Integrated
Report
February 2020
Integrated report 2020 / February 2020
www.iberdrola.com
Integrated report 2020
Integrated report 2020 / February 2020 |
3
Iberdrola’s public information
Iberdrola provides its Stakeholders with all relevant information regarding the performance of the company
and its strategic lines for the coming years in a systematic and accessible manner.
Annual information
● Annual Financial Report
Prepared according to international financial reporting standards and externally audited.
● Statement of Non-Financial Information. Sustainability Report
Prepared according to the Global Reporting Initiative (GRI) guidelines and externally assured.
● Integrated Report
Prepared following the recommendations of the International Integrated Reporting Council (IIRC).
● Annual Corporate Governance Report
Prepared according to the form provided by the National Securities Market Commission of Spain.
● Annual Director Remuneration Report
Prepared according to the form provided by the National Securities Market Commission of Spain.
● Annual Activities Report of the Board of Directors and of the Committees thereof
Prepared following the recommendations of the Good Governance Code of Listed Companies and
best international practices.
● Statutory Auditor Independence Report
Prepared according to the recommendations of the CNMV’s Technical Guide 3/2017.
Additional information
Information on the corporate website
● Economic/financial
www.iberdrola.com
Quarterly Results Report
IBE Watch Fact Sheet
Quarterly Shareholder Bulletin
● Environmental
Corporate Environmental Footprint Report
Biodiversity Report
Greenhouse Gas Report
● Other information
Innovation Report
● About Us
● Environment
● Innovation
● Social commitment
● Talent
● Culture
● Shareholders and Investors
● Corporate Governance
Access the annual reports for financial year 2019 and
supplementary documentation regarding the Iberdrola
group by scanning the corresponding QR code using
your smart phone or tablet.
This icon refers to related information. It also gives
information on other specific reports where more
information of interest can be accessed.
www.iberdrola.com
Integrated report 2020
Contents
1. Iberdrola Today
1.1 Iberdrola Today
1.2 Company Performance
1.3 Key Figures
1.4 Presence by Areas of Activity
2. Business Model and Strategy
2.1 The Future of Energy
2.2 Business Model
2.3 Value Chain
2.4 Iberdrola, a Different Company
2.5 Capital Management
2.6 Comparative Results and Awards
3. Iberdrola’s Primary Businesses
3.1 Regulatory Environment
3.2 Networks
3.3 Renewables
3.4 Wholesale and Retail
Integrated report 2020 / February 2020 |
4
8
9
10
12
26
28
30
32
36
38
42
45
49
53
www.iberdrola.com
Integrated report 2020
Integrated report 2020 / February 2020 |
5
58
60
62
64
66
68
74
80
82
86
87
90
4. Our Assets
4.1 Financial Capital
4.2 Manufactured Capital
4.3 Intellectual Capital
4.4 Human Capital
4.5 Natural Capital
4.6 Social and Relationship Capital
5. A Framework of Trust
5.1 Corporate Governance Model
5.2 Three Lines of Defence
5.3 Risks
5.4 Ethics
5.5 Sustainable Development
6. About this Report
6.1 About this Report
• The company Iberdrola, S.A., parent company of the Iberdrola group, is referred to as “Iberdrola”, the “Company” or the “company” in this report.
•
Iberdrola (as parent company) and the group of subsidiaries over which Iberdrola, S.A. has the power of control or joint control is also referred to as
the “Iberdrola group” or the “group”.
• The figures included in this translation follow the customary English convention, with figures in thousands separated by a comma (,) and decimals
indicated by a full stop (.).
• €M: millions of euros; $M: millions of dollars; £M: millions of pounds; R$ Brazilian reais.
•
IFRS-11 is not being applied in the operational indicators (installed capacity, output, etc.).
www.iberdrola.com
Integrated report 2020
East Anglia ONE offshore wind farm
/ United Kingdom
www.iberdrola.com
1. Iberdrola Today
Iberdrola Today |
7
www.iberdrola.com
Informe integrado 2020
Iberdrola Today |
8
1.1 Iberdrola Today
Our activities
What we are
• Transmission and distribution of electricity.
• Production of electricity from renewable and
conventional sources.
• Purchase/sale of electricity and gas on
Iberdrola today1 is the third-largest electricity
company in the world by stock market capitalisation
and the largest in Europe without government
participation.
wholesale markets.
• Distribution of gas.
The corporate and governance structure is described
in chapter 5.1 of this report and consists of:
• Other activities, mainly linked to the energy
•
Iberdrola as a holding company.
sector.
• Country subholding companies in the main
geographic areas of activity.
• Head of business companies under the
country subholding companies.
Iberdrola is one of the largest
electric utilities in the world
International presence
The Iberdrola group engages in its activities in many countries, including Spain, the United Kingdom, the
United States, Brazil, Mexico, Germany, Portugal, France, Italy and Ireland, as well as Australia, where the
Company has just commenced building a hybrid solar and wind project.
Iberdrola group 2019 Key figures
52,082 MW
Total installed capacity
32,041 MW
Total renewable installed capacity
151,714 GWh
Net production
34
Millions of consumers2
1,191,513
Km / Power lines
233,502 GWh
Distributed energy
8,158
€M Gross investments3
8,156
€M Direct tax contribution
35,374
People
Direct employment
Approximately 400,000
People4
Direct, indirect and induced employment
8,716
€M Procurement
(1) As at the date of issue of the Report.
(2) Consumers: for electric power, total number of customers is used where there are areas of electricity distribution and retailing, supply points are used for
the other areas. For gas: total number of gas customers is used, except for the United States, where total number of supply points is used.
(3) Net total investments for financial year 2019 were €7,240 million.
(4) Data from a Study of Iberdrola’s Impact, prepared by PwC, for financial year 2018.
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
9
1.2 Company Performance
Revenues (€M)
EBITDA (€M)
Net Profit (€M)
36,438
35,076
10,104.0
9,348,9
31,419
31,263
29,215
7,807,7
7,397,4
7,318,7
3,406
3,014
2,804
2,705
2,422
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
Total installed capacity
(MW) ¹
Total net production
(GWh) ¹
52,082
151,714
145,605
142,466
137,549
48,447
47,049
46,361
46,694
134,374
Distributed
energy (GWh) ²
233,502
233,409
230,151
229,920
224,749
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
Assets (€M)
Employees ¹
Consummers (millions) ³
122,369
113,038
110,689
106,706
104,664
35,374
34,082
34,255 34
,078
30,938
34,0
33,6
33,0
33,1
33,0
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
(1) Takes into account 100% of Neoenergia since 2016 in order to improve the comparability of the data.
(2) Takes into account 100% of Neoenergia during all periods reported.
(3) Consumers: for electric power, total number of customers is used where there are areas of electricity distribution and retailing, supply points are used for
the other areas. For gas: total number of gas customers is used, except for the United States, where total number of supply points is used
www.iberdrola.com
Integrated report 2020
1.3 Key Figures
Financial
performance
(€M)
2015
20161
2017
2018
2019
Revenues
31,418.7
29,215.4
31,263.3
35,075.9
36,437.9
Consolidated
gross margin
Consolidated
EBITDA
Networks
(Regulated)
EBITDA
Spain
12,842.7
12,916.2
13,363.8
15,435.1
16,263.4
7,397.4
7,807.7
7,318.7
9,348.9
10,104.0
3,628.0
4,081.7
4,228.0
4,915.0
5,262.2
1,456.8
1,603.1
1,519.5
1,709.4
1,710.7
United Kingdom 1,138.0
976.2
886.0
919.4
986.8
United States
780.5
1,269.6
1,334.0
1,331.2
1,330.4
252.7
232.8
488.5
955.0
1,234.3
1,647.2
1,500.2
1,754.8
2,445.5
2,386.0
United Kingdom
438.1
267.0
391.7
517.5
525.0
United States
570.9
563.6
529.7
573.1
591.3
26.9
24.9
66.0
129.4
125.0
43.1
95.0
52.0
95.3
52.5
65.4
85.6
99.3
241.6
323.0
Δ
Annual
average
2015-19
(%)
Δ
2018-
2019
(%)
3.8
6.1
8.1
9.7
4.1
(3.5)
14.3
48.7
9.7
3.9
5.4
8.1
7.1
0.1
7.3
(0.1)
29.2
(2.4)
4.6
0.9
46.8
18.7
35.8
1.4
3.2
(3.4)
30.9
33.7
473.2
497.4
615.6
918.5
736.1
11.7
(19.9)
2,323.1
2,253.3
1,463.8
2,038.3
2,468.7
1.5
21.1
1,504.6
1,520.5
779.4
1,000.7
1,557.7
0.9
55.7
United Kingdom
421.7
293.6
108.1
307.2
110.1
(28.5)
(64.2)
Iberdrola Today |
10
Financial
ratios
EBITDA margin
(EBITDA/revenues)
(%)
Net profit margin
(Net profit/Revenues)
(%)
2015
2016
2017
2018
2019
Δ
Annual
average
2015-19
(%)
Δ
2018-
2019
(%)
23.5
26.7
23.4
26.7
27.7
4.2
3.7
7.7
9.3
9.0
8.6
9.3
4.9
8.7
NOE/Gross margin (%)
29.8
27.7
31.2
26.9
26.6
(2.8)
(1.1)
Net financial debt /
EBITDA (multiple)
Financial leveraging
(%)
Funds from Operations
(FFO)/Net financial
debt (NFD)
Retained cash flow
(RCF/NFD) (%)
Return on equity
(ROE) (%)
Stock market
performance
Stock market
capitalisation (€M)
Number of shares at
end of period (millions)
3.79
3.77
4.49
3.653
3.74
(0.3)
40.7
42.0
43.4
43.73
44.8
2.5
2.4
2.5
21.0
21.5
19.7
21.53
21.5
0.6
(0.1)
18.7
19.1
17.2
20.23
20.0
1.7
(1.1)
6.3
7.3
7.8
8.43
9.2
9.8
9.7
2015
2016
2017
2018
2019
Δ
Annual
average
2015-19
(%)
Δ
2018-
2019
(%)
41,506
39,661
40,811
44,898
58,404
8.9
30.1
6,337
6,362
6,318
6,398
6,362
0.1
(0.6)
-
(3.1)
50.9
92.0
63.8
--
(30.6)
Share price (€)
6.55
6.23
6.46
7.02
9.18
8.8
30.8
455.2
436.2
525.4
638.4
762.0
13.7
International
--
--
--
(25.7)
(25.0)
(68.9)
(105.2)
13.0
29.0
28.1
19.4
2.7
(3.1)
Earnings per share
(EPS)
Dividend per share
(DPS)
0.37
0.42
0.44
0.47
0.54
9.9
14.9
0.276
0.286
0.317
0.331
0.356
6.6
7.6
--
--
(190.4)
83.8
(140.9)
(78.2)
(41.0)
31.9
47.6
Dividend yield (%)
4.21
4.59
4.91
4.72
3.88
(2.0)
(17.8)
(3,568.1)
(3,253.7)
(4,606.1)
(3,909.5)
(4,226.8)
(4.3)
(8.1)
Total dividend
(including cash
payments) (€M)
1.732
1.966
1.996
2.077
2.247
6.7
8.2
3,829.3
4,554.0
2,712.6
5,439.4
5,877.2
11.3
8.0
Payout ratio (%)
71.5
72.7
71.2
68.9
66.0
(2.0)
(4.2)
Financial results
(1,023.1)
(903.4)
(937.1)
(1,156.1)
(1,300.1)
(6.2)
(12.5)
Share price / net
earnings per share
(PER)
17.17
14.66
14.55
14.90
17.15
0.0
15.1
55.3
48.7
(28.7)
55.9
(51.4)
--
--
125.1
48.2
279.1
8.9
202.8
12.8
2,178.7
2,986.6
3,747.5
2,025.9
4,348.0
4,728.6
12.2
(527.1)
(904.6)
1,397.1
(959.4)
(914.0)
(14.8)
8.8
4.7
Statement of Non-Financial Information. Sustainability Report
Quarterly Results Report
Consolidated Annual Financial Statements
Minority interests
(38.0)
(137.9)
(365.9)
(323.3)
(408.2)
(81.0)
(26.3)
Net attributable
profit
2,421.6
2,705.0
2,804.0
3,014.0
3,406.3
Total assets
104,664.1 106,706.2 110,688.6 113,037.9 122,369.0
40,956.1
40,687.4
42,733.2
43,976.6
47,194.7
8.9
4.0
3.6
13.0
8.3
7.3
(1) For purposes of this report, 2016 is not re-stated due to the discontinuation of the
engineering business, which only appears as beginning in 2017.
(2) During financial years 2017 and afterwards hydroelectric production activity is
classified within the Renewables business.
(3) Data adjusted due to effect of potentially cumulative treasury share derivatives
3,819.2
5,008.9
6,631.6
6,172.5
8,157.7
20.9
32.2
(€50 million at 31/12/2018).
(4) Includes the bonus for attending the General Shareholders’ Meeting.
5,906.7
6,310.8
6,479.4
7,328.4
8,059.6
28,067
29,230
32,856
34,149
37,769
8.1
8.4
10.0
13.5
Brazil
Renewables
EBITDA2
Spain
Brazil
Mexico
International
Wholesale
and Retail
(Liberalised)
EBITDA2
Spain
Brazil
Mexico
Other businesses
EBITDA
Corporation
EBITDA and
adjustments
Amortisation.
depreciation.
provisions and
other
Operating profit
(EBIT)
Results from
companies
consolidated
by the equity
method
(net of taxes)
Results from
non-current
assets
Pre-tax profit
(EBT)
Corporate
income tax
Shareholders’
equity
Gross
investments
Funds from
Operations (FFO)
Adjusted net
Bank borrowings
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
11
20151
20162
20172
20182
20192
Δ
Annual
average
2015-19
(%)
Δ
2018-
2019
(%)
46,361
47,049
48,447
46,694
52,082
3.0
11.5
Social
Performance
Consumers
(millions)3
20151
20162
20172
20182
20192
33.0
33.1
33.0
33.6
34.0
42,019
42,707
43,811
42,058
45,702
2.1
8.7
Electric power
28.9
29.0
29.0
29.5
29.8
Δ
Annual
average
2015-19
(%))
0.7
0.8
Δ
2018-
2019
(%)
1.2
1..0
Spain
10.3
10.2
10.2
10.1
10.1
(0.5)
(0.2)
4,342
4,342
4,636
4,636
6,380
10.1
37.6
134,374
142,466
137,549
145,605
151,714
3.1
4.2
101,688
112,069
105,239
115,134
114,030
2.9
(1.0)
32,686
30,397
32,310
30,471
37,684
3.6
23.7
224,749
229,920
230,151
233,409
233,502
1.0
0.0
20151
20162
20172
20182
20192
Δ
Annual
average
2015-19
(%)
Δ
2018-
2019
(%)
United
Kingdom
United States
3.3
2.2
3.2
2.2
3.0
2.2
3.0
2.3
2.8
2.3
13.1
13.4
13.6
13.8
14.0
Brazil
IEI
Gas
Spain
United
Kingdom
United States
-
4.1
0.9
2.2
1.0
-
4.1
0.9
2.1
1.0
-
4.0
1.0
2.0
1.0
0.3
4.1
1.0
2.0
1.0
(3.9)
(6.3)
0.7
1.8
0.4
1.8
--
100
0.6
3.9
2.4
1.9
(3.7)
(6.0)
0.5
3.0
--
233.3
0.6
4.2
1.0
1.9
1.0
0.2
IEI
-
-
-
0.1
69.6
73.0
73.5
77.0
76.8
2.5
(0.2)
68.5
71.9
70.1
73.8
72.6
1.5
(1.6)
185
131
136
112
110
(12.2)
(1.8)
19,001
11,668
12,055
10,505
17,018
(2.7)
62.0
Number of
employees
Permanent
contracts (%)
Employees
with collective
bargaining
agreement (%)
30,938
34,082
34,255
34,078
35,374
3.4
3.8
98.4
98.4
99.4
99.0
99.1
0.2
0.1
76.6
79.3
77.8
78.9
78.7
0.7
(0.3)
1,014.2
2,262.2
2,239.9
2,132.6
3,711.7
38.3
74.0
669.2
527.1
513.2
549.7
705.9
1.1
27.4
84.2
82.4
79.8
80.0
83.4
(0.2)
4.3
533
573
597
604
583
2.3
(3.5)
19,929
15,637
15,020
13,328
12,928
(10.3)
(3.0)
963
4,504
3,415
2,544
2,154
22.3
(15.3)
19,269
16,853
23,460
19,485
22,920
4.4
17.6
0.125
0.047
0.038
0.023
0.011
(45.5)
(52.2)
0.230
0.140
0.113
0.085
0.3265
9.1
283.5
Employee turnover
7.0
7.3
7.9
10.7
6.6
(1.4)
(38.1)
Diversity
(men/women)
Injury rate
(IR)
Hours of training
(millions of hours)
Hours of training
per employee
trained (h)
Funds for social
development (€M)
Contributions to
society (€M)
Rural electrification
programmes (€M)
Investments in
R&D (€M)
General
procurement
(€M billed)
Procurement from
local suppliers (%)
76/24
76/24
77/23
77/23
77/23
--
--
1.4
1.8
1.8
1.4
1.3
(1.3)
(2.9)
1.0
1.4
1.5
1.6
1.8
15.9
11.9
46.0
45.3
41.8
45.2
54.9
4.5
21.3
46.0
106.7
341.2
243.1
92.4
19.0
(62.0)
38.0
57.7
63.0
53.5
52.3
8.3
(2.2)
8.0
49.0
278.2
189.6
40.1
49.6
(78.9)
200
211
246
267
280
8.8
5.0
5,093
7,508
8,648
7,753
8,716
14.4
12.4
85
84
88
85
89
1.2
4.7
Operating
performance
Installed capacity
(MW)
Total Net Own
Capacity
Total Net Third-
Party Capacity
Net output
(GWh)
Total Net Own
Production
Total Net Third-
Party Production
Electric power
distributed (GWh)3
Environmental
performance
Own emission-free
installed capacity
(%)4
Own emission-free
output (%)4
Own specific CO2
emissions (t/GWh)4
Fuel consumption
(M Tep)
Environmental
investments (€M)
Environmental
expenses (€M)
Energy produced
under certified
environmental
management
systems (%)
Water use/overall
production
(m3/GWh)
Direct emissions of
CO2. Scope 1 (kt)
Indirect emissions
of CO2. Scope 2 (kt)
CO2 avoided due to
efficiency initiatives
(kt)
SO2 emissions
(t/GWh)
NOx emissions
(t/GWh)
Statement of Non-Financial Information. Sustainability Report
Quarterly Results Report
Consolidated Annual Financial Statements
(1) Takes into account 39% of Neoenergia in 2015 (unless otherwise noted).
(2) Takes into account 100% of Neoenergia in 2016 in order to improve the comparability of the data.
(3) Consumers: for electric power, total number of customers is used where there are areas of electricity distribution and retailing, supply points are used for
the other areas. For gas: total number of gas customers is used, except for the United States, where total number of supply points is used.
(4) Calculated on own production.
(5) Change in method for calculating NOx emissions in Mexico
www.iberdrola.com
Integrated report 2020
1.4 Presence by Areas of Activity
Iberdrola Today |
12
Iberdrola in Spain
Largest electric company.
Primary brands
Local brand
Operating brands
Key figures 2019
26,624
MW
Installed capacity
16,526
MW
Renewable installed capacity
270,258
Km /
Power lines
9,587
Employees
93,516
GWh
Distributed energy
1,756
M€
Gross investments
58,560
GWh
Net production
11.1
Millions
of consumers1
3,529
M€
Direct tax contribution
(1) Total number of electricity and gas customers.
