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About this report

Scope of this report

The scope of this report is TenneT B.V. and the subsidiaries in which it has a controlling interest (generally speaking a voting interest of over 50%). For example, our 50% stake in BritNed and BritNed’s activities are not included in our results. This integrated report covers the full year 2018, i.e. 1 January 2018 to 31 December 2018. TenneT’s Integrated Annual Report 2018 was published on 21 February 2019 and is available online.

The 2017 Annual Report was published on 23 February 2018.

In 2018, there were no significant acquisitions or divestments impacting our non-financial reporting. A complete overview of all the entities consolidated in this Integrated Annual Report can be found in note 7.4 of the consolidated financial statements. Our reporting policy in the event of acquisitions or divestments can be found in Notes to the consolidated financial statements, 5. Other invested capital including working capital and provisions for our financial performance. For non-financial performance we report acquisitions and divestments from the day of purchase or when an entity is sold respectively. We recognise that in the event of acquisitions, reporting improvements may be required which may result in data being estimated.

Reporting principles

Our non-financial qualitative and quantitative information is prepared according to the Global Reporting Initiative (GRI) Standards, following the in-accordance option: ‘Core’. We also adhere to the sector guidelines for our industry (G4 sector disclosures - electric utilities). For more information, refer to the reporting guidance document on our corporate website

The GRI context index, as included on our corporate website, shows which GRI aspects are material to TenneT and refers to those sections in the report describing this aspect. In addition, and in accordance with the policy on state-owned companies (Nota Deelnemingenbeleid Rijksoverheid 2013), TenneT complies with the Dutch Corporate Governance Code, as laid down in the Corporate Governance section of this report.

We have used the Integrated Reporting (IR) framework, as defined by the International Integrating Reporting Council (IIRC) as a basis for this integrated report. This allows us to be transparent about our impact as an organisation. The financial information in this report was prepared in accordance with IFRS, as adopted by the EU, and complies with Section 9 of Book 2 of the Dutch Civil Code.

Furthermore, our Integrated Annual Report complies with the EU directive on the disclosure of non-financial and diversity information, which was translated to Dutch legislation and is mandatory for annual reports from 2017 onwards.

This report is also a Communication on Progress, i.e. an update on how we implement the 10 principles of the United Nations Global Compact (UNGC). We have endorsed these principles since 2015, not just to underline our 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. New suppliers who do not meet our standards during factory audits, are disqualified from our tender procedures. Our Communication on Progress document can also be found on our website.

In 2015, the UN launched new Sustainable Development Goals (SDGs). These goals are accepted worldwide as driving sustainability. The section in our annual report on strategy performance describes our impact and the contribution we make to the SDGs that are most relevant to our business.

Stakeholders and materiality

In accordance with the applied reporting principles, this integrated report covers topics considered material to our organisation. TenneT uses the materiality principle to determine which subjects to include in the report and which activities and supply chain to take into account. Our corporate website (www.tennet.eu) includes additional information which was not considered material for integrated-reporting purposes. How we defined the material topics and the results of this assessment can be found in the materiality section. 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 of our website.

Scope and boundaries

The table below provides a clear overview of the material topics, their impact, our contribution and the boundaries. A detailed disclosure of our management approach on each material topic can be found in the CSR section of our website.

ReferenceWhy material?What is the impact?What is our role?What are the bounderies?Key Performance Indicators (KPIs)Targets/ambitionsUnit(s) responsible within organisation
Material topic
Security of supplySecure supplyOur main task is to ensure security of electricity supply to over 41 million people across the Netherlands and Germany.Electricity is the backbone of the economy of the countries we operate in.We are responsible for maintaining a balance between supply and demand; we operate and manage the high-voltage grid.We are responsible for transmission services. Production is the responsibility of producers, distribution lies with DSOs.Security of supply: uptime in % Amount of interruptions (#) Energy not transported (MWh)100% grid availabilityAsset Owner
Sustainable Grid InfrastructureSecure supply, Financial performanceWe need to invest in onshore and offshore grid infrastructure to realise the energy transition over the next ten years, which includes additional investments in underground DC cables in Germany following the German government's decision hereon. Therefore it is important to carefully make the right investment decisions and to manage them properly to be sure we are doing the right things.To finance our investments, we need to spend approximately EUR 35 billion in the coming ten years.We are responsible for realising the investment programme and living up to our stakeholders’ expectations.We are responsible for realising our investment portfolio. The investment programme is based on the task we are given by the Dutch and German governments.Capital expenditures (capex) on grid infrastructure / assets (in EUR million) Return on Investment (ROI): Benefits - Costs / CostsInvest EUR 35 billion in the period 2017-2027Strategic Investment Committee Supervisory Board
NWE Electricity MarketLead NWE IntegrationElectricity does not respect borders and a NWE market is necessary to ensure a reliable and sustainable grid.An integrated market drives price convergence and security of supply.TenneT is taking a lead role in integrating the electricity market in NWE to encourage cross-border connections and closer collaboration for the benefit of society, both now and in the future.Our responsibility is to our own grid and interconnections with neighbouring grids. Other European TSOs are responsible for their grid.Interconnection capacity (imported and exported volumes + number of cross-border interconnections) Price convergence (number of price areas + number of hours of price equality)A seamless cross-border energy market Realizing the North Sea Wind Power HubCustomer & Markets
Community engagementEngage stakeholdersIt is crucial we connect with local communities, NGOs and politicians at the earliest stage of a project to address their concerns and gain their understanding and acceptance.There is increasing public opposition to grid expansion, especially where new assets are concerned.To be honest, open and fair to all stakeholders involved.The decision to expand the grid is taken by the Dutch and German governments. Executing our work and explaining the necessity of it is our responsibility.Number of stakeholder meetings and public events (#) Customer satisfaction score Corporate reputation Stakeholder approach scoreLive up to our values (i.e. being responsible, engaged and connected) when addressing our stakeholders’ concernsCorporate Public Affairs (PAC) Corporate Communications (CMC)

For most of our figures, our reporting focus is on our own operations, although we do take some aspects of the value chain into account in our carbon footprint and LTIF. We recognise that reporting outside our gate (so-called ‘value chain reporting’) provides a better overview of our impact. We have therefore decided to include the impact of our offshore operations into our carbon footprint reporting.

