VERBUND AG 
DMA-Disclosures on Management Approach
Supplement to the Integrated Annual Report 2023
The power to transform. Together.
Disclosures on | |
Management Approach | |
In this document, we present an overview of VERBUND'S central management systems.1 | |
Date: 31 December 2023 | |
Contents | |
General information on management approaches | 5 |
The PDCA model | 5 |
Determining the relevance of material topics and their boundaries | 5 |
Evaluation of the management approaches | 6 |
Strategy | 7 |
Strategy development | 7 |
Scenario analysis | 7 |
Corporate governance | 8 |
The Austrian Code of Corporate Governance | 8 |
Implementation of the Austrian Code of Corporate Governance at VERBUND | 8 |
Executive Board | 9 |
Supervisory Board | 9 |
Annual General Meeting | 10 |
Rules of procedure | 11 |
Minority protection in stock corporation law | 11 |
Stakeholder management | 12 |
Stakeholder identification | 12 |
Stakeholder engagement | 13 |
Advocacy of interests | 21 |
External memberships and representation on boards and panels | 22 |
Commitment to society | 24 |
Endorsement of external initiatives | 25 |
The VERBUND COLLECTION brings added value | 26 |
Secure supply of gas and electricity in a liberalised market | 28 |
High-performance power plant portfolio | 28 |
Grid security and expansion and security of supply | 29 |
Energy transition and energy storage | 29 |
ENTSO-E/GTen-Year Network Development Plan | 31 |
Development and impact of infrastructure investments | 33 |
Additional benefits of our investments | 33 |
Supply chain | 34 |
Organisational allocation of procurement activity | 35 |
1 APG, GCA: taking into account the Independent Transmission Operator (ITO) provisions
Environmental management | 35 |
Environmental management systems and certifications | 36 |
Environmental impact assessment | 36 |
Use of materials | 37 |
Use of energy | 37 |
Energy efficiency of VERBUND's thermal power plants | 37 |
Greenhouse gas emissions | 38 |
Airborne emissions | 39 |
Polychlorinated biphenyls | 39 |
Biodiversity | 40 |
Water and effluents | 45 |
Waste management | 47 |
Innovation and research | 48 |
VERBUND mission statement on innovation | 48 |
Innovation management organisation at VERBUND | 48 |
Human resources | 49 |
Human resources management | 49 |
Personnel planning | 49 |
Recruiting, personnel marketing and employer branding | 49 |
Types of employment and benefits offered | 50 |
Personnel development | 51 |
Executive development | 51 |
Development of values | 52 |
Maintaining a work-life balance | 52 |
Succession planning | 52 |
Apprenticeship training | 52 |
Diversity management | 53 |
Labour management relations | 53 |
Internationalisation | 54 |
Health and safety at the workplace | 55 |
Occupational health management | 55 |
Occupational health services | 55 |
Occupational health and safety | 56 |
Plant and process safety | 60 |
Compliance management | 63 |
Code of Conduct, guidelines | 63 |
Compliance management organisation | 63 |
Compliance risk survey | 64 |
Prevention, training and information | 64 |
Tax compliance | 64 |
Internal organisation | 65 |
Crisis management | 65 |
Budgeting and medium-term planning process | 66 |
Digital transformation, information security and data protection | 66 |
Digital transformation | 66 |
Information security | 67 |
Data protection | 68 |
Opportunity and risk management | 70 |
Principles and objectives of risk management | 70 |
Structures and processes | 70 |
Risk management levels | 71 |
Risk management system processes | 71 |
Identification/classification of opportunities and risks | 72 |
Measurement of opportunities and risks | 73 |
Measurement bases | 73 |
Key performance indicators | 73 |
Risk control measures | 73 |
Risk reporting | 74 |
Climate risk reporting - climate change risks | 74 |
Task Force on Climate-related Financial Disclosures | 74 |
Internal Audit | 75 |
Corporate Responsibility Management | 76 |
ONR 192500 certification - CR management system | 78 |
Human rights | 79 |
Principles | 79 |
DMA - DISCLOSURES ON MANAGEMENT APPROACH | 5 |
General information on management approaches
The PDCA model
VERBUND has established a variety of management systems at Group level, company level and organisational unit level. These systems follow the PDCA model - which refers to the Plan-Do-Check-Act cycle - either entirely or in part. The repetitive model structure ensures continuous improvement in business process management. Furthermore, processes are defined for non-conformities and corrective measures, particularly with respect to adverse impacts on sustainability concerns (environmental, social, governance) with the involvement of the affected stakeholders. In addition to eliminating the causes, corrective measures also include, among other things, reparations and (non-)financial compensation.
