016 we almost reached our goals, we ended on position 26 in the Transparency Benchmark and took a strong position in the top 25% of the sustainability ratings.