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
13
2
2
3
11
22
2
2
8
2
2
1
21
4
2
2
2
20
5
5
49
7
3
5
13
13
13
52
28
10
6
20
2
56
4
Primary facilities in Spain
201
Wind farms / 6,005 MW
164
Hydroelectric plants / 10,021 MW
7
Combined cycle gas plants / 5,695 MW
18
Cogeneration plants / 353 MW
5
Nuclear plants / 3,177 MW
1
Photovoltaic plant / 500 MW
Projects under construction
2 Thermal plants / 874 MW1
(1) Closure of coal plants requested
13
12
Principal Offices
Electricity distribution
Area of influence
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
14
Iberdrola in the United Kingdom
100% of electricity production from renewable sources.
Transmission and distribution networks in Scotland, Wales and England.
Sale of electricity and gas.
Primary brands
Local brand
Operating brands
Key figures 2019
2,520
MW
Installed capacity
2,520
MW
Renewable installed capacity
110,083
Km /
Power lines
5,637
Employees
33,670
GWh
Energy distributed
1,897
M€
Gross investments
4,640
GWh
Net production
4.7
Millions
of consumers1
639
M€
Direct tax contribution
(1) Total number of electricity and gas customers.
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
15
28
2
5
Primary facilities in the United Kingdom
39
Wind farms / 1,906 MW
1
Underwater power line / 425 km
Projects under construction
2
Offshore wind farms / 614 MW
2
1
4
Principal Offices
Electricity distribution
Area of influence
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
16
Iberdrola in the United States
Presence in 24 states.
Electricity and gas distributor in New York, Maine,
Connecticut and Massachusetts.
Almost all output from renewable sources.
Primary brands
Local brand
Operating brands
Key figures 2019
8,361
MW
Installed capacity
7,521
MW
Renewable installed capacity
170,755
Km /
Power lines
6,597
Employees
38,441
GWh
Distributed energy
2,836
M€
Gross investments
20,960
GWh
Net production
3.3
Millions
of consumers1
963
M€
Direct tax contribution
(1) Total number of electricity and gas supply points.
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
17
6
6
2
3
3
2
4
3
2
2
10
6
6
4
5
4
3
3
2
6
Primary facilities in the United States
65
Wind farms / 7,259 MW
9
Hydroelectric plants / 118 MW
4
Photovoltaic plants / 130 MW
1
Cogeneration plant / 636 MW
3
Combined cycle gas plants / 204 MW
4
Batteries / 13 MW
Projects under construction
4
4
1
1 transmission line (NECEC
Principal Offices
Electricity distribution
Area of influence
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
18
Iberdrola in Brazil
Presence in 18 states.
Energy leader in Brazil and Latin America.
Primary brands
Local brand
Operating brands
Key figures 2019
4,079
MW
Installed capacity
3,546
MW
Renewable installed capacity
640,417
Km /
Power lines
11,746
Employees
67,875
GWh
Distributed energy
1,050
M€
Gross investments
14,007
GWh
Net production
14.1
Millions
of consumers1
2,570
M€
Direct tax contribution
(1) Total number of electricity supply points.
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
19
2
11
15
3
12
3
Primary facilities in Brazil
8
Hydroelectric plants / 3,031 MW
1
Combined cycle gas plant / 533 MW
Projects under construction
17
Wind farms / 516 MW
27
11
Principal Offices
Electricity distribution
Area of influence
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
20
Iberdrola in Mexico
Second-largest producer of electricity.
20 years contributing to the energy development of the country.
Presence in 13 states.
Primary brands
Local brand
Operating brands
Key figures 2019
3,152
MW
Own installed capacity
860
MW
Own renewable installed capacity
13,198
GWh
Own production
6,380
MW
Third-party installed capacity
103
MW
Third-party renewable
installed capacity
37,684
GWh
Third-party output
1,291
Employees
486
M€
Gross investments
258
M€
Direct tax contribution
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
21
2
3
2
2
2
6
Primary facilities in Mexico
10
Combined cycle gas plant
5
Cogeneration plants / 346 MW
8
Own wind farms / 492 MW
Projects under construction
1,946 MW own
6,277 for third parties
2
Photovoltaic plants / 368 MW
1
Third-party wind farm / 103 MW
3
3
1
1
Principal Offices
Area of influence
Area with projects under construction
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
22
Iberdrola Energía Internacional
Europe
Qatar
5
3
7
4
2
18
Australia
Operating brand
Key figures and facilities 2019
965 MW
Renewable installed capacity
2.665 GWh
Net renewable production
516
Employees
133 M€
Gross investments
197 M€
Direct tax contribution
0,8 Millions
of consumers1
28
Wind farms / 609 MW
1
Offshore wind farm / 350 MW
4
Photovoltaic plants / 6 MW
Projects under construction
2
1
3
8
Principal Offices
Area of influence
Retail business areas
(1) Total number of electricity and gas customers.
www.iberdrola.com
Integrated report 2020
Iberdrola Today |
23
Installed capacity and production by country and technology
Installed
capacity
(MW)
1 2
Spain
United
Kingdom
United States
Brazil
Mexico
IEI
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Own
For Third-parties
Renewables
16,526
15,789
2,520
2,100
7,521
6,739
3,546
2,935
860
674
103
103
965
961
32,041
29,301
Onshore wind
6,005
5,770
1,906
1,906
7,259
6,466
516
516
492
306
103
103
609
605
16,890
15,672
Offshore wind
614
194
350
350
964
544
Hydroelectric
9,715
9,715
0
0
118
118
3,031
2,419
Mini-hydroelectric
306
303
12,864
12,252
306
303
Solar and others
500
0
143
155
368
368
6
6
1,018
529
Nuclear
3,177
3,177
3,177
3,177
Combined cycle
5,695
5,695
0
0
204
212
533
533
1,946
1,035
6,277
4,533
14,654
12,007
1,335
1,335
874
874
Cogeneration
353
353
636
636
346
346
874
874
Coal
Total
Net electricity
production
(GWh)
1 2
26,624
25,887
2,520
2,100
8,361
7,586
4,079
3,467
3,152
2,055
6,380
4,636
965
961
52,082
46,694
Spain
United
Kingdom
United States
Brazil
Mexico
IEI
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Own
For Third-parties
Renewables
22,191
25,973
4,640
5,145
17,480 17,261
10,674
10,099
1,424
817
227
279
2,665
2,180
59,301
61,754
Onshore wind
12,491
11,654
3,706
3,812
16,953 16,650
1,993
2,120
693
805
227
279
1,379
1,284
37,442
36,605
Offshore wind
934
755
1,277
887
2,211
1,642
Hydroelectric
9,082
13,590
0
577
179
269
8,680
7,979
Mini-hydroelectric
618
670
17,941
22,415
618
670
Solar and others
0
58
348
342
731
12
9
9
1,088
421
Nuclear
23,737
23,535
23,737
23,535
Combined cycle
9,697
4,092
0
5,585
3
8
3,334
3,553
8,940
7,229
37,457
30,192
59,431
50,659
Cogeneration
2,586
2,472
3,477
2,713
2,834
2,834
Coal
Total
349
1,637
58,560
57,709
4,640
10,729 20,960 19,983
14,007
13,652
13,198
10,880
37,684
30,471
2,665
2,180
151,714
145,604
8,897
8,020
349
1,637
(1) IFRS 11 is not being applied for operational purposes.
(2) Totals may vary due to rounding of decimals.
www.iberdrola.com
Integrated report 2020
Nuñez de Balboa photovoltaic
solar plant / Spain
www.iberdrola.com
Informe integrado 2020
Business Model and Strategy
Business Model and Strategy |
25
2. Business Model
and Strategy
www.iberdrola.com
Informe integrado 2020
2.1 The Future of Energy
The challenge of climate change
Climate change is one of the most significant and urgent
challenges facing humanity. Confronting this serious
threat requires not only the commitment of companies
and consumers, but also that of regulators and public
institutions, which should adopt appropriate energy policies
and regulations.
Electricity has a unique potential to contribute to this
challenge due to its ability to integrate renewable energy
into a number of productive processes. Therefore, it is first
important to continue promoting increased penetration
of renewable energy into the electricity supply. These
technologies are now competitive with other sources of
generation. And second there must be a drive to electrify of
other industries like transport and the heating and cooling
industries, which represent more than 50% of emissions
and in which the penetration of electricity is still low.
The optimal integration of increased renewable generation
also needs efficient and digitised transmission and
distribution networks (smartgrids), as well as storage
solutions.
Current energy context
The World Economic Forum’s Global Risks Report 2020
considers climate change to be the main risk to the global
economy over the next decade. Society is increasingly
aware of the need to transform the energy and production
model, and is thus demanding that governments and
companies take bold action with the ultimate goal of
limiting the increase in temperature to less than 1.5°C by
the end of the century.
According to the IPCC(1), this will require reducing
emissions by 45% by 2030 compared to those in 2010 and
achieving zero net emissions by 2050. This puts electricity
at the centre of decarbonisation. The electrification of
sectors like transport and construction, in which the
presence of electricity is still low, could multiply the total
demand for electricity by the end of this century by up to
six times the current demand, representing up to 71% of
the final consumption of energy.
Business Model and Strategy |
26
Within this context, a growing number of countries are
announcing goals for emission neutrality by 2050. This
includes the European Union, which has presented
the European Green Deal as the roadmap for reaching
this goal, with ambitious measures that promote the
renewables-based electrification of transport, heating and
industry.
The World Energy Outlook 2019(2) also anticipates that
electricity will play a fundamental role in the world energy
system, increasing its share in the total consumption of
final energy from 19% in 2018 to 24% in 2040 in the main
Stated Policies Scenario (STEPS), a scenario compatible
with the objectives of the Paris Agreement (Sustainable
Development Scenario, or SDS).
Electricity generation by source (TWh)
(WEO -Sustainable Development Scenario-)2
7,000
+19.000 TWh
26,000
20,000
2018
12,000
2040
Conventional Renewable
Progressive electrification will be based on renewable
energy, which would reach 67% of total generation by
2040 in the SDS scenarios (44% in the STEPS scenario).
The growth of renewable energy is being driven by the
significant reduction in its production costs(3), which
have decreased by 49% for onshore wind, 84% for solar
photovoltaic and 56% for offshore wind since 2010.
The electrification of the economy accords a key role to
an efficient, smart and flexible electricity transmission and
distribution infrastructure, capable of integrating renewable
energy and of meeting new requirements in terms of
connectivity, digitisation and demand management.
Along these lines, the central scenario of the WEO2019
anticipates an average investment of around 400,000
million U.S. dollars per annum in grids by 2040, almost
45% of the total investment of the electricity sector over
this period.
(1) Special Report of the Intergovernmental Panel on Climate Change (IPCC) on Global Warming of 1.5 ºC.
(2) World Energy Outlook 2019 – International Energy Agency.
(3) Levelized cost of electricity (LCOE) - Bloomberg New Energy Finance (BNEF) (2019). New Energy Outlook.
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
27
Iberdrola: we began the fight against climate change more than 20 years ago
Iberdrola began a profound transformation more than 20 years ago, when it committed to a sustainable,
safe and competitive energy model, which allowed it to take on the fight against climate change. This has
been the main driver of its profitable growth strategy, which has led it to invest more than 100,000 million
euros over these two decades in order to achieve a decarbonised energy model. The group is in an optimal
position to continue anticipating and managing risks and to capitalise on the opportunities offered by this
energy transition based on its leadership in renewable energy, smart grids and storage, as well as its firm
commitment to digitisation.
Climate
change
challenge
Decarbonisation
Integrated Markets
Renewables
Smart Grids
Customers
Storage
Digitisation
Iberdrola’s objectives
• Reduce the intensity of emissions of CO2 50% by 2030 compared to those in 2007, provide for its
emissions to be virtually zero in Europe by 2030, and be carbon neutral by 2050.
• In March 2019 Iberdrola set a goal of reducing greenhouse gas emissions of absolute scope 1, 2 and 3, a
commitment recognised according to Science Based Targets (SBTi).
• Support international climate change negotiation processes, private sector participation in the global
agenda, creation of partnerships and raising climate awareness.
Partnerships and actions
The company plays its role as an agent of transformation through its engagement in different platforms,
coalitions and world organisations, including: European Commission, UN Global Compact, We Mean
Business, World Business Council for Sustainable Development and Corporate Leaders Group (CLG). It has
also formally supported various initiatives, including the declaration on net-zero emissions by 2050 based on
the Science Based Targets initiative, of which Iberdrola was one of the first companies to join.
2019 milestones include the following:
• Leadership in the private sector’s participation in the principal milestones of the global climate
agenda, including the Climate Action Summit of the General Secretary of the United Nations in
New York and the Madrid Climate Change Summit (COP25).
• Progress on its commitment to implement the recommendations of the Task Force on Climate-
related Financial Disclosures (TCFD) in its public reports by 2020.
• Support for the goal of net-zero emissions by 2050 of the climate strategy of the European Union.
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
28
2.2 Business Model
Industry positioning
The group’s strategy since the beginning of the 2000s was designed based on the goals set out in the
Kyoto protocol, anticipating the role that the electric industry would play in the fight against climate change.
Iberdrola wagered on decarbonisation and renewable energy; and the strong focus on innovation by all of
the group’s businesses allowed for the rapid adoption of new generation technologies, as well as automation
and remote control of the transmission and distribution networks. As a result, Iberdrola is today positioned as
a leader in renewable energy and smart grids, activities that constitute the backbone of the decarbonisation
of the electricity sector.
Iberdrola will continue strengthening its commitment to the energy transition, accelerating its investments in
renewables and smart grids to a record amount of almost 10,000 million euros annually, double the amount
of only four years ago. In 2017 Iberdrola requested the closure of its last coal plants in the world, which
request is pending final approval by the government. The strong investment in smart grids will allow for the
large-scale integration of renewable sources as well as on a distributed scale, ensuring quality of supply and
safety of the system.
2019 saw the launch of the Núñez de Balboa photovoltaic solar plant in Spain, the Montague, Patriot and
Karankawa wind farms in the United States, and the inauguration of the Baixo Iguaçu hydroelectric plant,
the development of customer solutions based on connectivity, and the startup of various transmission and
distribution network facilities, as well as a continuation of smart grid transformation projects.
“Action is needed now. Iberdrola’s energy transition started 20 years ago.”
Ignacio Galán, during the World Economic Forum (Davos)
Economic/financial positioning
Economic/financial aspects are an essential part of Iberdrola’s business model, along with industrial and
technological positioning. The company engages in a strategy that seeks to balance growth, financial
strength and a sustainable dividend. To this end:
• Investment is concentrated in the regulated
businesses or long-term contracts, which provide
known and recurring cash flows.
• Country selection takes into account the stability
of the regulatory environment that applies to the
sector.
• The commitment to the group’s level of financial
strength is public and decisive in long-term
planning and in the group’s leverage level.
• The dividend policy is focused on a strong and
growing return in line with the increase in the
company’s results.
Acceleration
of
investments
Leading the Energy
Transition
Financial
strength
Increase in
cash flows
Improvement
in financial ratios
Additional
activities and
improvement in efficiency
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
29
Given the company’s position, Iberdrola’s business model is distinguished by:
Iberdrola’s Primary Businesses / page 41
Natural Capital / page 66
Manufactured Capital / page 60
Focus on regulated
businesses
Commitment to clean and
competitive energies
Operational efficiency
The company focuses its
projects and investments
preferably in regulated
businesses, renewable assets or
assets with long-term contracts.
• Generation and production
of largely emissions-free
electricity.
• Large portfolio of wind and
solar generation projects.
• Public and ambitious goals for
reducing emissions.
• A business culture highly
focused on innovation and
digitisation has allowed our
company to be 40% more
efficient than the average of the
main competitors1.
International diversification
Financial strength and solidity
of the group
Global, committed and
qualified workforce
The results obtained reflect the
diversification of the group
(2019 EBITDA by country):
40% in Spain.
16% in the United Kingdom.
19% in the United States.
14% in Brazil.
8% in Mexico.
3% in International.
• Growth in EBITDA and FFO
allows for continued strength
in solvency ratio levels, within
the framework of strong organic
growth.
• Liquidity position that covers
financial needs for more than
18 months even in a stress
scenario.
• Stable and high-quality jobs,
with high level of training.
• Health and safety as priorities:
“Zero accidents” programme.
• The companies of the group
have been recognised: in Spain
for their Reputation (Merco)
and in Brazil as the best
company to work for in Latin
America (Great Place to Work)
Presence by Areas of Activity / page 12
Financial Capital / page 58
Human Capital / page 64
Social Dividend
• Iberdrola is focused on the sustainable creation of
value, in accordance with the Purpose and Values
of the Iberdrola group and with the commitments
made in the Code of Ethics.
• The Company conceives of the social dividend as
the direct, indirect or induced contribution of value
of its activities for all Stakeholders, particularly
through its contribution to the achievement of
the Sustainable Development Goals (SDGs)
approved by the United Nations..
(1) Operating expenses by customer. Source: external reports.
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
30
2.3 Value Chain
Electricity
generation
Transmission
and distribution of electricity
Construction, operation and maintenance of
generating plants, and purchase/sale of energy on
wholesale markets.
Construction, operation and maintenance of
electrical lines, substations, transformer centres and
other infrastructure, to bring electrical power from
production centres to the end user.
Production plants*
% of 2019 net output
Electric grids*
At 31 December 2019
0%
Conventional
thermal
6%
Cogeneration
39%
Renewable
4,400
High- to medium-
voltage transformer
substations
25%
Third-party
combined cycle
production
16%
Nuclear
14%
Own combined
cycle production
Overhead lines
17,840 km
of transmission lines
979,926 km
of distribution lines
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
31
Retail sale
of electricity
and gas
Supply to end users of electricity, gas, products and
complementary services.
Consumers
9,9%
13,8%
34
millones
41,3%
32,7%
2,3%
Spain
United Kingdom
United States
Brazil
IEI
1.5
million
Medium- to low
voltage distribution
transformers
Underground lines
1,295 km
of transmission lines
192,452 km
of distribution lines
Key Figures / page 10
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
32
2.4 Iberdrola, a Different Company
Differentiating elements of the company
Aware of the social changes that are occurring
and of the large challenges resulting from the fight
against climate change and the energy transition,
Iberdrola has defined its Corporate Purpose,
focused on the well-being of people and the
preservation of the planet:
“To continue building together each
day a healthier, more accessible
energy model, based on electricity”
• The Purpose as raison d’être and social
contribution, and the Values as culture of the
Iberdrola group, defined by the Board of Directors.
• A framework of trust that ensures the
sustainability of the business model:
• Corporate Governance System consistent with
international best practices.
• Corporate ethics, internalised by the
management bodies and the organisation as a
whole.
• Sustainable development policies, which
respond to the expectations of the Stakeholders
and direct the company’s strategy.
• Advanced risk control system, to maintain an
optimal risk/opportunity balance.
• A pioneering and leading strategy that integrates
the expectations of all of its Stakeholders.
• Responsible management of the tangible and
intangible assets of the company.
• An organisation structured into three global
businesses (Networks Business, Renewables
Business and Wholesale and Retail Business),
with a Corporation as the group’s
supervisory body.
• A supply of healthy and
accessible energy.
Supply of
reliable and
high-quality
energy
Corporation
Networks
Business
Wholesale
and Retail
Business
Renewables
Business
Management of tangible and intangible assets
Financial / Manufactured / Intellectual / Human /
Natural / Social and Relational
Framework
of trust
Purpuse and
Values
Strategy
Our raison d'être
Central management
Value Chain
/ page 30
Competitiveness
/ page 29
Pillars
/ page 32
Corporate Governance Model / page 74
Sustainable Development. / page 87
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
33
To achieve this Purpose, Iberdrola has evolved its
corporate values to the following concepts:
• Sustainable energy: because we seek to be a
model of inspiration, creating economic, social and
environmental value in all of our surroundings,
and with the future in mind.
• Integrating force: because we have great
strength, and therefore great responsibility. For
this reason we work by combining talents, for a
purpose that is to be achieved by all and for all.
