Principles governing this report
This now the twelfth straight year in which Abengoa has published its Corporate Social Responsibility Report (CSRR). This report describes the company’s main activities and impacts, strategy and business model, changes in its scope and structure, as well as goals and challenges. The CSRR was prepared this year in accordance with the directives set out in the Global Reporting Initiative (GRI) G4 Guidelines1 in line with the exhaustive option (exhautive). Abengoa also adheres to the principles of the Accountability AA1000 APS2 (2008) standard and is committed to furthering and upholding the ten principles of the United Nations Global Compact governing the company’s performance, activity and strategy.
Additionally, the company continues to work toward improving its report, including new reporting frameworks that may bring added quality and new contents to the information published. For this reason, Abengoa progressively incorporates aspects defined by the International Integrated Reporting Council (IIRC)3. The report presented here now includes specific contents pertaining to this reporting framework, such as the information contained in the chapter titled “Business Model” on the company’s operating mechanism and activities, or the description provided in “CSR Strategy” regarding the connection that exists between strategy and the definition of report content and focus based on the challenges facing the company.
Note 1: GRI4 (guidelines): new guidelines published by the Global Reporting Initiative for the preparation of sustainability reports.
Note 2: AA1000 AS standard: international standard for sustainability assurance based on the princliples of inclusivity, relevance and responsiveness.
Note 3: International integrated reporting council (IIRC) organization founded in 2010 for the purpose of preparing the Integrated Reporting guide, aimed at integrating financial and non – financial information into the annual reports of corporations. (+info)
Independent Panel of Experts Sustainable Development Recommendation 2014
"The most precise definition possible of those issues which have the greatest environmental, social and governance (ESG) impact should form the basis for Abengoa’s sustainability strategy and policies.
While the identification of internally generated material issues is again well described, the weighting of issues from external stakeholders is less clear. Additionally, given Abengoa’s strong presence in Latin America, there are no specific references to key regional issues or related stakeholder input.
The three focus areas identified in the 2013 Report of Financing, Corporate Governance and the Need for a Stable Legal Framework are not explained in terms of their ESG impact. They contrast strongly with the Chairman’s statement which highlights climate change, energy efficiency and renewable energy growth as top issues for the company. Indeed the latter areas reflect expected stakeholder concerns for an engineering and construction company with strong activities in water and waste management and solar power. Abengoa is strongly encouraged to set out its longer term vision of how to achieve these fundamental goals and what risks and opportunities exist in the near and medium term future?."
"The criteria used in preparing the CSRR 2013 are clearly laid out but by including “full coverage” under the completeness category, the focus on key ESG material issues becomes lost in the length of the report. Following the above three issue categories the CSRR could be greatly improved by:
- Concentrating on the key issues determined via the materiality assessment.
- Stating the key sustainability policies and the performance indicators used to measure them.
- Reporting on achievements against set targets as the process of accountability by the company to its sustainability commitments.
(1) The chapters titled “Access to financing”, “Talent for business success” and “Connecting with the social environment” describe the company’s main stakeholders.
(2) Further information in the chapter titled “CSR Strategy”.
(3) Further information in the chapter titled “Connecting with the social environment”.
(4) Independent group of experts on different areas of sustainability that evaluates Abengoa’s Corporate Social Responsibility performance and strategy on an annual basis.
Scope of the information included in CSRR 2014
Unless specified otherwise in the text or in the data reported, all information and all performance indicators included in the CSRR refer to activity conducted in 2014 by the companies under the control of Abengoa (reflected in the annual accounts) when this has a social, environmental and economic impact both within and outside the corporation’s perimeter. So as to ensure the information reported can be compared, data for previous years has also been included. Data for 2012 was recalculated in CSRR 2013 to include comparable data with the exclusion of the Environmental Services business division4.
Focusing the report on materiality
In order to identify the issues which are material for Abengoa, the company has applied the content requirements established under the GRI G4 Guidelines in preparing this report. This guide defines the materiality process as the task of identifying what is important and where it is important, which increases the relevance of two variables: the company’s value chain5 and the main regionsn which the company operates. Abengoa performed a materiality analysis in 2014, lending continuity to the analysis conducted in previous years, while taking both variables into account.
This definition of material information constitutes a formal procedure adhered to by the company in its CSR management, which also enables it
to detect information that has sufficient relevance to be included in the CSRR, information that should be published on other media (such as the corporate website), and information which is not relevant.
The process got under way by taking the issues determined to be relevant in the preceding year and adding in other new issues identified during the external documentation process. The company also paid close attention to public information issued by other competing companies operating in the sectors in which Abengoa operates and the questions posed by the Independent Panel of Experts on Sustainable Development (IPESD). In addition to identifying new topics, the aim of this process is to focus efforts on delving deeper into the matters already deemed relevant by the company in order to approach prioritization from different perspectives and progressively adopt different variables, such as the components that make up the company’s value chain and the regions in which the company carries out its activities.
