POWERING CHANGE SSE PLC SUSTAINABILITY REPORT 2021
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POWERING CHANGE SSE PLC SUSTAINABILITY REPORT 2021
THE YEAR IN NUMBERS
SSE has the largest renewable electricity portfolio in the UK ABSOLUTE EMISSIONS RENEWABLES IN CONSTRUCTION
and Ireland, providing energy needed today while building (SCOPE 1 AND 2) AND OPERATION Coronavirus statement
a better world of energy for tomorrow. It develops, builds,
operates and invests in low-carbon infrastructure in 7.6MtCO2e 5.8GW The report covers the first full
year of operations within the
constraints of the coronavirus
support of the transition to net-zero, including onshore pandemic. Thanks to a highly
and offshore wind, hydro power, electricity transmission RENEWABLES CONNECTED TO SSEN MEDIAN GENDER PAY GAP (UK) resilient business model and the
TRANSMISSION’S NETWORK AND OPERATION commitment and flexibility of
and distribution networks, alongside providing energy
6.7GW 18.3%
its employees, SSE maintained
products and services to customers. the safe and reliable supply of
electricity throughout the year
and did not draw on furlough or
UK-listed and headquartered in Perth, SSE is a major
rates relief in doing so. Further
contributor to the economies in the UK and Ireland. It NUMBER OF SAFE DAYS RENEWABLES COMMUNITY FUNDS detail of SSE’s response to the
AND OPERATION
employs more than 10,000 people and is real Living Wage
271
coronavirus outbreak can be
£10.2m
found on sse.com/coronavirus
and Fair Tax Mark accredited. and throughout this report.
This Sustainability Report for the period 1 April 2020 to
UK/IRELAND TAXES PAID
31 March 2021 aims to provide enhanced disclosure of
SSE’s policies, practice and performance against its key
economic, social and environmental impacts and goals. £379m/€20.4m
On occasion the report refers to activities of joint ventures
and in these instances it is made clear this is the case. UK/IRELAND ECONOMIC CONTRIBUTION
£5.2bn/€439m
Stories in action
Throughout this report, SSE’s sustainability policies, practice and performance Contents
are brought to life through stories in action identified with the following icons: POWERING
SSE PLC ANNUAL REPORT 2021 For a better world of energy
CHIEF EXECUTIVE’S STATEMENT 3
CHANGE
SSE PLC ANNUAL REPORT 2021
SSE’S BUSINESS MODEL 4
STRUCTURED SUSTAINABILTY GOVERNANCE 9
IDENTIFYING MATERIAL ISSUES 10
Engagement Innovation Partnering Dilemma TAKING MEANINGFUL CLIMATE ACTION 18
in action in action in action
CLIMATE-RELATED FINANCIAL DISCLOSURE 26
Alternative Performance Measures PROTECTING THE NATURAL ENVIRONMENT 36
SSE assesses the performance of the Group using a variety of performance PROVIDING AFFORDABLE AND CLEAN ENERGY 42
measures. These measures are not all defined under IFRS and are therefore
INVESTING IN INDUSTRY, INNOVATION AND INFRASTRUCTURE 52
termed ‘non-GAAP’ measures. A reconciliation from these non-GAAP
measures to the nearest prepared measure in accordance with IFRS is DELIVERING A JUST TRANSITION TO NET ZERO 66
presented and described on pages 172 to 177 of the Annual Report 2021. The SSE plc Sustainability Report 2021 is COMMITTED TO DECENT WORK AND ECONOMIC GROWTH 70
The alternative performance measures SSE uses might not be directly complemented by SSE’s Annual Report 2021
comparable with similarly titled measures used by other companies. DATA AND PERFORMANCE 94
which can be found online at sse.com.
Our cover: Jasmine Allen emerges from the nacelle of one of the turbines at Greater
Gabbard wind farm, 12 miles off the coast of Suffolk. Jasmine, 21, is an apprentice in SSE
Renewables and featured in SSE’s 2021 brand campaign in the lead-up to COP26.
SSE plc Sustainability Report 2021 1
SUSTAINABILITY REPORT
CHIEF EXECUTIVE’S STATEMENT
POWERING
SUSTAINABLE CHANGE
“Our vision is to be a leading energy company in a net zero
projects over and above the base case that
will be key to delivering net zero.
With
world. Our core renewables and networks businesses,
all eyes on COP26 in Glasgow later this year, SSE is
And we are engaging as well as our complementary businesses in thermal,
focused on the practical
with stakeholders on ED2… and positive action required to
build
If we areafully
nettozero carbon
decarbonise distributed energy and customer solutions, all have
economy.
our economy
by 2050, this will require both a significant
increase in electricity demand and a
important roles to play in delivering that vision.”
fundamental shift in the way it is consumed
Theascoronavirus
millions more pandemic
electric vehicles, and
net storage
zero infrastructure.
world, our businessExamples of this
strategy sale of our stake
sustainability in SGN constant
requires set to be our
andnext
hundreds of powerfully
demonstrated thousands of heat
the pumps
nature can be seen in Aberdeenshire
deliberately reflects our objectiveand in the material disposal (see page 16 ).
creative innovation. The potential of
andinterconnected
of our embedded generation worldandandstorage toHumber where,simultaneously
create value with Equinor, wefor
have plans greater digitalisation in our industry
the come onto the
importance ofsystem in the coming
co-ordinated and years. to jointly develop pioneering power stations
shareholders and society. What we
enables usdo mattersmore,
to achieve and for less.
