We conducted a double materiality assessment during 2023–24. This approach considered both the financial effects and stakeholder impacts of sustainability-related impacts, risks and opportunities (IROs) identified as most important to Essential Energy and stakeholders.

The assessment consisted of four key steps:

Desktop research considered internal and external sources and identified 16 global megatrends most likely to impact our organisation and operating environment, grouped into four overarching themes: clean energy transition; climate change adaptation; social responsibility; and business conduct.

The relevance and importance of these megatrends were tested and discussed with internal and external stakeholders. This involved 11 interviews and three focus groups, as well as 178 employees completing online surveys.

The process identified 106 IROs, which were then assessed for materiality using Essential Energy’s risk framework and by incorporating the latest International Sustainability Standards Board (ISSB) and Global Reporting Initiative (GRI) guidance. After evaluating for magnitude/severity and likelihood, 61 IROs were assessed as ‘extreme’ or ‘high’ and therefore material to Essential Energy. They were then grouped under eight sustainability priorities representing the most important sustainability-related issues for Essential Energy.

Assessment findings were validated with the Sustainability Working Group and Steering Committee. Implications of the assessment were also explored by the Working Group, such as for our Sustainability Strategy and next steps to incorporate the IROs into the corporate risk register as appropriate.

The eight sustainability priorities identified as material to Essential Energy are summarised below.

These will inform a refresh of the Sustainability Strategy during 2024–25.

Increased integration of renewables into the electricity grid is changing the way we plan, operate, maintain and invest in the network. Facilitating renewables, supporting EV charging infrastructure, boosting energy storage capacity and managing supply chain resilience are all vital to optimising benefits for regional customers and communities from the energy transition. See Strategy for details of how we are addressing this topic.

As a state-owned utility, operating in alignment with customer and community needs and expectations is essential to ensuring affordable and accessible energy. By investing in our network and developing innovative solutions, we can help to maximise the benefits of the energy transition for all customers. See Strategy for more information.

As a critical infrastructure provider, we prioritise network resilience through rigorous inspection and maintenance programs. Prioritised and innovative investment will increase the network’s capacity to withstand extreme weather events, alongside managing rising infrastructure costs and evolving energy demands. See Vegetation management, Bushfire preparation and Resilience for details.

By proactively addressing the ecological impacts of our operations we can minimise environmental impacts and demonstrate sustainability credibility. This includes factoring sustainability into our asset management decisions, managing our resource use and waste, and effectively decommissioning sites. See Environmental compliance for our current performance.

Electricity is an inherently high-risk industry, which means the safety of our people, customers and communities is a top priority, as is the health and wellbeing of our employees. More broadly, we have a responsibility to insist on safe human rights practices throughout our supply chain. See Health and safety>, Public safety and Ensuring sustainable and resilient supply chains for performance and progress.

With growing competition for skilled workers in the energy industry, Essential Energy offers a differentiated career value proposition through a focus on regional recruitment, training and careers, along with advanced energy transition development opportunities, competitive pay and the development of a diverse workforce reflective of the communities we serve. See Our people for progress to date.

With evolving customer expectations, increasing cyber security threats and changing regulatory requirements, we continue to invest in the modernisation of our digital infrastructure. This includes advancing cyber security to protect both customers and operations, as well as harnessing benefits from new technologies such as artificial intelligence. See Pillar 5: Digital transition for details.

Meaningful community engagement, including with First Nations peoples, is imperative to our service of regional, rural and remote NSW communities. Enhancing communication, engagement and equitable service access will boost customer satisfaction, foster strong relationships and reduce reputational risks for Essential Energy. See Our customers and communities and Reconciliation for highlights from the past year.