Materiality is an assessment of how the activities of a business impact society, the environment, specific stakeholders and the finances of the business itself. That business may have caused these impacts, contributed to them or have links to the impacts.
At Meridian we consider both impact materiality (society, environment and stakeholders) and financial impact (how they do or may impact our bottom line). This is known as double materiality.
Closely related material impacts are then grouped into material topics.
Meridian reports on our material impacts and topics as part of our annual Integrated Report. We do this based on the updated 2021 Global Reporting Initiative (GRI) standards. Our material topics are also reflected in our business strategy and risk management approach.
We measure our material impacts using a mix of internal and external stakeholder engagement, together with consideration of our operating context (e.g. current priorities within our business, or political or market forces which might be shaping our impacts).
In 2024 we began alternating between what we call review years and reassessment years.
Review years involve an internal process which considers only those material impacts reported in the previous year. The focus is on reviewing and rescoring these based on any changes in both our operating sustainability contexts, so we can update our list of material impacts and review progress on our mitigations and targets. This is particularly important where impacts are negative. To do this we use a series of surveys for each individual impact, completed by a range of internal subject matter, financial and risk experts.
We assess the significance of each impact by scoring its severity and likelihood. For severity, we consider the scale (how grave the impact is), scope (how widespread it is) and each impact’s irremediable character (how hard it is to put the harm right). Potential impacts are considered against the likelihood of the impact occurring. In addition, we consider the potential financial impact on Meridian over time.
Reassessment years involve the same internal process plus external stakeholder engagement. We also adopt a broader focus than in review years, considering impacts beyond those currently reported. We use a specialist agency to engage a representative sample of individuals to help us identify the impacts of most significance to external stakeholders, the effectiveness of our mitigation actions and how these might be improved.
Below is a sample of our material topics for the year ending 30 June 2023.
The full list of topics, in prioritised order, can be found on page 150 of our Integrated Report for the year ending 30 June 2023.
This report pre-dated our transition to having review and reassessment years. For this reporting period we engaged a specialist consultancy to hold workshops with Meridian experts and interview a representative sample of external stakeholders. These stakeholders included customers, customer insights researchers, tangata whenua, community groups, regional economic development agencies, energy industry experts and researchers, environmental regulators and equity analysts.
Based on this research, Meridian’s material impacts were assessed against the GRI standards, grouped into topics and listed in a prioritised order.
| Material Topic | Business Case (Why this matters) | Type of Impact | Related Material Impacts | Targets (GRI indicators) | Progress against target |
|---|---|---|---|---|---|
| Renewable energy generation | This is a core part of our business and key to our business success. Meridian generates around one-third of all New Zealand’s electricity – all from renewable sources – and electrification is an obvious catalyst for New Zealand to achieve a net-zero economy. To maintain our business strength and drive further decarbonisation, Meridian is also investing heavily in new renewable generation assets. | Revenue | 100% renewable generation | 100% renewable generation | 100% renewable generation maintained. |
| Increasing the supply of renewable energy | 7 projects underway by 2030 | See FY23 Climate Related Disclosure, pp 29-31 | |||
| Customer decarbonisation | Decarbonising customers through electrification is key to growing overall demand for electricity. Thermal-fuelled industrial process heat, for example, accounts for 34% of New Zealand’s total energy consumption. Electrifying this alone represents a significant growth opportunity, and our goal is to grow this to 600GWh from a zero base in FY21. This represents up to $40 million in additional revenue. Customer decarbonisation also lies at the heart of our Retail Strategy and is one of three pillars of our Climate Action Plan. It reduces customer emissions, reduces overall energy costs and provides opportunities to increase the flexibility of New Zealand’s electricity system through demand response and utilisation of the energy customers store and generate. This flexibility is a key enabler of the growth of intermittent wind and solar generation, which is key to Meridian’s future business success. |
Revenue | Reducing the emissions of others | 600GWh of new process heat contracts by end FY23 250 public EV chargers (500 charging points) installed by end FY23 | See FY23 Climate Related Disclosure, pp 30-32 |
| See FY23 Climate Related Disclosure, pp 30-32 | |||||
| Maximising the benefits of demand flexibility and virtual power plants to support increased electrification | Virtual Power Plant live by FY2025 | Completion of VPP and smart charging trials See FY23 Integrated Report, p16 |
