Material Sustainability Matters
Material impacts, risks and opportunities and their interaction with strategy and business model
SBM-3-48
In 2024, Alpiq conducted a CSRD-aligned DMA for the first time. For this reason, it is not possible to make a comparison to IROs from previous reporting periods.
According to the DMA conducted in 2024, Alpiq’s IROs are concentrated on the environment dimension, but are also present in the social dimension. The sub-topics identified to be material are the following:
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- E1 Climate change mitigation
- E3 Water and marine resources
- E4 Direct impact drivers of biodiversity loss
- S1 Working conditions
Even though IROs were found to be relevant for the whole value chain, they are concentrated in Alpiq’s own operations, in particular when it comes to environmental risks linked to energy production.
In conducting the DMA, Alpiq identified sustainability topics of high relevance to the company, taking into account both the impact of Alpiq’s business on the environment and people (inside-out/impact perspective), as well as the risks and opportunities (outside-in/financial perspective) Alpiq is facing due to external effects such as climate change.
The following tables illustrate the findings of the DMA. There are two tables showing material actual or potential impacts (positive and negative), one table showing material opportunities, and one table showing material risks.
Material positive impacts
Material impact | ESRS topic (level 1) | Description | Time horizon 1 | Value chain location | Stakeholders affected (category) |
Renewable energy portfolio | E1 Climate Change | Providing renewable electricity (from hydropower, wind and photovoltaics) to customers helps reducing customers’ Scope 2 emissions. | S, M, L | Downstream | Nature |
Renewable energy portfolio | E1 Climate Change | Contributing to the green energy transition by supporting the development of local renewable energy and flexible power plants in line with the Confederation’s 2050 and EU Energy Targets and through participation in round tables organised by the federation. | S, M, L | Own operations | Nature |
Energy efficiency | E1 Climate Change | Reducing environmental impact through energy-efficiency measures and investments that reduce energy use in own buildings. | M, L | Own operations | Nature |
Environmental management system | E1 Climate Change | Systematic control and reduction of environmental impacts, e.g. through hydro sanitation, impact studies for new projects, certification by the Eco-Management and Audit Scheme (EMAS), installation of on-site electric car charging stations, or efficiency increases in thermal assets. | S, M, L | Own operations | Nature |
Certified renewable energy consumption | E1 Climate Change | Reduction of environmental impact by using certified renewable electricity consumption for plants and office buildings. | S, M, L | Own operations | Nature |
Energy transition investment | E1 Climate Change | Supporting energy transition by participating in and working on hydrogen and battery storage projects. | S, M, L | Own operations | Nature |
Electrification | E4 Biodiversity and Ecosystems | Energy use contributes to electrification and reduces the negative impact on biodiversity and nature in diverse sectors, such as the transport industry. | S, M, L | Downstream | Nature |
Awareness training | S1 Own Workforce | Positive impact on employees by spreading awareness, training employees, and maintaining processes for managing near misses, unsafe conditions and unsafe behaviour. | S, M, L | Own operations | Own workforce |
Employment of external temporary staff | S1 Own Workforce | Bridging short-term staff shortages with external temporary staff and employees working on consultancy mandates to ensure employee’s work-life balance. | S, M | Own operations | Own workforce |
Social dialogue | S1 Own Workforce | Social dialogue impacts employees’ well-being, work-life balance and mental health. Impact on own workforce as well as potential spill-over effect on peers. | S, M, L | Own operations | Own workforce |
1S = Short Term, M = Medium Term, L = Long Term
Material negative impacts
Material impact | ESRS topic (level 1) | Description | Time horizon 1 | Value chain location | Stakeholders affected (category) |
Scope 1 and 2 GHG emissions | E1 Climate Change | Scope 1 and 2 GHG emissions (e.g. CO2, NOx, SF6 etc.), mainly from the operation of own power plants, i.e. CCGT power plants. | S, M, L | Own operations | Nature |
Scope 3 GHG emissions upstream | E1 Climate Change | Scope 3 GHG emissions in the upstream supply chain mainly caused by drilling, the extraction of gas and biogas, the production of capital goods for renewable energies, energy production for energy trading, upstream transportation and the production of energy storage (batteries). | S, M, L | Upstream | Nature |