That means distribution networks have with CCS technology, and what could be we’re privileged to do it…
collaborative action across borders. Innovation can also provide answers to
a critical role to play and the next price the world’s first major 100% hydrogen- Above all, developments this year underline
control period between 2023 and 2028,
The greatest
fuelled plant.impact we make is to theimportance
the emerging challenges
of our work of our time:
to provide
As we look forward
RIIO-ED2, is key totounlocking
the mostthe strategic, deliver the profitable solutions to from restoring
energy nature
needed today to reusing
while building materials
a
important international
anticipatory investment conference
required to deliver climate change.
Construction From the
of Keadby development
2, meanwhile, in a way
better worldthat
oferadicates the notionWe
energy for tomorrow. of
on climate change
the resilience, since the
flexibility and Paris
responsiveness ofisawe-inspiring
progressing welloffshore wind
and it will farms
be the most ‘waste’.
are These
delighted to are
be aissues
PrincipalforPartner
the future,
of
Agreement, the imperative to transform
we will need. and incredible
efficient subsea
gas plant transmission
in Europe providing butUK
the thisGovernment
year’s report as places significance
it prepares to host
our businesses and economies has a much-needed
infrastructure, to capacity boost and
the complexity of world
on the leaders at the pivotal
importance COP26of
of a culture UN
We’ve
never felt consulted
so urgent.extensively
With averagewith all
global displacing less
repurposing carbongeneration
thermal efficient generation
assets climate
ongoing summit being held
innovation in Glasgow
for the benefit of all
stakeholders
temperatures to build a1.2°C
reaching robust and
above toon the system;
support however, we are
a renewables-led clear this
energy in November.
SSE’s stakeholders.
compellinglevels,
business will be the last unabated CCGT plant we
pre-industrial theplan and areof
window system, SSE is in the business of climate
excited about the role we can play in the build and we are already looking at options With the eyes of the world on the UK, it
opportunity to prevent rises above action that transitions our energy system That culture of innovation is also
transformation journey that lies ahead. for hydrogen blending there. is a reminder that the work we are doing
1.5°C is closing. It is therefore both a to a net zero world. And in doing so, designed
to to ensure
decarbonise we areand
our economy alive to
tackle
privilege and a responsibility
Refocusing to be a
thermal generation we support green
Disposals haveeconomic
sharpened activity,
the the constant
climate changeneed to important
is vitally update our– and our
Principal
for a Partner
net zero of world…
the UK Government’s creating
focus on jobs,
ourprosperity
net zero and fair returns
vision… sustainability
role in this putsobjectives and, in
us in a privileged 2021/22,
position.
presidency
As variableof renewable
COP26 inelectricity
Glasgow this toOur
ourvision
shareholders.
is to be a leading energy we look forward to a review of our
November.
increasinglySSE’s role as athe
dominates sponsor is to
electricity company in a net zero world. Our core 2030
We areGoals
working tohard
ensure they remain
to showcase the best
be asystems
positive in contributor before,SSE
the UK and Ireland, during Inrenewables
this years’ and networks
report, businesses,
we spell out the as the UK has to
stretching offer
right toand
theengaging
end of thewith a
decade.
andThermal’s
after the fleet played anthrough
conference importanttherole role of each of SSE’s business units in in
well as our complementary businesses wide range of stakeholders to share our
last year
practical securing
action that electricity
removes supplies
carbon for thermal,
the distributed
mission energy
to establish netand customer
zero. And experience
Finally, theon the in
spirit decarbonisation journey
which this report
homes and solutions, all have important roles to play so far. There is a long way to go to deliver
emissions frombusinesses when system.
the electricity the wind because a net zero economy is as much is published is to stimulate further
did not blow and the sun did not shine. in delivering that vision. Our business mix net zero in the next three decades – but
about people as it is about technology, engagement and feedback from the
is very deliberate, highly effective, fully with our clear strategic focus and expertise
Right now, SSE is constructing more
Gas-fired electricity will continue to
assets
focusedand infrastructure,
and we outline
well set to prosper on the the many
in interested
low-carbon people
assets and parties
and infrastructure,
offshore
have awind generation
role to play for somecapacity than
years yet in principles
journey tothat guide us to help deliver
decarbonisation. thatare
we have an interest
extremely in SSE.toAs
well placed always,
play an I
anyany
other company in the world
credible net zero pathway, but weand fairness as we transform to a carbon free would encourage
important part in thisyou
effort get create
to and in touch
we don’t
continue to build
envisage newany
running pipelines
of the fleet society.
We’ve made great progress with our £2bn with us directly,
long-term value forusing the email
shareholders andaddress
for the futureinto
unabated too.
theWe are tackling,
2030s and have a disposals programme, recycling capital sustainability@sse.com.
society along the way.
head on,ambition
clear the complexity of removing
to decarbonise through from
This non-core
notion of a assets less alignedtowith
‘Just Transition’ net
pioneering
carbon carbon
emissions fromcapture andthermal
flexible storage our is
zero vision that will we
something helphave
to fund growth
considered
(CCS) andso
generation, hydrogen
that homestechnologies.
and opportunities
throughout in our core
2020/21. businesses
Inspired by a and
sharpen our net zero focus.