The next step was to categorize the issues raised based on their importance for a company such as Abengoa (sector). A methodology was also developed to enable the company to perform external and internal prioritization of the list of previously identified issues.
External prioritization was carried out by analyzing the information deemed important by different endorsers and opinion creators, taking into account the influence of each topic in the decision-making process of the company’s stakeholders, analyzing the requirements of investors, who take into account environmental, social and governance aspects, and examining the reputational crises arising in 2014. In selecting endorsers for consultation, the different sectors of company operation (water, energy and construction) were taken into consideration. In total, priorities were established based on 20 organizations. 6
Note 4: The Environmental Services business division was sold in July 2013.
Note 5: Value chain: The series of actions and activities tha make up a company’s productive process, encompassing both the organization itself and agents involved in the life circle of the products and sevices the company off to the market
Note 6: Direct interviews and documentation analysis were carried out.
Also taken into account were the stakeholder channels he company has in place (including customers, investors, suppliers and local communities).
Internal prioritization was carried out with diversity criteria in mind –in terms of responsibility, region and gender– at the annual meetings held by the Committees on Relevant Issues at Abengoa. These committees are made up of employees from all areas of management of non-financial information considering diversity criteria –both responsability as geographic and gender–. During these committee meetings, assessments were made regarding the importance in terms of impact on the business of each matter at the different points along the value chain.
(1) SASB: Sustainability Accounting Standards Board.
The diagram shows the results obtained from internal and external prioritization. This provides the basis for determining the topics on which exhaustive information («focus»)7 must be included in the CSRR («report»), and indicates the number of times that each matter impacts the components of the value chain,, which is represented by the size of the spheres. The company continues to work on identifying the main geographies in which the “focus” issues bear greater relevance.
Note 7: Upper right quadrant of the diagram.
Shown below is the internal relevance assigned to each issue at each point along the value chain.
Process and functions of the Independent Panel of Experts on Sustainable Development (IPESD)
Since 2007, the company has engaged each year in a voluntary exercise aimed at further transparency by undergoing the evaluation of an Independent Panel of Experts on Sustainable Development (IPESD).
During this process, the company works continuously in conjunction with the panel so that each evaluation brings greater added value to the company rather than carrying out a mechanical or systematic assessment process. Therefore, in 2014, the IPESD opted for assessments focused more on the company’s CSR policy , and performance in lieu of doing so on the basis of the information published in reports from previous years.
At a personal meeting held in Madrid, Abengoa presented the members of the panel with its responses to each of the recommendations issued by the panel. The recommendations of the IPESD are included in pertinent chapters throughout this report and indentified as follows: “2014 Recomendation of the IPESD”. Additionally, the Recommendation Report prepared by the panel based on the analysis sessions conducted can be found in both Appendix E and on the Abengoa website.
Corporate Social Responsibility Management System
Abengoa’s Corporate Social Responsibility Management System8 is intended to provide information control to facilitate responsible management that seeks to minimize the negative impacts associated with company operations, while increasing the positive impacts derived from company activity. The system is grounded in Abengoa’s mission, vision and values and encompasses policies defined by the company as well as the public commitments undertaken throughout the company’s history. Additionally, this system was designed in accordance with the international ISO 26000:20109tandard and alignment to the standard is verified on an annual basis by an independent third party.
Note 8: Social Responsability Management System: covering indicators of relevance in managing company performance in the three CSR areas (social, environmental and economic).
Note 9: ISO 26000: international standard which provides performance guidelines for all types of organizations in areas related to social responsability, the environments, human rights and consumer rights.
Below is a description of the different components that provide input to the system:
(1) Integrated Sustainability Management System: computer tool enabling management of the company’s non-financial information through subsystems.
(2)Greenhouse Gas (GHG) Management System: managing the GHG emissions associated with Abengoa products and services, including supplier emissions.
(3) Environmental Management System: managing the facility-level impact of Abengoa operations on the environment.
(4) Corporate Social Responsibility (CSR) Management System: covering indicators that are relevant for the company in the three dimensions comprising CSR: environmental, social and economic.
(5) People Center: computer tool that manages all of the information pertaining to employee contracts and payroll.
(6) C@mpus: used to manage training at Abengoa.
(7) InPreso: contains information relating to employee health and safety and hours worked.
(8) Management Balance Sheet.
How Abengoa ensures information quality
It is essential for Abengoa to have reliable and rigorous information readily available to enable the company to accurately determine the impact of company operations. To this end, Abengoa has devised a set of internal controls that are part of the CSR management system which applies to the different tools used for reporting and consolidating non-financial information (including the EMS and GHG systems, among others).
These control mechanisms are overseen by the non-financial internal auditing unit, which is dedicated solely to verifying the information pertaining to the three dimensions of CSR.
(1) ISAE 3000: Benchmark stablishing paramenters for the verification of non-financial information.