Scope 3 GHG emissions downstream | E1 Climate Change | Scope 3 GHG emissions in the downstream supply chain mainly caused by the consumption of fossil fuel energy traded by Alpiq, transmission and distribution losses, and end-of-life treatment of energy storages and power plants. | S, M, L | Downstream | Nature |
Scope 3 GHG emissions upstream and downstream | E1 Climate Change | Scope 3 GHG emissions in the upstream and downstream supply chain due to the transportation of gas, biogas, and hydrogen, e.g. the leakage of methane during transportation. | S, M, L | Upstream and downstream | Nature |
Water use in supply chain | E3 Water and Marine Ressources | Significant water withdrawal, consumption and discharge which affects water availability and the state of habitats, with potentially negative impacts on local communities. | S, M, L | Upstream | Affected communities |
Water use in own operations | E3 Water and Marine Ressources | Significant water withdrawal, consumption and discharge which affects water availability and the state of habitats, with potentially negative impacts on local communities. | S, M, L | Own operations | Affected communities |
Nurturing life on water in own operations | E4 Biodiversity and Ecosystems | Construction in areas occupied by natural environments worthy of protection. Hydropower plants and wind turbines are often located in biodiversity-critical areas. | S, M, L | Own operations | Nature |
Nurturing life on water upstream | E4 Biodiversity and Ecosystems | Building new power plants, production facilities or mines has negative impacts on the environment, e.g. loss of surface area usable by flora and fauna, and changes to the soil on this surface area. | S, M, L | Upstream | Nature |
Light pollution | E4 Biodiversity and Ecosystems | Energy production and use, as well as construction work, create light pollution, disrupting species’ light-dark cycle and affecting their survival. | S, M, L | Downstream | Nature |
Occupational safety and health incidents in own workforce | S1 Own Workforce | Occupational safety and health incidents can negatively impact workers by creating physical harm, psychological distress and a lower sense of security in the workplace. | S, M, L | Own operations | Own workforce |
1S = Short Term, M = Medium Term, L = Long Term
Material opportunities
Material opportunity | ESRS topic (level 1) | Description | Time horizon 1 | Value chain location |
H&S awareness | S1 Own Workforce | Opportunity to reduce workplace accidents and absenteeism rate by improving H&S awareness. | S, M, L | Own operations |
1S = Short Term, M = Medium Term, L = Long Term
Material risks
Material risk | ESRS topic (level 1) | Description | Time horizon 1 | Value chain location |
Direct risks of climate change | E1 Climate Change | Less efficient cooling systems for CCGT power plants if river water temperature rises above standard and extreme hydro intakes occur due to variations in precipitation, lower total precipitation in the long term, glacier retreat, and more sediment. | S, M, L | Own operations |
Physical and transition climate change risks | E1 Climate Change | Risks of downtime, higher insurance costs, reputational damage, increased operational expenses for damage mitigation and compliance measures, e.g. due to flooding, strong winds, heavy rainfall, and high temperatures. | S, M, L | Own operations |
1S = Short Term, M = Medium Term, L = Long Term
The identified material IROs as presented in the above tables are taken up in Alpiq’s yearly strategy review and thus serve as a basis for decision-making and inform strategic initiatives, business plans etc.
Description of the processes to indentify and assess material impacts, risks and opportunities
IRO-1-53
The process and methodology applied for conducting the DMA can be described as a set of successive steps:
Understanding phase:
- Mapping of the value chain: the value chain (including own operations, upstream and downstream activities) was identified and mapped to Alpiq’s internally used principle of value chain elements (Asset, Trading and Origination) and business segments (Asset Renewable Energies, Asset Non-Renewable Energies, Energy Trading, Origination and Cross-Activities).
- Site and asset-level assessment considerations: identification of subsidiaries, sites and assets where specific material topics are applicable.
- Identification and classification of stakeholders: Alpiq stakeholders were identified and classified to inform the selection of stakeholders (or stakeholder representatives), to be involved in the DMA and engaged with on a regular basis.