businesses can be assured of the secure thoughtful question at our 2020 Annual
SSE Thermal’s generation plant are located
electricity supplies they have, rightly, General Meeting we published our Just Alistair Phillips-Davies
in places of strategic importance to the That programme continues, with Alistair Phillips-Davies
got electricity
used to. These are the practical Transition
agreement Strategy
reachedininNovember. That
April to sell our ChiefExecutive
Chief Executive
system with good proximity to
actions that must be
industrial clusters andreplicated
access tointransport
every strategy has prompted
Contracting business and further work,
the prospective 18May
25 June 2021
2021
electricity system in the world, if the particularly in our electricity distribution
objectives of COP26 are to be met. business plans and with our supply SSE plc Annual Report 2021 7
chain partners: with the respective
The purpose of this report, however, objectives of ensuring universal access
is to disclose to our shareholders and to the wonders of smart local grids; and,
stakeholders the policies, practices sharing economic opportunities with
and performance of efforts to be local people from a growing offshore
continuously more sustainable in our wind industry.
business activity. As we pursue our vision
to be a leading energy company in a Long term environmental and social
2 SSE plc Sustainability Report 2021 SSE plc Sustainability Report 2021 3
Non-financial KPIs
Non-financial KPIs Non-financial KPIs
Non-financial KPIs
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OUTPUT (INC. PUMPED STORAGE) CARBON INTE
GENERATED (
(GWh)* GENERATED (
More information 2021 10,242 2021
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10,242 2021
2021 255
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OUR BUSINESS MODEL SSE’s
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2020 10,242
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55
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ADJUSTED EBITDA JOBS SUPPORTED IN UK AND IRELAND TOTAL RECOR
SSE’S PURPOSE AND STRATEGY RENEWABLE OUTPUT (INC. PUMPED STORAGE) CARBON INTENSITY
ADJUSTED OF ELECTRICITY
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Adjusted
2020 342.7 329.0 364.9 2019 €18.1m 2019 €650m
2019 1,718.1 2020
Reported 60,550 2020
Reported
2020 0.16
£403.7m £8.9bn
283.1 335.7 447.5 283.1 335.7 447.5 €14.6m £403.7m €689m
2020 2019
2020 2019
2019 105,250 2019 0.16 Reported 2019 2019
2019 1,718.1 Renewables
€14.6m
283.1 Transmission
335.7 Distribution
447.5 €689m
€14.6m £403.7m €689m
VALUES Renewables
2019 Transmission Distribution
105,250
2020
2019
Renewables Transmission 0.16
Distribution
2019
UK€14.6m Ireland
2019
UK €689m
Strategic relevance: The main focus of SSE’s
All of this is underpinned by a set of core values designed to guide decisions and actions in SSE. UK
Renewables
investment
Ireland
Transmission
and capital
Distribution
expenditure
UK
UK Ireland
Ireland UK
Strategic relevance: The main focus of SSE’s Strategic relevance: The main focusisof onSSE’s Strategic relevance: Taxes support the public Strategic relev
investment and capital expenditure is on renewable energy and regulated electricity UK Ireland
services everyone relies on. When companies do
UK
and thriving ec
Strategic
investment
Strategic relevance:
and capital
relevance: The Taxes
mainsupport
expenditure
focus isof the
on public
SSE’s Strategic
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relevance: SSE
Taxes depends
supporton thea healthy
public Strategic relev
Strategic relevance: Extracting interest, tax, Strategic relevance: SSE relies on the people that renewable Strategicenergy
relevance:and regulated electricity
Safety is SSE’s No. 1 value, networks.
servicesenergy
renewable
investment everyoneandrelies
and capital on. When
regulated
expenditure is companies
electricity
on do well,
and theyeveryone
thriving
services should share
economy totheir
relies on. success
enable
When with
its business
companiessociety
do success,
and which
thriving ec
Strategic relevance: Taxes support the public Strategic relev
depreciation and amortisation from earnings work for it in order to operate, with its activities networks.
and everybody in the Company operates to the well, they
networks.
Performance:
renewable should
SSE
energy andshare
invested their
regulated success
£1.08bn in with
its
electricity coresociety success,
through
well, which
the
theyeveryoneis why
payment
should share it
of calculates
taxes. the value it do adds to UK
success, and
which
Strategic relevance: Extracting interest, tax, Strategic relevance: SSE relies on the people that Strategic relevance: Safety is SSE’s No. 1 value, services reliestheir success
on. When with society
companies and thriving ec
provides a useful measure of SSE’s operational supportingand jobsamortisation
in both urban andearnings
rural areas. Performance:
safetyfor
licence of invested
“if to
it’soperate,
not£1.08bn
safe,with
weindon’t do it”. through the
businesses,
networks. payment
representing of
80%taxes.
of itsoperates
total
in itscapital adds
well, to UK and Irish GDP each year. adds to UK and
depreciation from work it inSSE
order itsitsactivities
core Performance:
and everybody SSEininvested
the Company £1.08bn core
to the through
they the
Performance: payment
Taxes
should shareoftheir
paid taxes.
in the UK decreased
success with society success, which
Performance:
performance. Performance:
provides a useful measure
Through of itsSSE’s operational businesses,
supporting representing
jobsAgainst
in boththe80%
urban of its total
and rural capital
of areas. and investment
Performance:
businesses,
Performance:
safety expenditure
ofTaxes
representing
licence SSE “if it’spaid
invested 80%
not for
inofthe
the
safe,its
£1.08bn we year.
