Hydro Tasmania Annual Report 2009

To Hydro Tasmania’s stakeholders,

Banarra Sustainability Assurance and Advice (Banarra) was commissioned by Hydro Tasmania to assure its Annual Report 2009 (the Report) against the AA1000 Assurance Standard (AA1000AS) 2008. Banarra was also commissioned to check the Report against the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines. This is Banarra’s fifth reporting cycle with Hydro Tasmania, so we have built on our previous understanding of the organisation and its progress.

Assurance scope

A moderate level of assurance was provided. The assurance scope is a Type 2 engagement under AA1000AS (2008). As a Type 2 engagement, the scope covers the nature and extent to which Hydro Tasmania adheres to the AA1000 AccountAbility Principles of Inclusivity, Materiality and Responsiveness and how it communicates this adherence in the Report, and an evaluation of the reliability of specified sustainability performance information within the following material issue areas:

• Management of water storages (including long-term water security);
• Climate change response policies and strategy (including GHG emissions);
• Aquatic ecosystem management;
• Employee attraction and retention (including the impacts of business transformation);
• Health and safety;
• Stakeholder engagement (including customer focus); and
• Governance (sustainability).

The performance information was verified using the criteria in the GRI G3 Sustainability Reporting Guidelines and Hydro Tasmania’s own criteria where this is stated in the Report. In addition, the NGERS Technical Guidelines 2008 were used as criteria for verification of greenhouse gas emissions.

Banarra Assurance Methodology

Our methodology included:

• Interviews with: a) the Chairman of the Board, David Crean, and five members of the Executive Leadership Team, including the CEO, Vince Hawksworth, concerning sustainability performance, governance and strategy; and b) 33 Hydro Tasmania staff at corporate and site levels concerning sustainability performance, strategy, policies for material issues and implementation of responses.
• Review of Hydro Tasmania information including operational planning documents, Integrated Business Risk Management (IBRM) reports, Board Environment and Sustainability Committee (BESC) Minutes, materiality and stakeholder engagement documentation and records, program management systems and documentation as well as sustainability self-assessment documentation and records.
• Visits to Hydro Tasmania’s headquarters in Hobart, Tasmania and to one Hydro Tasmania site - Poatina Power Station, Tasmania.
• An independent check of Hydro Tasmania’s material issues and stakeholder views on these issues, including analysis of peer reports, media articles on Hydro Tasmania in FY09, Hydro Tasmania’s own documentation and engagement records and issues identified from Banarra’s interviews.
• Checks of the methodology, completeness and accuracy of sampled quantitative performance information relating to the material issues described above. In addition, the processes for capturing, aggregating and reporting this data were examined through interviews and document review, comparison with the criteria used in the assurance process, re-performing a sample of calculations and cross-checks with corroborative evidence, including sample testing of source data.
• Checks of the accuracy of sampled qualitative performance information (such as management assertions and performance claims), through interviews and document review.
• A review of the Report to check consistency with the GRI application level requirements of B+.
• A review of the Report to check that it appropriately communicates the nature and extent of Hydro Tasmania’s adherence to the AA1000 AccountAbility Principles.

Findings and Recommendations

We believe the Report has adequately communicated the nature and extent of Hydro Tasmania’s adherence to the AA1000 AccountAbility Principles, although the description of the materiality process and its results should be more accurately communicated in the Report. Findings and recommendations on the nature and extent of Hydro Tasmania’s adherence to the AA1000 AccountAbility Principles are provided below.

Inclusivity - has Hydro Tasmania a stakeholder engagement and participation process?

Hydro Tasmania has committed to engaging with its stakeholders. Banarra found strong support for this amongst the Executive Leadership Team and employees interviewed.

Hydro Tasmania has identified its key stakeholders within Tasmania and, from state level to operational sites, has a range of engagement approaches for its stakeholder groups. Banarra recommends that Hydro Tasmania extend its formal engagement and participation processes to customers of its energy business and to stakeholders of its mainland Australian operations, India Consulting business, and joint ventures.

The quality of Hydro Tasmania’s stakeholder engagement varies across the business. We are pleased that it is developing a stakeholder engagement framework to deliver a more strategic and consistent approach. Banarra recommends that implementation of the framework include capacity building for stakeholder engagement across the different business functions and at operational sites.
During the assurance we reviewed several examples of situations where Hydro Tasmania recognised and constructively responded to complex and conflicting stakeholder needs, however these were ad hoc. Going forward, Hydro Tasmania should develop a process to proactively identify and manage conflicting views between stakeholders at both a project and corporate level.

Materiality – has Hydro Tasmania identified its most important sustainability issues?

We are pleased that Hydro Tasmania has this year applied a materiality process that engaged stakeholders and identified its most important sustainability issues. All of the material issues that Hydro Tasmania identified are included in the Report. In addition, Banarra’s independent materiality review did not identify any additional material or stakeholder issues for inclusion in the Report.

Hydro Tasmania’s materiality process uses appropriate criteria to evaluate and prioritise material issues in terms of their relevance and significance to the business and to stakeholders. However, formal guidelines for using the criteria are needed to increase transparency and replicability.

Hydro Tasmania has various processes that identify sustainability issues including the report materiality process. Improving Hydro Tasmania’s understanding and prioritisation of its sustainability issues and stakeholder views would be more effective by channeling the results of these various processes through a central function such as the organisation’s Integrated Business Risk Management system.

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