Our approach to sustainability
Sustainability, and energy transition,
TAKES INGENUITY
ACWA Power regards sustainability and ESG as essentially the same because for us to have a sustainable operation we seek to conform to internationally recognised environmental, social and governance standards. This review demonstrates ACWA Power’s commitment to sustainability and contains our ESG strategy, framework and metrics.
It is widely accepted that sustainability and ESG reporting is a dynamic process and that organisations are typically on a journey of improvement. Hence, ACWA Power reviews and updates its reporting every year in the light of our growth and development, evolving international standards, changing stakeholder needs, and our progress in data capture and analysis.
Our sustainability reporting aligns with the principles of the Global Reporting Initiative (GRI) 2021 and we aim to report in full compliance with GRI and World Economic Forum (WEF) standards in due course.
The WEF has established a set of ‘Stakeholder Capitalism Metrics’ to help companies align their reporting on performance against environmental, social and governance (ESG) indicators and track their contributions towards the SDGs on a consistent basis. This has been developed within the International Business Council, a community of over 120 global CEOs, and seeks to improve the ways that companies measure and demonstrate their contributions towards creating more prosperous, fulfilled societies and a more sustainable relationship with our planet.
In 2023, we will be monitoring international best practice, refining our ESG strategy and framework, conducting further stakeholder analysis and rolling out our own comprehensive ESG dashboard of metrics.
We are acutely aware that our health and safety record includes, tragically, three fatalities in 2022 and regard the avoidance of accidents as our first and foremost priority in 2023.
Our ESG strategy
There is growing recognition in the investor community that ESG issues have a direct correlation with the economic value of an investment. Most investors are now taking meaningful steps to integrate ESG considerations into their investing criteria when evaluating the environmental and social impact of their portfolios.
This became even more relevant in 2021 when ACWA Power shares debuted on the Saudi Exchange’s main market. The Saudi Exchange is a partner exchange which supports the UN Sustainable Stock Exchanges Initiative. It has an ESG reporting framework and encourages sustainable investment, in collaboration with market participants such as issuers and investors.
ACWA Power’s ESG strategy is integral to our business strategy — we see it as a source of long-term value creation. The cornerstone of our ESG approach and strategy is centred on energy transition, low-carbon product leadership, water management, health and safety, and corporate governance. As such, we are responding to a changing societal context, as well as supporting the shift to a low-carbon economy, while capturing growing business opportunities in energy transition. This strategy also enables the investment community to assess our performance against ESG-related indicators, and it demonstrates transparency and the effective management of our priorities. It is shaped by our stakeholders’ priorities and, as such, we engage with a variety of key stakeholders, including employees, off-takers, partners, shareholders and suppliers.
In 2021, while we continued to work towards our ESG goals, we also refined our approach and systems for improved data monitoring, including for our water use indicators . In 2022, ACWA Power’s digital team began building a comprehensive ESG platform which will source all the required ESG data points, and help us better monitor and report our ESG related KPIs.
ACWA Power’s ESG framework
In 2021, we conducted an extensive stakeholder survey to produce a comprehensive materiality assessment, which helped us identify the most material topics and will be updated every two to three years. We supplemented our initial materiality assessment by referencing it against the GRI reporting standards, as well as industry best practice. The materiality assessment helped us to identify our core ESG focus topics and indicators, which include climate change, water, health and safety, and governance, and to develop our ESG framework accordingly.
We see materiality as dynamic and want to ensure agility in our ESG strategy and framework development. It was important to ensure we have dedicated experts working towards implementing the framework with cross-functional working teams set up to implement the initiatives.
Our stakeholder requirements and regulatory landscape are constantly evolving and we review and update our ESG strategy and framework accordingly.
Our ESG governance
Last year, we updated our governance and management processes in the context of our ESG strategy, and demonstrated further commitment this year with the Board overseeing ESG. The Board makes overall strategic recommendations and guides direction, as well as oversees progress on sustainability and ESG targets. It ensures alignment with our overall corporate strategy and vision.
