POWERING THE TRANSITION TO A CLEAN ENERGY FUTURE - ESB RESPONSIBLE BUSINESS REPORT 2019
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SOCIAL DISCLOSURES
02
03
04
05
01
BUSINESS OVERVIEW ECONOMIC PERFORMANCE ENVIRONMENTAL TOPICS APPENDICES
PERFORMANCE
A CLEAN ENERGY
POWERING THE
TRANSITION TO
ESB RESPONSIBLE BUSINESS
FUTURE
REPORT 2019
2 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 3
ESB'S CARBON INTENSITY
POWERING THE
TRANSITION TO A CLEAN INTENSITY g/kWh
ENERGY FUTURE 800
ESB is committed to leading the 700
2005
transition to a reliable, affordable, low- 600 670g/C02kWh
carbon energy future. This is a future 500
powered by clean, sustainable electricity. 2019
400 406g/C02kWh
We are investing and innovating right
300
across our business to make this future a
2030 Target
reality. 200
200g/C02kWh
100
0
2005 2010 2015 2020 2025 2030
ABOUT ESB
ESB was established in 1927 as a statutory
body under the Electricity (Supply) Act 1927.
With a holding of 95.7%, ESB is majority owned
by the Irish Government. The remaining 4.3%
is held by the trustees of an Employee Share
Ownership Plan. As a strong, diversified,
vertically integrated utility, ESB operates
across the electricity market, from generation
through transmission and distribution, to
supply of customers, with an expanding
presence in Great Britain’s generation and
supply markets. In addition, we extract further
value at certain points along this chain by
supplying gas and using our networks to carry
fibre for telecommunications. ESB is a leading
Irish utility with a regulated asset base (RAB)
of approximately €10 billion (comprising ESB
Networks €8.1 billion and NIE Networks €1.9
billion), a 30% share of generation in the all-
island market and a significant supply business
supplying electricity and gas to approximately
1.5 million customers throughout the island of
Ireland and Great Britain. ESB will continue
to grow the scale of its generation, trading
and supply businesses so that it can continue
to compete within the all-island competitive
environment. ESB is focused on providing
excellent customer service and maintaining its
financial strength. As at 31 December 2019, ESB
Group employed over 7,900 people.
4 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 5
ABOUT THIS REPORT
CONTENTS ESB’s purpose is to lead the transition to a reliable,
affordable, low-carbon energy future. This report
ESB'S FIRST IRISH OFFSHORE WIND FARMS 01
BUSINESS OVERVIEW
explains ESB’s strategy and environment and
sustainability ambition in service to that purpose.
It also accounts for ESB’s environmental and
sustainability performance for the past year. It’s
intended audience is customers, investors, analysts,
CHAPTER 1 policy makers, the public and other stakeholders,
STRATEGY AND PERFORMANCE
BUSINESS OVERVIEW internal and external to ESB Group and it is focused
Welcome from Chief Executive 1.1 on the sustainability issues of greatest concern to
ESB at a Glance 1.2 these stakeholders.
Highlights 1.3
Business Model 1.4 Our reporting is guided by the principles of
Strategy and Progress 1.5 materiality, inclusiveness and responsiveness.
Governance 1.6 We use leading standards and methodologies for 02
Materiality Approach 1.7 Joint venture with Parkwind to develop wind farms at Oriel &
reporting, such as the Greenhouse Gas Protocol,
ECONOMIC PERFORMANCE
Stakeholder Engagement 1.8 Clogherhead
CDP and the Global Reporting Initiative (GRI).
Associations and External Initiatives 1.9 This report has been prepared in accordance with
the GRI Standards Core option and has been
CHAPTER 2 independently assessed by DNV GL against this
ECONOMIC PERFORMANCE option. A guide linking the disclosures in the report
Introduction 2.1 to the relevant GRI indicators is presented in the
Investing for the Future 2.2 report appendices.
Indirect Economic Impacts 2.3
Pension Obligations 2.4
Procurement Practices 2.5
SCOPE OF REPORT
This report covers the fiscal and calendar year
5ggggh2njjkhj\
CHAPTER 3 2019. This report pertains to the full activities of
ESB and its subsidiary companies, including NIE 03
SOCIAL DISCLOSURES PERFORMANCE
Occupational Health and Safety 3.1 Networks, hereinafter referred to as ESB Group. It
SOCIAL DISCLOSURES
Public Safety 3.2 has been prepared in accordance with GRI global
PERFORMANCE
ESB People and Organisational Development 3.3 standards for sustainability reporting, as well as the
Community Engagement and CSR 3.4 GRI Electric Utilities Sector Supplement. The report
Customer Privacy 3.5 content is based on the output from a materiality
Risk Management 3.6 process, including both operational and strategic
engagements with internal and external stakeholders.
CHAPTER 4 The 2019 Sustainability Report meets our
ENVIRONMENTAL TOPICS
commitment to report annually on our Sustainability Jim Dollard, Executive Director Generation and Trading (GT); Kate
Energy Management 4.1
Biodiversity 4.2
performance. Where scope boundaries pertain to Tuohy, GT Asset Development; Pat O’Doherty, ESB Chief Executive;
Emissions 4.3 specific material aspects of the business, these Richard Bruton, Minister for Communications, Climate Action and
Effluents and Waste 4.4 are detailed in the specific sections of the report. Environment; Eric Antoons – Co-CEO Parkwind; Francois Van Leeuw, 04
Environmental Management 4.5 Readers of this report may also view the ESB Group Co-CEO Parkwind and Paul Lennon – GT Asset Development.
ENVIRONMENTAL TOPICS
Water 4.6 Annual Report 2019 https://www.esb.ie/investor-
Energy Utility Sector Specific Disclosures 4.7 relations/result-presentations-investor-updates .
Together these reports present a coherent picture
of ESB’s activities and explain how sustainability is
CHAPTER 5 central to our corporate strategy. Accordingly ESB
APPENDICES Group is embedding environmental stewardship
Independent GRI Standards Option Check 5.1 and sustainability throughout our business. The
ESB Green Bond 2019: Allocation and Impact Report 2019/20 5.2
alignment of our activities with the UN Sustainable
GRI Standards Cross Referencing Table 5.3
Development Goals is highlighted where relevant
Glossary of Terms 5.4
throughout the report.
05
APPENDICES
We welcome requests, comments and enquiries relating to this report
and to sustainability. Please email our mailbox: sustainability@esb.ie or our
Sustainability Coordinator: brian.gray@esb.ie
www.esb.ie
Twitter: @ESBGroup
LinkedIn: www.linkedin.com/company/esb
YouTube: www.youtube.com/user/ESBVideo
CHAPTER 1 BUSINESS OVERVIEW 1.1 Chief Executive’s Review 1.2 Highlights 1.3 ESB at a Glance 1.4 Business Model 1.5 Strategy and Progress 1.6 Governance 1.7 Materiality Approach 1.8 Stakeholder Engagement 1.9 Associations and External Initiatives
8 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 9
1.1 CHIEF EXECUTIVE’S REVIEW 01
BUSINESS OVERVIEW
required to meet future customer needs and invested €1,242 million including €340
in the Oriel project off the coast of Dundalk
with our partners in Parkwind and we are
inform future network planning and investment
decisions. During the year, ESB Networks
made its submission on Price Review 5
Q
changing
How successful has ESB
been in keeping up with
customer expectation
million in renewables as we continue to lead
the transition to low-carbon generation. The
dividend for 2019 amounted to €88 million,
developing further onshore projects in the to the Regulator which includes by leveraging the potential of bringing the total dividends paid over the
Republic of Ireland (ROI) at Clogherhead, provision to support the delivery new technologies? past decade to over €1.2 billion.