• Driving force: because we make into reality small
and large changes causing the life of people to be
easier, while being efficient and self-demanding,
always seeking continuous improvement.
This Purpose reflects the strategy that the company
has been implementing for years and its commitment
to continue promoting a social dividend based on:
• A real and global energy transition, based
on the decarbonisation and electrification of the
energy sector, and of the economy as a whole,
that contributes to the fight against climate change
and generates new opportunities for economic,
social and environmental development.
• An energy model that is more electric, one that
abandons the use of fossil fuels and generalises
the use of renewable energy sources, the
efficient storage of energy, smart grids and digital
transformation.
• An energy model that is healthier for people,
whose short-term health and well-being depend
on the environmental quality of their environment.
• An energy model that is more accessible for
all, one that favours inclusiveness, equality, equity
and social development.
• An energy model that is built in collaboration
with all involved players and all of society.
Corporate Governance Model / page 74
Sustainable Development. / page 87
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
34
Iberdrola’s Contribution to the Sustainable Development Goals (SDGs)
The group has committed to the SDGs defined by
the United Nations for the 2015-2030 period. They
are 17 global goals intended to transform our world,
ending poverty, fighting against inequality and
injustice, and confronting climate change.
Iberdrola has integrated the SDGs into its business
strategy and its operations, and the company
concentrates its efforts on the following objectives
based on the activities it performs:
• Electricity for All programme:
Goal of 16,000,000 beneficiaries by 2030.
Reached 7 million by year-end 2019.
A global renewable leader: more than 32,000 MW
in 2019.
Energy efficiency: 65.8 million tons of CO2 emissions
avoided during the last three years.
• Iberdrola has set the following objectives:
Be carbon neutral by 2050.
Reduce greenhouse gas (GHG) emissions of
absolute scope 1, 2 and 3, which has been
approved by the Science-Based Target initiative.
The company has an SDG Advisory Committee that reviews actions taken and analyses the alignment
thereof, in addition to proposing new challenges and encouraging actions that help to achieve the fixed
goals.
Iberdrola firmly believes in the innovative role of the private sector, and commits to achieving the SDGs
through business results. In this way, the company’s contributions through its social dividend generate
shared value for all of its Stakeholders:
Responsible business model ...
Fights against climate change
• A global renewable leader, with more than 32,000 MW installed.
• 77% of installed capacity1 free of CO2 emissions.
• Approval of emission reduction goals scopes 1, 2 and 3 by Science Based Target
Initiative.
• Pioneers in adopting the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD).
Rapidly adopts new technologies
and commits to innovation
• Drives the development of smart grids. Innovative improvement projects.
•
Invests in sustainable mobility, in order to install 25,000 charging points in Spain by 2021.
...with positive impacts on all of its Stakeholders...
Economic
• Annually generates more than €31,100 million in Gross Domestic Product (GDP) in the
countries in which it operates2.
• Contributes more than €6,600 million in investments annually to the capital formation of
the world economy2.
Environmental
•
Invests more than €3,160 million in renewable generation during 2019, which has
reduced the group’s emissions intensity to an overall level of 110 gr / kWh in 2019.
Social
• Creates close to 400,000 jobs worldwide (direct, indirect and induced employment)2.
• More than €2,500 million in employee remuneration.
•
Invests €52.3 million in projects contributing to the community3.
• Makes more than €8,700 million in purchases from its suppliers throughout the world.
• Contributes more than €8,100 million in taxes in the countries in which it does business.
(1) Own installed capacity is taken into account.
(2) Data from a Study of Iberdrola’s Impact, prepared by PwC, for financial year 2018.
(3) According to the London Benchmarking Group (LBG) measurement standard.
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
35
Iberdrola also takes action to contribute to the other SDGs. These activities are aligned with its Business
model, and respond to the company’s firm commitment to the social dividend, conceived as the sustainable
creation of value for all the Stakeholders. The activities and results of the company for these Objectives can
be summarised as follows:
Procedures to protect customers in situations of
vulnerability: covers 100% of vulnerable customers
in Spain. Warm Home Discount and Price Cap
programmes in the United Kingdom and Operation Fuel
in the United States.
Iberdrola Social Programme 2020 by Fundación
Iberdrola España.
More than 20,000 kg of food collected through the
Operation Kilo programme promoted in all countries.
Volunteer activities to distribute food, soup-kitchens, etc.
berdrola contributes to reducing the noxious effects
I
o
n health of greenhouse gases with its commitment to
educe these gases.
r
T
he company also has goals to reduce accident rates.
Training for our employees: more than 50 hours of
training per trained employee in 2019.
SDGs to school: Initiative to provide education about
the SDGs at schools, with training for more than 3,000
children.
Included for the third consecutive year in Bloomberg’s
2020 Gender Equality Index.
Iberdrola supports the Women’s Universe (Universo
Mujer) programme of the Higher Council for Sport
(Consejo Superior de Deportes) (CSD), supporting 16
Spanish female federations.
Adoption of the UN Women Empowerment Principles.
Iberdrola is one of the utilities with the highest water
productivity (revenue/water utilised).
Goal: Maintain intensity 50% below the European
average for next 5 years.
Iberdrola has joined the UN CEO Water Mandate to
encourage sustainable practices in the use of water.
Approximately 400,000 direct, indirect and induced job
positions throughout the world1. More than €31,100
million in impact on the GDP of the countries in which it
does business1.
Iberdrola continues to be the largest corporate issuer of
green bonds in the world.
Goal: continue supporting the development of the green
financing market.
World leaders in smart grids. Promotion of Star + project in
Spain and the Smart UK project in the United Kingdom
Innovation projects in all businesses, to support energy
efficiency and the fight against climate change.
Goal: Development of the Innovation and Digitisation
Programme.
Goal: Foster diversity and the social inclusion of
vulnerable groups through the corporate volunteering
programme.
More than 7,000 volunteers participated in the
Corporate Volunteering Programme in 2019.
III Edition of the Iberdrola Awards for Solidarity..
Iberdrola has developed a Sustainable Mobility Plan
with the ultimate goal of contributing to a rational use of
the means of transportation.
Goal: Install 25,000 electric vehicle charging points in
Spain by 2021, within its Smart Mobility plan.
89% of the volume of purchases is made from local
suppliers.
Iberdrola was the first IBEX 35 company to renew the
sustainable event certificate (ISO 20121) for its General
Shareholders’ Meeting in 2019
During the construction and operation of offshore
wind farms, Iberdrola adopts innovative measures to
preserve the neighbouring undersea eco-systems,
including the installation of noise mitigation systems for
mammals in the construction and relocation phase and/
or respect biotopes for the preservation of marine life.
Iberdrola has obtained the first AENOR Corporate
Environmental Footprint certificate.
Goal: Adjustment of 234,000 pylons at distribution lines
to protect birds from electrocution between 2018 and
2025 (Aleteo project).
The company has renewed the UNE-ISO 37001 and
UNE19601 certifications regarding anti-bribery and
compliance.
It has also been chosen for the sixth consecutive year
as one of the most ethical companies in the world,
according to the World’s Most Ethical Companies 2019
ranking prepared by the Ethisphere Institute.
Iberdrola works with a variety of companies,
associations, universities and public bodies to achieve
the SDGs.
Recognised as LEAD participating company in the
United Nations Global Compact.
Worked with United Nations during the COP25 Climate
Change Summit in Madrid (Chilean Presidency).
(1) Data from a Study of Iberdrola’s Impact, prepared by PwC, which is based on 2018 figures. Includes indirect and induced impacts.
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
36
2.5 Capital Management
The Iberdrola group holds valuable assets for the development of its business model. The strategy defined
by the company transforms this capital to create value for all its Stakeholders
What is it?
Management approach Significant aspects
Financial Capital
Financial Capital
/ page 58
Financial resources that the
company already has or
obtains through the capital
markets.
Create value for
shareholders through
sustainable growth.
• Balanced and diversified
growth.
• Sound financial structure.
• Operational excellence.
• Sustainable results and
dividends.
Manufactured Capital
Manufactured Capital
/ page 60
Tangible assets or goods
used by the company
to carry out its business
activities.
Offer a competitive supply of
energy in a safe and reliable
environment.
• Power generation assets.
• Power transmission and
distribution assets.
Intellectual Capital
Intangible, knowledge-based
assets.
Consider innovation as a
strategic element of the
company.
Intellectual Capital
/ page 62
• Other assets.
• Promotion of R&D.
• Digitisation for efficiency and
development of new products
and services.
• Disruptive technology and
business models.
Human Capital
Employee knowledge, skills,
experience and motivation.
Guarantee the availability of
a committed and qualified
workforce.
Offer an diverse, inclusive
and balanced work
environment.
• Global human resources
management.
• “Zero accidents” programme.
• Talent management.
• Diversity, equal opportunity
and reconciliation.
Human Capital
/ page 64
Natural Capital
Natural Capital
/ page 66
Social and
Relationship
Capital
Social and Relationship
Capital / page 68
Natural resources potentially
affected by the company’s
activities.
Ensure a sustainable use
of natural resources and
contribute to combating
climate change
Ability to share, relate
and collaborate with its
Stakeholders, promoting
community development and
well-being.
Promote relations of trust
with Stakeholders, improving
the quality of life of people in
areas where the group has a
presence.
• Climate change.
• Preservation of biodiversity.
• Management of environmental
footprint.
• Operating excellence and
energy efficiency.
• Circular economy.
• Stakeholder Engagement
Model.
• Community support
and electricity access
programmes.
• Human rights due diligence
system.
• Foundations of the Iberdrola
group.
• Brand management.
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
37
Social dividend as an increase in the value of capital
The social dividend created by the business strategy
and model of Iberdrola translates into an increase in
the value of its capital, which in turn feeds back into
a cycle of value creation, thus efficiently inter-relating
the operations of the businesses and the capital of
the company.
The chart below shows its strategic focus for each
Chapter and quantifies an aspiration or achievement
of the company in this area.
This process creates shared value for both Iberdrola
and for its Stakeholders, and constitutes a main
vector for achieving the company’s purpose of
offering an in increasingly healthy and accessible
energy supply.
Electicity
demand
Growth
Technological
changes and
digitisation
Opportunities
Economic
environment
GDP Growth
External Context
Raw materials
markets
Outlook
Financial Capital
Balanced growth, financial
strength, sustainable dividend
Record net profit of €3,406
million in 2019
Manufactured
Capital
Supply of safe and competiti-
ve energy, business focused
on networks and renewables
Gross Investment of more
than €8,100 million during
the 2019 year
Supply costs
Prices and
regulation
Social and
Relationship Capital
Strengthen trust and link to
the community
More than €31,100 million of
contribution to the GDP of
the countries �
ork of tr u s t
w
e
m
a
r
F
Networks
Rene-
wables
Purp
u
s
e
a
n
d
V
a
l
u
e
s
Wholesale
and Retail
D
i
s
tinguishing f a c t
o r s
Intellectual Capital
Promotion of R&D
115% increase in R&D
investment over the last
10 years
Natural Capital
Human Capital
Fight against climate change
and protection of biodiversity
50% reduction in specific
CO2 emissions by 2030
compared to those of 2007.
In 2019: 110 g/kWh
Diverse workforce within a
stable and safe environment
More than 400,000 direct,
indirect and induced job
positions �
(1) Data from a Study of Iberdrola’s Impact, prepared by PwC, which is based on 2018 figures. Includes indirect and induced
impacts.
www.iberdrola.com
Integrated report 2020
Business Model and Strategy |
38
2.6 Comparative Results and Awards
Comparative analysis1
Comparative economic/financial variables
2019
Comparative performance of total
shareholder return
Growth in EBITDA
Return (%)
Average
2
Comparables
Eurostoxx
Utilities
Iberdrola
CAGR (%)
31-Dec.-09 /
31-Dec.-19
Average
Comparables
2
Iberdrola
31-Dec.-09 /
31-Dec.-19
2.1 %
28.1 %
82.2 %
-5.4 %
4.5 %
Growth in stock market capitalisation
Total growth
(%)
Average
comparables
2
Iberdrola
31-Dec.-09 /
31-Dec.-19
-26.5 %
66.7 %
Iberdrola’s performance
Iberdrola has increased its assets by close to
30% and its revenues by more than 50% over the
last 10 years. It has also improved its EBITDA
by approximately 50% and its net profit by
approximately 20%, with close to a 10% increase in
shareholder return and financial strength.
10 years ago, Iberdrola, S.A. held sixth place among
comparable companies in terms of capitalisation.
It now is the leader among those in which the
government does not hold an interest.
Share price
Total growth
(%)
Average
Comparables
2
Eurostoxx
Utilities
Iberdrola
31-Dec.-09 /
31-Dec.-19
-36.2 %
-11.4 %
37.6 %
Iberdrola
31-Dec.-09
31-Dec.-19
Assets (€M)
87,367
122,369
Revenues (€M)
24,559
36,438
EBITDA (€M)
6,815
10,104
Net Profit (€M)
3
Dividends
(€/share)
Net Debt/EBITDA
2,824
0.327
4.55
3,406
0.356
3.80
Comparable companies analysed: Engie, EDF, E.On, Enel, RWE. CAGR: Compound Annual Growth Rate, i.e. weighted
average annual growth.
(2) For Engie, EDF, E.ON, Enel and RWE, the 2019 EBITDA figures are the estimates published by Bloomberg, due to the lack
of final closing figures on the date of preparation of this document.
(3) Including the bonus for attending the General Shareholders’ Meeting
www.iberdrola.com
Integrated report 2020
Awards/Recognitions:
Business Model and Strategy |
39
To the company:
To the chairman:
• Energy Transition Award (S&P Platts): 2019.
• One of the 30 most influential leaders in the fight
• Best Corporate Governance in Spain
against climate change (Bloomberg): 2020.
(World Finance): 2019.
• One of the five best-performing CEOs in the
• World’s Most Ethical Company Index
(Ethisphere Institute): 2019.
• Best Integrated Report Award
(Asociación Española de Contabilidad y
Administración de Empresas): 2019.
• Gold Plaque of the Royal Order of Sporting Merit
(Consejo Superior de Deportes): 2019.
• Award for Contribution to Equality
(El Economista newspaper): 2019.
• Healthy Company Certificate (AENOR): 2019.
• Innovation Awards from the United Nations for
Iberdrola’s Corporate Volunteering programme.
2018.
• Spanish version of European Environmental Award
2018 called by the European Commission and
awarded by His Majesty the King.
world and the top in the utilities sector
(Harvard Business Review): 2019.
• National Innovation and Design Award in the
Innovative Career Category (Ministry of Science,
Innovation and Universities): 2019.
• Premio León award for business management
(El Español): 2019.
• Honourable Mention for his professional career
(Colegio Oficial de Ingenieros Industriales de
Madrid) 2019.
• Best European Utility CEO (Institutional Investor
Research): 2017, for the eleventh time.
• Commander of the Most Excellent Order of the
British Empire: 2014.
• Honorary Doctorate from the Universities of
Salamanca (2011), Strathclyde (2013) and
Edinburgh (2011).
To other members of the company:
• Best utility in the area of Investor Relations
(IR Magazine): 2019.
• Best In-House Legal Advisory Service (Forbes): 2019.
Other Awards / page 87
www.iberdrola.com
Integrated report 2020
Baixo Igauaçu
hydroelectric plant
/ Brazil
www.iberdrola.com
Informe integrado 2020
Iberdrola’s Primary Businesses |
41
3. Iberdrola’s
Primary Businesses
www.iberdrola.com
Informe integrado 2020
Iberdrola’s Primary Businesses |
42
3.1 Regulatory Environment
European Union
Spain
• The publication of all rules of the Clean Energy for
All Europeans Package concluded in June 2019.
It includes goals to be reached by 2030, both for
renewable energy (at least 32% of final EU gross
consumption of energy) and energy efficiency
improvements (32.5% for the entire Union).
There was also a revision to the Regulation and
Directive on the Internal Market in Electricity to
improve the operation thereof, set the foundations
for the transition towards a cleaner energy model,
and give consumers a more active role.
• Adoption of the Clean Mobility Package, which
develops measures to reduce emissions from
the transport sector during the 2021-2030 period,
concluded in 2019. The minimum goals for
acquisition, leasing and hiring of clean vehicles by
the government have been set out in a Directive
and Regulations have been approved with goals
to reduce emissions for new cars and vans by
37.5% and 31%, respectively, by 2030 compared
to 2021 emissions, and by 30% for new heavy
goods vehicles compared to 2019 emissions.
• In December 2019, after the inauguration of the
new European Commission, there was publication
of the Communication on “A Green New Deal”,
which consists of a package of measures to be
implemented in the next 5 years to transform the
European Union into a competitive and efficient
economy in the use of resources and with net zero
emissions by 2050, promoting a fair and inclusive
process for this purpose. The related Investment
Plan will mobilise at least 1 billion euros from the
EU budget and related instruments in sustainable
investments during this decade.
The legislative development thereof will take place
between 2020 and 2021, beginning in March
2020 with the proposed European “Climate Law”
that will enshrine a target of reaching net-zero
carbon by 2050. This target would also increase
the reduction in emissions by 2030 to -50/-55%
and would require the revision of all existing legal
provisions as well as the development of new
laws.
• In February 2019 Spain sent to the European
Commission its first draft of the National
Integrated Energy and Climate Plan proposing
ambitious national goals for decarbonisation of the
economy by 2030, mainly through electrification
with renewable energy. It has been supported by
Brussels and applauded as an example of good
practices. The final document must be approved
in 2020.
• As a result of the transfer of powers to the
National Markets and Competition Commission
(Comisión Nacional de los Mercados y la
Competencia) (CNMC) pursuant to RDL 1/2019,
it has been working on a number of Circulars
on issues relating to the market, network
remuneration and tolls.
• The government still needs to develop the
legal provisions within its purview, including
the methodology for calculating and assigning
charges and the Statute for Electrointensive
Customers (Estatuto de electrointensivos).
United Kingdom
• In June 2019 the British government amended
the Climate Change Act to introduce a new
legally binding objective of “net zero emissions”
of greenhouse gases by 2050 (the prior goal
was a reduction of at least 80% compared to
1990). At the same time, the Scottish government
established a “net zero emissions” goal by 2045.
• After the general elections of 12 December
2019, the new Johnson government approved in
Parliament the application of the EU bill for the
Withdrawal Agreement revised with the EU-27 in
October 2019. The United Kingdom left the EU on
31 January 2020, and negotiations regarding the
future relationship between the United Kingdom
and the EU are expected to move forward during
the year. The British government maintains its
contingency plans to deal with any risk of a “no
deal” situation by the end of 2020, including a plan
for the energy sector.
www.iberdrola.com
Integrated report 2020
Iberdrola’s Primary Businesses |
43
• The regulator has approved an 8% increase in the
Energy Development Account (CDE) budget to
R$21.9 thousand million for 2020. This account is
used to finance, among other things, programmes
like the Light for All Programme to aid vulnerable
groups or support for buying fossil fuels by the
generators in isolated regions.
• Legislative and court initiatives continued during
2019 to reduce the litigation in the Brazilian
electric sector due to disputes between the
hydroelectric generators and the government
regarding hydrological risk. Given that certain
generators continue to be supported under court
measures exempting them from payment for the
costs of hydrological risk between July 2015 and
February 2018, a deficit is occurring in the short-
term market settlements, and therefore in the
income of the distributors. Neoenergia has a net
creditor position.
Mexico
• In March 2019 SENER changed the Terms for the
strict legal separation of CFE. On 25 November
the Terms were published to define the generation
assets and contracts that the CFE must reassign
to each of the Generation Subsidiaries (Empresas
Productivas Subsidiarias de Generación).
• On 26 November 2019, the National Investment
Agreement in Infrastructure by the Private Sector,
with an investment of 859 thousand million pesos
over the six-year period in 147 private investment
projects was approved in order to maintain the
confidence of domestic and foreign investors. 6
electric energy projects with an investment equal
to 63 thousand million pesos will be announced in
2020.