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| Ngā whakaaweawe o Te Ao Turoa – impacts on the natural world | The construction of our hydro assets, in particular, had a significant environmental and cultural impact. These hydro assets represent 80% of our total electricity generation, which makes them critical for our business. As a result, taking steps to maintain our social licence to operate through enhancing the natural world is critical to the sustainability of our business. | Risk | Diversion and reduced river flows and water quality issues | 100% compliance with consent and regulatory requirements regarding water use. | 100% compliant in FY23 |
| Harm to biodiversity in water | Secure agreement with Department of Conservation for Waitaki catchment biodiversity mitigation and compensation package, expansion of Project River Recovery | See FY23 Integrated Report, p25 | |||
| Adverse effects of generation assets and activities on cultural values | Sign a 35-year agreement with Waitaki Rūnaka to address the cultural and environmental impacts of the Waitaki Power Scheme. Early and meaningful engagement with iwi on all new development projects. |
See FY23 Integrated Report, pp16-18 and 54-56 | |||
| Improving biodiversity on land | Grow our Forever Forests carbon abatement programme in FY23 to align with our FY30 residual operational emissions. | See FY23 Climate Related Disclosure, p28 |
Meridian’s material topics are reflected in our risk management approach. We review our enterprise risks every six months, new and emerging risks every quarter and ESG risks (including new ones arising from material impacts assessment) at least annually. A key part of these reviews is to ensure appropriate mitigation measures are in place to deal with those risks.
In assessing risk related to our material topics we consider their potential impact on our business across the following risk categories:
Learn more about our risk management approach:
As part of our materiality approach, Meridian’s materiality analysis identifies the most significant positive/negative impact on external stakeholders associated with our company’s business operations, products/services and/or our supply chain.
The top two topics that are most important to our stakeholders for the reporting period ending 30 June 2023 are:
| Material Topic | Area of value chain responsible for external impact | Impact areas evaluated | Why the impact is relevant to external stakeholders | Related Impacts | Metrics used to measure the output of our business activity | Impact valuation | Quantitative impact metric | |
|---|---|---|---|---|---|---|---|---|
| Customer Decarbonisation | Products and services | Environment Society Consumers/end-users |
Aotearoa’s long-term target of net zero emissions by 2050 means there is clear benefit to stakeholders and the environment from Meridian contributing to customer decarbonisation Meridian can help decarbonise commercial and residential energy use by creating products that support the increased use of electricity to replace fossil fuels and through better energy efficiency Meridian can contribute to the creation of a more reliable, decarbonised and cost-effective electricity system by maximising the potential of demand flexibility and virtual power plants. |
Reducing the emissions of others | 600GW new demand (process heat conversions) 250 public EV chargers Virtual Power Plant live by FY2025 |
Access to product/service with positive impact provided: reduced customer emissions | tCO2e (total customer emissions reduction) | |
| Access to Affordable Energy | Products and services | Society Consumers/end-users |
Some New Zealanders face energy hardship and the risk of this affecting our most vulnerable customers is heightened by the current cost-of-living crisis. Energy hardship caused by factors such as housing quality, financial situation, energy literacy, energy efficiency and usage, means a population of consumers self-ration electricity or use it inefficiently driving unnecessary costs. This can contribute to a range of negative wellbeing outcomes such as poor physical and mental health and flow on effects to employment and academic achievement. For this reason, there is clear benefit to stakeholders when Meridian addresses energy hardship. In addition, we recognise that not everybody has the financial means to transition to electric at the same pace. By contributing to energy equity, Meridian can help to reduce costs for electricity users over the longer term. | Some New Zealanders experiencing energy hardship | $5m to support 5,000 households into improved energy wellbeing by FY24 | Social return on investment: Customer wellbeing and social benefit per $1 spent |
$1:$5.20 | |
| Addressing inequality of access to new energy technologies | Value of fund created to invest into community decarbonisation initiatives | Reduced emissions for recipient community groups | tCO2e (total recipient emissions reductions) |
Tackling Zero is Meridian’s quarterly newsletter for people whose roles or studies are focused on sustainability, or for whom this is an area of interest. Each issue will offer Meridian’s insights into a topical sustainability issue, as well as stories on how we, our customers and supply chain partners are tackling sustainability. It also includes links to recent Meridian disclosures such as new policies and reports.