In 2022, ACWA Power’s dedicated sustainability and CSR function continued to drive overall ESG strategy, as well as reporting to external and internal stakeholders. The sustainability function will continue to enable the implementation of ESG and sustainability initiatives by:
- Developing frameworks and procedures relating to GHG inventory and ESG monitoring.
- Developing the CSR framework and monitoring its implementation at corporate and local level.
- Organising a company-wide ‘sustainability network’ to foster commitment to sustainability and cascading it down to asset-level to enhance the impact of our sustainability efforts.
The United Nations’ Sustainable Development Goals
According to the UN, ‘The Sustainable Development Goals (SDG) are a universal call to action to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere’. The 17 SDGs were adopted by all UN Member States in 2015, as part of the 2030 Agenda for Sustainable Development which set out a 15-year plan to achieve the Goals.
ACWA Power has selected the SDGs which are most aligned with our activities and impacts, and these are shown in colour within the infographic on the right.
Saudi Vision 2030
ACWA Power aligns its sustainability strategy with the Saudi Vision 2030 objectives for an ambitious nation, thriving economy and vibrant society. ACWA Power’s central focus on energy transition and its renewable energy and water projects contribute to the Kingdom of Saudi Arabia’s diversification policy, create local employment, provide career opportunities for women and help to give the nation a sustainable future that is less dependent on the oil industry.
Taking the three strands of Saudi Vision 2030:
Ambitious Nation: ACWA Power is using its nimble entrepreneurialism, innovative capacity and speed to market to advance Saudi Arabia at home and abroad.
Thriving Economy: ACWA Power’s energy transition is diversifying the economy from reliance on fossil fuels and creating local employment.
Vibrant Society: ACWA Power works closely with government and national institutions to strengthen national identity while, at the same time, working in partnership with governments and organisations abroad to advance energy transition and deliver affordable power and water to those who need it, wherever they may be.
Our ESG reporting journey
Our public listing in 2021 heightened our commitment to further disclosure on ESG related topics.
In 2022, we continued to work on improving the collection and reporting of our ESG KPIs, continuously aiming to provide the relevant information that key stakeholders need to make informed decisions about our ability to create value in the short, medium and longer term.
In 2023 we will appoint a leading third-party ESG auditor to inspect our operations and certify our performance. The audit will provide an independent point of view and identify areas for improvement, and represent another step on our ESG journey.
Developing our ESG performance metrics
Our ESG performance is continually measured, monitored and assessed against our overarching sustainability ambitions and material KPIs.
KPIs are assigned to relevant departments, with sustainability performance measurement, monitoring and management responsibilities. Results are reported to the Management Committee and the Board and become a reference against which to develop future strategies to achieve our targets and improve performance.
We are planning to refine our primary ESG KPIs in 2023.
An innovative approach to ESG data management
We continue to strengthen internal reporting systems and processes and strive for the ongoing improvement of our ESG data management. With 68 projects across 12 different countries, it is essential that the monitoring of our ESG-related KPIs are not only centralised but also digitised for more efficient analysis and reporting.
ACWA Power’s digital team has been building a comprehensive ESG platform which will source all the required ESG data points, and help us better monitor and report our ESG related KPIs.
We are now automating data collection from the company’s departments to reduce the risks of human errors and achieve a streamlined process which will provide immediacy and transparency. We plan to have the system fully operational in 2024.
Our ESG reporting process — listening to stakeholders
ACWA Power’s reporting process ensures that increasing disclosure and communication of our ESG performance is ongoing. Our stakeholder partnerships are central to the journey towards excellence and, as such, we value stakeholder feedback as a critical resource for improving our strategic goals and plans. Our aim is to understand any issues of concern and to respond openly and transparently to questions about our operations.
Regular stakeholder engagement is an essential part of our approach to ESG, since the process underpins our engagement and collaboration with governments, civil society, local communities and others to achieve ‘transformational change’, creating fundamental change to whole systems, rather than by incremental improvements.
As a part of ACWA Power’s Annual Report, this ESG review will provide insights and updates on our most material ESG issues and topics.