- Creation of long list of sustainability matters: sustainability matters were identified based on the sector-agnostic sustainability matters covered in the ESRS, sector-specific topics from the Sustainability Accounting Standard Board’s (SASB) internal documentation, external sources and peer benchmarking.
- Creation of short list of sustainability topics: the list was reduced to only include relevant topics. If a topic from the long list was identified as not relevant a reasoning was included.
Identification phase:
- Definition of IROs: Topics on the short list were further broken down into sub-topics and sub-sub-topics, in order to define IROs at a more granular level. IROs were pre-identified by the DMA project team and mapped to ESRS and SASB sub-(sub)-topics. The DMA project team consisted of the Alpiq Lead Group Sustainability Team and Alpiq’s advisor. For the pre-identification of IROs, internal analysis (e.g. ERM or impact assessments) as well as external documents (e.g. industry reports, scientific research) were used. The IROs were then reviewed by Alpiq internal experts, and review outputs were discussed during two workshops, leading to a final list of IROs.
Assessment phase:
- Establishment of assessment criteria: criteria and scores for assessing the scale, scope, irremediability and likelihood (of impacts) and likelihood and magnitude of the potential financial impact (for risks and opportunities) were defined. For the financial assessment, Alpiq’s ERM was used to inform the scale.
- Assessment of IROs: Alpiq’s internal experts assessed the IROs based on their topic expertise. Their assessments were verified by the DMA project team and potential assessment discrepancies were discussed in order to arrive at a final assessment.
Determination phase:
- External stakeholder engagement: Alpiq conducted surveys and interviews with external stakeholder groups, namely banks, business partners, customers, NGOs (WWF and Pro Natura), shareholders and suppliers, in order to include the perspective of external stakeholders in the assessment. The following topics were analysed: affected communities, biodiversity & ecosystems, business conduct, business model resilience, child labour and forced labour, circular economy, climate change, consumers and end-users, critical incident risk management, equal treatment and opportunities for all, grid resilience, health & safety, pollution, security of supply, waste, water & marine resources, and working conditions for workers in the value chain.
- Alpiq asked the BoD and EB to provide a financial and impact assessment of all topics under discussion. The result served as an indication as to which topics are material for Alpiq.
- Determining material sub-topics: Alpiq decided to set the threshold at 4.2 (on a scale from 1 to 5), enabling the company to focus on the key impacts, risks and opportunities. The materiality outcome was presented to and approved by the EB and the NRSC.
- Documentation of the DMA process: the process used to conduct the DMA was documented.
In order to ensure that Alpiq stays up to date with regard to material IROs, the Sustainability Committee will review the DMA and resulting IROs once a year and decide on potential changes to them. If material IROs change, the Sustainability Committee will inform the EB.
ESRS 2 IRO-1 53 (a),(b),(c),(d),(e),(f),(g),(h)
Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement
Material topics and sub-topics identified through the DMA were displayed in a double materiality matrix in accordance with their ratings for financial materiality and impact materiality. It was then decided where to set the materiality threshold above which a topic or sub-topic should be considered material and therefore be reported on in the Alpiq Sustainability Report going forward. In order to be able to make an informed decision regarding the threshold, benchmarking, practices followed by peers, the company’s strategic directions and previous DMA outcomes were taken into consideration.
After identifying material topics and sub-topics, a scoping exercise was conducted in order to determine materiality at a requirements level (for material topics and sub-topics). Some requirements were deemed not to be in scope due to missing materiality, even if the topic/sub-topic as a whole was considered to be in scope. The result of the scoping exercise served as the basis for the disclosure requirements included in this Sustainability Report. However, material requirements for which data is missing were omitted in this year’s report but will be included in the Sustainability Report 2025 to ensure CSRD-compliance.
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A list of the disclosure requirements complied with in the Sustainability Report 2024 can be found in the ESRS Index in the Appendix.
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After covering the general disclosures, the Sustainability Report follows by disclosing information belonging to the environment, social and governance spheres as well as sector-specific information.