United States and Canada
• On 16 July 2019 the Senate ratified a protocol
to the tax treaty between the United States and
Spain. The new protocol eliminates the 10%
withholding tax on dividends, reduces taxes on
interest, royalties and capital gains, and adds
provisions for more expeditiously handling tax
disputes through binding arbitration. It entered into
force on 27 November 2019.
• In June 2019 the Environmental Protection
Agency (EPA) published the Affordable Clean
Energy (ACE) rule, replacing the 2015 Clean
Power Plan (CPP) that never became effective.
It allows the states to develop their own plans to
reduce GHG emissions for existing coal plants
based mainly on efficiency improvements at the
plants and the application of new technologies.
The states have three years to develop and
submit their plans. This rule is being challenged in
the federal courts by more than 20 entities, and a
decision is not expected before 2020.
• In 2019 some states like Maryland, New York
and Connecticut have updated their long-term
offshore wind objectives, thus committing to the
development of this technology.
Brazil
• The Ministry of Mines and Energy (MME)
diagnosed the needs for modernisation of the
electricity sector during 2019. It has analysed
everything from the formation of prices in the
market in the short term to capacity mechanisms
to encourage the expansion of generation and the
sustainability of distribution. Beginning next year,
it is expected that measures will be developed
allowing for implementation of the required
changes.
• In August 2019 the MME confirmed the schedule
for implementation of hourly spot prices in the
Brazilian market. Beginning in January 2020 the
hourly spot price formation model will be used to
guide the programming of the system’s operation,
although it will not be used for the formation of
settlement prices in the short-term market until
2021.
www.iberdrola.com
Integrated report 2020
Nuñez de Balboa photovoltaic plant
/ Spain
www.iberdrola.com
Informe integrado 2020
Iberdrola’s Primary Businesses |
45
3.2 Networks
Regulatory environment of the business
Spain
United Kingdom
• 2019 saw the conclusion of the process to revise
remuneration for the distribution activity for the
second regulatory period (2020-2025). The new
circulars approved by the CNMV provide a new
methodology for calculating the continuing financial
remuneration rate (WACC), based on remunerating
audited investments, recognising efficient operating
expenses and establishing incentives to improve
losses and the quality of supply. The remuneration
rate for the distribution activity is set at 6.003% for
2020 and 5.58% for the remaining years.
•
In December 2019 a Ministerial Order was published
extending the electricity access tariffs beginning
1 January 2020 on a temporary basis until the
publication of new network tariffs and new charges.
• Ofgem continues the process of designing the
RIIO2 regulatory framework. The new periods
will be 5 years instead of the current 8 years, and
the cost of equity, which will be decided in 2020,
is linked to the CPIH (inflation) index. RIIO-T2
for transmission is in a more advanced state of
development and will enter into force in 2021,
while RIIO-D2 relating to distribution will apply
beginning in 2023.
• Until then, SP Transmission Ltd. as well as
SPD Ltd. and SPM Plc continue to perform their
activities under the RIIO-T1 and RIIO-D1 tariff
frameworks, complying with all investment and
quality goals agreed with Ofgem.
United States
Brazil
• New tariffs entered into force in January 2019 for the
gas distribution company CNG (Connecticut), and
will be in effect for the next 3 years, with financial
profitability (ROE) of 9.3%, an equity percentage of
54% and planned investments of $150 million.
• New tariffs entered into force in February 2019 for
the gas distribution company BCG (Massachusetts),
and will be in effect for the next 3 years, with an ROE
of 9.7% and an equity percentage of 54%.
•
In October 2018 a new 1-year tariff proposal was
presented for the electricity distribution company
CMP (Maine). The final determination by the
regulator and the entry into force is expected during
the first quarter of 2020. Thea same conditions set in
2014 were maintained during 2019, with an ROE of
9.45% and an equity percentage of 50%.
• The tariff conditions for the gas distributors of
the State of New York (NYSEG and RG&E) were
maintained during 2019, with a recognised ROE
of 9.0%. In May 2019 a new 1-year tariff proposal
was presented and is now being negotiated with the
regulator and would enter into force in April 2020.
•
In August 2019 the 5th Tariff Review of Elektro was
approved and will be in effect for the next 4 years
beginning on 27 August 2019. The regulatory asset
base (RAB) is R$3,900 million and is expected
to increase to R$5,800 million by the end of the
regulatory period, with an investment effort of
R$2,800 million during the period.
•
In April there was an annual period adjustment for
Coelba, Cosern and Celpe that mainly reflects the
change in the General Price Index and recognises
the improvement in supply quality.
• Neoenergia won a transmission projects in the
auction by the Brazilian regulator ANEEL in
December 2019 for the construction of a 210 km line
and a 1,000 MVA substation.
• Neoenergia has been awarded a total of 11 projects
in auctions from 2017, 2018 and 2019 for a total
investment of approximately R$8,000 million.
• The Energy Research Office (Empresa de Pesquisa
Energética) has also published the schedule of new
auctions (two per year), which will take place until
the end of 2021.
www.iberdrola.com
Integrated report 2020
Objectives, risks and principal activities
Iberdrola’s Primary Businesses |
46
Objectives
• Zero accidents.
• Offer our customers excellent service based on the
quality of supply and information regarding the network.
• Maximise efficiency in system operations through
operational excellence and the digitisation of our assets.
• Lead the energy transition towards a cleaner model
favouring a more efficient integration of renewable
energy (centralised and distributed) and the penetration
of electric vehicles through the use of smart grids.
Significant risks
• Operational risks: impacts on supply as a result of
meteorological events and work-related and third-party
accidents at owned facilities.
• Technological and cybersecurity risks affecting the
security of the facilities and service to our customers.
Customer service
•
In Spain, the new brand i-DE Redes Eléctricas
Inteligentes, S.A.U. has been launched to favour
identification by customers and avoid confusion with
the retailers of the group. The digital channels have
also been renewed, providing customers with all of their
consumption information in real time.
• A record quality level was once again reached in Brazil,
with a 10% decrease in the Equivalent Duration of
Interruption (DEC) compared to 2018.
• 2019 was a year with strong storms in all of our
distribution areas, which required tremendous efforts
to restore supply. The good performance of the electric
grid in view of the strong “cold drop” (gota fría) in the
southeast of Spain during September is noteworthy.
• The companies UI and CMP received the EEI
Emergency Recovery Award for their extraordinary
response to the strong storms of May 2018 and October
2019, respectively.
• SPEN achieved the prestigious BSI (Bristish Standards
Institution) Kitemark quality certification mark, becoming
the first utility to receive this mark. At the end of
November 2019, SPD and SPM are in 1st and 3rd place
in customer service among UK distributors, according to
the regulator.
Principal activities 2019
• Spain: After the deployment of 10.8 million smart
meters, which was completed in 2018, the digitisation of
the low-voltage network is being extended to favour the
penetration of renewables, which extension is expected
to be completed in 2020.
• United Kingdom: Implementation of investments
set out in RIIO-T1 and RIIO ED1. Joined the Low
Carbon Strategic Partnership, focused on the role of
electricity networks in favouring the energy transition.
Investment of £20 million within the Green Economy
Fund to finance 33 local projects in Scotland to favour
decarbonisation and £8 million to accelerate the
deployment of electric vehicle recharging infrastructure.
• United States: Progress in obtaining permits for
the New England Clean Energy Connect (NECEC)
project awarded in 2018, with a planned investment
of $950 million, for the construction of a 233 kilometre
transmission line between Canada and New England,
which will allow for the supply of 1,200 MW of 100%
hydroelectric power to Massachusetts beginning in 2022.
• Brazil: Progress as planned in the construction of 10
transmission projects awarded in the 2017 and 2018
auctions, completing the startup of one of these projects
in 2019.
Operational excellence
• The adjusted evolution of operating expenses continues
in order to maintain and improve efficiency ratios in all
countries.
• New plans and models have been launched to end
electricity fraud in electricity consumption in Spain and
Brazil, and also to comply with the parameters defined
by the regulators.
• They improve the loss indicators in Brazil as a result of
the fraud reduction plan.
Digitisation of the network
•
In Spain the Smart Cities initiative has launched in
order to contribute to the country’s main municipalities
advancing in their transition towards smart cities.
Collaboration agreements have been reached with eight
government administrations, including the municipalities
of Madrid and Murcia and the Provincial Council of
Castellón, to expand the possibilities of a smart and
digitalised grid.
• Six Electric Mobility Control Centres have also been
created to monitor and evaluate the impact of electric
vehicles on the distribution network.
www.iberdrola.com
Integrated report 2020
Iberdrola’s Primary Businesses |
47
Key figures of the Networks Business
Spain
United
Kingdom
United States
Brazil
Total
Item
Unit
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Gross margin
EBITDA
Distributed
electricity
Supply Points
(Electricity)
1
€M
€M
2,117
2,109
1,311
1,222
2,875
2,780
1,828
1,530
8,131
7,641
1,711
1,709
987
919
1,330
1,331
1,234
955
5,262
4,915
GWh
93,516
93,881
33,670
34,659
38,441
39,579
67,875
65,290
233,502
233,409
Millions
11.1
11.1
3.5
3.5
2.3
2.3
14.1
13.8
31.0
30.7
Gas supply
GWh
Supply Points
(Gas)
Millions
--
--
--
--
--
--
--
64,234
65,140
--
1.0
1.0
--
--
--
--
64,234
65,140
1.0
1.0
Gross
investments
€M
537
458
736
625
1,435
1,165
916
811
3,624
3,059
Workforce
No. of people
3,574
3,743
3,000
2,963
5,375
5,325
11,310
10,360
23,259
22,391
Quarterly Results Report
International Financial Reporting Standard (IFRS) 11 has been applied to
the financial information.
(1) Supply points in Spain include Conquense and other small distributors.
EBITDA of the Networks Business by
geographical area 2019
Gross investments of the Networks
Business by geographical area 2019
33%
€ 5,262 M
23%
25%
15%
25%
€ 3,624 M
20%
19%
40%
Spain
United Kingdom
United States
Brazil
Spain
United Kingdom
United States
Brazil
www.iberdrola.com
Integrated report 2020
East Anglia ONE offshore
wind farm substation
/ United Kingdom
www.iberdrola.com
Informe integrado 2020
Iberdrola’s Primary Businesses |
49
3.3 Renewables
Regulatory environment of the business
Spain
Brazil
• In November the Ministry for the Ecological
• The construction of the Oitis Wind Farm Complex,
Transition published Royal Decree Law 17/2019,
which establishes the remuneration rate for
renewable facilities based on the weighted
average cost of capital (WACC). The current pre-
tax rate of 7.389% for facilities prior to RDL 9/2013
will remain in effect until the end of 2031, provided
that the developer thereof does not have existing
litigation or commits to end any such litigation.
Otherwise, or for facilities after RDL 9/2013, a
value of 7.09% is set until 2025. The approval of
the other remuneration parameters is expected
during 2020.
RDL 17/2019 also provides that if facilities are
closed, sustainability and employment standards
will be taken into account for awarding permits for
new projects.
United Kingdom
• 12 Contracts for Difference (CfD) were awarded
in September for a total capacity of 5.8 GW. 5.46
GW (6 contracts) were awarded to offshore wind
and 300 MW to other renewable technologies.
United States
• At the federal level, a one-year extension of tax
credits for wind was approved in December 2019.
Facilities that begin construction in 2020 can
choose between a 60% Production Tax Credit
(PTC) or an 18% Investment Tax Credit (ITC).
• The industry also maintains clean energy
incentives at the state level, with various states
increasing their Renewable Portfolio Standard
(RPS) targets.
located in the States of Piauí and Bahía, was
approved in 2019. It will consist of 12 wind farms
with an installed capacity of 566 MW. 30% of all
energy generated by these two wind farms was
awarded in an “A-4” auction held on 28 June
2019.
Mexico
• The mechanism for the purchase and sale
of Clean Energy Certificates (Certificados de
Energías Limpias) (CELs) continues in effect
to encourage new clean power generation
projects, but in October 2019 the Secretary of
Energy approved changes to the requirements
for granting CELs in order for the CFE’s clean
generation plants in existence before the Reform
to be able to verify CELs for generation. This
measure eliminated in practice the need for CFE
Suministro Básico to purchase CELs in the Long-
Term Auctions, in order not to increase the Basic
Supply tariffs for domestic customers.
The business will engage in
sustainable growth, mainly
based on onshore wind, offshore
wind, solar, hydroelectric and
pumped storage investments
in the countries that are most
important to the group.
www.iberdrola.com
Integrated report 2020
Iberdrola’s Primary Businesses |
50
Objectives, risks and principal activities
Objectives
Principal activities 2019
• Occupational Safety and Health.
• 2,791 MW of installed capacity was added during
• Efficiency in operations to optimise the operation
the year:
of the assets.
• Efficiency in development and construction costs
to maximise the competitiveness of all renewable
projects.
• Profitable growth from various technologies in the
countries that are strategic for the group, and in
new countries of interest.
• Develop a robust portfolio that covers the
company’s growth plan.
Significant risks
• Regulatory risk: changes in regulations in the
countries in which it operates.
• Operational risk: availability rate of facilities and
potential incidents with environmental impact.
• Market risk: changes in prices of energy in short-
term markets.
• Risk of access to evacuation networks and limits
on production due to technical restrictions of the
networks.
• Technological and cybersecurity risks affecting the
facilities.
• Onshore wind: 235 MW in Spain, 186 MW in
Mexico, 832 MW in the United States and
4 MW in Greece.
• Offshore wind: 420 MW in the United Kingdom.
• Photovoltaic solar: 500 MW in Spain.
• Hydroelectric: 612 MW in Brazil and 2 MW in
Spain.
• More than 7,000 MW are also under construction,
of which more than 2,500 MW are onshore wind
in Spain, the United States, Brazil and Mexico,
and more than 3,500 MW are photovoltaic solar
in Spain, Mexico, the United States and Portugal.
Construction of the Tâmega hydroelectric
complex, with 1,158 MW, continues in Portugal.
• Growth continues in offshore wind with the
construction of the 714 MW East Anglia
ONE project in the United Kingdom and the
development of the 800 MW Vineyard project
in the United States, 496 MW St. Brieuc project
in France and 476 MW Baltic Eagle project in
Germany. Iberdrola was also recently awarded the
804 MW Park City project in Connecticut.
Load factor
Maximising the load factor of
facilities and availability, through
operating and maintenance
measures, as well as other
external factors, optimising
generation with renewable
sources.
Operation and maintenance
costs
Continuous improvement
in efficiency through
global standardisation and
systematisation processes,
exploiting digitisation
opportunities.
Project portfolio
Development of the portfolio of
onshore wind and photovoltaic
projects in Spain, the United
Kingdom, the United States,
Brazil, Mexico and International
(Continental Europe, Australia and
South Africa) and offshore wind
projects in France, Germany, the
United Kingdom and the United
States.
www.iberdrola.com
Integrated report 2020
Iberdrola’s Primary Businesses |
51
Key figures of the Renewables Business
Spain
United
Kingdom
United
States
Brazil
Mexico
IEI
Total
Item
Unit
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Gross margin
€M
1,251
1,580
678
644
852
835
174
178
113
88
378
286
3,446
3,611
EBITDA
€M
736
919
525
518
591
573
125
129
86
65
323
241
2,386
2,445
Load factor1
%
15.9
18.7
24.8
22.1
29.1
29.7
29.0
31.3
29.5
31.2
31.6
26.9
21.3
22.6
Gross
investments
Workforce
€M
778
375
907
427
1,396
386
102
180
93
291
50
141
3,326
1,800
No. of
people
1,567
1,537
418
355
752
710
225
192
136
125
257
166
3,355
3,085
Quarterly Results Report
International Financial Reporting Standard (IFRS) 11 has been applied to
the financial information
(1) The load factor includes all renewable technologies.
EBITDA of the Renewables
Business by geographical area
2019
Gross investments of the
Renewables Business by
geographical area 2019
4%
13%
5%
31%
€ 2.386 M
25%25%
22%22%
3%
2%
3%
€ 3.326 M
42%42%
23%
27%27%
Spain
Brazil
United Kingdom
Mexico
United States
IEI
Spain
Brazil
United Kingdom
Mexico
United States
IEI
www.iberdrola.com
Integrated report 2020
Smart Mobility Project
www.iberdrola.com
Informe integrado 2020
Iberdrola’s Primary Businesses |
53
3.4 Wholesale and Retail
Regulatory environment of the business
Spain
United Kingdom
• Royal Decree 750/2019, establishing a fixed unit
rate of €7.98/MWh for the public non-tax financial
obligation by means of which ENRESA’s service
to the nuclear plants in operation is funded, was
published in December 2019.
• Royal Decree 244/2019, which governs the
administrative, technical and financial conditions
for the self-consumption of electric power, was
published in April 2019. This Royal Decree
expanded the definition of self-consumption,
including the concept of “facilities close
through the network”, developed collective self-
consumption, simplified government procedures
and allowed for the remuneration of surpluses for
small facilities.
• In June 2019, Ofgem published new market
access requirements for incoming retailers relative
to their financial capacity, ability to comply with
legal provisions and market rules, willingness to
provide a high-quality service to customers and
management capacity of the management team
and the main shareholders.
• In October 2019 the government re-established
the capacity mechanisms after the European
Commission concluded its investigation holding
that the mechanism complies with the rules on
State Aids, because it is necessary to guarantee
supply, is in line with the energy policy goals of
the EU, and does not distort competition within the
single market.
Mexico
Brazil
• The methodology for determining the values
of the electricity tariff beginning in 2020 was
approved on 16 December 2019 without changes,
for which reason tariffs are expected to remain
stable in comparison with the figures for 2019.
The resolution determining the transmission and
distribution tariffs was also published.
• Portaria (Implementing Regulation) No. 389,
establishing the guidelines for the auctions of
exclusive A-4 and A-5 generation for thermal
plants to be held in 2020, was published in
October 2019. The supply period is 15 years,
beginning in January 2024 and January 2025,
respectively.
• Portaria No. 465, which provides that consumers
with a capacity above 1.5 MW since January
2021, above 1 MW since January 2022 and
above 0.5 MW since January 2023 can purchase
conventional energy from any retailer, was
published in December 2019. ANEEL and CCEE
must submit a study before 31 January 2022 on
the regulatory measures required to allow the
opening to the free market of consumers with a
capacity below 0.5 MW beginning in 2024.
www.iberdrola.com
Integrated report 2020
Iberdrola’s Primary Businesses |
54
Objectives, risks and principal activities
Objectives
• Occupational Safety and Health.
• Competitive supply and excellence in service to
customers.
• Environmental management and protection of
biodiversity
• Operational excellence and continuous
improvement in efficiency.
• Risk identification and minimisation.
• Development of growth opportunities and new
energy solutions.
Principal activities 2019
• Spain: Continued development of products and
services adapted to the needs of customers
(Customised Plans, Smart services, Smart
mobility, Smart solar, Smart home).
• United Kingdom: At year-end 2019 a cumulative
total of 1.5 million smart meters had been
installed.
• Mexico: Entry into commercial operation of
2,655 MW (878 MW Escobedo CC, 911 MW
Topolobampo II CC and 866 MW El Carmen
CC). Approximately 1,300 MW thermal under
construction.
• Europe: Growth of retail activity and connection
to customers through Smart Solutions. 1.5 million
contracts in portfolio reached during 2019.
Significant risks
• Regulatory risk: Changes in regulations in the
countries in which it operates.
• Operational risks: Availability rate of facilities and
potential incidents with environmental impact.
• Market risk: Fuel prices and competition levels in
liberalised markets.
• Technological and cybersecurity risks affecting the
security of the facilities or the information of our
customers.
Efficiency
Growth
Customers
• Optimisation of production
• Mexico: upon startup of the
• Loyalty-building and
and increase in availability of
thermal facilities.
• Facilitating operations in
complementary markets.
• Operational improvements
in the customer service and
management processes.