ESB
and Kilmichael Point - all of which build on of the Irish Government's Networks made its ESB collaborates with
our investment in the Galloper
offshore wind farm (UK)
Climate Action Plan. submission on Price
Review 5 to the Regulator
industry, academia and
start-ups to identify and Q Is ESB investing in talent as
well as in technology?
in 2018. We also
invested significantly
in onshore wind farms
We
successfully
Q How is ESB
adapting its
customer offering in
which includes provision
to support the delivery of
the Irish Government's
deploy new technologies to
improve efficiency and meet
customers' needs. During
We recognise that a high-performance
culture requires an engaged and agile
workforce and a supportive work 02
in ROI at Oweninny launched Ireland’s response to changing Climate Action Plan. the year, we embarked on environment that values diversity and
ECONOMIC PERFORMANCE
in Mayo, which we first corporate energy needs? pilot projects with five finalists inclusion. This year, we recruited 77
completed in 2019, Green Bond Customers will play a critical role in from Free Electrons, an accelerator graduates and 86 apprentices across a
and in Grousemount the electricity system of the future and we programme co-founded by ESB with other range of disciplines and backgrounds, and
in Co.Kerry, which will have therefore implemented new structures to energy companies, which targets start-ups provided extensive training and development
be completed by the start of Q2 support customer-centric product development operating in the energy sector. We are also opportunities for our existing employees.
2020. for both business and residential markets. incubating new commercial propositions in We also developed new volunteering
Pat O’Doherty During the year, we continued to build our our offsite Innovation Hub, where we fast opportunities for our employees through
If we can aid Chief Executive
the electrification of In 2019 we announced the closure, by portfolio and pipeline of products and services track new ideas in a start-up environment. our Generation Tomorrow sponsorship
heat and transport , and the end of 2020, of our two remaining to help customers manage their energy use programme, which empowers young people
remove carbon from the
production of electricity, then
electricity becomes a hugely
Pat O’Doherty discusses progress
against the Brighter Future Strategy
peat-fired power stations, which will
further reduce our carbon emissions. Over
seven decades, peat has been part of
more efficiently and reduce their carbon
footprint. These included new green tariffs, a
home charging installation service and home
Q
and
What progress is ESB making
in addressing environmental
safety concerns raised
through STEAM (Science, Technology,
Engineering, Arts and Mathematics)
education and learning.
03
in 2019 and looks forward to the year
transformative force, the our generation fuel mix and its cessation retrofit supports. The new Brighter Together during the year regarding legacy
SOCIAL DISCLOSURES
catalyst for a low carbon ahead.
has significant implications for local advertising campaign to promote this suite of infrastructure?
Q What are the major challenges
PERFORMANCE
world
communities. Also, during the year, we products went live in December. With €10 ESB has an ongoing programme of facing ESB in the year ahead?
Q What progress have you
made during the year?
reconfigured the operation of Moneypoint
coal station in order to secure its
million support from the Government Climate
Action Fund, our eCars division began a €20
maintenance and investment to ensure
that its legacy infrastructure meets
The increasing need for climate action
presents new opportunities for ESB to build
Q What were the biggest
developments affecting ESB in
2019?
ESB’s new organisational
structure has focused on
Each of
our business
commercial viability in the short
term in the context of reduced
million upgrade of the national electric vehicle
(EV) charging infrastructure. In Great Britain
applicable safety and environmental
standards. We have invested significantly
on its core areas of expertise in the areas
of renewable generation, smart networks,
driving transformational units has a unique running due to the impact of (GB), we opened a new office in Manchester to in the replacement of switch gear and electric heating, transport and innovative
2019 was a watershed year for energy and change across every area of but interrelated role increasing renewables and serve our growing customer base there and we fluid-filled cables in recent years and customer offerings. However, it also
climate change, particularly in Ireland where our business during 2019. in making this [the carbon pricing. In line with completed the roll-out of electric vehicle (EV) although considerable progress has been presents challenges in terms of managing
government policy and public sentiment We successfully launched transition to low- Government policy, we will infrastructure for the London Taxi Fleet. Our made, we recognise the need for further legacy infrastructure, securing community
04
combined to significantly accelerate the pace Ireland’s first corporate carbon] a reality. not generate electricity from Smart Energy Services business consolidated improvement. This will be a central part support for new infrastructure and engaging
ENVIRONMENTAL TOPICS
and urgency of the transition to a low-carbon Green Bond, and have coal beyond 2025. its position as a leading energy services of our 2020 transformation programme. citizens to ensure the electricity system is
energy system. It is widely accepted at a invested significantly in low-carbon provider to businesses securing a contract to Safety and environmental responsibility are built around the future low-carbon energy
policy level that electricity will play a critical
role in the low-carbon energy system of the
future. This has big implications for all parts of
technologies and solutions, including new
low-carbon and renewable generation, smarter,
more resilient networks, and new products and
Q meet
What is ESB doing to prepare
the electricity networks to
future customer needs?
design and deliver heat pump and combined
heat and power (CHP) installations for what will
be the largest and most sustainable commercial
priorities at every level of the organisation
and we continue to encourage an
open reporting culture to identify and
needs of all our customers, while at the
same time ensuring that ESB has the people
and financial capability to deliver our own
ESB, by way of both challenge services to support our customers. We continue to invest and innovate greenhouses in GB. appropriately address issues as they arise. growth ambitions. While challenging, the
and opportunity. in our ROI and Northern Ireland (NI) transformation of the energy sector that is
Q How has this impacted the
delivery of ESB’s strategy?
Qpeat?
How is ESB managing the
transition away from coal and
networks businesses to increase the level
of automation and resilience, to meet
growing demand and to facilitate significant
ESB Networks continued to improve
digital services for customers,
and commenced the roll-out of
“Safety QHow was
ESB’s financial
performance in 2019?
happening before our very eyes is exciting
and I believe that ESB is in a strong position
to take advantage of the many opportunities
and
Our strategy is fully aligned with emerging In 2019, we continued to increase volumes increases in customers' own distributed the National Smart Metering Following a challenging that lie ahead.
environmental 05
policies around low-carbon energy and of electricity generated from low-carbon energy assets. ESB programme which will see over couple of years, ESB
is anchored to our purpose of creating and renewable sources, while reducing our Networks is working with 2 million meters upgraded
responsibility are achieved an improved
APPENDICES
a brighter future for the customers and dependence on high carbon thermal plant. New three communities ESB over a multi-year programme priorities at every level of financial performance
communities we serve by leading the partnerships with Coillte, Parkwind, EDF and – Limerick, Dingle
Networks is working to smart digital technology, the organisation and we in 2019 with EBITDA
transition to reliable, affordable, low-carbon Equinor will enable us to significantly increase and the Aran
with three communities paving the way for all suppliers continue to encourage of €1,372 million and Pat O’Doherty, Chief Executive
– Limerick, Dingle and the
energy. This presents a great growth our onshore and offshore wind portfolio to grow Islands – to pilot to develop new products an open reporting Operating Profit before 27 February 2020
Aran Islands – to pilot ….
