How Scatec Solar, a frontrunner in renewable energy, is conducting sustainability reporting
Simon Pitsillides (SustainCase Editor):
Interview with Scatec Solar’s Julie Hamre
Scatec Solar is an integrated independent solar power producer, delivering affordable, rapidly deployable and sustainable clean energy worldwide.
A long- term player, Scatec Solar develops, builds, owns, operates and maintains solar power plants and has an installation track record of more than 1.6 GW. The company has a total of 1.9 GW in operation and under construction on four continents. With an established global presence and a significant project pipeline, the company is targeting a capacity of 4.5 GW in operation and under construction by end of 2021.
The Governance Group recently rated Scatec Solar with A, placing the Company in the top category among companies excelling at ESG reporting on the Oslo Stock Exchange.Sim
S.P.: Scatec Solar is operating successfully all around the world. What are the challenges you are facing in your efforts to bring renewable energy to businesses and communities around the world?
J.H.: We are operating in several complex markets around the world and one challenge we often face is managing many projects in parallel across different countries. Over the last couple of years, we have more than tripled our installed capacity by constructing and grid connecting projects across four continents.
From a sustainability perspective, the challenges we often face relate to potential environmental and social impact in areas such as labour management, health and safety, land acquisition and resettlement, communities and biodiversity. Other challenges we could face in our projects relate to the risk of corruption, political instability and security.
Sustainability is an integrated part of our business and we are committed to operate our projects in line with strict risk management frameworks such as the IFC’s Environmental and Social Performance Standards and Equator Principles. We work with trusted partners like the IFC, Norfund, KLP and several larger development banks that all have high standards for projects and their associated impact.
The reporting on our sustainability performance and work is a central part of our business. Since we published our first sustainability report in 2014, we have worked strategically with our reporting in close dialogue with key stakeholders.
S.P.: Sustainability reporting does not only concern the environment. Economy and Society (people) are also very important. Please let us know how Scatec Solar is tackling these areas.
J.H.: Through the lens of materiality and GRI (Global Reporting Initiative), we report on several areas related to society (people) and economy. As a developer of solar power projects there is a potential for both environmental and social impacts. A wide range of reporting areas relating to society are material to our business. This includes for example labour and working conditions, diversity and equal opportunity, training and education, security and emergency preparedness, land acquisition and resettlement and local communities.
We often operate in countries where the legal frameworks and governing structures do not necessarily protect the communities where we might have an impact. For this reason, it is critical for us to establish a good dialogue and relations with our project neighbours. We have a grievance mechanism in all our projects to ensure we make ourselves available to anyone who would like to raise an issue or give feedback to our projects. We report on the number of grievances and the percentage of unresolved grievances in each project on a regular basis.
Our reporting related to economy covers topics like anti-corruption, procurement practices and indirect economic impact. For example, the indirect economic impact on local communities is an important part of our sustainability work and reporting. We target about 70-80% local workers in every project during the construction phase, preferably from the surrounding communities. Reaching this target can be challenging in some projects, but it remains a key priority area both for our company and key stakeholders. We also undertake local needs assessments in the communities to understand their need for basic services and infrastructure. At the moment, we have more than 50 ongoing programmes across sectors like education, health, infrastructure and energy.
A final point I would like to make is the importance of reporting and transparency. We seek to report on material topics in an open and transparent manner by focusing on the key risks and challenges we are facing in our projects. This is not always an easy task, but an important responsibility to our stakeholders and to ensure a balanced sustainability report.
S.P.: Sustainability reports show the actions taken to minimise negative impacts and increase positive impacts. How do sustainability reports help to bring on-board key stakeholders that can hold a business back or stop it from reaching its objectives (investors, personnel, local communities, business partners, clients etc)? Can you share with us examples?
J.H.: ‘We see a great demand for sustainability reporting from a broad group of stakeholders – ranging from co-investors and partners, financing partners and shareholders, governments and local authorities and our employees. A few examples: Local governments and authorities are often concerned with local impacts and value creation, specifically job creation, local content and education and training. Financing partners and shareholders are increasingly concerned with strong ESG performance and ratings, and we experience a lot more interest in climate-related reporting including both direct and indirect CO2 emissions from our business activities, emissions reduction targets and how we identify and manage climate-related risk and opportunities.
We see a strong need to tailor our sustainability reporting across platforms to meet the specific needs of different stakeholder groups. For example, earlier this year we established a separate “ESG resources” section on our corporate website. This platform is specifically tailored towards investors, partners, analysts, and rating agencies, and is structured according to their information needs.
ESG rating agencies are also playing an increasingly larger role in the field of sustainability reporting. Strong ESG performance and ratings are now enabling more business opportunities and cheaper financing. We currently have three rating agencies actively following Scatec Solar with top ESG ratings. This, along with our recent A rating from the Governance Group opens up new opportunities for our business from investors, partners, lenders and other key stakeholders.
To give an example, earlier in 2020 we refinanced our revolving credit facility of USD 90 million with Nordea Bank as agent. The facility is linked to three sustainability KPIs, which means that we are offered a better margin if we fulfil the KPIs on an annual basis. This is a very positive development in the finance sector and something I am certain we will see much more of going forward.
S.P.: What is you your number one advise to companies undertaking sustainability reporting?
JH: My advice is to make sure your reporting journey is guided by close dialogue with key stakeholders – this is not only important for determining material topics and what to report on, but also to better understand their perspectives and maintain a close relationship for valuable feedback and input on your sustainability work.
And lastly, if you are in a position to bridge the gap between the reporting world and your business’ operations – that is a huge advantage. This could be done in many ways – getting hands on experience from a project, sit in on meetings with various business departments or establish working groups across disciplines. ∎
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