Prices
• Management of fuel price risks
through appropriate hedging of
all generation.
Topolobampo III CC in 2020,
the company will have an
installed capacity of more than
10,000 MW, strengthening its
position as the largest private
producer of electricity in the
country.
• United Kingdom: Continued
widespread deployment of
smart meters that began in
2016.
development of new digital
products and smart solutions
adapted to the needs of
customers, which promotes
efficiency and the consumption
of renewable energy.
• Retail development in Mexico
concurrently with the energy
reform.
• Sustained growth of retail
activities of electricity, gas and
Smart Solutions in the rest of
Europe.
www.iberdrola.com
Integrated report 2020
Iberdrola’s Primary Businesses |
55
Key figures of the Wholesale and Retail Business
Spain
United
Kingdom
Brazil
Mexico
IEI*
Total
Item
Unit
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Gross margin
EBITDA
€M
€M
2,932
2,396
684
863
92
134
935
756
45
19
4,688
4,168
1,558
1,001
110
307
64
92
762
638
(25)
(26)
2,469
2,038
Electricity contracts
Millions
10.1
10.1
2.8
3.0
0.0
0.0
0.0
0.0
0.6
0.3
13.5
13.5
Gas contracts
Millions
1.0
1.0
1.9
2.0
0.0
0.0
0.0
0.0
0.2
0.1
3.1
3.1
Smart solutions
contracts
Millions
5.7
5.3
1.9
1.4
0.1
0.1
0.0
0.0
0.7
0.4
8.4
7.1
Contracts total
Millions
16.8
16.5
6.6
6.4
0.1
0.1
0.0
0.0
1.5
0.7
25.1
23.7
Gross investments
€M
318
218
218
201
31
12
380
682
85
26
1,032
1,139
Workforce
No.
of people
2,646
2,695
1,552
1,588
128
98
997
855
191
122
5,514
5,358
Quarterly Results Report
International Financial Reporting Standard (IFRS) 11 has been applied to
the financial information.
* IEI - Iberdrola Energía Internacional
EBITDA by geographical
area 2019
Gross investments of the
Wholesale & Retail Business by
geographical area 2019
30%
3%
4%
€ 2,469 M
62%62%
8%
31%
37%
€ 1,032 M
21%
3%
Spain
United Kingdom
Brazil
México
Spain
United Kingdom
Brazil
México
www.iberdrola.com
Integrated report 2020
Construction of the Alto Támega hydroelectric plant
/ Portugal
www.iberdrola.com
Informe integrado 2020
Our Assets |
57
4. Our Assets
The group’s assets are the basis for the creation of value by the company,
which carries out its activities through the sound management thereof.
In this report, Iberdrola identifies and classifies its assets in accordance with
the IIRC classification system:
• Financial capital
• Manufactured capital
• Intellectual capital
• Human capital
• Natural capital
• Social and relationship capital
www.iberdrola.com
Informe integrado 2020
Our Assets |
58
4.1 Financial Capital
Management Approach
Results 2019
Balanced
growth
The company has an investment policy consistent with its
• Net investments of €7,242 million, of which 85% has been
strategic vision and financial policy. The main goals are:
assigned to the Networks and Renewables businesses.
• Ensure a return on capital through projects and
investments preferably in regulated businesses,
renewable assets or assets with long-term contracts.
• Investments in Networks assets have been boosted by
the long-term regulatory frameworks established in all of
the countries, and have increased 25.1% in the United
Kingdom, 23.6% in the United States, 22.3% in Spain and
• Increase geographic diversification, further balancing the
contribution of the countries in which it does business.
13.8% in Brazil.
• Tailor investment levels to the actual needs of each
market.
• In Generation, there has been a startup of approximately
5.4 GW of capacity since the beginning of 2019.
• Funds From Operations have increased 10.0%, reaching
€8,060 million thanks to all the investments, exceeding
investments by more than €820 million.
Solid financial
structure
• Iberdrola considers financial strength to be an essential
• Gross margin of €16,263 million (+5.4%).
factor that allows it to successfully face potential
turbulence in the markets and to be in a position to
exploit growth opportunities in the countries in which it
does business.
• The financial policy seeks improvement in solvency
ratios, balancing an increase in debt with the generation
of additional cash flow from new investments.
• The debt structure is in line with the profile of the
business, which is mostly regulated, and the composition
thereof reflects the results obtained in the relevant
currencies.
• Net profit of €3,406 million (+13.0%), in line with forecasts
for the year.
• EBITDA increased by almost 8.1% to €10,104 million,
thanks to the good operational performance of all of the
businesses, especially the performance of the networks
business.
• Adjusted net financial debt is €37,769 million, increasing
€3,620 million over the year, as a result of the strong
investment process implemented by the group and the
effect of the first implementation of IFRS 16.
• Liquidity of €14,300 million, which covers more than 18
months of financing needs.
Operational
excellence
• Notwithstanding the high efficiency levels that have been
• Net operating expenses increased 4.2% to €4,330 million,
reached, the company believes that there is still a margin
2.7% excluding the effect of exchange rates. This increase
for improvement thanks to investments in digitisation and
is mainly explained by the effects of growth (including
innovation.
Wholesale and Retail in Mexico, and Wikinger).
• The implementation of best practices in all areas will
allow for additional savings and an increase in synergies
at the global level.
Sustainable
results and
dividends
• Iberdrola offers its shareholders an industrial enterprise
• Shareholder remuneration of 0.356 euro per share, equal to
for the long-term creation of value. The confidence of its
a dividend yield of 3.87%.
shareholders enables Iberdrola to secure the resources
needed to move its enterprise forward.
• Flexible dividend offering tax benefits, the repurchase of
shares to avoid dilution, adding the cash payment option.
www.iberdrola.com
Integrated report 2020
Create value for the shareholder with sustainable growth
Gross margin by business 2019
EBITDA by business 2019
Our Assets |
59
21%
29%
24%
24%
€ 16,263 M
50%
€ 10,104 M
52%52%
Wholesale and retail
Networks
R
enewables
Wholesale and retail
Networks
Renewables
Gross investment by geographical area
2019
Bank borrowings, gross by product type
2019
2%
6%
13%
35%
21%
23%
2%
17%
32%
10%
7%
5%
18%
8%
Spain
United Kingdom
United States
Brazil
México
IEI
Diversification of investments, with a heavy concentration outside of the euro zone.
EUR market bonds
Other Bonds
Project finance
USD market bonds
Notes
Bank loans
GBP market bond
Multilaterals
s
Structure of adjusted net debt broken by
currency in 2019
Maturity of financial debt
(€M)
10%
27%
37,769 M€
46%
17%
0
0
9
,
8
1
6
7
6
,
4
1
6
6
,
3
2
1
0
,
4
6
1
8
,
3
0
2
3
,
4
Euro
Pund
Dollar
Reais and others
2020
2021
2022
2023
2024
2025+
Debt structured by origin of cash flow earned in each currency. Includes
derivatives to hedge net investment.
Comfortable maturity profile.
Excludes credit lines
www.iberdrola.com
Integrated report 2020
Our Assets |
60
4.2 Manufactured Capital
Size
Principal activities 2019
Electric power
generation
assets
• Iberdrola’s generation assets are made up
of more than 300 wind farms, almost 90
hydroelectric power plants (in addition to the
mini-hydro plants), 11 photovoltaic plants, more
than 50 thermal power stations using various
technologies, 5 of which are nuclear, and other
facilities built and operated according to the best
practices.
• The year ended with additional installed capacity of 5,446
MW, of which more than half (2,791 MW) are renewable,
including the Nuñez de Balboa photovoltaic plant in
Spain, the Baixo Iguaçú hydroelectric plant in Brazil, and
the Montague, Patriot and Karankawa wind farms in the
United States. The remaining 2,655 MW is related to the
combined cycles in Mexico (866 MW El Carmen, 911 MW
Topolobampo II and 878 MW Escobedo).
• At the same time, 49 MW of capacity has left the boundary
due to the sale of two wind and solar plants in the United
States.
• 40% of the 714 MW East Anglia ONE offshore wind project
in the United Kingdom was sold.
Power
transmission
and distribution
assets
• Iberdrola’s electricity transmission and
distribution networks comprise over 1.1 million
km of distribution and transmission lines,
more than 4,400 substations and 1.5 million
transformers, built and operated to supply a high-
quality, reliable service to 30.99 million electricity
supply points.
• Iberdrola also has more than 40,000 kilometres
of gas pipelines for the transport and distribution
of gas in the United States.
• Iberdrola is a pioneer in the development of
innovative projects to improve the reliability of
electric supply.
• In Spain, regulatory commitments required the deployment
of smart meters for customers of less than 15kW (Type 5)
after 2018, with the deployment of these meters for Type 4
customers (15 kW to 50 kW) during 2019. The are currently
more than 10.97 million smart meters.
• There is continued deployment of smart meters in the United
Kingdom, with more than 1.5 million installed.
• In the United States progress continues to be made in
securing permits for the 233-km-long New England Clean
Energy Connect (NECEC) construction project.
• In Brazil a 500 kV static compensator was placed into
service in São Paulo in 2019 and construction is advancing
on almost 5,000 kilometres of transmission lines and 30
substations in 14 states.
Other assets
• Iberdrola manages approximately 1,323,000 m2
• Construction of the Iberdrola Campus at San Agustín del
of offices and work centres throughout the world,
with a total of 843 properties, of which 266 are
located in Spain, 89 in the United Kingdom, 167
in the United States, 301 in Brazil and 20 in the
rest of the world. These properties, which follow
the same corporate criteria in the interior spaces,
are designed, built and operated in accordance
with the strictest sustainability and efficiency
standards.
Guadalix has been completed, cementing its position as the
group’s centre of excellence, training and events.
• Real estate consolidation continues along the east coast
of the United States, with real estate activities in the states
of NY, MA, ME and CT to improve the efficiency and
modernisation of the asset portfolio.
• The integration and first phase of consolidation of the
headquarters of Neoenergia has been completed. There is
also work on the process of internalising the main functions
of the Networks Business.
• The construction of a new corporate headquarters in Mexico
DF for approximately 500 employees has commenced.
• Iberdrola’s has consolidated its presence in the rest of the
world, increasing its footprint in Paris, Berlin, Rome, Milan,
Lisbon, Dublin and Melbourne.
www.iberdrola.com
Integrated report 2020
Offer a secure supply of energy that is competitive in cost and quality
Average availability factor of Iberdrola’s generation facilities
Our Assets |
61
Conventional
thermal
Combined
cycle
Cogeneration
Nuclear
Hydroelectric
Wind
4.676
96.04
91.64
97.07
90.12
89.27
94.01
Iberdrola´s
average:
91.07%
2017
2018
2019
0
25
50
75
100
Quality of electricity supply
Fixed assets (€M)
Average power outage duration
2019
2018
Spain
TIEPI (min)
45.20
44.60
United Kingdom CML (min)
33.47
35.51
United States
CAIDI (h)
1.93
2.07
Brazil
DEC (h)
11.02
12.24
Power outage frequency
2019
2018
Spain
NIEPI (nº)
0.94
0.91
United Kingdom CI (ratio)
39.46
43.32
United States
SAIFI (índice)
Brazil
FEC (frecuencia)
1.17
5.47
1.22
5,81
1
0
3
,
7
5
7
1
5
8
5
,
9
4
4
3
6
,
6,837
2017
7,651
2018
7,841
2019
In progress In use
TIEPI: Installed Capacity Equivalent Interrupt Time.
CML: Customer Minutes Lost Per Connected Customer.
CAIDI: Customer Average Interruption Duration Index.
DEC: Equivalent Duration of Interruption by Consumer Unit.
NIEPI: Installed Capacity Equivalent Interrupt Number.
CI: Customer Interruptions Per 100 Connected Customers.
SAIFI: System Average Interruptions Frequency Index.
FEC: Equivalent Frequency of Interruption by Consumer Unit.
www.iberdrola.com
Integrated report 2020
Our Assets |
62
4.3 Intellectual Capital
Management approach
Principal activities 2019
Promotion of
R&D
• Iberdrola continues to wager on innovation as one
of its main pillars for successfully facing the future
energy scenario, promoting energy efficiency,
decarbonisation and the electrification of the
economy.
• Ignacio Galán, the chairman & CEO of the Iberdrola
group, has received the National Innovation and
Design Award in the Innovative Career Category
from the Ministry of Science, Innovation and
Universities.
Innovation Report
Efficiency and
new products
and services
• New developments driving flexibility, operational
efficiency and the safety of facilities, as well as a
reduction in our environmental impact through the
implementation of disruptive technologies and the
reduction of emissions.
• Design of new products that guarantee an efficient,
agile and high-quality service and ensure an
improvement in the experience of its more than 16
million customers.
• €280 million of R&D investment in 2019, a 5% increase over
2018.
• Expansion of Iberdrola’s Universities Programme, Iberdrola
U, with the inclusion of Yale University in the United States,
Pernambuco University in Brazil and Hamad bin Khalifa
University in Qatar.
• Wager on internal talent through the launch of INVENTA, the
global platform for the management of innovative campaigns and
ideas.
• Launch of two start-up challenges, where companies throughout
the world submit potential solutions to specific problems of the
energy industry.
• Expansion of the Innovation Programme with Proveedores
Iberdrola Bizkaia (Iberdrola Biscay Suppliers), to finance
innovative projects of Biscayan suppliers allowing for the
development of products and services in the energy industry.
• Development of domestic and international R&D projects to
promote sustainable development, renewable energy and
emerging technologies.
• There has been a launch of the Asistente Smart Iberdrola
allowing customers to disaggregate the electricity consumption
of their home appliances.
• Customers with electric vehicles can manage their home
recharging point using the Smart Mobility Hogar app. It will also
be possible to locate and reserve recharging points on the web
using the Iberdrola Public Charge App.
• Using the Smart Solar App, each customer will be able to
monitor generation, self-consumption and injection into the grid
from their solar panels.
Disruptive
technology
and business
models
Through the Iberdrola-PERSEO international start-up
programme, investments are made in technologies
and new disruptive businesses models, which ensure
the sustainability of the energy model. Since its
creation, more than €65 million have been invested
through the programme worldwide.
Lines of activity:
• Technologies favouring the integration of renewable
• Iberdrola has been recognised by the European Commission
within the framework of the Start-up Europe Partnership initiative,
which has named Iberdrola for the third consecutive year as one
of the top 12 European companies that work best with start-ups,
and also giving it the special “Start-up Procurement Award”.
• There were more than 15 pilot projects with start-ups in
technological areas like Artificial Intelligence, Big Data, Internet
of things (IOT) and blockchain in 2019.
energies.
• Investment in the company Wallbox, dedicated to the
development of electric mobility solutions, and in Balantia,
which develops solutions for improvement in the area of energy
efficiency. These investments are an important contribution to
Iberdrola’s wager on the areas of electric mobility and energy
efficiency.
• Aggregation and management of distributed energy
resources (batteries, solar, etc.).
• Innovative solutions for customers (demand-side
management, digital solutions, etc.).
• Advanced technologies for operation and
maintenance of energy assets.
• Electromobility: charging infrastructures and new
solutions.
• Energy efficiency, including efficient thermal
solutions.
www.iberdrola.com
Integrated report 2020
Our Assets |
63
Highlight the value of the company’s intangible assets
Main R&D research projects
Smart grids
• ATELIER arises with the goal of developing Positive Energy Districts in eight European cities where Smart solutions for
cities will be implemented and tested.
• In COORDINET, transporters, distributors and consumers of electricity will define a European energy platform allowing for
a bidirectional flow of energy.
• As regards the integration of electric vehicles into the grid, the ASSURED project intends to develop rapid recharging
solutions for heavy-load electric vehicles.
Renewable
energy
• There has been a launch of the European ENERXICO project, the goal of which is to prepare computational fluid
dynamics (CFD) models for future exascale computers and advance in the use of simulation models.
• There has been a continuation of the ROMEO and ASPA projects to develop new models and tools for the early detection
of failures based on AI/big data techniques.
• In offshore wind, the construction of East Anglia One offshore wind farm in the United Kingdom is nearing completion and
will enter into operation in 2020.
Clean
generation
• The OCTAVE project, giving greater flexibility to combined cycle plants and facilitating the integration of renewables into
the energy mix, has been completed.
• REDEMIS has commenced, to improve environmental performance in combined cycle startup, shut-down and load
changing.
Customers
• Energy Wallet allows the purchase of 6-, 12- or 24-month green energy packages knowing the final price. from the
renewable plant selected by the customer. It can be used at different addresses and managed from a mobile phone.
• Smart Home includes a wide range of web-connected devices, wagering on energy management, and the Asistente Smart
Iberdrola allows for the disaggregation of consumption.
• Smart Mobility is a comprehensive solution that includes the purchase of a charging point, installation and warranty,
operation by means of an app, and a personalised supply contract.
Iberdrola, at the forefront of digital transformation
Iberdrola’s roadmap has digitisation as one of the keys of the future energy scenario.
Iberdrola participate in proofs of concept and multi-sector working groups, in addition to its R&D
projects.
It leads working groups of the World Economic Forum (WEF), including Cyber Resilience, and
participates in others, including Digitization and Blockchain for Energy We are also members of
Euroelectric Blockchain Platform, the ERT Digital Transformation Working Group, the multi-sector
consortium of Alastria and the Digitisation Committee of the Spanish Chamber of Commerce.
Investments in R&D (€M): 2nd most innovative company in Europe, and 3rd in the world1
+115%
0
3
1
6
3
1
5
4
1
9
5
1
0
7
1
7
6
2
0
8
2
6
4
2
0
0
2
1
1
2
% R&D investment by strategic area
19%
25%
24%
32%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Renewables
Networks
Wholesale and Retail
Systems
(1) Industry classification by the EU R&D Scoreboard, with a total of 23 companies.
www.iberdrola.com
Integrated report 2020
Our Assets |
64
4.4 Human Capital
Management approach
Principal activities 2019
Global human
resources
management
• Achieve the goals of competitiveness and
• Management of an appropriate labour relations framework that can
business efficiency in a climate of social peace,
fostering stable, high-quality employment.
be adapted to suit business and social requirements.
• Review of the human resources processes, conforming them to the
• Harmonise human resources processes and
purpose and values.
make inroads with implementing the Iberdrola
culture in all countries, respecting specific local
conditions.
• Improvement in the digitisation of the goals, selection and on-
boarding process.
• Strengthening of new forms of collaborative internal communication.
• Inclusion of Neoenergia within OneHR, extending and unifying
practices and processes.
Goal of
“accident
reduction”
• Prioritise the safety of individuals at the
group’s facilities and within its sphere of
influence, fostering a progressive reduction in
incident rates and improving health and safety
conditions.
• Attainment and/or maintenance of the OHSAS 18001 certification,
and implementation of the global prevention system and standards in
accordance with the group’s policy. Conformance of global standards
to the new ISO 45001 standard.
• Monitoring of proactive and reactive indicators among the group’s
• Replicate throughout the group the best
companies.
practices identified in the area of occupational
health and safety, fostering a culture of
excellence in management and coordinating
global preventive activities.
• Creation of improvement groups (GPGs) for improving Indicators,
Safety Culture and Digitisation in order to promote innovation, safe
behaviour, best practices and lessons learned.
• Implementation of the Zero Accident Plan at Neoenergia to reduce
the accident rate.
Talent
management
• Drive staff qualifications, preparing employees
• Strengthen and measure the impact of leadership development
to work in a multicultural environment and
making continual efforts to improve their
employability.
• Develop alternatives to compensate for factors
stemming from the ageing of the workforce.
• Maintain a team of competent, committed and
motivated professionals, which is key for the
sustained success of the business.
• Manage talent on an integrated basis in order
to train future leaders, preparing them now to
assume larger responsibilities.
programmes for team leaders in all countries.
• Review and simplification of the skills and leadership model towards
principles of values-based behaviours.
• Implementation of self-assessment and career recommendation
tools.