opportunity for the electricity sector while earnings from renewables while also meeting new network
the network required to
and services that will enable culture exceptional items of €682
also playing a key role in addressing climate carbon reduction targets. We are building a and customer customers to take more control of million. We are focused
meet future customer
change. Each of our business units has a portfolio of assets in the offshore wind sector. technologies with a their energy use. on maintaining ESB's financial
needs
unique but interrelated role in making this a In 2019, we acquired a 50% stake in Neart na view to gaining valuable strength to ensure we can deliver on our
reality. Gaoithe in the North Sea. We acquired a stake insights into the network Brighter Future strategy. During 2019 ESB
10 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sust
Sustaainab ility Report 2019
inabil 11
1.2 ESB AT A GLANCE 1.3 HIGHLIGHTS 01
BUSINESS OVERVIEW
ENVIRONMENT CUSTOMERS IRISH ECONOMY
02
ECONOMIC PERFORMANCE
CO2 INTENSITY
406GCO2/kWh - ENDURING SAVINGS OF UP TO
REDUCTION IN CARBON 8.5% FOR RESIDENTIAL ROI
INTENSITY: 39% SINCE CUSTOMERS OVER €1 BILLION
BASELINE 2005 INVESTMENT IN
INFRASTRUCTURE
OVER
15,000
SMART
METERS OVER €2
NORTHERN MILLION
GENERATION INSTALLED
IRELAND DISBURSED 03
BUSINESS ESB CUSTOMER OTHER
AND TRADING ELECTRICITY ACROSS A
SEGMENT NETWORKS SOLUTIONS SEGMENTS
SOCIAL DISCLOSURES
(GT) NETWORKS RANGE OF
PERFORMANCE
(NIE NETWORKS) COMMUNITY
INITIATIVES
INNOVATION AND
ELECTRICITY ELECTRICITY TRANSMISSION ELECTRICITY
DESCRIPTION INTERNAL SERVICE
GENERATION AND DISTRIBUTION SUPPLY
PROVIDERS
OVER 34,000 NEW
CUSTOMER CONNECTIONS
REVENUE €€1,518m €1,156m €303m €2,069m €326m 2.5TWh
RENEWABLES 04
GENERATED STAKEHOLDERS
ENVIRONMENTAL TOPICS
CAPITAL
EXPENDITURE** €198m €344m €61m €59m €20m
ROI, NI,
REGIONS OF ROI, NI,
OPERATIONS NI
ROI, NI, GB ROI
EU, MIDDLE EAST,
OVER 7,900 EMPLOYEES
GB
ASIA, AFRICA
10 THERMAL
88 DEPOTS,
STATIONS, 8 HYDRO 41 OFFICES AND
YARDS, 15 DEPOTS, YARDS, 5 OFFICE
SCALE OF
OPERATIONS
AND PUMPED
STORAGE
STORES AND STORES AND LOCATIONS IN
STORES ACROSS
ROI, NI, GB AND
€500 MILLION
STATIONS, 24
VEHICLE OFFICES ROI, NI AND GB
INTERNATIONALLY IRELAND'S FIRST 05
WORKSHOPS
WINDFARMS CORPORATE PUBLIC
APPENDICES
GREEN BOND RAISED
EMPLOYEE
NUMBERS 914 3,490 1,208 551 1,811
DEVELOPING A
BRINGING
LOW BRINGING
LEADING EDGE
CARBON BUILDING SMARTER MORE SUSTAINABLE AND
ENERGY SOLUTIONS 78MW NEW WIND JUST UNDER €2 BILLION
STRATEGIC FOCUS
PORTFOLIO,
CREATING
RESILIENT NETWORKS. PUTTING
THE CUSTOMER IN CONTROL OF
COMPETITIVE
ENERGY
TO FARMS CONNECTED CONTRIBUTION TO IRISH
ALL OUR
CLEANER POWER THEIR ENERGY. FACILITATING THE SOLUTIONS TO ALL
CUSTOMERS.
ECONOMY
USING CONNECTION OF RENEWABLES. OUR
INNOVATING FOR
SUSTAINABLE CUSTOMERS
THE FUTURE
GENERATION
12 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 13
1.4 BUSINESS MODEL
Our Purpose is to 'Create a Brighter Future for the customers and communities we serve,
by leading the transition to reliable, affordable, low-carbon energy.'
CAPITAL INPUTS SUPPLY OUTPUT
Manufactured Capital GENERATE TRANSMIT
• 5,520 MW of generation capacity Supplying electricity, Customers
• Over 229,000 km of Network across ESB develops, operates and ESB builds, manages gas and energy • Customer satisfaction 84%
ROI and NI trades the output of ESB’s and maintains the services to customers • 34% market share
electricity generation assets. transmission and in ROI, NI and GB. • Enduring residential customer
Financial Capital The portfolio consists of 5,520 distribution network savings of up to 8.5%
• A-credit rating MW of thermal and renewable in ROI and NI – over • 30% generation market share
• Total net assets €3.9 billion generation assets across ROI, 229,000 km of
• Liquidity of €1.5 billion NI and GB and a further 338 Network. Shareholders
MW under construction • Dividend of €1.2 billion over the
Intellectual Capital last decade
• Promotion of innovation • Return on capital employed
• Corporate governance Structure 5.9%
• €1.4 billion EBITDA
Human Capital
• 7,974 employees Irish Economy
• Employee development programmes • Invested €1 billion
• Safety transformation programme • Contributes €1.8 billion to the
Irish economy
Social and Responsible Capital • Over €2 million disbursed over
• Over 1.5 million customers a range of community based
initiatives
Natural Capital
• 884 MW of renewable generation
WE'RE WE'RE WE'RE WE'RE PUT CUSTOMERS’ PRODUCE, CONNECT DEVELOP ENERGY GROW THE DELIVER A HIGH-
COURAGEOUS CARING DRIVEN TRUSTED CURRENT AND AND DELIVER SERVICES TO MEET BUSINESS WHILE PERFORMANCE CULTURE
FUTURE NEEDS AT CLEAN, SECURE EVOLVING MARKET MAINTAINING THAT SUPPORTS
THE CENTRE OF ALL AND AFFORDABLE NEEDS ESB’S FINANCIAL INNOVATION AND
OUR ACTIVITIES ENERGY STRENGTH COLLABORATION
14 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 15
1.5 STRATEGY AND PROGRESS 01
BUSINESS OVERVIEW
ESB’s Brighter Future Strategy puts sustainability at the heart of our strategic objectives and our purpose as an organisation. With the ambition to 'Create a Brighter
Future for the customers and communities we serve, by leading the transition to reliable, affordable, low-carbon energy’, our progress during 2019 in putting this into
action has begun to deliver on that ambition. Aligning our activities and progress to the broader global efforts to deliver the Sustainable Development Goals, allows
ESB to demonstrate its contribution to the global purpose and climate action focus that underpins the SDGs.
OWENINNY WIND 02
FARM ENTERS
ECONOMIC PERFORMANCE
RENEWABLE ESB SIGNS LOW ESB NETWORKS GREW OVER 30,000 89 MW 50% COMMERCIAL ESB NETWORKS
PROGRESS AGAINST
CONNECTIONS: CARBON PLEDGE ITS REGULATED ASSET HOUSES OWENNINEY SHAREHOLDING
OPERATION FLEET BEGINS
550 MW IN ROI, COMMITTING BASE BY €0.2BN CONNECTED WIND FARM IN THE 448 STRATEGY FROM
Oweninny, Phase 1, is an 89MW wind farm TRANSITION TO EV
BRINGING TOTAL TO LESS THAN THROUGH DELIVERY DURING 2018 COMMISSIONED. MW NEART AROUND THE
RENEWABLES 200gC02/kWh OF TRANSMISSION 338 MW IN NA GAOITHE joint venture with Board na Móna in Co. Mayo.