UK
total
indecreased
itscapital
don’t core
do it”. slightly
through inthe
Performance:2020/21
payment
SSE and ofincreased
continuedtaxes. in decreased
to make the Republic
a strong economic
adds to UKconand
Safety Service Sustainability Excellence Teamwork operations
and Ireland, in 2020/21 SSE supported 41,400
in the UK Performance:
and investment expenditure
backdrop
forhas
thedecreased
year.
a
andslightly inrepresenting
investment
businesses, 2020/21 and80%
expenditure increased
for
ofthe in the
year.
its total Republic
Performance:
of Ireland.
economic
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contribution
paid in the
in the
UK
UKUKand Ireland.
Performance:
Figures for con
201
If it’s not safe, We are a company
Performance: Results reflect the underlying
We focus on what resilience
We do things We and
continually
performance.
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challenging
Performance: year, SSE’s TRIR
Through its operations in thetoUK Performance: Against the backdrop of capital
a slightly in 2020/21
Performance: Taxesandpaidincreased
in the in decreased
the Republic economic
Performance:
and 2,160 jobs respectively. ofinvestment
Ireland. expenditure for the year. Figures for 2019/20andhave now been in restated to exclude SSE En
of SSE’s business model the fact Performance: Results reflect theFigures for 2019/20
underlying 0.15,Ireland,
and makingin2020/21
2020/21 SSE’s
SSE best year on41,400
supported record and
challenging year, SSE’s TRIR has decreased to of Ireland.
slightly in 2020/21 increased the Republic Figures
economicfor 201
con
we don’t do it. that customers matters. responsibly
that the financialto add of coronavirus
impact improve was
the held
way respect
have now
resilience
each
of SSE’s
other
been andmodel
restated
business to exclude SSEfact
and the Energy for safety
and 2,160performance.
jobs respectively. Figures for 2019/20 0.15, making 2020/21 SSE’s best year on record
exclude SSE Energy Services.
of Ireland. excludefor
Figures SSE201
En
can rely on. long-term
to £170m, at thevalue. weguided
lower end of the do things.
range. thatServices.
the financial impact of coronavirus was held have now been restated to exclude SSE Energy for safety performance. exclude SSE En
to £170m, at the lower end of the guided range. Services.
S
SSE plc Annual Report 2021 23 S
S
INVESTMENT AND CAPITAL EXPENDITURE BY TAXES PAID IN THE UK/IRELAND ECONOMIC CONTRIBUTION IN UK/IRELAND
CORE BUSINESS, BEFORE REFUNDS (£M) INVESTMENT AND CAPITAL EXPENDITURE BY TAXES PAID IN THE UK/IRELAND ECONOMIC CONTRIBUTION IN UK/IRELAND
CORE BUSINESS, BEFORE REFUNDS (£M)
£379.0m £5.2bn
Adjusted 2021 2021
294.3 435.2 350.8 €20.4m €439m £379.0m £5.2bn
2021
Adjusted 2021 2021
Reported 294.3 435.2 350.8 €20.4m €439m
2021
223.9 436.2 412.6 2021
£421.6m £5.7bn
Reported
2020 2020
4 SSE plc Sustainability Report 2021 Adjusted
342.7 329.0 364.9 2021
223.9
€18.1m 436.2 412.6 €650m £421.6m £5.7bn SSE plc Sustainability Report 2021 5
2020 2020 2020
Adjusted
342.7 329.0 364.9 €18.1m €650m
Reported £403.7m £8.9bn
283.1 335.7 447.5 2020
2020 2019 2019
Reported
SUSTAINABILITY REPORT
OUR BUSINESS MODEL
SSE’S BUSINESSES AND HOW THEY CONTRIBUTE TO NET ZERO
SSE is led by its purpose to provide energy needed today while building a better world of energy for tomorrow and is principally
involved in the generation, transmission and distribution of electricity; and also in the supply of energy and related services to
customers in the UK and Ireland. Renewable electricity generation and electricity networks form the low-carbon electricity core
of SSE. Complementing this core, flexible thermal generation is undergoing its own transition for a net zero world, customer
facing businesses provide both a route to market and solutions for customers to reduce their carbon emissions and its Enterprise
business provides distributed energy solutions for businesses and organisations.
SSE Renewables SSEN Distribution Customers
What it does What it does SSE Thermal What it does
Develops, builds, operates and Responsible for safely and SSE Business Energy and
invests in assets that generate reliably maintaining the electricity What it does SSE Airtricity provide energy
electricity from renewable sources. distribution networks, supplying Generates electricity from and related services to SSE Enterprise
homes and businesses across thermal sources in a flexible households, businesses and
How it supports net zero central southern England and the and reliable way, and its public sector organisations What it does
Develops and generates zero- north of Scotland. gas storage business holds across GB and the island of Provides localised flexible
carbon electricity at large scale
SSEN Transmission
around 40% of the UK’s Ireland. energy infrastructure to Energy Portfolio
from onshore and offshore wind How it supports net zero underground capacity,
farms and provides clean flexible Through the timely connection supporting security of How it supports net zero
public sector, commercial Management
What it does and industrial markets in the
power from hydro-electricity of local renewables and the supplies in the UK. Increases the accessibility UK, as well as the ‘Energy
schemes. Owns, operates and develops the coordinated delivery of network of green energy solutions, What it does
electricity transmission network in as a Service’ platform and Secures value for SSE’s asset
investment and flexible solutions How it supports net zero acting as a partner to digital services.
the north of Scotland. to alleviate network constraints Supports the electricity customers and stakeholders portfolios in wholesale energy
5.8GW How it supports net zero
and enable the electrification and,
therefore, decarbonisation of other
system with important
services that keeps the
as they seek ways to
respond to the climate crisis
How it supports net zero
markets and manages volatility
through risk-managed trading
Renewable generation capacity Through offering grid edge
Connecting sources of renewable energy sectors including transport electricity system secure, and provides a route to of energy-related commodities.
in construction and operation services, bringing low-
electricity generation in the and heat. provides flexibility to market for SSE’s renewable
resource-rich north of Scotland to carbon, on-site generation, How it supports net zero
facilitate increasing levels of electricity output. storage and delivery
the national grid and transporting renewable electricity, at the Provides efficient route-
that zero-carbon electricity to areas
of demand in the south.