• Launch of new international mobility portal.
• Launch of skills development programmes for specialists (technical
career).
• Alignment of high potentials identification process with the
remunerative cycle.
• New edition of the “Early Career” international mobility programme.
Diversity, equal
opportunity and
reconciliation
• Diversity, equal opportunity and reconciliation
• Inclusion of Iberdrola in the 2020 Bloomberg Gender-Equality Index
• Guarantee a social model committed to
professional excellence and the quality of life of
our employees.
• Develop labour relations based on equal
opportunity, non-discrimination and the
promotion of diversity.
• Create a high-quality labour environment by
committing to reconciliation.
for the second consecutive year.
• Launch of awareness-raising, training and communication initiatives
that contribute to improving gender diversity within the group.
• International cultural exchanges.
• Corporate Volunteerism Activities to improve the quality of life and the
integration of vulnerable groups (International Volunteering Day, the
INVOLVE international volunteering programme, Lights and Action
and Operation Kilo).
• Contribute to achieving the SDGs for the
2015-2030 horizon through the Corporate
Volunteering Programme.
• Volunteerism for environmental protection, including climate
change workshops, reforestation, cleaning and recovery of natural
environments.
• Volunteering to disseminate the SDGs.
www.iberdrola.com
Integrated report 2020
Our Assets |
65
Ensure the availability of a committed, qualified and diverse workforce in a
safe and stable environment
Geographic diversification of the workforce
Social commitment
2019:
35,374
employees
1%
4%
27%
16%
33%
19%
Spain
Brazil
United Kingdom
Mexico
United States
Othes countries
Hours of training per employee trained:
+31%
9
.
4
5
.
2
5
4
8
.
1
4
2017
2018
2019
Various corporate volunteer activities by employees around the world
(Photos: Brazil, Mexico and Portugal)
Iberdrola committed to leadership
Improvement in accident ratios
(2016-2019)1:
Graduation of 3rd MBA in the Global Energy Industry class.
7
4
.
0
1
3
.
0
6
5
.
0
0
3
.
0
8
2
.
0
2
2
.
0
4
3
.
0
1
2
.
0
2016
2017
2018
2019
Subcontracted personnel Company personnel
Key Figures / page 10
(1) Neoenergia data has been 100% consolidated for all periods.
www.iberdrola.com
Integrated report 2020
Our Assets |
66
4.5 Natural Capital
Protect the
environment
and stop
the loss of
biodiversity
Management approach
Principal activities 2019
• Conserve and recover the ecosystems associated with
our activities, coordinating the biodiversity plans of the
businesses in affected areas.
• Improve the compatibility of Iberdrola’s infrastructure with
protection of the environment.
• Avoid discharges and pollution of water and soil,
all in line with Iberdrola’s Biodiversity Policy and
Environmental Policy.
• Iberdrola commits to continuously improve biodiversity
protection standards in order to reach a net positive
balance at all new generation infrastructure that it
deploys by 2030, applying mitigation hierarchy principles
and avoiding the construction thereof in protected areas.
• Acquisition of ISO-TS 14072 Certificate for Corporate
Environmental Footprint (CEF) 2018.
• Climate Change Adaptation Report for activities in Spain.
• Sustainable 2019 General Shareholders’ Meeting: ISO
20121 certification as a sustainable event for fourth
consecutive year.
• Renewal of all certificates updating to the new ISO
14001:2015 standard.
• Participation in Natural Capital’s working group with
companies in the industry.
• Biodiversity Action Plans.
Combat climate
change and its
effects
• Prevent pollution and the emission of greenhouse gases
(GHGs) through practices that reduce or eliminate the
production of pollutants at source.
• Reduce the emissions of non-GHGs into the air.
• Gradually replace equipment using substances that
reduce the ozone layer.
• Promotion of awareness-raising campaigns regarding
air quality.
• New GHG emissions-free facilities (renewable, wind,
hydroelectric, etc.).
• Emissions in Spain were 94 gr CO2 / kWh.
• Approval of SBTi Targets regarding the group’s emissions.
• Commitment to reduce specific emissions, and very active
participation in the Madrid Climate Change Conference
(Spain).
• Sustainable Mobility Plan.
Guarantee
sustainable
modes of
production and
consumption
• Continuous improvement in operational performance.
• Innovative activities in environmental management and
• Implementation of actions to increase energy efficiency.
control.
• Decrease in consumption of natural resources.
• Inclusion of environmental variable in the design of
• Assurance of quality in environmental management.
• Efficient management of water consumption.
infrastructure (Eco-design).
• Improvement in withdrawal and consumption of inland water
• Improvement in control and management of waste
generated.
at all generation facilities.
• Reuse and recycling of water.
• Awareness campaign on use of plastic.
• Improvement in reuse and recycling of waste.
• Active awareness-raising on the circular economy.
Revitalise
alliances with
Stakeholders
for sustainable
development
• Strengthen transparent dialogue with Stakeholders
in order to work together in seeking solutions to
environmental problems.
• Make or provide information for the various reports
relating to this capital (Sustainability Report, Corporate
Environmental Footprint Report, etc.).
• Manage environmental compliance by suppliers.
• Public-private cooperation with the Basque Government on
• Transparently report on environmental results and
activities.
• Optimisation of and innovation in environmental
management systems.
environmental issues.
• SDG Acceleration Day at the San Agustín de Guadalix
Campus in partnership with REDS, IS Global and ITD-UPM.
www.iberdrola.com
Integrated report 2020
Our Assets |
67
The environmental dimension is a key factor in the concept of sustainability
Specific CO2 emissions from facilities in
Europe
Intensity of emissions in Spain
(g CO2/kWh)
(Carbon factor in g of CO2/MWh)
European Carbon
Factor: 296 g CO � / kWh
185
94
2007
2019
Statkraft
9
26
33
54
60
Fortum
Verbrund
EDF
E.ON
PVO
Iberdrola �
Orsted
Vattenfall
Drax
SSE
Engle
EnBW
Naturgy
Enel
A2A
CEZ
RWE
PPC
Overall intensity of the group’s
emissions (g CO2/KWh)1
- 65.5% vs
European average
301
110
98
102
131
169
224
284
293
338
342
2007
2019
(1) Calculated on total own production.
Volume of recovered, reused or recycled
waste (t)
401
431
442
690
1070
8
3
8
,
1
1
3
2
3
8
,
0
7
4
0
2
9
,
9
4
4
5
4
8
,
4
9
2
*
6
2
1
,
3
6
6
7,512
7,353
7,288
8,838
17,548
0
100
200
300
400
500
600
2015
2016
2017
2018
2019
European carbon factor 2018: 296 g CO2 /kWh1
Hazardous Non-hazardous
Source: “Facteur carbone européen Comparaison des émissions de CO2
des principaux électriciens européens” PwC France. Dec. 2019.
(*) Increase as a result of the reuse of construction land at facilities in the
United States.
Key Figures / page 10
(1) The 102 g CO2 in this chart refers to emissions from Iberdrola’s facilities
in Europe during 2018. The other companies only include the European space.
www.iberdrola.com
Integrated report 2020
Our Assets |
68
4.6 Social and Relationship Capital
Stakeholder engagement
Iberdrola works to increasingly engage its Stakeholders in all of the company’s activities and operations.
Throughout the value chain, Iberdrola interacts with millions of people and thousands of organisations that make up
it social and relationship capital, and thus a fundamental element for the sustainable performance of the company.
Stakeholders
Principles
Objectives
Workforce
• Two-way communication
Shareholders and financial
community
Regulatory entities
• Transparency
• Active listening
• Equal treatment
Customers
Suppliers
Media
Society in general
Environment
• Take into consideration the
legitimate interests of the
Stakeholders
• Effectively disclose information
regarding the activities and
businesses of the group
• Contribute to improving the
reputation of the company
To meet its goals in this area, Iberdrola has a Global Stakeholder Engagement Model which, based on the AA1000
Stakeholder Engagement Standard 2015, ensures that all areas and businesses of Iberdrola have an in-depth
understanding of their Stakeholders; have suitable channels of communication therewith; analyse their expectations
(with the risks and opportunities thereof); and establish appropriate action plans with specific related impacts.
.
.
.
l
e
d
o
m
t
n
e
m
e
g
a
g
n
e
l
r
e
d
o
h
e
k
a
t
S
1
2
3
4
5
6
7
8
9
10
IDENTIFY
the
stakeholders
SEGMENT
stakeholder
categories into
subcategories
PRIORITISE
stakeholder
subcategories
Define
LEVELS OF
ENGAGEMENT
Review
CHANNELS
FOR
ENGAGEMENT
Design the
ENGAGEMENT
MODEL
Identify
RELEVANT
ISSUES
Identify
RISK AND
OPPORTUNITIES
Design
ACTION
PLAN
MONITOR
AND REPORT
Defined
by Board
of Directors
Based on daily
management
criteria
According to
impact and
influence on
value creation
Information,
consultation,
interaction or
collaboration
Evaluate
existing chan-
nels and create
new ones
The best
suited to each
stakeholders
subcategory
For both
IBERDROLA
and the
stakeholder
subcategory
That help
create value for
IBERDROLA
and its
stakeholders
Initiatives in
relation to the
engagement
model and
relevant issues
To analyse
outcomes and
report on
performance
Stakeholder map
Engagement
List of relevant
issues, risks and
opportunities
Action
plan
.
.
.
e
n
s
u
r
i
n
g
c
o
n
t
i
n
u
o
u
s
i
m
p
r
o
v
e
m
e
n
t
Iberdrola Stakeholders’ Hub
The company has an internal Stakeholder
coordination body made up of the parties responsible
for all of the Stakeholders and businesses of
Iberdrola. This Hub meets periodically, sometimes
with the presence of outside experts.
www.iberdrola.com
www.iberdrola.com
Integrated report 2020
Our Assets |
69
Key figures
Through its Stakeholder Engagement Model, Iberdrola has detected:
• 70 categories of sub-stakeholders
• More than 40 different channels of communication, increasingly digital.
• More than one hundred relevant issues, with numerous related plans.
• Around thirty emerging trends.
The main issues and trends guide the company in its decisions and form part of Iberdrola’s CSR Plan
“Responsible Energy for People”. And also aligned with the latest materiality study performed by an
independent firm based on external information sources.
Materiality matrix 2019
+
l
s
r
e
d
o
h
e
k
a
t
S
r
o
f
y
t
i
r
o
i
r
P
-
15
13
19
2
18
11
1
12
7
24
16
22
22
14
9
17
23
4
6
21
3
10
8
5
Priority
issues
Significant
issues
Priority for Iberdrola
+
Economic
Dimension
Environmental
Dimension
Social
Dimension
Good Practices
Stakeholders Panel on CSR
Iberdrola has launched a permanent Stakeholders
Panel on CSR, made up of major opinion leaders in
this area. Its goals include:
• Knowing the opinions of CSR experts regarding
global trends and relevant CSR issues.
• Using these opinions as a benchmark for
guidance when Iberdrola designs strategies and
makes decisions in this area.
Priority issues
15. Energy transition
13. Climate change
24. Connectivity, digitisation
and cybersecurity
23. Attraction, development
and retention of human capital
19. Occupational safety and health
18. Diversity and equal opportunity
11. Economic and finalcial
performance
17. Customer satisfaction
6. Public policy
8. Green financing
3. Transparency
21. Human rights
Significant issues
1. Socially responsible investment
5. Responsible supply chain
20. Impact on local communities
12. Integration of renewable energy
within the electric system
Other significant issues
22.Vulnerable customers
7. Smart grids and supply quality
14. Management of biodiversity
16. Availability and management
of water
4. Ethics and integrity (anti-
corruption and free competition)
9. Management of natural capital
10. Circular economy
Global internal communication campaign: ten
new guidelines on stakeholder engagement
Know in detail what
stakeholders you
engage with
Listen to them about the
issues tht concern them
Provide specific responses
to the issues that most
interest and concern them
Ask whether they approve
of our decisions and how
we can improve
In short, take them into
consideration whenever
making decisions that
affect them
Check that the communication
channels available to them
are working properly
Analyse the risks and
opportunities of these
issues
Give them clear and simple
explanations of why we do
things the way we do
Fulfil your commitments
and collaborate with them
whenever possible
And always keep, your stake-
holders´best interests in mind and
think about what they might need
www.iberdrola.com
Integrated report 2020
Our Assets |
70
Community support and electricity access programmes
Primary programmes
Activities 2019
Foundations of the Iberdrola group
Activities 2019
• Contribution of €52.3 million to the community in the countries
• Iberdrola has strengthened the operation of its foundations in
in which Iberdrola operates, measured according to the London
Spain, the United Kingdom, the United States, Brazil and Mexico.
Benchmarking Group (LBG) international standard.
• Overall investment dedicated to activities in all countries in 2019
• International corporate volunteering programme, offering various
increased to a total of €9.2 million.
volunteering opportunities to employees in Spain, the United
• A new Master Plan has been prepared for the 2018-2021 period,
Kingdom, the United States, Brazil and Mexico.
in order to contribute to sustainable development.
• Entrepreneurial support: €54 million of procurement from
• The industry areas have been consolidated, but prioritising the
companies in operation for less than 5 years, and €65 million in
impact on the specific targets of the SDGs.
venture capital for new initiatives with high technological value.
• In the Training area, there is strengthening of the promotion of
• Specific programmes and pricing for vulnerable groups in Spain,
equal opportunities through the Social Assistance programme,
the United Kingdom, the United States and Brazil.
with more than 80,000 beneficiaries.
• Rural electrification programmes in Brazil, to which more than
• In Art and Culture, there are three major programmes:
€40 million has been allocated.
• Programmes implemented by the foundations created by
Iberdrola in the principal countries in which it operates.
• Lighting: The most important have been the Cathedral of
Santiago (in progress) and the Grand Staircase of the General
Navy Headquarters (Spain), the National Museum of Art
• Development of the Electricity for All programme.
(Mexico), the illumination of the façade of the Cascudo Memorial
Electricity for All
• The SDGs recognise energy as an engine for sustainable
development.
• The Electricity for All programme is Iberdrola’s response to
the demand to extend universal access to modern forms of
energy, with environmentally sustainable, financially affordable
and socially inclusive models. This initiative is focused on
sustainable electrification activities in emerging and developing
countries.
• Iberdrola has set itself the goal of reaching 16 million
beneficiaries of this programme by 2030. At year-end 2019, the
programme had reached 7 million users.
Chamber (Brazil) and the Luces de Esperanza (Lights of Hope)
project in Mexico.
• Restoration: Includes the Gabinete de descanso de los Reyes
(Their Majesties’ Retiring Room) (Prado Museum), the Altarpiece
of Villarmentero de Campos and the church of San Martín de
Castañeda in Spain.
• Museums: Promote the restoration and exhibition of works,
including: El Prado in the Streets (Prado Museum), Sorolla en
pequeño formato, Sorolla Dibujante (Sorolla Museum).
• Biodiversity and climate change includes the MIGRA program to
protect birds in danger of extinction, the LIFE project with SEO
Birdlife in Spain, Sussex Wildlife Trust (in the United Kingdom),
National Fish and Wildlife Foundation (NFWF) at Avangrid, the
Cañón de Fernández Project (Mexico) and the CORALIZAR
project in Brazil.
• In the area of Cooperation and Solidarity, there have been more
than 70 partnerships in the five countries with an impact on
more than 100,000 people in the fight against child poverty, the
independence of people with disabilities and serious illnesses, with
special attention on the most vulnerable groups: infants and youth.
Foundation Programs 2019
Contribution by region (%)
Contribution by programme (%)
6%
21%
11%
62%
35%
13%
13%
9%
30%
Spain
United Kingdom
Brazil
Mexico and Brazil
Training and research
Art and culture
Climate change
Solidarity and cooperation
Sustainability Report
www.iberdrola.com
Integrated report 2020
Our Assets |
71
Corporate reputation
Soundness and strength of the brand
Reputation
• Management of the brand so that it transmits the
essence of the Iberdrola group’s Purpose and
reflects the company’s strategy to commit to the
environment and to Sustainable Development.
• Consolidation of an international brand,
strengthening communication and alignment
under a single brand positioning strategy in the
countries in which the company operates.
4.310 M€
Value of the Iberdrola
brand according to
Brand Finance 500
2020
+17,5%
Increase over
2019
Evolution of the digital ecosystem.
• Offer of useful and dynamic information, with
messages adapted to each stakeholder.
• Facilitate direct interaction with our stakeholders,
overcoming barriers and making use of existing
synergies.
Iberdrola on social media and the internet.
Twitter
Facebook
Linkedin
Instagram
Youtube
Finect
Snapchat
Web
Blog / Historias
en verde
Blog/Shop
Gente que brilla
Blog/Shop
Cambio climático
Flickr
• Iberdrola considers reputation to be an intangible
asset of great value, which influences aspects as
important as the attraction the company’s global
reputation, which is also influenced by the social
perception of the electricity sector.
• Iberdrola therefore manages and constantly
measures its reputation with a dual objective:
To bring out opportunities that trigger
favourable behaviour towards the company.
To minimise and mitigate reputational risks
inherent in its activities.
• Management: Reputation is mainly
managed through two elements:
Proactive management of the Stakeholders
through the Stakeholder Engagement
Model, which allows one to know
expectations and needs, to analyse
risks (including reputational risks) and
to establish specific action plans, as
explained at the beginning of this section.
The communication plans, the Sustainable
Development Plan and numerous other
specific actions focused on each of the
company’s eight Stakeholder groups.
• Measurement: Reputation is monitored and
measured through a specific scoresheet
that includes variables from reputational
rankings, Stakeholder surveys and various
sustainability indexes, among other things.
• Iberdrola reviews and updates its Reputational
Risk Framework Policy, which is the main
reference point for the control and management
of this risk, on an annual basis. The company also
has internal processes that allow it to respond to
potential reputational crises.
www.iberdrola.com
Integrated report 2020
Iberdrola Tower
/ Spain
www.iberdrola.com
Informe integrado 2020
5. A Framework of Trust
A Framework of Trust |
73
www.iberdrola.com
Informe integrado 2020
A Framework of Trust |
74
5.1 Corporate Governance Model
Foundations of the corporate governance model
A. Corporate Governance System
Iberdrola is a multinational leader in the energy
sector committed to ethics, zero tolerance for
corruption and crime, transparency, the fight against
climate change, and good governance, and which
has integrated the Sustainable Development Goals
into its strategy.
The purpose of the group, its raison d’être, is none
other than “to continue building together each day a
healthier, more accessible energy model, based on
electricity”.
Position
Director
Status
Date of last
appointment
Ending date
Chairman & CEO
José Ignacio Sánchez Galán
(Salamanca, Spain, 1950)
Executive
29-03-2019
29-03-2023
Vice-chair
Director
Director
Director
Director
Director
Director
Director
Director
Inés Macho Stadler
(Bilbao, Spain, 1959)
Íñigo Víctor de Oriol Ibarra
(Madrid, Spain, 1962)
Samantha Barber (Dunfermline, Fife,
Scotland, United Kingdom, 1969)
María Helena Antolín Raybaud
(Toulon, France, 1966)
Georgina Kessel Martínez
(Mexico City, Mexico, 1950)
Denise Mary Holt
(Vienna, Austria, 1949)
José W. Fernández
(Cienfuegos, Cuba, 1955)
Manuel Moreu Munaiz
(Pontevedra, Spain, 1953)
Xabier Sagredo Ormaza
(Portugalete, Spain, 1972)
Lead independent
director
Juan Manuel González Serna
(Madrid, Spain, 1955)
Director / Business
CEO
Francisco Martínez Córcoles
(Alicante, Spain, 1956)
Director
Director
Anthony L. Gardner
(Washington, D.C., U.S.A., 1963)
Sara de la Rica Goiricelaya
(Bilbao, Spain, 1963)
Other external
08-04-2016
08-04-2020
Other external
08-04-2016
08-04-2020
Independent
08-04-2016
08-04-2020
Independent
29-03-2019
29-03-2023
Independent
13-04-2018
13-04-2022
Independent
29-03-2019
29-03-2023
Independent
29-03-2019
29-03-2023
Independent
29-03-2019
29-03-2023
Independent
29-03-2019
29-03-2023
Independent
31-03-2017
31-03-2021
Executive
31-03-2017
31-03-2021
Independent
13-04-2018
13-04-2022
Independent
29-03-2019
29-03-2023
www.iberdrola.com
Integrated report 2020
A Framework of Trust |
75
B. Governance model
The model differentiates between the duties of
strategy and supervision and those of guidance and
effective management. It is based on a system of
checks-and-balances that avoids the accumulation of
powers:
• Iberdrola’s Board of Directors, made up of a large
majority of independent directors (one of whom is
the lead independent director), focuses its activity
on the determination, supervision and monitoring
of the policies, strategies and general guidelines
of the Iberdrola group.
