2016 can be described as a year in which our CSR position became more visible. Our CO2 footprint improved sharply in 2016 and we celebrated the tenth anniversary of two of our CRS programmes: Step2work and the Alliander Foundation.
Areas of attention
Our CSR efforts are aimed at three areas of attention. First of all, Alliander wants to contribute towards the energy transition by giving all customers equal access to renewable energy. You can read more about this in the About Alliander and Customers chapters. In addition, as a large employer we can offer more than just work. A socially responsible company is an inclusive company where everyone gets a fair chance to reach their full potential. We actively manage diversity and inclusiveness in our HR policy, for example, in recruitment and selection, training and development. You can read more about this in the Employees chapter. Finally, Alliander has ambitious targets for climate-neutral and circular operations including working with partners in our supply chains. In 2016, no explicit changes have occured in the CSR policy of Alliander.
Climate-neutral operations in 2023
Alliander had a substantial CO2 footprint totalling 797 kilotonnes in 2016, although CO2 emissions fell by 110 kilotonnes during the year compared with the year before, representing a reduction of some 12%. The effect of our greening policy became clear for the first time, but it was less clear as a result of changes in our service area and renovations and relocations. Our ambition is to be fully climate-neutral by 2023; in other words Alliander will have zero CO2 emissions on balance in 2023 as a result of our network activities, offices and vehicles. Our programme on reducing and greening our CO2 emissions is moving us step by step toward more sustainable operations.
Emissions from network and leakage losses
95% of our emissions are caused by network and leakage losses that arise mainly from the distribution of electricity and gas. Network losses cost us some €60 million in 2016 and can only be mitigated to a limited extent. Nevertheless, we are working to reduce our technical and administrative network losses each year.
In 2016, the volume of technical network losses grew by some 4% in absolute terms. The main reason for this was that, with a growing economy, more energy is being distributed. We are also reporting on a larger distribution area (now including Friesland and the Noordoostpolder). The reduction programme for technical network losses is being pursued as diligently as ever and focuses on measures for savings at our stations and better day-to-day management of the network. In addition, each year we are replacing grey cast-iron gas pipes at various locations for safety reasons and to reduce gas leakages. The effect of this programme is a reduction of some 3% by 2020.
Our administrative network losses grew by 6%. Administrative network losses arise in part from fraud (e.g. illegal cannabis growing). We rely partly on the police and judiciary, with whom we work closely, to give us active and focused assistance in our efforts to fight fraud. The digitisation of our networks is supporting the fight against energy fraud.
Greening network losses with renewable energy
Alliander is greening its network losses by generating additional renewable energy in the Netherlands. We have made a deliberate decision to shift the purchase of energy to meet our network losses to energy from new investments in renewable sources in the Netherlands. This will allow us to ensure that our network losses are low-carbon and we will be supporting the objective of renewable energy generation. In 2016 we greened some 13% of our total network losses, representing a reduction of about 80 kilotonnes .
Vehicle and buildings emissions
We have made the energy usage at a number of offices significantly more sustainable. By redeveloping and concentrating activities at the sustainable office building in Duiven in 2015 and the now energy-neutral head office in Bellevue in Arnhem, our energy consumption has fallen. The concentration of activities and reduction in the number of offices in our distribution area combined with the new way of working will also lead to lower energy consumption. 2016 was a year of transition with much relocation and renovation activity. We expect to see the effect of our changes in location in 2017. Our CO2 emissions rose by 2% compared with 2015.
We were able to reduce vehicle emissions by 2% in 2016. During the year we invested mainly in a more efficient vehicle fleet: most of our vans have been fitted with speed limiters (Ecodrive) and the initial results are positive. The stricter CO2 criterion for our lease cars (maximum of 110 g/km) is producing the first visible effects.
CO2 emissions of Alliander
Some of the energy-saving installations in the building will take a couple of years to settle down. In the second year we managed to meet 80% of the energy needs in Duiven with 1.1 million kWh of sustainable energy. We are aiming for a positive energy balance in 2017.
Supply chain emissions
Alliander’s activities indirectly create carbon emissions in the energy chain and when obtaining goods and services we purchase. Our supply chain emissions (scope 3) were determined using a more extensive method and served to help us make good sustainable arrangements with our suppliers. The total supply chain emissions were calculated at about 111 tonnes.
The highest step on the CO2 performance ladder
Our CO2 approach and methodology were externally assessed on the basis of the CO2 performance ladder. Certification on the CO2 performance ladder provides proof of insight into the company's own footprint (level 1), the possible reduction measures (level 2) and the competence to actually implement these measures (level 3), make insights transparent (level 4) and initiate innovations with supply chain partners (level 5). The CO2 performance ladder is often used as a tender award criterion.
A renewed assessment in 2016 saw Alliander maintain level 5 on the ladder. This means that we know the CO2 emissions of our A-suppliers, have achieved the level 3 and 4 objectives, and are publicly committed to the government's CO2 reduction programme. We are proud of this step but to retain our excellent position on the CO2 performance ladder we must continue mobilising and challenging our suppliers to reduce emissions throughout the supply chain.