The PDCA model as implemented at VERBUND can be described as follows:
- Plan: targets, processes and procedures are established with the aim of achieving results in compliance with the integrated corporate strategy.
- Do: the planned processes and procedures are put into action.
- Check: implementation of the processes and procedures is monitored and measured against the integrated corporate strategy, the targets established and to determine compliance with any other obligations.
- Act: continuous improvement measures are taken.
Determining the relevance of material topics and their boundaries
The material topics and the relevant action areas for VERBUND were first determined in 2013 via a survey of internal and external stakeholder groups in Austria and Bavaria. In 2016, the analysis of materiality was reviewed and enhanced in an internal process involving employees in close contact with various stakeholder groups. In 2019, the survey of internal and external stakeholder groups in Austria and Germany was repeated. The material topics were updated on the basis of questionnaires (quantitative information) as well as in-depth interviews (qualitative information). As a result of the acquisition of 51% of the shares in Gas Connect Austria GmbH (GCA), two expert workshops were held in 2021. At both workshops, a total of 15 topics related to environmental, social and governance issues and the economy were evaluated from the perspective of the stakeholders and on the basis of their impact on society and the environment. The material topics of Gas Connect Austria GmbH identified in this way were then compared with the material VERBUND topics and reviewed.
These results are reviewed by the members of the sustainability team, and adjustments are made wherever necessary. The changing conditions in the industry are also taken into account in this process, as are VERBUND's impacts on the environment and society and vice versa.
In most cases, the boundaries of the material topics extend to VERBUND AG and all companies included in its consolidated financial statements as well as those companies in which VERBUND AG holds a sole controlling interest, either directly or indirectly. Special mention will be made of any isolated exceptions to these boundaries.
GRI 2-13 GRI 2-25 GRI 3-3
GRI 3-1
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Evaluation of the management approaches
GRI 3-3 VERBUND measures and monitors a number of financial and non-financial indicators. The data and calculations used in sustainability reporting are based on the Global Reporting Initiative (GRI) standards, which are published each year in VERBUND's Integrated Annual Report. All in all, VERBUND reports more than 100 non-financial performance indicators and GRI disclosures. All data is collected and evaluated across the Group using proprietary sustainability software. In addition, the individual Group divisions have adopted specific guidelines and executive orders (EOs) that stipulate mandatory annual review.
Participation in various external sustainability ratings (e.g. ISS ESG, EcoVadis, Sustainalytics, CDP) establishes an industry benchmark and offers additional incentive to make continuous improvements in the area of social responsibility.
Internal audits are conducted periodically for the purpose of checking the compliance of the management systems with the underlying regulatory standards as well as the implementation status of the procedures established to reach the identified targets. The internal audits are conducted at least once per year. In addition to the internal audits, external audits are also conducted in connection with numerous certification processes (e.g. ISO 14001, ONR 192500, ZukunftVIELFALT®).
The monitoring and modification processes specified are intended to ensure continuous improvement and updating of the corporate responsibility (CR) management system and all other management systems and workflows. The following mechanisms, among others, are used for this purpose:
- workflow optimisation;
- monitoring the status of identified CR goals;
- stakeholder feedback;
- studying improvements at other organisational units;
- internal and external audits;
- monitoring, implementing and checking the effectiveness of the corrective actions derived;
- employee suggestions for improvements;
- management evaluations; and
- proposals derived from internal communications.
DMA - DISCLOSURES ON MANAGEMENT APPROACH | 7 |
Strategy
The Group Executive Board is responsible for developing the Group's strategy. It determines the corporate objectives together with relevant divisional heads from the holding company, the management of the Group subsidiaries as well as leading experts in the core areas in which the Group operates.
Strategy development
VERBUND identifies specific opportunities for strategic growth as well as (new) business models and potential partnership and cooperation opportunities on the basis of an environmental analysis (analysis of demographic and technological trends, market developments and the strategic implications of regulatory measures) on the one hand and a company analysis (analysis of strategic competitive advantages, VERBUND core competencies and unique selling propositions) on the other. These potentials and opportunities are evaluated to determine their fit with VERBUND's mission and strategy and in terms of their impact on the economically, legally, technically and environmentally sustainable development of the Group.
The strategy development process is based on recurring strategy reviews and culminates in strategic focus areas and operational targets for the Group and its subsidiaries. The strategic determinations made are documented in a Group strategy paper.
This process is followed by monitoring the implementation of the strategies at the level of both the Group and its subsidiaries and equity interests, thus ensuring consistent achievement of the strategies adopted by the Executive Board and, where necessary, enabling short-term corrective action to be taken on the way to reaching the targets.
Scenario analysis
Strategy planning and risk management both make use of scenario analysis. The analysis is based on the prevailing general conditions and aims to identify possible future developments and their repercussions.