EU Directive on Non-Financial and Diversity Information

Our annual report complies with the EU directive on non-financial reporting. The table below provides a clear overview of where the different aspects of this directive are reported.

A description of the policies pursued, including due dilligence.The outcome of those policies.Principle risks in own operations and within value chain.How risks are managed.Non-financial key performance indicators.
Topic
Relevant social and personnel maters (e.g. HR, safety etc.)Strategic performance, engage stakeholder Operational performance, non-financial, our people ambition Summary stakeholder activitiesStrategic performance, engage stakeholder Operational performance, non-financial, Our people ambitionStrategic performance, deliver stakeholder value, engage stakeholder Operational performance, non-financial, Our people ambitionStrategic performance, deliver stakeholder value, engage stakeholder Operational performance, non-financial, Our people ambitionStrategic performance, engage stakeholder Operational performance, non-financial, Our people ambition
Relevant Environmental maters (e.g. climate-related impacts)Operational performance, non-financial, Our planet ambitionOperational performance, non-financial, Our planet ambitionOperational performance, non-financial, Our planet ambitionOperational performance, non-financial, Our planet ambitionOperational performance, non-financial, Our planet ambition
Relevant matters with respect for human rights (e.g. labour protection)Operational performance, non-financial, Our impact on our supply chainOperational performance, non-financial, Our impact on our supply chainOperational performance, non-financial, Our impact on our supply chainOperational performance, non-financial, Our impact on our supply chainOperational performance, non-financial, Our impact on our supply chain
Relevant matters with respect to anti-corruption and briberyGovernance and risk management, Risk management and internal control, compliance and integrityGovernance and risk management, Risk management and internal control, compliance and integrityGovernance and risk management, Risk management and internal control, compliance and integrityGovernance and risk management, Risk management and internal control, compliance and integrityGovernance and risk management, Risk management and internal control, compliance and integrity
A description of the policies pursued.Diversity targetsDescription of how the policy is implementedResults of the diversity policy
Topic
Insight into the diversity (executive board and the supervisory board)Operational performance, non-financial, Our people ambition Supervisory Board report, Diversity and cultureOperational performance, non-financial, Our people ambition Supervisory Board report, Diversity and cultureOperational performance, non-financial, Our people ambition Supervisory Board report, Diversity and cultureOperational performance, non-financial, Our people ambition Supervisory Board report, Diversity and culture

Data collection process

The reported data is obtained from financial and non-financial data management systems in our own operations, such as IFS and SAP for financial and HR data, Mecoms for our electricity transport data, and iTask for our safety data. The key non-financial qualitative and quantitative data is included in the regular planning and control cycles and reported internally at least once a quarter by the Business Control department which performs a check on the quality and reliability of the data. TenneT’s Executive Board and senior management contribute to the context of the report and the quantitative data.

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 were re-assessed based on such things as process improvements, further alignment within the group and the materiality analysis. As a result, certain originally reported comparative figures were re-classified to conform to the current year’s presentation.

The data for this report was measured, and where no data was available, it was estimated. An example of this is the energy use at some of our smaller offices. No uncertainties or inherent limitations to the data were identified due to the measurement, estimation or calculation of data.

External assurance

The financial statements included in this report are subject to an independent external audit and TenneT’s non-financial reporting is subject to a limited assurance review. These were both conducted by our external auditor, EY Accountants LLP. Reliable data is essential in our dialogue with stakeholders, so we decided to have our non-financial data reviewed by an external accountant. We have requested EY to review Integrated Annual Report chapters 'At a Glance', 'Letter from the CEO', 'About TenneT' and 'Our Performance in 2018' (excluding ‘Operational performance: Financial’ and ‘Statements of the Executive Board’) in accordance with the GRI Standards and audit the financial statements in accordance with IFRS and Section 9 of Book 2 of the Dutch Civil Code.

Governance of CSR

For TenneT, CSR covers a broad range of subjects, all aimed at creating a sustainable future for our internal and external stakeholders. In 2018, we have adopted a CSR Ambition plan 2025, focusing on three main areas with clear ambitions we aim to achieve by 2025. Priorities and targets have been set as well as key performance indicators. For some areas we are currently developing new or updating key performance indicators. In 2018, we have expanded our CSR organisation within TenneT. We have embedded the CSR role within the Asset Owner department to increase our efforts from a policy side, whilst keeping the CSR reporting role within the finance organisation.

Progress on CSR policy and actions are tracked every quarter in the CSR board. We have established a this board to monitor progress on the CSR Ambition plan and advise the Executive Board on the integration of CSR into the business. The CSR board, is chaired by the CSR manager and includes the CEO, CFO and senior managers from Asset Management, Large Projects, Communication, Public Affairs and Finance. It is TenneT's ambition to be one of the best-performing TSOs in CSR in Western Europe and as such 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 Netherlands Transparency Benchmark, ISS-Oekom, Sustainalytics and Vigeo. Our ambition is to be in the top 25 of the Transparency Benchmark and within the top 25% for the other ratings. This supports our defined ambitions in CSR reporting and CSR substantive issues, respectively