• The chairman of the Board of Directors & chief
executive officer and the rest of the management
team are responsible for the organisation and
strategic coordination of the group.
• In the principal countries in which the group
operates, organisation and strategic coordination
is implemented through country subholding
companies, which group together equity stakes in
the head of business companies and centralise
the provision of common services. Each of these
companies has its own CEO.
• Country subholding companies have boards of
directors, including independent directors, and
their own audit and compliance committees,
internal audit divisions and compliance units or
divisions.
Listed country subholding companies like Avangrid,
Inc. and Neoenergia, S.A. have a framework of
strengthened autonomy.
• The head of business companies are in charge
of the day-to-day administration and effective
management of each business. They also have
boards of directors, which include independent
directors, and specific management teams.
Corporate and governance structure of Iberdrola, S.A.
Board of Directors
Chairman
& CEO
+
Management
Team
Consultative Committees
Audit and Risk Supervision Committee
Executive
Committee
Appointments Committee
Remuneration Committee
Sustainable Development Committee
Country Subholding Companies
Iberdrola
España
Scottish
Power
Avangrid
Neoenergia
Iberdrola
México
Iberdrola
Energía
Internacional
Head of Business Companies
(1) Company listed on the New York Stock Exchange.
(2) Company listed on the New Market segment of BOVESPA (Brazil).
www.iberdrola.com
Integrated report 2020
�
�
A Framework of Trust |
76
C. Equity structure
Iberdrola has approximately 600,000 shareholders
throughout the world, and none of them has a
controlling interest.
Investment funds, pension funds and other
foreign institutional shareholders account
for 69.7% of the capital.
Foreign investors
Domestic institutional
investors
Domestic individual
investors
69.70%
7.74%
22.56%
Status at 31/12/2019
External corporate governance awards/recognitions / page 39
Iberdrola, at the forefront of corporate governance
A. Corporate governance strategy
The key elements defining Iberdrola’s corporate
governance strategy are:
• Zero tolerance towards corruption and fraud
• Shareholder engagement
• Corporate structure and governance model
• Diverse and balanced composition of the Board of
Directors
• Effective system of checks and balances.
• Social dividend and contribution to the Sustainable
Development Goals
• Active listening to the legitimate interests of the
Stakeholders
• Prudent and balanced management of risks
B. Continuous improvement of its corporate
governance rules and practices
• On corporate governance matters, the Company
looks to the Good Governance Code of Listed
Companies published by the CNMV and generally
accepted practices in the international markets.
71.4% of the directors
are independent.
Remuneration policy
Director Remuneration Policy approved by the shareholders at
the General Shareholders’ Meeting.
Executive directors’ variable remuneration tied to objectives.
Clause on cancellation and reimbursement of variable
remuneration (malus and claw-back clauses)
Operation of the Board
71.4% of the directors are independent.
System of checks and balances, including a lead independent
director.
Gender diversity: six women on the Board. A female vice-chair
of the Board, and two female Committee chairs.
Diversity of skills, experience, nationality and origin.
Annual evaluation of the governance bodies by an independent
expert..
Sustainable development and corporate reputation
Sustainable Development Committee
Sustainable development policies focused on the
maximisation of the social dividend, promotion of the SDGs
and Stakeholder engagement.
Climate Action Plan and adoption of the recommendations
of the Tax Force on Climate-related Financial Disclosures
(TCFD).
General Shareholders’ Meeting conceived of and certified as
a sustainable event.
Corporate Governance System
Ethics / page 86
Sustainable Development / page 87
www.iberdrola.com
Integrated report 2020
C. Commitment to shareholders and
investors
• The Iberdrola group has a strong industrial and
financial model based on balanced growth,
focused on the regulated networks businesses,
renewables, and long-term contract assets,
focused on the achievement of growing profits and
an increase in shareholder remuneration.
• The Shareholder Engagement Policy is intended
to understand the opinions and concerns of the
shareholders in the areas of corporate governance
and sustainable development, encourage their
sense of belonging and align their interests with
those of Iberdrola.
• Boost shareholders’ participation throughout the
year, especially at the General Shareholders’
Meeting.
The quorum in attendance at the 2019
General Shareholders’ Meeting was
74.12%.e asistencia del 74,12 %.
A Framework of Trust |
77
D. Remuneration policy
• The Director Remuneration Policy was approved
by the shareholders at the General Shareholders’
Meeting held on 13 April 2018.
• Director remuneration is aligned with strategic
objectives and shareholder return.
Remuneration model for the Board
Type of
remuneration
External (non-executive)
directors
Executive directors
Fixed
According to their duties
and on market terms
Short-term
variable
Long-term
variable
Not applicable
Not applicable
According to their
duties and on market
terms.
Tied to financial and
non-financial targets.
Tied to multi-annual
targets payable in
shares (3-year accrual
period and payment
deferred over 3 years
following accrual).
Parameters to which the annual variable remuneration of executive
directors is tied in 2020
Shareholder´s
Office
Operational /
Financial
Net Profit.
Shareholder remuneration.
Shareholder
Day
Shareholder´s
Club
Financial strength.
Efficiency in costs.
Installed capacity.
Project portfolio.
Engagement
Corporate
governance
roadshows
Investor
relations
office
Sustainable
Development.
Female presence in management positions.
Presence on relevant sutainability indexes.
Training.
On line
shareholder
(OLS)
Investor
relations
app
Parameters to which the multi-annual variable remuneration of
executive directors is tied (2020-2022)
1
Net profit.
Financial strength.
Total shareholder return.
All blocks of shareholder resolutions for the
2019 General Shareholders’ Meeting were
approved with an affirmative
vote above 98%
Sustainable Development Goals (the Fight against Climate Change,
the drive for Sustainability in the Supply Chain and Commitment to Salary
Equality between Men and Women).
(1) Pending approval by the shareholders at the General Shareholders’
Meeting to be held in 2020.
www.iberdrola.com
Integrated report 2020
Principal activities of the Board of Directors.
A Framework of Trust |
78
Key topics in 2019
Balanced growth
Sustainable
remuneration of
shareholders
Social dividend
Alignment of Outlook 2018-2022 with challenges and trends in the
sector
Review of results and level of achievement of Outlook 2018-2022
Approval of the budgets for financial year 2020
Performance and expectations of each of the businesses of the group
IPO of Neoenergia
Potential opportunities for investment in strategic markets
Shareholder remuneration in line with Outlook 2018-2022
Implementation of the Iberdrola Flexible Remuneration optional
dividend system for 2019
Renewal of the Iberdrola Flexible Remuneration system for the
coming financial year
Change in corporate philosophy: definition of Purpose, update
of corporate values and update of the General Sustainable
Development Policy and of the Human Resources Framework
Policy.
Supervision of the group’s activities having an impact on Stakeholders,
and alignment with the Sustainable Development Goals.
Analysis of Talent Management trends and best practices.
Approval of the Statement of Non-Financial Information.
Sustainability Report 2018
Publication of the Fiscal Transparency Report
Publication of the Gender Equality Report
Climate Action Plan, TCFD recommendations, participation in the UN
Climate Action Summit 2019 and in COP25
Financial strength
Approval of major financial transactions of the group
Monitoring of the financing policy and principal transactions in the
capital markets
Divestments from non-strategic assets
www.iberdrola.com
Integrated report 2020
A Framework of Trust |
79
Control of corporate risks
Review and update of Risk Policies and approval of guidelines on risk limits
for 2019
Monitoring of risk control and management systems and of level of
compliance with the Corporate Tax Policy
Corporate governance
and compliance
Re-election of the chairman as executive director, CEO and member of
the Executive Committee
Appointment, re-election and classification of directors
Evaluation of candidates
Selection and composition of the governance bodies
Appointment of independent directors at the various country subholding
companies
Analysis of the latest corporate governance trends
Continuous update of the Corporate Governance System to conform to
internal rules, regulations and best practices
Review of corporate governance policies
Contacts between directors and shareholders
Acknowledgement of the Annual Compliance System Effectiveness
Report 2018 prepared by the Compliance Unit
The Board of Directors has focused its work on defining strategy, monitoring
the implementation and control of risks and advancing best corporate
governance practices.
www.iberdrola.com
Integrated report 2020
A Framework of Trust |
80
5.2 Three Lines of Defence
Internal control model
The Internal Control System of Iberdrola and the companies of its group is configured by reference to
international best practices. It is based on an assurance system combined around three lines of defence,
providing a comprehensive view of how the different parts of the organisation interact in an effective and
coordinated manner, increasing the efficiency of the processes for management and internal control of the
entity’s significant risks.
Governance Bodies
Management Team
1st line of defence
Operational Management
2nd line of defence
Assurance Functions
3rd line of defence Internal Audit
External Assurance
(Regulators,
External Auditors,
etc.)
Based on the document “Guidance on the 8th EU Company Law Directive, article 41” ECIIA/FERMA, September 2010.
1st line of defence Operational Management
2nd line of defence Assurance Functions
As the first line of defence, the management team
and the professionals of Iberdrola and its group are
the direct managers of the risks of the entity.
Thus, the company’s Management is responsible
for maintaining effective control and implementing
procedures to control risks on a continuous basis.
Significant Risks Facing Iberdrola’s Primary Businesses/ pages 46, 50, 54
Internal Control Objectives (COSO. May 2013)
• Operations objectives- Pertain to the effectiveness and
efficiency of the entity’s operations, including operational
and financial performance goals, and safeguarding assets
against loss.
• Reporting objectives- Pertain to internal and external
financial and non-financial reporting and may encompass
reliability, timeliness, transparency or other terms as set
forth by regulators, recognised standard setters or the
entity’s policies.
• Compliance objectives- Pertain to adherence to laws and
regulations to which the entity is subject.
As the second line of defence, certain functions
provide the foundation for the entity’s Internal
Control System, proposing guidelines to the Board of
Directors and monitoring how the first line of defence
implements them.
The primary assurance functions within Iberdrola,
within their respective areas of responsibility, are:
(i) the group’s Risk Division, within the framework of
its functions within the Comprehensive Risk Control
and Management System; (ii) the Cybersecurity
Division within the Corporate Security Division,
through the supervision, monitoring and reporting
of cybersecurity risks; (iii) the Compliance Unit,
which is responsible for proactively ensuring the
effective operation of the Compliance System; and
(iv) the Internal Control Division, which is part of the
Administration and Control Division, within its duties
relating to the internal control and risk management
systems in relation to the preparation of financial
information (ICFRS).
Iberdrola adopts the three lines of defence
model to ensure effective and integrated
management of its internal control system.
Comprehensive Risk Control and Management Service / page 82
Compliance Unit / Page 86
www.iberdrola.com
Integrated report 2020
A Framework of Trust |
81
3rd line of defence Internal Audit
The function of the Internal Audit area, as the third
line of defence, is to proactively ensure the proper
functioning of the internal control, risk management,
and governance systems, systematically auditing
the first and second lines in the performance of their
respective duties of management and control.
To ensure its independence, the director of the
Internal Audit Area reports hierarchically to the
chairman of the Board of Directors and functionally
to the Audit and Risk Supervision Committee.
The Internal Audit divisions of the various country
subholding companies have this same positioning,
and are coordinated under the framework of the
Basic Internal Audit Regulations of Iberdrola and
its group, which forms part of Iberdrola’s Corporate
Governance System.
The 2019 annual activities plans of the Internal
Audit Area Division of Iberdrola and of the Internal
Audit divisions of the group, with a risk-based focus
looking to support the achievement of the company’s
goals, responded to the requirements established
by the Audit and Risk Supervision Committee of
Iberdrola and the respective Audit and Compliance
Committees of the country subholding companies,
and included work for the senior management and
the rest of the organisation, including:
• Half-yearly reviews of the operation of the most
critical controls of the Internal Control Over
Financial Reporting (ICFR) System, as well as
reviews of the various cycles of preparation of
the financial information of Iberdrola, S.A. and
the various companies of the group, within the
framework of the general goal of reviewing the
entire ICFR over a period of 5 years.
• Audits of key corporate and business process and
risks, based on the Risk Policies approved by the
Board of Directors on an annual basis.
• Audits of compliance programmes and
frameworks established by the group in the
various areas of application, such as the crime
prevention programme.
Continuing with the commitment made in 2005, the
Internal Audit area submits to an exhaustive review
every five years of compliance with internal audit
rules (called a Quality Assessment) by the Global
Institute of Internal Auditors. During the last review
in 2015, the certification of Iberdrola, S.A. and of
ScottishPower was renewed and the scope of the
certification was expanded to include Iberdrola
España and Avangrid.
Furthermore, the Internal Audit has had ISO
9001 certification since 1999, updated to version
9001:2015. This ensures that all of the group’s
internal auditors perform duties under the same
framework and that such framework is aligned with
the international professional rules of the function.
Basic Internal Audit Regulations of Iberdrola, S.A. and its group
• Approved by the Board of Directors of Iberdrola upon a proposal of
its Audit and Risk Supervision Committee (updated on 28-Mar-2019)
• Defines its nature as an independent internal unit, and establishes
the regulation, competencies, powers and duties of Internal Audit,
among other things.
• Establishes the framework of relations with: i) the Board of
Directors, its Chairman and Committees; ii) the Internal Audit
divisions of the other companies of the group; and iii) the rest of
the organisation.
• Disseminates the knowledge of the Internal Audit function among
the professionals of the group.
• Serves as a reference for the management model and the quality
system of the Internal Audit Area of the company and the Internal
Audit divisions of the other companies of the group.
External assurance
Regulatory bodies and other entities external to the
organisation play a significant role in the general
structure of governance, internal control and risks
of Iberdrola, especially in the regulated businesses.
The regulators establish requirements intended
to strengthen the controls of an organisation and
perform a function of independent and separate
monitoring, and the auditors provide assurance
regarding the true and fair view of the entity’s
financial information. In this regard, the powers of the
Audit and Risk Supervision Committee of Iberdrola
and the Audit and Compliance Committees of the
country subholding companies include ensuring the
preservation of the independence of the auditors in
the performance of their duties.
Regulatory Environment / Page 42
Audit Report on the Consolidated Financial Statements
www.iberdrola.com
Integrated report 2020
5.3 Risks
Risk management within the
Iberdrola group is based on foresight,
independence, commitment to the
group’s business objectives and the
engagement of senior management
and the Board.
Commitment of the Board of Directors and
of senior management
Iberdrola’s Board of Directors and senior management is
strongly committed to and engaged in the management of
the group’s risks:
• Ex-ante: acceptable levels of risk tolerance are
reviewed and approved on an annual basis through
risk policies and limits that establish the qualitative and
quantitative risk appetite at the group level and at each
of the main businesses and corporate functions.
• Ex-post: periodic monitoring of significant risks (key
risk maps) and threats and the various exposures of the
group, as well as of compliance with the approved risk
policies, limits and indicators.
Board of Directors
Audit and Risk Supervision Committee
Risk Policies
Operating
Committee
of the group
Risk Factors
identified and described
in the Risk Policies
Audit and
Compliance
Committees and
Boards of the
subsidiaries
Risk
Committee
Corporate Risk Division
Risk Divisiones
at the subsidiaries
By way of supplement, the group has a Compliance System, linked to the
Board’s Sustainable Development Committee, with elements that include
the Code of Ethics and the Compliance Unit.
A Framework of Trust |
82
Comprehensive Risk Control and
Management System
The General Risk Control and Management Policy of the
group approved by the Board of Directors establishes
the mechanisms and basic principles for appropriate
management of the risk/opportunity ratio, at a risk level
that makes it possible to:
• Attain strategic goals with controlled volatility.
• Provide the maximum level of assurance to the
shareholders.
• Protect the results and reputation of the group.
• Defend the interests of the Stakeholders and guarantee
the business stability and financial strength of the group.
• Contribute to meeting the SDGs, with a special focus on
goals seven and thirteen.
At the operational level, the Comprehensive Risk Control
and Management System is structured around a Risk
Committee and an independent specialised Risk Division
that analyses and quantifies the risks within the main
businesses and corporate functions of the group.
Duties of the Risk Division
Active management
Credit risk
• Analysis and approval of counterparties and limits, establishment of
approval criteria, and monitoring of exposures in order to minimise
credit losses.
Market risk
• Analysis and approval of detailed limits and monitoring of exposures
in order to delimit the effects of volatility in the markets in which the
group operates.
Enterprise Risk Management (ERM) focus
Ensure that there are mechanisms for all significant risks of the group to
be adequately identified, measured, managed and controlled at all times
and that they are regulated reported to the various committees.
Instruments and reports:
• Risk policies and risk limits and indicators.
• Quarterly report on key risks.
• Continuous monitoring and detection of emerging risks and other non-
financial risks, including risks relating to the environment, society and
governance of the group, including fraud and corruption (ESG). The
impact of such risks may be diverse in nature, whether economic or
reputational.
Operational risk is centrally managed through the group’s corporate
Insurance, Information Technology, Security and Cybersecurity, and
Occupational Safety and Health units.
www.iberdrola.com
Integrated report 2020
A Framework of Trust |
83
Risk policies and limits of the Iberdrola group
The General Risk Control and Management Policy is further developed and supplemented with the following
specific policies established in relation to certain risks, corporate functions or businesses of the group, which are
also annually approved by the Board of Directors at the head of the group, and which include limits and indicators
that are subsequently monitored:
Specific risk policies of the businesses:
• Liberalised Businesses of the
• Networks Businesses of
Iberdrola group.
the Iberdrola group.
• Renewable Energy Businesses
• Real Estate Business.
of the Iberdrola group.
Corporate risk policies:
• Corporate Credit Risk Policy.
• Corporate Market Risk Policy.
• Operational Risk in Market
• Reputational Risk
Framework Policy.
• Procurement Policy.
Transactions Policy.
• Information
• Insurance Policy.
• Investment Policy.
• Financing and Financial Risk
Policy.
• Treasury Share Policy.
• Risk Policy for Equity Interests
in Listed Companies.
Technologies Policy.
• Cybersecurity Risk
Policy.
• Occupational Safety
and Health Risk Policy.
Approved by the
Board of Directors
General
Risk Policy
Risk Policies and Limits
of the Businesses and
Corporate Functions
Specific risk procedures and reports
ERM management system
Strategic positioning towards risk.
Responsibilities to manage risk.
Proactive and preventive actions.
Quantitative and qualitative limits.
Quarterly report on key risks and
monitoring of risk limits and indicators.
The country subholding companies adopt the group’s risk policies and specify the application thereof,
approving the guidelines on specific risk limits, based on the nature and particularities of the businesses
in each country. The listed country subholding companies or companies with significant stakes of other
partners, under their own special framework of strengthened autonomy, approve their own policies.
Principal risk factors of the Iberdrola group
The group is exposed to various risks inherent in the different countries, industries and markets in which it
operates, and which may prevent it from achieving its objectives and implementing its strategies. These risks
are grouped into:
Corporate governance risks: those that endanger
the corporate interest and the strategy of the
company.
Market risks: exposure to volatility in variables like
prices of electricity and other energy commodities,
emission rights, exchange rate, interest rate, etc.