(ALL ISLAND) AND DISTRIBUTION CONSTRUCTION OFFSHORE
BUSINESS
BY 2030 (50% Its 29 turbines will supply clean energy to ESB Networks took delivery
CONNECTED TO THE REDUCTION) PROGRAMMES WIND FARM FACILITATING RENEWABLES the equivalent of over 50,000 homes. The
GRID TO 6.2GW IN UK
of 70 Nissan ENV200 fully
CARBON cross business ESB team is now looking to
INTENSITY Knockanure underground cable. This new 22km electric light vans which will be added to the fleet
the development of Phase 2 of Oweninny
length cable in north Kerry will allow the region to throughout 2019/2020 and are estimated to
(83MW).
PRODUCE, utilise its abundant energy resources, will allow for offset 170 tonnes of carbon annually by phasing
CONNECT AND future growth in demand, will increase the security out diesel in ESB Networks’ small van fleet. The
DELIVER CLEAN,
SECURE AND of supply for the South West region and further vehicles will be deployed nationally to replace
AFFORDABLE support the development of the renewable energy small diesel equivalents working in the areas of 03
ENERGY
sector. metering and stores.
SOCIAL DISCLOSURES
PERFORMANCE
ELECTRIC ELECTRIC ESB NETWORKS
IRELAND IRELAND SUCCESSFULLY
CONTINUES LAUNCHED ITS INSTALLED THE FIRST NEW ESB ARCHIVES
TO FOCUS ON ALL ELECTRIC SMART METER IN 2019
REDUCING DISCOUNTED AND HAS CONTINUED
BUILDING
DISCONNECTION TARIFF FOR TO SAFELY RAMP COMPLETE
RATES, NOW CUSTOMERS WITH UP DELIVERY WITH The new ESB Archives building was
BELOW 20 PER
10,000
ALL ELECTRIC
HOMES OUR PURPOSE OVER 15,000 METERS
INSTALLED IN 2019
completed in July 2019, to a BER A1 energy
ESB’s purpose is to create ESB ECARS rating standard. The project, designed in house,
provides an energy efficient all electric building,
a brighter future for the CELEBRATES 1OOTH
including an array of roof mounted solar panels.
customers and communities RAPID CHARGER IN
04
PUT CUSTOMERS’ we serve and we will do this GB
DEVELOP ENERGY
ENVIRONMENTAL TOPICS
CURRENT AND by leading the transition to ESB has rapidly expanded its
FUTURE NEEDS SERVICES TO
reliable, affordable, low- MEET EVOLVING charge point networks in both
AT THE CENTRE
OF ALL OUR carbon energy MARKET NEEDS
London and Coventry City. Our rapid charge points
ACTIVITIES
provide CCS, CHAdeMO and Fact AC charging,
that can charge an EV up to 80% in as little as 30
minutes.
DELIVER A HIGH- GROW THE
PERFORMANCE BUSINESS WHILE
CULTURE THAT MAINTAINING
SUPPORTS ESB’S FINANCIAL
INNOVATION AND STRENGTH
COLLABORATION 05
APPENDICES
ESB INVESTS IN 50%
STAKE OF NEART NA
GAOITHE OFFSHORE
WIND FARM
ESB invested in a 50% stake in NnG offsore wind
ESB IS NATIONAL 11 OF 83 APPRENTICESHIP ESB DELIVERED farm project from EDF Renewables off the east
SPONSOR OF BITC TIME STARTERS IN 2019 WERE EBITDA OF €1.4BN coast of Scotland. It will have a capacity of 450MW
TO COUNT NUMERACY WOMEN IN 2019. CAPEX OF
PROGRAMME, BUILDING €1.2BN WAS SPENT and will offset over 400,000 tonnes of CO2
STEAM CAPABILITIES ON INCREASING ESB'S emissions annually once operational in 2023.
FOR THE FUTURE ASSET BASE
16 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 17
1.6 GOVERNANCE 01
ESB BOARD
BUSINESS OVERVIEW
Responsible for the long-term success of ESB and for its overall judgement on matters of strategy, performance, resources and governance
ESB is committed to the highest standards of ESB has adopted a Code of Ethics, which sets to managing risk being defined by the ESB Risk
corporate governance to manage risk and support out our approach to responsible and ethical Policy and Governance Framework and a strong
sustainability and growth. ESB has put in place business behaviour. The underlying principle internal control framework. While the Board has
measures to comply with the Code of Practice of The Code of Ethics is that employees overall responsibility for the Group’s approach to CHIEF EXECUTIVE BOARD HEALTH,
Executive leadership of the Group’s business SAFETY AND ENVIRONMENT
for the Governance of State Bodies (2016). In best serve ESB by adhering to the highest risk, the responsibility for supporting the Board’s
COMMITTEE
addition, ESB complies, (on a voluntary basis standards of integrity, loyalty, respect, fairness review of the effectiveness of internal controls and To advise the Board on health, safety and
to the maximum extent possible as a statutory and confidentiality and by meeting all legal and risk management has been assigned to the Audit environment matters
EXECUTIVE DIRECTOR TEAM
corporation), with the UK Code of Corporate regulatory requirements. The Code of Ethics is and Risk Committee which played a key role in Leadership and control of the Group
Governance 2016 and the Irish Corporate published on the ESB intranet. Group Internal 2019 in ensuring that appropriate governance
Governance Annex. Audit investigates any reported breaches and challenge around risk and assurance were
and provides updates to the Audit and Risk embedded across the Group. The approach to ENVIRONMENT AND SUSTAINABILITY LEADERSHIP TEAM 02
A revised UK Corporate Governance Code was Committee: risk is set out further in section 3.6 of this report (ED GROUP PEOPLE AND ORGANISATIONAL DEVELOPMENT)
ECONOMIC PERFORMANCE
issued by the Financial Reporting Council (FRC) https://www.esb.ie/who-we-are/corporate- and in the Risk Report. Leadership on sustainability and owners of sustainability strategy
in July 2018 and applies for periods commencing governance/esbs-code-of-ethics-and-practice
on or after 1 January 2019. ESB completed GOVERNANCE OF SUSTAINABILITY BUSINESS UNIT ENVIRONMENT AND
a detailed review of the UK Code in 2019 in HUMAN RIGHTS The Board Committee on Health Safety and
ENVIRONMENT AND
SUSTAINABILITY MANAGERS
Operational Owners of Environment and
SUSTAINABILITY COMMITTEE
line with its “comply or explain” model and has ESB respects human rights and expects all Environment has oversight of environment (Chaired by ED Group People and
Sustainability at business unit level
implemented certain recommendations including suppliers/contractors providing goods, services and sustainability issues. The HSE Committee Organisational Development)
Organisational Development)
the establishment of a Cultural Dashboard report, or works to ESB and/or on behalf of ESB to monitors and tracks progress against
briefing the Board on the Stakeholder Mapping conduct their business in an honest and ethical environmental and sustainability targets and
and Engagement Plan, updated code of conduct
for Board members, carrying out a review of
manner, in accordance with all applicable laws,
and to respect internationally recognised human
assesses the implications of environmental
sustainability and climate issues for major 1.7 MATERIALITY APPROACH
the terms of reference of the Remuneration rights. As the parent of a number of subsidiary company plans and delivery of the company 03
Committee and revising ESB's Whistleblowing companies with significant operations in the UK, strategy. The Committee meetings take place five
and Protected Disclosure policy to provide further ESB has adopted a Policy on Modern Slavery times a year and facilitate detailed consideration ESB works in the very heart of every and interests of our stakeholders is front and the most material topics are identified and form
SOCIAL DISCLOSURES
guidance to employees on how to raise concerns. with the aim of preventing opportunities for of environment and sustainability matters on community across Ireland. Being embedded centre in delivering of our services and to help the bulk of the disclosures in this report, as per
PERFORMANCE
Exceptions to compliance with the UK Code modern slavery occurring within its business and behalf of the Board. in this way, brings a broad span of exposure shape a brighter future. From the consolidated the materiality matrix below. Disclosures focus
are outlined on page 91 of the annual Report. In supply chains. In accordance with the Act, ESB to and engagement with a wide range of engagements and inputs into the various on the most material issues identified in the top
this way, ESB adheres in so far as is reasonably publishes an Annual Statement setting out the The Environment and Sustainability Leadership stakeholders. In our purpose of creating stakeholder channels and a formal stakeholder right quadrant. As robust reporting and data
applicable to listed company governance steps that ESB has taken during the previous Team is chaired by the Executive Director a brighter future for the people we serve, engagement process, we identify the most sets are established, disclosures will expand to
standards. financial year to ensure that slavery and human Group People and Organisational Development we recognise that electricity is an enabler material topics raised by these internal include other issues of importance within the
trafficking is not operating within either its own and made up of senior managers from each of societal and economic wellbeing and and external stakeholders. The stakeholder matrix and newly emerging material issues.