Supply chain responsibility with partners
We achieve a considerable part of our CSR performance by the way we do business. Our Socially Responsible Procurement policy addresses the three sustainability pillars: circularity, CO2 and labour participation and by fostering corporate social responsibility in the chains in which we are primarily involved by virtue of the money we spend.
A sustainable relationship with our suppliers
With an annual procurement volume of about €902 million, we are a major purchaser of products and services in the Netherlands. Together with our suppliers, we can make a major contribution to sustainability. Sustainable procurement is an integral part of our tender invitation/evaluation criteria. Our outsourcing policy incorporates provisions relating to working conditions, use of raw materials, recycling and/or CO2 emissions. All suppliers contracted by Alliander are required to commit to the ‘Alliander Suppliers Code of Conduct.’ Under this code, which is based on OECD guidelines, our suppliers (and their suppliers and manufacturers) must adhere to ethical and fair business practices. Infringements of the code can lead to sanctions, such as termination of the contract or temporary suspension of work with or without notice of default. Regular audits are conducted in which compliance with the Code is discussed. Compliance chain aspects and monitoring of possible discussion points are part of the audit reports. If we work with companies in low-wage countries, we conduct risk-based audits of these suppliers. In 2016, no audits have been carried out.
In addition to the Code of Conduct, 71% of our goods and services were purchased on the basis of Socially Responsible Procurement (SRP) statements in 2016 (2015: 66%). This supports our circular procurement objective in the Netherlands and enables us to further streamline sustainability at our suppliers. With the SRP statements we encourage suppliers to employ people at a distance from the labour market to work on our products and services. We ask suppliers with whom we do not have a SRP statement to register on the FIRA Platform (www.fira.nl). These suppliers are requested to share their own sustainability results on the FIRA platform. FIRA assures the quality of the information supplied. The platform brings parties together and gives us more insight into the sustainability performance of suppliers. FIRA prepares its reports in conformity with the international CSR standard: ISO 26000. Registration gives the supplier insight into sustainability performance and ambitions. We ask that our suppliers are at least at BRONZE level.
As a network operator, we use large quantities of materials and consumables. We have a responsibility to do the best we can in meeting our materials needs and so we are aiming to make circular purchases of at least 40% of the technical materials by 2020. This means that all raw materials we use are recycled and nothing is wasted. To do this, our management focus is along four lines:
We make the best possible use of the materials we have
Where possible we make circular purchases of our main materials
We avoid wasting materials in our operations
We recycle 100% of the remaining waste
Circular procurement demands intensive co-operation with our suppliers. Underlining our commitment to this policy, we became one of the first 20 signatories of the Circular Procurement Green Deal. The aim of this Green Deal is to learn from each other's experiences by starting up circular procurement processes and to speed up circular purchasing. The more than 60 participants have a great deal of knowledge and experience. Alliander makes a major contribution to these objectives, involving such things as protective clothing, transformers, redeveloping office space, coffee cups, furniture and fair meters. In 2016, we integrated circular procurement into our purchasing processes. Each quarter we report on the percentages of circular procurement and recycling. There is a clear roadmap for achieving our targets. The percentage of circular procurement is still very small because of the lack of reliable data from our suppliers. Implementing a raw materials or goods passport, therefore, has the highest priority for 2017.
In addition to our own activities, we are permanently exploring opportunities for cooperation in sustainability with other infrastructure managers. Alliander is an initiator of the Green Networks platform consisting of eight national infrastructure managers and which is working to create a climate-neutral and circular national infrastructure sector.
In 2016 the partners in the Green Networks (Alliander, Enexis, Gasunie, ProRail, KPN, Stedin, TenneT and Rijkswaterstaat) signed a mission statement for climate-neutral and circular infrastructure. It expresses their wish to cooperate intensively on energy saving, circular materials usage and the use of renewable energy for constructing, managing and maintaining our infrastructure.
Cooperation with the government
In 2016, Alliander joined the Ministry of Infrastructure and Environment’s programme Nederland Circulair! which includes a group of parties such as Evides, Wavin, Prysmian, Waternet, Brabant Water, MVO Nederland, Thermaflex, Van Gansewinkel, TKF and Sita cooperating in three areas.
Developing innovative approaches that lead to improvements in various links in the chain and to optimizing solutions, for example with greater scope for alternatives in tenders.
Setting up returns logistics to keep valuable raw materials within the chain.
Designing and implementing according to circular principles, such as using cables produced with recycled materials that are designed to have another use at the end of their lives.
Outlook for 2017
As all the key steps in our ambitious programmes are in place, we will again be making major progress towards climate-neutral and circular operations in 2017. With respect to CO2, additional attention will be given to vehicle emissions, with new policies and by moving in a sustainable direction with our employees. Our greening will be ramped up. In addition we will work closely with our suppliers to raise the level of knowledge of circular materials usage in the supply chain and to improve our combined procurement performance.