3.8 million same time as undertaking
its own transition to c.1.2 million
flexibility close to the point
of use, and offering local
to-market for low-carbon
electricity, supports system
Homes and businesses supplied by ‘whole system’ approach.
progressively reduce the Domestic and business
balancing and provides energy
SSEN Distribution
carbon emissions associated solutions for business energy
6.7GW
customer accounts
Renewable generation capacity
with its activities.
c. 10,500 customers.
Heat network customer
5GW
connected to SSEN Transmission’s accounts
network
Installed thermal generation
capacity
6 SSE plc Sustainability Report 2021 SSE plc Sustainability Report 2021 7
SUSTAINABILITY REPORT
STRUCTURED SUSTAINABILITY GOVERNANCE
The Board and its sub-committees chaired by an independent non-Executive had oversight of the internal process to
At the highest level, the Board sets SSE’s Director of the Board. It prepares SSE’s identify and quantify the most material
STRUCTURED SUSTAINABILITY vision and purpose. The Group strategy
that seeks to fulfil that vision and purpose
policy on executive remuneration for the
approval of shareholders and assesses
climate-related risks and opportunities,
forming the core of the TCFD report on
GOVERNANCE
is also set by the Board and reviewed Executive Directors’ performance in pages 26 to 35.
annually. Sustainability is articulated within relation to progress towards SSE’s four
the description of SSE’s strategy given the business goals for 2030 which are aligned The Safety Health and Environment
close alignment between its strategy and to the UN’s SDGs. 2020/21 is the second Committee is responsible for the careful
Strong governance and clear lines of accountability the pursuit of net zero. In meeting both time Directors have been assessed against management of safety, health and
support the delivery of sustainable outcomes for SSE the spirit and letter of the Companies’ these criteria, see pages 96 to 97 for environment matters across the SSE
Act Section 172 responsibilities, more information. The Remuneration Group.
and its stakeholders. including taking decisions about long Committee is undertaking its three-yearly
term consequences and promoting review of its Remuneration Policy through SSEPD Board and its sub-Committee
The governance structures of sustainability the success of the company for the 2021/22 and as part of that, consideration SSE’s two electricity networks businesses,
“ The good governance of sustainability benefit of all stakeholders, the Board will be made to the potential of SSEN Transmission and SSEN Distribution,
continue to serve SSE well. With sustainability
hardwired into the responsibilities of the
policies, practice and performance aids the approves the framework for engaging embedding sustainability metrics within have a dedicated governance framework
Board, the Chief Executive and the wider delivery of SSE’s environmental and social with its key, defined stakeholder groups. long-term incentive plans, in addition to underneath the SSE plc Board, reflecting
Group Executive Committee, responsibility objectives which, in turn, supports the During 2020/21, the Board reviewed and the Annual Incentive Plan. business separation obligations under
for the most material sustainable impacts lie approved SSE’s Group Policies, including their Ofgem licences. The SSEPD Board
achievement of SSE’s strategy to create specific policy statements on human While not referenced within the is chaired by the SSE Finance Director and
at the highest levels of the organisation. With
the quantity and diversity of environment, value for both shareholders and society.” rights, the environment, climate change structure chart outlined opposite, the comprises Executive Directors from the
social and governance (ESG) issues of and sustainability. While the purpose of Audit Committee of the Board has two businesses, non-Executive Directors
Helen Mahy CBE, Chair, SHEAC these policies is to guide the behaviours, responsibilities relating to the effective from the SSE Group and two independent
increasing interest to stakeholders SSE
is undergoing a process to strengthen actions and decisions of SSE employees management of risk. From 2021/22, non-Executive Directors. It is responsible
governance pathways further. and their senior leaders, those of material as a result of a review of sustainability for the oversight of SSEN’s most material
interest to stakeholders can be viewed on governance pathways, the Audit sustainability impacts.
sse.com/sustainability. Committee will also take oversight of
SSE’s annual Task Force on Climate- The Sustainability Sub-Committee of the
Sustainability governance structure 2020/21* The Board also approves annually Related Financial Disclosures (TCFD) SSEPD Board governs the sustainability
SSE’s priorities relating to its principal report. strategies of both SSEN Distribution and
Board of Directors sustainability impacts, of which, SSEN Transmission, comprising of one
climate change is defined as the most The Group Executive Committee and its independent non-Executive Director, the
Oversight of SSE’s most material sustainability impacts and opportunities, including climate change. material of all. Sustainability and climate- sub-Committees Group Chief Sustainability Officer and
related issues are considered by the Board SSE’s Group Executive Committee (GEC) Executives from each of the respective
throughout the year. is responsible for implementing strategy, businesses.