Credit risks: possibility of contractual breach by a
counterparty, causing economic or financial losses.
Business risks: deriving from the uncertainty as to
the behaviour of variables intrinsic to the business
(characteristics of demand, weather conditions, etc.).
Regulatory and political risks: coming from
regulatory changes made by the regulators that can
affect remuneration of the regulated businesses,
environmental or tax provisions, etc.
Operational, technological, environmental, social
and legal risks: losses resulting from external
events, inadequate internal procedures, technical
failures, human error, climate change, etc.
Reputational risks: potential negative impacts on
the company’s reputation arising from situations
or events that fail to meet the expectations of its
Stakeholders.
www.iberdrola.com
Integrated report 2020
A Framework of Trust |
84
Risk factors and mitigation measures
< 15 €M
15 - 50 €M
> 50 €M of annual impact
Price and demand risks
Changes in the price
of electricity
The main variable affecting the results of the group’s Wholesale and Retail Businesses as regards market prices is the
price of electricity, which relatively corresponds to the price of fuel and applicable emission rights, required to produce
such electricity.
The group’s Renewables Businesses preferentially sell their energy at: i) regulated tariff; or ii) fixed price via PPAs.
The remaining market exposure of the Renewables Businesses of Spain, the United Kingdom, Brazil and Mexico is
transferred to the Wholesale and Retail Business of such countries to be managed.
Offsetting at-risk positions between wholesale and retail activities allows for a large reduction in the group’s market risk;
the remaining risk is mitigated via diversification of purchase/sale agreements and the specific clauses thereof, and by
trading in derivatives.
Possible impact of a 5%
change in the price of
electricity and/or of energy
commodities and CO2
Spain
Integrated Wholesale, Renewables and Retail risk
United Kingdom
Integrated Retail and Renewables
Mexico
Brazil
(power from wind farms with ROCs) risk
The PPAs with the CFE do not have a market risk
Integrated Wholesale, Renewables and Retail risk
United States
For windfarms exposed to the marke
Change in demand
Wholesale, Retail and Renewables: moderate short-term impact, given the characteristics
of the group’s generation facilities and the structure of the long-term power purchase
agreements.
Possible impact of 1%
reduction in demand for
each country
Networks: no impact, except for the Brazilian subsidiaries in between tariff periods.
Resource risks
Change in
hydroelectric
resources - Spain
•
In the medium-to-long term, humid years are offset by
dry years. The storage capacity of multi-year reservoirs
and the group’s portfolio of power plants mitigate the
level of volatility during the year
Lower hydroelectric
production - Spain
Renewables Business
- Spain
Change in wind
resources - group
• Mitigated thanks to the high number of facilities in
operation and the geographic dispersion thereof.
Lower wind output - group
Renewables Business
- group
•
In the medium-to-long term, years with more wind are
offset by years with less wind
Financial risks
Change in interest
rate
Change in exchange
rate
Other risks
Credit risk
Operational risk
Regulatory and
political risk
The Iberdrola group maintains a fixed-rate and variable-rate
debt structure, based on the structure of its revenues and
the sensitivity thereof to changes in interest rates.
Possible impact on
financial cost of +25 bps
increase
Group financial cost
This risk is mitigated by taking on debt and carrying out all
its financial flows in the functional currency corresponding
to each company, whenever possible and economically
efficient, and managing its open positions with derivatives.
The risk associated with the translation of results from
subsidiaries is closed out annually.
Possible impact on financial
cost of 5% increase in
currency
Group financial cost
• Main sources: amounts outstanding (customers, suppliers, banks, partners, etc.) and cost of replacement.
• Retail: cost of late payments/defaults has been kept to moderate levels, close to 1% of global invoicing.
• Networks: In Spain and in the United Kingdom there is no retail sale of energy, in the United States and Brazil late
payments are generally recovered through the tariffs.
These risks are mitigated by making the necessary investments, applying operation and maintenance procedures and
programmes (supported by quality systems), planning appropriate training and skills development for staff, and finally by
obtaining appropriate casualty and civil liability insurance.
The group is subject to laws and regulations on tariffs and other regulatory aspects of its activities in the countries in
which it does business. The introduction of new laws/regulations or amendments to existing ones could adversely affect
operations, annual results and the financial value of the businesses of the group (including risks relating to commercial
trade between the EU and the United Kingdom).
Climate change risk
Includes the risks of transition (regulatory or market associated with emissions reduction goals) and physical risks
(deriving from potential impacts of an increase in extreme climate phenomena, increase in temperatures, increase in sea
level, changes in rain patterns, etc.).
Iberdrola believes that it is well positioned with respect to this risk, given the nature of its current businesses and its main
goals for growth.
www.iberdrola.com
Integrated report 2020
A Framework of Trust
www.iberdrola.com
Informe integrado 2020
5.4 Ethics
Compliance System
Iberdrola’s Compliance System is made up of all of the
rules, formal procedures and significant actions intended to
ensure the company’s conduct in accordance with ethical
principles and applicable law and to prevent improper
conduct or conduct that is contrary to ethics, the law or the
Corporate Governance System that might be committed by
the professionals thereof within the organisation.
Prevent
Detect
React
Regular evaluation
of risks
Development of
policies, procedures
and protocols
Training, dissemination
and communication
measures
Regular reviews
of the system
Grievance channels
Identification and
evaluation of
compliancecontrols
Investigation of
grievances
Corrective measures
for the on-going
improvement of the
Compliance System
Commitment of the
Governance bodies
Integrated within
the organisation
Trackable and
documented system
Auditable and under
continuous improvement
The Code of Ethics, which forms part of Iberdrola’s
Corporate Governance System, was approved by the
Board of Directors in 2002 and is regularly updated. In its
last review, in April 2019, the Code of Ethics strengthened
the obligation of the group’s professionals to report to
Compliance the commission of any illegal act or any
impropriety. The obligation of suppliers to comply with the
Code of Ethics and with the Corporate Anti-Corruption
Policies is also included.
Compliance Unit
The Code of Ethics, which forms part of Iberdrola’s
Corporate Governance System, was approved by the
Board of Directors in 2002 and is regularly updated. In its
last review, in April 2019, the Code of Ethics strengthened
the obligation of the group’s professionals to report to
Compliance the commission of any illegal act or any
impropriety. The obligation of suppliers to comply with the
Code of Ethics and with the Corporate Anti-Corruption
Policies is also included.
A Framework of Trust |
86
Powers of the Unit
The Compliance Unit has powers related to the Code
of Ethics, the Anti-Corruption and Anti-Fraud Policy,
the Crime Prevention Policy, the Internal Regulations
for Conduct in the Securities Markets, legal provisions
regarding the separation of activities, and all other
powers that may be entrusted thereto by the Sustainable
Development Committee or the Board of Directors of the
company or that are established in Iberdrola’s Corporate
Governance System.
Main areas of the Compliance System
The main activities and areas of activity within the
framework of the group’s Compliance System are: (i) the
crime prevention programmes, which are developed within
the scope of the provisions of the Spanish Criminal Code
(without prejudice to additional actions required by the laws
of any other jurisdiction in which the group does business),
(ii) measures for compliance with the Code of Ethics,
which include specific training and communication plans
for all professionals of the group, (iii) the development and
implementation of specific rules and measures regarding
fraud and corruption, (iv) actions to ensure compliance with
the rules on market abuse and separation of activities, and
(v) management of the ethics mailboxes.
Principal awards/recognitions
In 2019, Iberdrola renewed the Compliance Leader
Verification certification provided by the Ethisphere Institute
to those companies that show they have an ethical culture
implemented within all of their businesses and activities as
well as a robust and effective compliance system.
In 2019 it also renewed the UNE-ISO 37001 and UNE
19601 certifications provided by AENOR in 2017.
Furthermore, the companies of the Spain subgroup also
renewed these certifications in 2019.
Iberdrola has been chosen for the sixth consecutive
year as one of the most ethical companies in the world,
according to the World’s Most Ethical Companies 2019
ranking prepared by the Ethisphere Institute, thus
recognising the ethical leadership and conduct of the
organisation.
www.iberdrola.com
Integrated report 2020
5.5 Sustainable Development
External awards/recognitions
A Framework of Trust |
87
Organisation of sustainable development and
social responsibility within the group
Iberdrola’s commitment to sustainable development is
carried out by integrating the UN 2030 Agenda into the
strategy and operations of the Iberdrola group.
The group’s Social Responsibility is thus developed
generically for all of the Areas and Businesses, in all
countries.
The corporate Sustainable Development Committee
and the Sustainable Development Committees of
the country subholding companies coordinate social
responsibility within the Iberdrola group. The Board
of Directors’ Sustainable Development Committee
performs the work of supervision within its purview.
“Responsible Energy for People” Plan
The most significant contributions towards achieving
the SDGs are focused around two major foundations
that inspire our actions:
• We care for the planet, putting ourselves in the lead
of the process of transition in the energy sector.
• We contribute to the well-being and progress of
the societies of all the territories in which we are
present.
Iberdrola’s commitment has taken shape through
various lines of work that cover more than 300
environmental, social and economic activities, thus
responding to the expectations and needs of our
Stakeholders, encompassed within 7 priorities.
Only European electric utility included
for the past 20 years
Only Spanish electric company selected
in 2020 as one of the 100 most
sustainable companies in the world.
A rating in CDP Climate Change.
Iberdrola chosen as CDP Supplier
Engagement Leader
Iberdrola selected AAA
Iberdrola selected in various Euronext
Vigeo Eiris indices.
Classified as “Silver Class” in the
electricity sector.
Leader among Spanish utilities in
various reports: electricity, gas and
water.
Iberdrola classified as Prime.
Iberdrola classified as the top utility
in the world in report on status of
sustainability reporting 2019.
Iberdrola among top 25 scoring
companies.
1
Fight againts
climate change
and protecting
biodiversity
Priorities
of the
sustainable
development
plan
7
Workplace health &
safety and personal
development
6
Promoting CSR
in the
supply chain
2
Iberdrola among the top four utilities.
Contributing to the
wellbeing of our
communities
3
Sustainable
economic growth
Only Spanish electrical utility included
in all editions
Iberdrola selected in various
sustainability indices.
Iberdrola selected for the Emission
Transparency Index.
Good governance,
transparency and
stakeholders
engagement
5
Innovation,
digitalization and
quality for our
customers
4
www.iberdrola.com
Integrated report 2020
Wikinger offshore wind farm
/ Germany
www.iberdrola.com
Informe integrado 2020
About this Report |
89
6. About this Report
This report, which Iberdrola directs to both its shareholders
and all other Stakeholders, has been prepared using the
integrated report concept in accordance with the IIRC
guidelines, and constitutes one more example of the group’s
desire to be innovative in the area of transparency.
www.iberdrola.com
Informe integrado 2020
About this Report |
90
6.1 About this Report
Integrated report
• This report has been prepared
in accordance with the reporting
framework published by
the International Integrated
Reporting Council (IIRC)
and in accordance with the
recommendations thereof, taking
into consideration the individual
and consolidated financial
statements of the company
formulated by the Board of
Directors, audited and pending
approval by the shareholders
at the General Shareholders’
Meeting of Iberdrola.
• Information regarding the
Outlook 2020-2022 is available
in the Integrated Report,
February 2019.
• A multi-disciplinary team made
up of corporate businesses and
areas of the group was created
in order to provide a complete
view of the company, its
business model, the challenges
and risks it faces, and its social,
environmental, financial and
governance performance.
• The participating organisations
guarantee the completeness of
the information included.
• The content of this document
has been reviewed by
the company’s Operating
Committee. All operating and
financial figures were approved
by the Board of Directors at its
meeting held on 24 February
2020, after a favourable
report from the Sustainable
Development Committee.
August 2017. As a result of
this transaction, the Iberdrola
group’s interest in Neoenergia
increased from 39% to 52%.
Information boundaries
Material aspects identified
• Iberdrola has channels of
communication and dialogue
with its Stakeholders, developed
in accordance with the principles
of the AA1000 Assurance
Standard, as described in detail
in the Stakeholder Relations
Policy and in the Statement
of Non-Financial Information -
Sustainability Report 2019.
• The company also performs
materiality analyses that help
identify matters of significance
to its Stakeholders, bringing
to light particularly sensitive
financial, environmental or social
issues related to the business
in the various communities and
geographic areas in which the
group operates.
• The contents of this report have
been selected by taking into
account the existing channels for
dialogue as well as the materiality
analyses and the framework
defined by the IIRC for this kind of
information.
Social and Relationship Capital / page 68
• The information submitted
covers Iberdrola and its
subsidiaries and affiliates.
The information boundaries
are defined in the group’s
consolidated annual financial
statements and Statement of
Non-Financial Information -
Sustainability Report 2019.
• The group’s performance
in recent years has been
influenced by external corporate
transactions, which the reader
should take into account in order
to properly interpret this report.
These transactions and activities
are described in the group’s
public information, the following
being particularly noteworthy:
– The integration of UIL Holdings
Corporation into Iberdrola
USA (December 2015), which
is now called Avangrid, a
company listed on the New
York Stock Exchange and the
country subholding company of
the group in the United States.
– The inclusion of Neoenergia
within all of the businesses
of the Iberdrola group held in
Brazil through Elektro Holding,
which became effective on 24
This report has been prepared in accordance with the reporting framework
published by the International Integrated Reporting Council (IIRC).
www.iberdrola.com
Integrated report 2020
About this Report |
91
Internal and external verification
• This report has been subject to a process of internal verification, by means of a limited review performed
by the Management of the Internal Audit Division of Iberdrola.
• Although it has not been subject to a process of independent external verification, a significant portion
of the information contained herein relating to financial year 2019 and to previous years comes from
annual financial reports and sustainability reports, all of which have been the subject of an external audit
or verification for which the respective certificates are available. The remaining information comes mainly
from other reports or public presentations made by the company.
Legal disclaimer with respect to forward-looking statements
• This document contains forward-looking information and statements about Iberdrola and its affiliates. Such
statements include projections and estimates and their underlying assumptions, statements regarding
plans, objectives and expectations with respect to future operations, capital expenditures, synergies,
products and services, and statements regarding future performance. Forward-looking statements are
statements that are not historical facts and are generally identified by the words “expects”, “anticipates”,
“believes”, “intends”, “estimates” and similar expressions.
• Although Iberdrola believes that the expectations reflected in such forward-looking statements are
reasonable, investors and holders of Iberdrola shares are cautioned that forward-looking information
and statements are subject to various risks and uncertainties, many of which are difficult to predict and
generally beyond the control of Iberdrola, that could cause actual results and developments to differ
materially from those expressed in, or implied or projected by, the forward-looking information and
statements. These risks and uncertainties include those discussed or identified in the documents filed by
Iberdrola with the Comisión Nacional del Mercado de Valores and which are available to the public.
• Forward-looking statements speak only as of the date on which they were made, are not guarantees
of future performance and have not been reviewed by the auditors of Iberdrola. You are cautioned not
to place undue reliance on the forward-looking statements. All the forward-looking statements included
herein are qualified by the cautionary statements above and are based on information available on the
date of approval hereof. Except as required by applicable law, Iberdrola does not undertake any obligation
to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise.
www.iberdrola.com
Integrated report 2020
About this Report |
92
Integrated Report, February 2020
Publisher: IBERDROLA, S.A.
Spain
© 2020 IBERDROLA, S.A. All rights reserved.
For purposes of section 32 of the restated text of the
Intellectual Property Act approved by Royal Legislative
Decree 1/1996 of 12 April, IBERDROLA, S.A. expressly
objects to any commercial use of this publication
without its express approval, particularly including
any reproduction, modification, registration, copy,
exploitation, distribution, communication, transmission,
delivery, re-use, publication, processing or any other
total or partial use of this publication in any way, means
or format.
Except as allowed by law, any form of reproduction,
distribution, public communication or transformation of
this work may only be performed with the approval of
IBERDROLA, S.A.
www.iberdrola.com
Integrated report 2020
About this Report |
93
Glossary of terms and abbreviations
Term
Definition
Term
Definition
AENOR:
Asociación Española de Normalización
y Certificación (Spanish Association for
Standardisation and Certification). Pages 35, 39, 86.
NECEC
New England Clean Energy Connect.
Pages 17, 46, 60.
ANEEL
CCEE
CELs
CEO
CfD
CFE
CNMC
CNMV
COSO
CPIH
CSD
Agência Nacional de Energia Elétrica
(National Electrical Energy Agency). Pages 45, 53.
IFRS
International Financial Reporting Standard.
Pages 5, 47, 51, 55.
Câmara de Comercializaçao de Energia Elétrica
(Electric Power Trading Chamber). Page 53.
NYSEG
New York State Electric and Gas Corporation.
Page 45.
Clean Energy Certificates (Certificados de Energías
Limpias). Page 49.
Chief Executive Officer.
Pages 35, 39.
Contracts for Difference. Page 49.
Comisión Federal de Electricidad (Federal Electricity
Commission). Pages 43, 49, 84.
National Commission on Markets and Competition
(Comisión Nacional de los Mercados y la
Competencia) (CNMC). Pages 42, 45.
National Securities Market Commission (Comisión
Nacional del Mercado de Valores). Pages 3, 76.
Committee of Sponsoring Organizations of the
Treadway Commission. Page 80.
Consumer Prices Index including owner occupiers’
housing costs. Page 45.
SDGs
Ofgem
ILO
GDP
PIEC
PTC
RAB
RDL
Sustainable Development Goals.
Pages 29, 34, 35, 64, 66, 70, 76, 82, 87.
Office of Gas and Electricity Markets
(United Kingdom). Pages 45, 53.
International Labour Organization. Page 11.
Gross Domestic Product.
Pages 34, 35, 37.
Integrated Energy and Climate Plan
(Plan Integrado de Energía y Clima). Page 42.
Production Tax Credit.
Page 49.
Regulated Asset Base.
Page 45.
Royal Legislative Decree (Real Decreto
Legislativo). Pages 42, 49.
Higher Council for Sport (Consejo Superior de
Deportes) Page 35.
RG&E
Rochester Gas and Electric.
Page 45.
EBITDA
Earnings Before Interest, Taxes, Depreciation and
Amortization. Pages 9, 10, 29, 38, 47, 51, 55, 58, 59.
RIIO-D1
Revenue=Incentives+Innovation+Outputs.
Distribution 1. Page 45.
ENRESA
Empresa Nacional de Residuos Radiactivos, S.A.
Page 53.
RIIO-T1
Revenue=Incentives+Innovation+Outputs.
Transmission 1. Pages 45, 46.
ESG
FFO
GHG
GRI
CEF
IEI
IIRC
IPCC
ITC
LBG
Environmental, Social and Governance. Page 82.
Funds from operations. Page 10.
Greenhouse Gases. Pages 43, 66.
Global Reporting Initiative.
Page 3.
ROE
RPS
SBTi
ICFRS
Return on equity. Pages 10, 45.
Renewable Portfolio Standard. Page 49.
Science Based Targets. Pages 27, 66.
Internal Control Over Financial Reporting
System. Pages 80, 81.
Corporate Environmental Footprint. Page 66.
SENER
Mexican Ministry of Energy. Page 43.
Iberdrola Energía Internacional. Pages 23, 51, 55.
SPD
ScottishPower Distribution. Pages 45, 46.
International Integrated Reporting Council.
Pages 3, 57, 89, 90.
Intergovernmental Panel on Climate Change.
Page 26.
Investment Tax Credit.
Page 49.
SPM
CAGR
TCFD
ScottishPower Manweb.
Pages 45, 46.
Compound Annual Growth Rate.
Page 38.
Task Force on Climate-related Financial
Disclosure. Pages 27, 34, 76, 78.
London Benchmarking Group. Pages 34, 70.
EU
European Union. Pages 42, 53, 84.
MME
Ministry of Mines and Energy. Page 43.
WACC
Weighted average cost of capital.
Pages 45, 49.
www.iberdrola.com
Integrated report 2020