ESB has put in place the appropriate measures business or its supply chains. The most recent business unit. The Environment and Sustainability a pathway to a decarbonised society. groupings that we engage with are detailed in
to comply with the State Code, which sets out Annual Statement was published in June 2019. Leadership Team is responsible for the overall Understanding the expectations, concerns section 1.8 of this report. From this process,
the governance framework established by the direction of Environment and Sustainability to
04
Government for the internal management and Our procurement policies are available here: deliver on the corporate strategy and for providing MATERIALITY MATRIX 2019
ENVIRONMENTAL TOPICS
the internal and external reporting relationships https://www.esb.ie/who-we-are/procurement/ leadership on environment and sustainability in
of State Bodies. ESB has a robust process procurement-policy each business unit.
Access and Affordability Carbon Emissions
in place to confirm compliance with the state HIGH
code and a report on such compliance is made DIVERSITY The committee meets four times a year to
annually to the Audit and Risk Committee. A report The Board, both for itself and the Group as a review progress and overall group performance. Ethics, Trust and Reputation
Security of Supply
confirming compliance is also issued annually to whole, is fully committed to diversity as a key The committee also oversees assurance on
the Minister for Communications, Climate Action value, and an important factor in achieving ESB’s environmental management through receiving Business Ethics
Demand Side Management
Importance to Stakeholders
and Environment (DCCAE) which confirms business objectives. It is committed to achieving reports from the Environment and Sustainability
compliance with the requirements of the State the optimal balance of skills, experience and Management Group, made up of the business Data Security & Product Quality &
Code. diversity among its members. In relation to Board unit Sustainability and Environmental Co-
Customer Privacy Safety
diversity, the Chairman of the Board, in assisting ordinators and Managers. The Group meets MEDIUM Community
Water 05
ESB values its reputation and maintaining best the DCCAE in drawing up the specification for monthly and tracks progress and debates
Renewables Environmental
practise governance arrangements is an important Board appointments, has regard to the benefits proposals and plans, agreeing on proposals
APPENDICES
Management Health & Safety
Development
aspect of ESB business performance. of diversity on the Board, as provided for under for consideration by the Environment and
the State Code of Practice guidelines and the Sustainability Leadership Team.
FULL DETAIL ON CORPORATE related “Guidelines on Appointments to State
GOVERNANCE IN ESB IS Bodies”.
AVAILABLE IN OUR 2018 Energy Management Staff Development
ANNUAL REPORT; & Efficiency
Risk management and reporting continues to be MEDIUM HIGH
a key area of focus for both the Board and the Importance to ESB
Audit and Risk Committee, with ESB’s approach
18 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 19
1.8 STAKEHOLDER ENGAGEMENT 1.9 ASSOCIATIONS AND EXTERNAL INITIATIVES 01
BUSINESS OVERVIEW
CHARTERS TO WHICH THE ORGANISATION SUBSCRIBES
As a business we generate and distribute community group and ranges in focus from prioritise the issues emanating from the various • Code of Practice for the Governance of State Bodies (2009)
electricity to homes, farms and businesses national to community level interests. From the external and internal stakeholder engagement • Bettercoal Code (2015)
across Ireland. This means that we have consolidated engagements and inputs into the channels and to formulate the issues output • UK Corporate Governance Code (2012)
a strong and visible interface with every various stakeholder channels and the formal from these engagements into a list of • Irish Corporate Governance Annex (2010)
community to which we provide electricity. stakeholder engagement process outputs, prioritised material issues. • The Prompt Payment Code of Conduct (2014)
Stakeholder engagement is central to the members of the stakeholder management • The Energy Engage Code (2014)
success of our business activities. Stakeholder group, together with the Environment & • E.DSO Sustainability Charter
engagement takes place at all levels, from Sustainability Leadership Team hold a
the policy makers right down to the local materiality workshop every two years to help PRINCIPAL ASSOCIATIONS TO WHICH THE ORGANISATION BELONGS 02
ESB plays an active role in many associations, both at a board level and as an active member. Playing an active role in such external associations is central
ECONOMIC PERFORMANCE
to the development of key staff, the promotion of engineering skills, developing common approaches on national policy, promoting diversity and inclusion in
society as well as policies consistent with national climate objectives.
STAKEHOLDER MATRIX
STAKEHOLDER GROUPING MEANS OF ENGAGEMENT SUBJECTS OF ENGAGEMENT KEY ISSUES • Association for Higher Education Access and Disability (AHEAD)
• Business In The Community (BITC) Ireland
• Bettercoal
Ministers & Government Depts. Policy meetings, consultations Energy policy, regulatory Energy policy, maintaining financial
DCCAE, DfE, DAERA, DBEIS, consultation processes, strategy strength • Business in the Community NI
DEFRA, PER (New ERA), DTTAS • Chambers Ireland
Market, Data and Transparency Price reviews, regular meetings, Compliance with licence and permit Compliance planning, Delivery of work • Chartered Institute of Professional Development
Regulatory Bodies (CRU, UR, programme meetings conditions, price reviews, work programmes, emission reduction plans, • CHAdeMO Association
Ofgem, ComReg, Ofcom, DPC, ICO, programmes. consultations. • Corporate Leadership Council
SIPO) 03
• Confederation of British Industry (CBI)
Networks Operators EirGrid, SONI, Scheduled meetings, programme Grid connections, work programmes, Renewable energy, network stability,
SOCIAL DISCLOSURES
• Diversity Charter of Ireland
National Grid meetings planning, renewable integration security of supply
PERFORMANCE
• European Distribution System Operators
• Electricity Association of Ireland (EAI)
Industry NGOs (Eurelectric, EAI, Consultation processes, information National and EU energy policy, Policy positions, climate action, • Electric Power Research Institute (EPRI)
IWEA, IBEC, CBI, AEP, IETA, meetings. climate action and sustainability competitiveness, supply security
Chambers Ireland, British Irish policy development, consultations. • Energy Networks Association
Chamber of Commerce, NI Chamber • Energy UK EV Task Force
of Commerce, Dublin Chamber, Cork • Engineers Ireland
Chamber.