Remuneration Committee Safety, Health and Environment as approved by the Board, including
Considers the performance of SSE’s progress against Advisory Committee (SHEAC) The Board is advised on matters related Group Policies and the management of Chief Sustainability Officer
its UN SDG-linked 2030 business goals in relation to Oversight of SSE’s Sustainability Report and all to safety, health and the environment risks. The GEC agrees priorities relating The role of Chief Sustainability Officer
executive remuneration. by the Safety, Health and Environment to its most material social, environmental (CSO) was established in 2019, reporting
Manageme nt accountabilit y
matters relating to safety, health and the environment.
Advisory Committee (SHEAC), and economic impacts. The Chief directly to the Chief Executive and is
Board oversigh t
which continues to be chaired by an Executive chairs the GEC and as responsible for advising the Board and
SSEPD Board Group Executive Committee independent non-Executive Director. Executive Director with responsibility for its Committees, the GEC and individual
Its membership comprises three non- sustainability, agrees the annual objectives Business Units on sustainability issues and
Executive Directors and five Executive and priorities for the Chief Sustainability strategy.
Oversees SSE’s economically-regulated networks Responsible for the implementation of
Directors. The SHEAC has oversight of Officer.
businesses: SSEN Transmission and SSEN Distribution. sustainability policies and practice.
the annual SSE Sustainability Report. To further support the integration of
As a result of a review at the end of The Group Risk Committee is responsible sustainability within the governance
2020/21, the Board agreed in April 2021 for managing the processes in place to structures of SSE, the CSO is a member of
Sustainability Safety, Health and Environment Group Risk to enhance the responsibilities of the assess and monitor the Group Principal the SHEAC and two of the four Group-
Sub-Committee (SHE) Committee Committee SHEAC to incorporate further oversight of Risks and provides oversight of Business level sub-Committees of the GEC: the
SSE’s overall performance in ESG ratings Unit risks. The Human Rights Steering Risk Committee and the Safety, Health
Oversees the sustainability plans and Responsible for Group policies on Responsible for SSE’s and reviews. The title of the Committee Group, responsible for the production of and Environment Committee; and is
performance in both SSEN Transmission safety, health and the environment Human Rights Policy will change in 2021/22 to include the annual Modern Slavery Statement, also a non-Executive Director of the
and SSEN Distribution. and oversight of Business Unit SHE and climate-related risks sustainability. and the action plans that fall underneath, SSEPD Board and its Sustainability Sub-
plans and performance. and opportunities. reports to the Group Risk Committee. In Committee.
The Remuneration Committee is also 2020/21, the Group Risk Committee also
*Diagram represents the relevant committees and sub-committees in relation to
sustainability. For SSE’s full Governance Framework, see page 102 of its Annual Report 2021.
8 SSE plc Sustainability Report 2021 SSE plc Sustainability Report 2021 9
SUSTAINABILITY REPORT
IDENTIFYING MATERIAL ISSUES
IDENTIFYING
MATERIAL ISSUES
SSE considers issues material if they have the potential
to have considerable impact on its operations or its
stakeholders, either positively or negatively.
The overwhelming challenge facing the energy industry as a whole is to maintain secure and affordable supplies of energy at the
same time as cutting carbon to tackle climate change. These three, sometimes competing, factors: decarbonisation; affordability;
and, security of supply, have been described as the ‘energy trilemma’ and remain the most important balance for an energy
company to strike.
In addition to this overarching challenge, there are many other related material internal and external factors that SSE considers
through a range of well-established channels outlined in this section. They all have a role to play in a comprehensive assessment
of SSE’s most material issues.
Emerging trends Page 12
Working with and for stakeholders Page 14
Group Principal Risks Page 15
Global frameworks and partnerships Page 16
Aligning to the UN’s SDGs Page 17
“ The first, most important step
in ensuring SSE’s long-term
CO2 sustainability is to deeply
understand the materiality of the
impacts we make on the outside
world. To achieve that, SSE must
listen carefully to the perspectives
of a multitude of stakeholders;
pay close attention to economic
and social trends; and, align
to international and national
frameworks designed to create
a more sustainable world.”
Rachel McEwen,
Chief Sustainability Officer
10 SSE plc Sustainability Report 2021 SSE plc Sustainability Report 2021 11
SUSTAINABILITY REPORT
IDENTIFYING MATERIAL ISSUES
WORKING FOR AND
WITH OUR STAKEHOLDERS
EMERGING TRENDS GLOBAL TAX REFORM
Achievement of SSE’s strategic goal of creating
Anvalue
organisation’s long-term
for shareholders sustainability
and society is, in part, determined by its ability to identify
is dependent
and
onrespond
effectiveto emerging trends
engagement inkey
with its its external environment. In 2020/21, the case for
stakeholders. A MINIMUM GLOBAL
social and environmental impact was given greater impetus through the combined RATE OF CORPORATION TAX
global challenges of the coronavirus pandemic and the urgency of climate change.