This method is also used at VERBUND. A variety of scenarios are used, with different input parameters and development pathways, both analysed internally and used by external providers. Specific options for action can then be derived for current management decisions.
VERBUND's strategy: www.verbund.com > About VERBUND > Company > Strategy
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The Austrian Code of Corporate Governance is available on the website of the Austrian Working Group for Corporate Governance at www.corporate- governance.at
Corporate governance
The Austrian Code of Corporate Governance
In September 2002, the Austrian Code of Corporate Governance (Österreichischer Corporate Governance Kodex, ÖCGK) was presented to the public. It has since been adapted and updated several times. The version currently in effect is from January 2023.
In accordance with its international objective, the Code is intended to strengthen the confidence of investors, customers and the public in companies and groups in the capital market.
The Code represents the framework for the management and control of companies and is geared towards ensuring responsible, sustainable and long-term value creation. This is intended on the one hand to achieve greater transparency in the capital market and, on the other, to improve the quality of cooperation between executive boards, supervisory boards and annual general meetings. In particular, listed stock corporations in Austria are called upon to agree to comply with the Code in a public declaration. It is intended for adherence to the Code to be reviewed regularly by an external institution on a voluntary basis and the outcome to be published.
Implementation of the Austrian Code of Corporate Governance at VERBUND
VERBUND AG is a listed stock corporation domiciled in Austria. VERBUND shares are listed on the Vienna Stock Exchange. They are traded in the US through an ADR (American Depository Receipt) programme. VERBUND's management system is based on Austrian law, in particular the Stock Corporation Act (Aktiengesetz, AktG), the Commercial Code (Unternehmensgesetzbuch, UGB) and capital market law, the regulations governing employee co-determination, the Company's Articles of Association, the rules of procedure for the Company's boards and the Austrian Code of Corporate Governance (ÖCGK). This provides a corporate governance framework with strict rules governing corporate actions and corresponding regulations relating to the diligence and liability of the boards of stock corporations.
VERBUND declares its unconditional commitment to the ÖCGK. The Executive Board and Supervisory Board see it as their primary duty to comply with all of the rules of the Code as fully as possible and to maintain and continue to develop the Group's high internal standards. Active and - insofar as possible - seamless implementation of the requirements of the Code is intended to ensure responsible management and control of the Group directed at sustainable, long-term value creation and thus represents an essential building block in strengthening the trust placed in the Group by shareholders, business partners, employees and the public.
Application of and compliance with the ÖCGK are evaluated externally by an independent auditor at regular intervals. The last such evaluation was performed for 2022.
Each year, VERBUND prepares a comprehensive, written Consolidated Corporate Governance Report containing not only the information prescribed by law but also the additional information stipulated by the ÖCGK. The report provides detailed information on the Group's Executive Board and Supervisory Board as well as on compliance with the ÖCGK and also contains a diversity concept for filling seats on the Executive Board and the Supervisory Board. The report is published in VERBUND's Integrated Annual Report and on the VERBUND website.
DMA - DISCLOSURES ON MANAGEMENT APPROACH | 9 |
Executive Board | |
Austrian stock corporation law prescribes a dual management system that provides for strict separation | |
of the executive board as a managing body and the supervisory board as a supervisory body. | |
Simultaneous membership in both the executive board and the supervisory board is not permitted. | |
The executive board has sole responsibility for managing the company and "shall endeavour to take | |
into account the interests of the shareholders, of the employees and the public good". In addition to stock | |
corporation law, the law governing the filling of positions (Stellenbesetzungsgesetz, Federal Law Gazette | |
[BGBl. I] No. 26/1998), the regulation governing the filling of positions (Stellenbesetzungsverordnung, | |
Federal Law Gazette II [BGBl.] No. 254/1998) and the relevant provisions of the ÖCGK apply to the | |
appointment of the Executive Board of VERBUND AG. | |
The Executive Board manages the Group's business activities and represents the Group externally. It is | GRI 2-10 |
responsible for all operating activities, for the organisational and operational structure of the Group and | |
for its corporate strategy, which it coordinates with the Supervisory Board. The Executive Board is not | |
required to take instruction from either the Supervisory Board or the Annual General Meeting. However, | |
certain significant Executive Board management actions require the approval of the Supervisory Board. | |
To support its activities, the Executive Board grants signatory authority that is governed by law and | |
either comprehensive in scope (Prokura) or limited to a defined area (limited authority) to members of | |
senior management with the approval of the Supervisory Board. There are currently six signatories with | |
Prokura authorisation and one representative with limited authority at VERBUND AG, the Group's parent | |
company. The major subsidiaries have also granted such legal authorities. | |