• Eurelectric
Sustainability/Non industry NGOs Scheduled meetings, focus groups, Land access, work programmes, Emission reduction, corporate • Institute of Engineering and Technology
(BiTCI & NI, CDP, IIEA, IFA, Coillte) member fora, surveys CR programme, performance responsibility, renewable energy,
disclosures. planning • Institute of Directors
• Institute of Customer Service
04
Environmental Authorities (NPWS, Ongoing dialogue. Annual reporting, planning, safety Water conservation, energy efficiency, • Irish Wind Energy Association (IWEA)
UW, SEAI) waste
ENVIRONMENTAL TOPICS
• Irish Business and Employers Confederation (IBEC)
Environmental and Safety Licences, inspections, formal Licence conditions and compliance, Legal compliance. • Irish Marketing Institute
Regulators (EPA, NIEA, EA, HSA, compliance reviews annual reporting, dealing with • Low Carbon Vehicle Partnership
HSENI, HSE, RSA) breaches and complaints
• National Irish Safety Organisation (NISO)
Engineering and Scientific Industry for a, partnerships, Technology, skills pool, research Technical innovation, market disruption, • NI Chamber of Commerce
Research (UCD, ERC, UL, TUD, conferences, technical collaborations, partnerships, technology energy efficiency, availability of skills. • National Energy Action
TCD, NUI, EPRI, SEAI, VGB, QUB, ongoing dialogue deployment
• Open Charge Alliance
Public representatives, local Scheduled meetings, planning process, Planning concerns, building Community engagement, legal • Society of the Irish Motor Industry
authorities ongoing dialogue community support compliance
• The Society of Motor Manufacturers & Traders (SMMT)
Ratings agencies Scheduled review meetings Economic performance, Rating, ability to raise debt at • The Mediators Institute of Ireland.
Performance to Plan, Strategy, competitive rates, financial performance. • Ulster Wildlife
Funding rounds, Growth programme
05
Employees ESB Group of Unions Team and one-to-one meetings, Business performance, safe Employee engagement, Recognition
APPENDICES
surveys. working environment, fair and reward, Development
employment and trading practices,
sustainability
Customers (Domestic, Commercial, Social media, customer contact Price, continuity and quality of Energy price, disconnection policy,
Industrial) centres, surveys, via business supply, energy efficiency services, energy efficiency
development team disconnection policy.20 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 21
01
BUSINESS OVERVIEW
CHAPTER 2 02
ECONOMIC PERFORMANCE
ECONOMIC PERFORMANCE
2.1 Introduction
2.2 Investing for the Future
2.3 Indirect Economic Impacts
2.4 Pension Obligations
03
2.5 Procurement Practices
SOCIAL DISCLOSURES
PERFORMANCE
04
ENVIRONMENTAL TOPICS
05
APPENDICES22 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 23
2.1 INTRODUCTION 2.2 INVESTING FOR THE FUTURE (GRI 203-1) 01
BUSINESS OVERVIEW
In 2019 ESB delivered an improved financial performance KEY FACTS AND FIGURES Capital expenditure totalled €1,242 million
in 2019, an increase of €77 million on 2018.
CAPITAL EXPENDITURE
following profit reductions in 2017 and 2018 which were
OPERATING PROFIT* €’M Capital investment in the networks businesses
both challenging years. As we continue the transition to a
continued in 2019 with €735 million (59%
low carbon future ESB delivered Earnings before Interest, 800 2019 581 424 154 83
682 of the total capital investment) invested in the
Tax, Depreciation and Amortisation (EBITDA) of €1,372 597
635
600 networks infrastructure in Republic of Ireland
million, Operating Profit before exceptional items of €682 490
455 (ROI) and Northern Ireland (NI) in line with
million and capital investment of €1,242 million. Our
400 agreed regulatory programmes. Expenditure
gearing at the end of 2019 was at a relatively moderate
in Generation and Trading in 2019 amounted
level of 57% and during 2019, ESB successfully issued 200
to €424 million (2018: €299 million). This
Ireland’s first corporate public Green Bond. 2018 590 299 171 105
expenditure primarily related to the continued
Our 2019 performance reflects: 0
2019 2018 2017 2016 2015 02
investment in renewable generation including
• ESB Networks and NIE Networks continuing to deliver €227 million
ECONOMIC PERFORMANCE
€243 million in the 448 MW Neart na Gaoithe
safe and reliable networks with significant capital and (GB) offshore windfarm and €97 million in the 0 200 400 600 800 1000 1200 1400
* Before exceptional items. See Financial Review page 50.
maintenance programmes in accordance with their 114MW Grousemount wind farm in Co.Kerry,
■ ESB NETWORKS ■ GENERATION AND TRADING ■ NIE NETWORKS ■ OTHER SEGMENTS
regulatory contracts; EBITDA* €’M which is expected to become fully operational
• Generation and Trading (GT), operating successfully in 1,500 1,372 1,324 1,348 by the start of Q2 2020. Capital investment of
1,276
the first full year of the Integrated Single Electricity Market €83 million in other segments includes various
1,200 1,175
group projects such as the redevelopment
(I-SEM) and delivering continued growth in our renewable
900 of the Fitzwilliam Street Head Office and IT ESB’s Green Bond will primarily
portfolio (including further investment in offshore wind)
systems (see figure Captial Expenditure). contribute to Climate Change
with the 50% acquisition of the 448MW Neart na Gaoithe 600
Mitigation through the following
project in GB; 300 Eligible Green Project categories:
In June 2019, following the launch of ESB’s
• Customer Solutions continuing to innovate and create value Green Bond Framework the previous month,
1. Climate
0 Change
2019 2018 2017
for customers, including the application of enduring longterm 2016 2015
the Group issued a EUR €500 million 11-year Mitigation
03
savings to almost one million of its residential electricity and €197 million Green Bond with a fixed coupon of 1.125%. RENEWABLE ENERGY 6. Protection 2. Climate
gas customers. This was the first ever Irish corporate public of healthy
SOCIAL DISCLOSURES
Change
ecosystems Adaptation
Green Bond. The transaction was executed
PERFORMANCE
TOTAL ASSETS €’M
2019 Operating Profit (before exceptional items) is following an extensive European roadshow, ENERGY EFFICIENCY
EU
14,159 13,304 Environment
15,000 13,157
up 50% on 2018, primarily reflecting improved energy 12,294 12,907 involving more than 100 leading investors Objectives
3. Sustainable
margins from our thermal gas plant, lower operating costs 12,000 and resulted in ESB’s lowest coupon for a 5. Pollution
use and
protection
reflecting reduced overhaul spend, higher revenues in our senior bond. There was strong participation CLEAN TRANSPORTATION
prevention of water
9,000 control and marine
Customer Solutions business and foreign exchange. from socially responsible investors from a 4. Transition resources
to a circular
6,000 diverse range of geographies, demonstrating economy,
Arising from our announcement to close the midland 3,000 confidence in ESB’s Brighter Future Strategy waste
prevention
GREEN BUILDINGS
peat stations at the end of 2020, the re-organisation and associated investment programme. A and recycling
0
of Moneypoint arising from reduced coal running and 2019 2018 2017 2016 2015 dedicated Green Finance Committee has been
the closure of North Wall power station, an exceptional created to ensure compliance with the Green
€855 million 04
charge for related severance and associated costs on Bond Framework and to oversee the allocation
expenditure for ESB Networks for the coming capital and maintenance programmes are
ENVIRONMENTAL TOPICS
these plants of €60 million has been made. In addition, of the net proceeds of this Green Bond to
NET DEBT €’M
eligible projects that are sustainable and five-year period. The ESB Board welcomed delivered in accordance with these established
a further impairment charge of €34 million was made
6,000 5,239 socially responsible in areas such as renewable the Regulator’s proposal that the submission regulatory frameworks. ESB carefully and
against shareholder loans advanced to Tilbury Green
4,915 4,975
energy, energy efficiency, green buildings and should provide for the resources and capability continuously monitors all of these strategic
Power Holdings Limited (a waste wood to energy joint 5,000 4,377 4,524
clean transportation. For more information on required to deliver on the National Climate financial opportunities and challenges and
venture in GB). 4,000
the disbusal of funds raised by the Green Bond, Action Plan and ESB looks forward to working takes prudent financial actions, including
3,000
please refer to the Green Bond report in the constructively with the Regulator to finalise the management of the significant capital
