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Energy and Utilities Industry Insights
Part 3: Identifying material aspects for your sustainability plan
December 2013
Specific standard disclosures
As discussed in our previous article, there are two options to sustainability reporting under the G4 Sustainability Reporting Guidelines, core and
comprehensive. Our last article discussed the different “in accordance” options and the reporting variances between the two options for general and specific standard disclosures. The requirements to be reported under general standard disclosures are fairly straightforward compared to specific standard disclosures due to the material aspects focus of specific standard disclosures. The concept of materiality is the same for sustainability reporting as for financial reporting purposes: The question is “what is significant that would influence the decision of a reasonable stakeholder in a sustainability report?” This article focuses on some tools that are available to help determine which sustainability topics would be considered material to your organization. Material aspects and indicators
Specific standard disclosures are organized in three different categories: economic, environmental, and social. The social category is further
broken down into four subcategories: labor practices; human rights; society; and product responsibility. Each category / subcategory contains a list of aspects which are covered by the Guidelines. An independent member of Baker Tilly International Energy and Utilities Industry Insights
> Economic performance
> Market presence
> Procurement practices
> Materials
> Effluents and waste
> Products and services
> Compliance
> Employment in the labor practices and decent work subcategory
> Investment under the human rights subcategory
> Local communities under the society subcategory
> Customer health and safety under the product responsibility subcategory
The aspects to be reported under specific standard disclosures vary based on the ”in accordance” option being used to prepare the report. The following table from the Guidelines illustrates the aspects that should be reported on under each option: Specific standard disclosure
‘In accordance’ – core
‘In accordance’ - comprehensive
Generic disclosures on management
approach
Indicators
All indicators related to each identified What the utility industry is doing
Depending on the type of organization, there are a significant number of disclosures that could be considered material aspects. The Sustainabil-
ity Disclosure Database contains thousands of sustainability reports which can be filtered in order to find reports from similar organizations and in similar regions. It also contains a catalog of benchmarks which lists the categories that could be reported and the percentage of reports that fully, partially, or do not disclose that specific topic. Sector types include energy, energy utilities, and water utilities. This database can be found at: http://database.globalreporting.org/ This database includes sustainability reports from Duke Energy, Exelon Corporation, and Pacific Gas &Electric, which are some of the largest electric utilities in the United States, as well as Guelph Hyrdo Electric Systems, Inc. and Hyrdo Quebec, located in Canada. An independent member of Baker Tilly International Energy and Utilities Industry Insights
Guelph Hydro Electric Systems, Inc. published their first sustainability report in 2011, which was the runner-up in the small and medium sized enterprise (SME) Global Award Program that recognizes excellence in corporate responsibility reporting. If your organization is looking for ideas about how to start defining material aspects, Guelph Hydro’s Sustainability Report offers some very good examples on what to disclose and how to present those disclosures. Some of these include: > Economic aspects reported included financial and operational performance. Most of this information reported in this area is most likely
already included in the annual financial report, including revenues generated, operating costs, donations and community investments, partici- pation in defined benefit plans, market presence, development of infrastructure assets, and demand-side management programs.
> Environmental aspects reported covered areas such as energy and water use, biodiversity, emissions, effluents and waste, as well as com-
pliance and transport. The material aspects reported in these categories by Guelph Hyrdo include direct and indirect energy consumption by primary source, energy saved due to conservation and efficiency improvements, initiatives to provide energy-efficient or renewable energy products and services, and greenhouse gas emissions. Disclosures also include the reductions achieved in each area.
> Many of the disclosures of social aspects included training programs for employees. Training ensures a skilled workforce trained in human
rights and anti-corruption policies. Other material social aspects disclosed include policies for assessing products and services for improve- ment, customer satisfaction practices, and access of electricity to customers, including the number of disconnections, outages, and the Many of the disclosures made in sustainability reports are required to be reported either in the financial statements or by other regulatory agen- cies. Gathering this information and putting it into a sustainability report provides more transparency and demonstrates to the stakeholders of your organization commitment not only to the sustainability impacts on the environment by your organization, but also the commitment to your How can Baker Tilly help your organization?
Defining material aspects may be the most difficult aspect for any organization preparing a sustainability report, especially for the first time.
As with any such initiative, using a trusted advisor to provide insights into establishing and reviewing the framework will provide assurance to both internal preparers and readers of the reporting and to external stakeholders that they can rely on the reporting and that the metrics will be beneficial in advancing your organization’s implementation strategy.
For further information, contact Russ Hissom (608 240 2361) or Megan Decker (608 240 2527). An independent member of Baker Tilly International Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party. Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought.

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