For details on the composition of the Executive Board and on its operation and allocation of | |
responsibilities, please refer to the annual Consolidated Corporate Governance Report. | |
Supervisory Board | |
The Supervisory Board of VERBUND AG is comprised of ten members (shareholder representatives) | GRI 2-10 |
elected by the Annual General Meeting and five members delegated by the Works Council. The | |
shareholder representatives are appointed in accordance with the Austrian Stock Corporation Act (AktG) | |
and the ÖCGK (especially rules 42, 44, 52 and 53) for a maximum of five years, with the Supervisory Board | |
required to propose its candidates for election to the Annual General Meeting. Reappointment is possible. | |
Pursuant to the provisions of the Austrian Labour Constitution Act (Arbeitsverfassungsgesetz, ArbVG, | |
Federal Law Gazette [BGBl.] No. 22/1974 as amended), employee representatives are entitled to delegate | |
one member to the supervisory board for every two shareholder representatives on the board, with the | |
members delegated by the employee representatives having the same rights and duties as the shareholder | |
representatives. The Supervisory Board of VERBUND AG already fulfils the requirement set forth in the | |
Austrian Stock Corporation Act (AktG) of having women account for at least 30% of board members. | |
Under Austrian law, elected supervisory board members may not also be members of the executive | GRI 2-11 |
board or employees of the company in question. | |
The Supervisory Board of VERBUND AG does not perform any operating tasks. It advises the Executive | GRI 2-12 |
Board and supervises its management of the Group. To this end, the Supervisory Board receives regular | |
and comprehensive information from the Executive Board on the performance, position and strategy of | |
the Group as well as on its risk position and risk management. |
The Supervisory Board submits a proposal for the election of the auditor and engages the auditor. Each year during the audit of the financial statements, the auditor provides the Supervisory Board with a separate report on the effectiveness of risk management. The report from the auditor details
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sustainability risks in the same manner as in the written quarterly reports on operating risk management that the Supervisory Board discusses at its meetings.
The performance of the Supervisory Board is evaluated annually during the Annual General Meeting, at which the shareholders vote on the discharge of the Supervisory Board. The Supervisory Board also performs a self-evaluation of its actions each year.
The Supervisory Board shall form the following committees as required by law and the ÖCGK and in accordance with the Supervisory Board's rules of procedure:
- an audit committee (review of the quarterly and annual financial statements as well as the budget and financial reports, monitoring of the internal control systems and risk management, plus the accounting);
- a strategy committee (strategy review, handling of special topics);
- an emergency committee (decision-making in urgent situations);
- a nomination committee (nomination of Executive Board and Supervisory Board members);
- a remuneration committee (handling of matters relating to remuneration of the Executive Board, pension arrangements, agreements on targets, Executive Board contracts), and
- a sustainability committee (handling of the topics of sustainability, New Green Deal, decarbonisation, energy transition, climate change and environmental protection).
Detailed information on the operation, meetings and composition of the Supervisory Board and its committees, on the independence of members of the Supervisory Board as well as on the Supervisory Board's self-evaluation and on its handling of conflicts of interest can be found in the Group's annual Consolidated Corporate Governance Report.
Annual General Meeting
The Annual General Meeting is the Group's most senior body. All shareholders may exercise their rights at the meeting, which is held at least once per year. The shareholders have the opportunity to engage in dialogue with the Executive Board and the Supervisory Board and to express their opinions on the meeting agenda and state their concerns. This also applies to NGOs participating in the Annual General Meeting as shareholders.
Irrespective of their shareholding, each shareholder participating in the Annual General Meeting has the right to take the floor, ask questions, submit motions and vote. Each share in VERBUND AG grants the holder one vote ("one share, one vote"). The sole exception is based on a restriction on voting rights embodied in the "federal constitutional act regulating the ownership structure of enterprises in the Austrian electricity industry" Federal Law Gazette I [BGBl.] No. 143/1998), and in the provision of the Articles of Association based on this. The exception is worded as follows: "With the exception of regional authorities and companies in which regional authorities hold an interest of at least 51%, the voting rights of each shareholder at the Annual General Meeting shall be restricted to 5% of the share capital."
The Annual General Meeting is chaired by the Chairman of the Supervisory Board. Questions posed by shareholders at the Annual General Meeting are responded to in detail by the Executive Board, and the Executive Board states its position regarding any suggestions or criticism. Resolutions of the Annual General Meeting are generally adopted by a simple majority of the votes cast. All shareholders are entitled to submit motions to adopt resolutions, regardless of their shareholding. Exceptions to this are
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Verbund AG published this content on 14 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 March 2024 07:21:47 UTC.