ESB invested €1,242 million in capital expenditure in
2,000 proposal during 2020. programme, as appropriate, so as to enable
2019. Almost 60% of which was invested in our two Appendices, Chapter 5 of this report.
1,000 the delivery of Strategy 2030 while maintaining
networks businesses in line with agreed regulated capital
0 These public bond transactions enabled both All infrastructure development is subject ESB's financial strength. Please see also
programmes, including €64 million on Smart metering
2019 2018 2017 2016 2015 to appropriate planning authority approval, section 3.4, detailing further how we engage
roll out in ROI. As part of the transition to low-carbon the growth of ESB’s portfolio of renewable
generation ESB invested €340 million in renewable
€474 million assets and the early repayment of a portion of including the undertaking of Environmental with communities around these investment
ESB’s existing project finance debt Impact Assessments, as required. Operational determinations. 05
generation projects. Notwithstanding the exceptional
GENERATION ALL-ISLAND MARKET SHARE SUPPLY ALL-ISLAND MARKET SHARE procedures for works in and adjacent to
charge, as outlined above, ESB has delivered a strong
APPENDICES
70% 30% REGULATED INVESTMENT SAC's or where particular environmental or BOARD LEVEL OVERSIGHT
set of financial results in 2019, with Group EBITDA at 34%
ESB, Ireland’s leading energy utility, has a biodiversity risks may be identified, are in The Board has overall responsibility for risk
€1,372 million, a strong liquidity position of €1.5 billion
stable business profile with over two thirds of its place and subject to on-going review. Energy management and internal control. The main
and credit ratings of A- or equivalent with Standard & 66%
earnings and assets accounted for by regulated infrastructure needs assessment is undertaken financial risks faced by the Group related to
Poor’s and Moody’s (BBB+ standalone).
electricity networks in Ireland under established as part of the broader regulatory engagement liquidity, foreign exchange, interest rates,
and transparent regulatory frameworks. process, which culminates with a price review commodity price movements and operational
Revenue and other operating income before exceptional
ESB Networks made its Price Review 5 determination, incorporating specific asset risk. Policies to protect the Group from these
items at €3,718 million has increased by €285 million
(PR5) submission to the Commission for the development programmes, which form the risks, and other risk areas, such as credit risk,
compared to 2018 (€3,433 million). The increase is
Regulation of Utilities in November. This is a basis of investment programmes for our are regularly reviewed, revised and approved
primarily driven by higher revenue in Customer Solutions
very important process for the company, which regulated assets, at the scale summarised by the Board.
due to increased volumes and increased unit rates arising
■ OTHER POWER SUPPLIERS ■ OTHER POWER PRODUCERS above. Within our networks' businesses the
from increased wholesale energy prices in 2018. ■ ESB
will set the level of investment and operating
■ ESB24 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 25
2.3 INDIRECT ECONOMIC IMPACTS 01
BUSINESS OVERVIEW
INVESTMENT TAXES SUPPORTING
Investing over €1 billion per annum Annual payments across various COMMUNITIES
to facilitate a more sustainable headings Seek to empower and enrich
energy environment as well as the lives of individuals and
supporting economic growth communities through the
through providing, safe and reliable OVER €450 MILLION corporate social responsibility
electricity supply to homes and programme 02
businesses
ECONOMIC PERFORMANCE
OVER €2 MILLION
€1,242 MILLION
03
SOCIAL DISCLOSURES
PERFORMANCE
04
ENVIRONMENTAL TOPICS
EMPLOYMENT RETURN TO THE DEBT INDIRECT ECONOMIC IMPACTS (GRI203.2) RESIDENTIAL 05
Making a long-term commitment to SHAREHOLDER INVESTORS Investments in the generation portfolio are focused on accelerating investment in CUSTOMER
APPENDICES
employees, giving them the time to ESB targets an annual dividend of Annual interest and renewable energy to reduce the carbon intensity of the generation portfolio and SATISFACTION
build their skills and the opportunity 40% of adjusted profits after tax repayments support the transition to reliable, affordable, low carbon energy. Investments in Developing new and innovative
to advance their careers. the networks business in Republic of Ireland focused on the reinforcement and products and services for
Supporting jobs through contractor construction of new network infrastructure to facilitate the connection of renewables customers aimed at improving
and supplier service contracts €88 MILLION FOR 2019 €741 MILLION and the diversification of electrification, whilst also committing significant investment customer experience and
to maintaining existing network. NIE Networks focused on the delivery of its network empowerment
investment plan under RP5 to achieve reliability of supply and ensure the safety of the
163 APPRENTICES network for customers, as well as continuing investment to facilitate the connection of 84%
AND GRADUATES additional renewable generation and the replacement of customer meters.
RECRUITED IN 201926 ESB Sustainability Report 2019 -Powering the Transition to a Clean Energy Future ESB Sustainability Report 2019 27
2.4 PENSION OBLIGATIONS (GRI 201-3) 01
BUSINESS OVERVIEW
ESB expects our suppliers/contractors of all tiers to comply with all applicable laws and to respective internationally recognised human rights. ESB’s Supplier
Charter sets out the basic principles that all ESB suppliers, service providers and contractors are expected to comply with in relation to:
The Group companies operate various pension schemes in the Republic of Ireland and Northern Ireland, which are funded through payments to trustee Conduct of business
administered funds. All permanent staff are members of either the Defined Benefit Plan or another retirement plan. Health & Safety
Environment (GRI308-1)
2.4.1 Pension schemes in the Republic of Ireland Ethics, Bribery & Anti-corruption
The Group operates two pension schemes, which are called the ESB Defined Benefit Pension Scheme and the ESB Defined Contribution Pension Scheme. Employment Standards and Modern Slavery.
Pensions for the majority of employees in the electricity business are funded through a contributory pension scheme called the ESB Defined Benefit
Pension Scheme. The fund is vested in Trustees nominated by ESB and its members for the sole benefit of employees and their dependants. The Scheme is ESB’s Requirements for Third Parties gives contractual effect to these expectations, and copies of these documents and other relevant ESB Procurement
registered as a Defined Benefit Scheme with the Pensions Authority. Policies are publicly available on the ESB Group website; www.esb.ie/who-we-are/procurement
The regulations governing the Scheme stipulate the benefits that are to be provided and the contributions to be paid by both ESB and the contributing
members. Benefits payable are determined by reference to a Career Average Revalued Earnings (CARE) pension model for benefits earned after 1 January ESB’s Supply Chain supports its business operations across the value chain in generation, networks and supply - including its international activities. With 02
2012 (previously based on final salary). ESB has no legal obligation to increase contributions to maintain benefits in the event of a deficit and ESB’s rate of an annual procurement spend (excluding fuel) of approximately €900m, we rely on a complex and diverse supply chain in order to provide the services
ECONOMIC PERFORMANCE
contribution cannot be altered without the agreement of ESB and approval of the Minister for Communications, Climate Action and Environment. Should an necessary to meet our customer’s needs. Of this spend approximately 75% is sourced from suppliers within the Republic of Ireland & Northern Ireland, 13%
actuarial deficit arise in the future, ESB is obliged under the Scheme regulations to consult with the Superannuation Committee, the Trustees and the Scheme from the UK, and 9% from other EU member states (GRI204-1). We currently have approximately 4600 Tier 1 suppliers, ranging from local SME’s & micro
Actuary to consider the necessity of submitting an amending Scheme for Ministerial approval. companies to large multi-national corporations / contractors, with whom we placed over 40,000 purchase orders in 2019.