While SSE has long believed that SSE also notes that international “ Together we can use a global
corporation tax is an important tax that collaboration on corporation tax sends
cements the connection between a positive signal for the potential for
minimum tax to make sure
businesses that are profitable and the international collaboration on carbon the global economy thrives
CLIMATE ACTION people they serve, it also believes that pricing. While a single global price for based on a more level
international co-operation on tax is vital. carbon is unlikely to be practical in the
It supports the Fair Tax Foundation’s short term, SSE continues to believe that
playing field in the taxation of
GLOBAL MOMENTUM TO efforts to establish a voluntary framework a more international price for carbon multinational corporations,
for good multinational businesses to based on cooperation and forms of and spurs innovation, growth
TACKLE CLIMATE CHANGE demonstrate that they play fair with tax, linkages between regional Emissions
and prosperity.”
paying the right amount, in the right place Trading Systems (ETSs) has potential in
While the imperative to tackle climate Determined Contributions (NDC). The However, SSE is mindful that climate and at the right time. delivering a fair and lower cost pathway to Janet Yellen, US Treasury Secretary,
change has been clear since the Rio UK Government’s own, highly stretching science suggests the world has already decarbonise all national economies. April 2021
Summit in 1992, the political and policy NDC that will reduce UK greenhouse warmed to 1.2°C above pre-industrial SSE is taking a keen interest in recent
response has ratcheted up since the gas emissions by 78% between 1990 and levels, and that 1.5°C warming may be efforts initiated by the USA to establish SSE believes this is a particularly important
Paris Agreement in 2015. In 2018, the 2035 is expected to be enshrined in law reached as early as 2034. It therefore a global minimum corporation tax rate point post-Brexit and firmly supports the
Intergovernmental Panel on Climate by the end of June 2021. is conscious that there may be further and believes healthy intergovernmental establishment of a firm link between the
Change (IPCC) report outlined in detail calls for increased acceleration of net collaboration on tax supports good UK Emissions Trading Scheme and the
the consequences of a world warmed on From SSE’s perspective, the increasing zero policies globally and policy may be competition and the sustainable European one.
average by 1.5°C. It was this report that consensus to ongoing climate action required to adapt. development of economies.
supported the adoption of net zero laws is welcome. In the first instance it helps
and regulations in the UK, Ireland and to reduce the risk of climate policies
beyond. and interventions being watered down “ Scientists tell us that this is
and, therefore, reduces political risk the decisive decade – this is STANDARDISED ESG METRICS
In 2020/21, this momentum continued. associated with the investments it is the decade we must make
With the USA rejoining the Paris
Agreement in January 2021 and the
making in low-carbon infrastructure.
Secondly, and more importantly, the decisions that will avoid the THE PROSPECT OF COMMON
commitment made in October 2020
by China for carbon neutrality by 2060,
consensus in favour of climate action
establishes a wealth of opportunity to
worst consequences of the
climate crisis.”
INTERNATIONAL ESG STANDARDS
COP26 in Glasgow later this year pursue net-zero investment that helps
provides a platform for the publication generate future prosperity across the President Joe Biden, “ ESG investing is moving well 2020 was another record-breaking Reporting Directive in the EU to mandated
year for sustainable investing. The trend TCFD reports in the UK, the potential
of further nation state Nationally world. April 2021 beyond negative screening where significant capital flows towards for consolidation of ESG standards and
and towards finding companies that can demonstrate existing voluntary frameworks appears
THE NATURE EMERGENCY companies that are truly good performance as a result of their to be gaining momentum. Proposals
environmental, social and governance from the International Financial Reporting
creating value.” (ESG) policies and practice has continued Standards (IFRS) for a common set of
A GOAL FOR NATURE: Mark Carney, UN Special Envoy
for Climate and Finance,
throughout the year. According to the
European Fund and Asset Management
metrics may provide a global uniform
framework which all companies can
NATURE POSITIVE BY 2030 November 2020 Association, net assets in European ESG
funds grew to €1.2 trillion in 2020, up 37%
adopt.
from 2019, compared to a 4.8% increase SSE will continue to engage
“ The climate and biodiversity The risks associated with the decline of making progress. SSE’s own effort to
in non-ESG funds. comprehensively with any investor that
nature are now well understood. The implement methodologies that define
crises are inextricably linked annual World Economic Forum’s Global the concept of ‘biodiversity net gain’ wishes to scrutinise its ESG policies,
– fail to solve one, and we fail Risk Report, published in January 2021, in the development of its electricity At the same time, there has been an practice and performance, believing that
ongoing debate about the future of such accountability is a powerful driver for
on both. We need to address identified both biodiversity loss and human transmission infrastructure, means it
common standards in ESG disclosure. performance improvements itself. It will,
environmental damage as high risk for understands the scientific complexity of
both complex challenges to both likelihood and impact. establishing a common goal for society With more mandated non-financial however, welcome greater consolidation
reach a future that is nature- which is supported and contributed to disclosure, from a tightened Non-Financial of the ESG metrics by which it is judged.
positive, carbon-neutral, and The efforts by a group of business and by business. SSE believes such a goal
environmental organisations to create a has the potential to be very powerful. It
equitable for all.” framework for a global goal to restore supports the concept in principle and will
Joint letter in The Independent nature, akin to the science-based targets engage positively with any framework that
from the organisations behind framework for climate, appears to be emerges in the coming months.
‘Nature Positive’,
November 2020
12 SSE plc Sustainability Report 2021 SSE plc Sustainability Report 2021 13
SUSTAINABILITY REPORT
IDENTIFYING MATERIAL ISSUES
WORKING WITH AND FOR STAKEHOLDERS GROUP PRINCIPAL RISKS
The essential nature of SSE’s core product, energy, means there is a wide range The execution of SSE’s strategy and delivery of its purpose is dependent on the effective
of stakeholders who have a direct interest in SSE and whose perspectives must be identification, understanding and mitigation of the Group’s Principal Risks.
considered if it is to achieve its business objectives.