Under the 2010 Pensions Agreement (approved by employees in July 2010 and formally ratified by the Board of ESB on 20 October 2010), ESB agreed GRI 204-1: PROPORTION OF SPENDING ON LOCAL SUPPLIERS
to a once-off cash injection into the Scheme, payable over a number of years, which had an agreed valuation for actuarial purposes as at 1 January 2010 Location Name %
of €591.0 million. The fixed contribution rates for the employer and for employees were not changed. Under the Agreement membership of the Scheme UK, NI & Ireland 88%
has been closed to new joiners. The obligations to the Scheme reflected in ESB’s financial statements have been determined in accordance with IAS 19
Employee Benefits. Given that the Scheme is not a typical “balance of costs” Defined Benefit Scheme (where the employer is liable to pay the balance of Contracts range from standard supply type arrangements for consumable items, such as tools & equipment to more complex service / works contracts for
renewable generation, smart metering installation, networks substation & overhead/underground line construction & refurbishment, customer billing & metering
contributions required to fund benefits), the obligations to be reflected in the financial statements require the exercise of judgement. Should a deficit arise in
services and financial & engineering related consultancy assignments. Where technical considerations allow, we favour the use of functional and performance-
the future, the Company, as noted above, is obliged to consult with the parties to the Scheme. However, ESB has no obligation to increase contributions to 03
based specifications, supported by International/European standards. All significant contracts are advertised in the Official Journal of the European Union.
maintain benefits in the event of a deficit and the Company does not intend that any further contributions, other than the normal on-going contributions and
the balance of the Company’s €591.0 million additional contribution (committed to as part of the 2010 Pensions Agreement), will be made. Therefore, ESB
SOCIAL DISCLOSURES
Many of these contracts by their nature are labour intensive and it is essential that suppliers maintain a strong culture of corporate responsibility, in addition to
has concluded that the financial statements should reflect its obligations to the Scheme, which consist of:
PERFORMANCE
good sustainable and environmental practices. During 2019 ESB conducted desktop assessments of over 400 suppliers for the potential of modern slavery /
a. any remaining amounts to be paid in relation to the once-off contribution agreed pursuant to the 2010 Agreement (€591.0 million in 2010 money to be forced labour in their supply chains, in addition to conducting over 100 contractor employment standards audits on ESB sites in the Republic of Ireland during
paid over a number of years); 2019 (GRI409-1).
b. pre-existing commitments relating to past service (the present value of the agreed contributions that relates to service prior to October 2010); and Sustainability features are generally sought from tenderers where such features contribute to the delivery of ESB’s sustainability goals. Some notable
c. Past Voluntary Severance (VS) Programmes – in 2010 the Company recognised a future commitment in respect of staff who have left the Company procurements that included a strong sustainability remit in 2019, included:
under past VS programmes. ESB will make pension contributions in respect of those staff and these are recognised at fair value.
Mini-tenders for Wind Turbines for a number of high-profile renewable projects in ROI & UK
Ongoing contributions (up to 16.4%) are recognised in the income statement as incurred. Any unpaid amounts at year end are recognised as liabilities on the ESB’s Integrated Facilities Management Framework Agreement, which placed a clear emphasis on the importance of using environmentally friendly
balance sheet. cleaning products, the need to reduce, re-use and re-cycle materials, and the requirement to work closely with supply chain partners of all tiers to supply
environmentally friendly services
The ESB Defined Contribution Pension Scheme is a defined contribution scheme and contributions to the Scheme are accounted for on a defined ESB’s Shuttle Bus Tender to our temporary Head Office in Gateway sought information on how tenderers propose to adhere to emission standards and how
04
contribution basis with the employers’ contribution charged to income in the period the contributions become payable. The percentage of salary contributions their respective telematics system monitors and reports on individual vehicle fuel efficiency.
ENVIRONMENTAL TOPICS
made by individual employees to the scheme are confidential between ESB and the individual employee.
ESB’s aim is to ensure that sustainability is embedded across every business function including Procurement. In Procurement very significant elements of our
business operations are transacted electronically, including the issue and receipt of tenders and purchase orders to our suppliers. ESB are also committed to
complying with the terms of applicable late payments legislation and are signatories to the Prompt Payment Code of Conduct. ESB’s standard terms of payment
2.5 PROCUREMENT PRACTICES
are Nett Monthly Account. In recent years ESB has significantly increased the number of PDF invoices received from suppliers - 72% of all invoices received
in 2019 were in PDF format. The key benefits for suppliers for submitting invoices in this way include, traceability and the ability to email queries to a dedicated
mailbox for quick resolution. This is a no cost option to suppliers and means invoices can be processed much quicker. This also has a positive environmental
impact due to the reduction in the submission of paper-based invoices, envelopes and associated postal costs.
ESB’s Supply Chain is key to our business success and delivery of the Group’s Brighter Future Strategy. ESB’s procurement strategy is aligned to the
delivery of these business objectives & sustainability goals. 2.5.1 Modern Slavery
As an organisation that operates in the United Kingdom, ESB fully supports the aims of the UK Modern Slavery Act 2015 and has a zero-tolerance approach
Competitive tendering is our standard procurement procedure, and all procurement processes are undertaken in a non-discriminatory, transparent and to modern slavery. In order to prevent acts of slavery and human trafficking from occurring within its business and supply chains ESB has taken a number
proportionate manner. This process ensures equal treatment, non-discrimination, mutual recognition and freedom to provide services and establishment, in of steps, including the adoption of a Policy on Modern Slavery, which is published on ESB’s website; https://www.esb.ie/who-we-are/procurement/ 05
line with applicable procurement law, the Irish Government’s Code of Practice for the Governance of State Bodies and EU Treaty Principles. procurement-policy.
APPENDICES
It is custom and practice in ESB to conduct tender evaluations based on the total lifetime cost (LCC) of a product or service. ESB are increasingly using ESB seeks at all times to comply with employment law applicable to the jurisdictions in which it operates and puts in place contractual arrangements with
sophisticated LCC models to capture whole life costs when assessing major projects and equipment purchases. For example, tailored LCC’s are used to providers of agency staff requiring that they achieve the same level of compliance.
evaluate the cost and efficiency of renewable generation tenders. For the purchase of vehicles, the total cost of ownership (fuel and Adblue), maintenance Following on from its previous statements on the prevention of slavery and human trafficking, ESB has, during 2019, taken the following steps to prevent acts
and emissions are assessed along with the upfront purchase cost. Similarly, a Total Cost of Ownership (TCO) model is used to assess the total cost of of modern slavery from occurring within its supply chains:
major items of equipment, which may include a range of cost inputs including purchase price, energy usage (load or otherwise) prototyping costs, type tests,
installation costs, maintenance and end of life costs. • Risk assessed all vendors with an annual spend of greater than €250,000 based on their geographical location & industry sector (415 vendors in total)
• Issued questionnaires to vendors identified as being potentially high risk based on this assessment and the previous year’s review
• Assessed these returns and identified three vendors for external auditYou can also read