Sustainability in the Group Principal Risk context
SSE’s approach to stakeholder perspectives are built into its business Board level engagement. A full report Whilst all the Group Principal Risks are relevant to the sustainable development of SSE, those defined as being particular significance
engagement plans and objectives every step of the of the engagement methods deployed, to social and environmental impacts are outlined below. More information can be found in SSE’s Group Principal Risk report and SSE’s
SSE understands that there is an way: from project planning, project and the material issues raised are outlined Annual Report 2021, pages 54 to 63, which detail key developments during the year and key mitigations SSE has in place. SSE has also
effective social contract between the delivery and onwards through long- on pages 28 to 31 of the SSE Annual outlined key developments associated with coronavirus for each Group Principal Risk.
company and the society within which term operations and customer service. Report 2021.
it operates. At the core of that contract It therefore promotes an open and Climate Change Energy Affordability
is a reciprocal relationship between transparent approach to stakeholder SSE’s key stakeholder groups
SSE and its stakeholders, with SSE engagement which is supported SSE defines its stakeholders as the people, The risk that SSE’s strategy, investments or operations are The risk that energy customers’ ability to meet the costs of
relying on a range of inputs, in return by accountability at both Group communities and organisations with deemed to have an unacceptable future impact on the providing energy, or their ability to access energy services
for which value is generated and and Business Unit level. an interest in SSE’s purpose, strategy, natural environment and on national and international is limited, giving rise to negative political or regulatory
shared. operations and actions and who may targets to tackle climate change. intervention that has an impact on SSE’s core regulated
SSE adopts a range of engagement be affected by them. In 2020/21 the Networks and Renewables businesses.
SSE interacts with a vast array of methods to build those reciprocal SSE Board, reconfirmed the six principal The physical impacts of climate change, such as severe
stakeholders every single day. Its relationships. These methods exist stakeholder groups, outlined below, weather that can interrupt energy supply or generation, and SSE seeks to support the transition to net zero through
approach to stakeholder engagement in a strategic framework that is a within that context. the transitional risks relating to developments in political and disciplined investment in developing and operating low-
seeks to ensure that stakeholder combination of business-led and regulatory requirements on the products and services SSE carbon energy infrastructure, and delivering this in a way
provides, have potential to impact SSE’s operations. SSE work that represents value for money for energy customers. It
to reduce its impact on climate change and the consideration works to ensure that the energy it supplies to customers
of longer-term key climate-related risks and opportunities that is not only affordable but is accessible too, and it strives to
Shareholders face it business is detailed on pages 26 to 35. offer services that are inclusive to all. See pages 44 to 51.
Employees and debt providers Energy customers
We engage to attract, retain and We engage to ensure confidence We engage to support an Large Capital Projects Management People and Culture
develop a diverse and talented and support from those that accessible low-carbon energy
workforce now and for the future. invest in and lend to SSE. system that represents value for The risk that SSE develops and builds major assets that do The risk that SSE is unable to attract, develop and
customers’ money. not realise intended benefits or meet the quality standards retain an appropriately skilled, diverse and responsible
required to support economic lives of typically 15 to 30 workforce and leadership team, and maintain a healthy
See pages 82 to 93 See SSE’s Annual Report 2021
years within forecast timescales and budgets. business culture which encourages and supports ethical
See pages 46 to 51
behaviours and decision making.
SSE’s investment in large infrastructure projects can
have considerable social, economic and environmental The talents, skills and values of SSE’s employees enable it
Government NGOs, communities Suppliers, contractors consequences. To deliver high-quality projects, SSE works to fulfil its purpose and achieve its strategic goals. SSE has
and regulators and civil society and partners closely with suppliers and contractors to ensure its values on a long-standing commitment to fair and decent work and
issues such as environmental protection, safety and other seeks to provide an inclusive, fulfilling and high-performing
social issues, are upheld. SSE’s work to promote and embed workplace. SSE’s responsible approach to attracting,
We engage to ensure fair energy We engage to support the We engage to support the sustainability within its supply chain is detailed on pages developing and retaining a future skilled workforce is
sector frameworks for energy achievement of shared goals greatest all-round value from 74 to 75. detailed on pages 82 to 93.
customers and investors that with social benefit. our investments.
support progress to net zero
at the required pace. See pages 73 to 93 See pages 74 to 77 Politics, Regulation and Compliance Safety and the Environment
See page 21 The risk from changes in obligations arising from operating The risk of harm to people, property or the environment
in markets which are subject to a high degree of regulatory, from SSE’s operations.
legislative and political intervention and uncertainty.
SSE has an uncompromising commitment to keep people
Creating value through stakeholder collaboration SSE aims to work constructively with governments and safe and healthy, and to respect the environment in which
regulators to help deliver net zero, whilst ensuring the it operates. SSE’s working environment includes challenging
Throughout this report, SSE provides case studies and dilemmas
energy system works in the interest of energy customers. geographic locations and adverse weather conditions, which
to demonstrate practical real-life examples of projects that
SSE’s activities are influenced by international and national can impact its activities. It has clear safety and environmental
have been undertaken with and for its stakeholders. These are
Engagement Innovation Partnering Dilemma agreements on climate change, and sustainability issues processes and training in place to address these risks. SSE’s
highlighted using the below icons. are increasingly included in regulatory and legislative safety, health and environment performance and initiatives
in action in action in action
requirements. See page 21. are detailed on pages 140 to 143 of SSE’s Annual Report 2021.
14 SSE plc Sustainability Report 2021 SSE plc Sustainability Report 2021 15
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