Integrated Report / February 2021
2
NOTICE. This document is a translation of a duly approved Spanish-language document, and its provided for informational
purposes only. In the event of any discrepancy between the text of this translation and the text of the original Spanish
language document that this translation is intended to reflect, the text of the original Spanish-language shall prevail.
Integrated Report 2021www.iberdrola.com Integrated Report / February 2021
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.
Additional information
Economic / financial
Environmental
● Quarterly Results Report
● Presentation of results
● IBE Watch Fact Sheet
● Quarterly Shareholder Bulletin
Social
● Diversity and Inclusion Report
● Sustainability
● Social commitment
● Innovation
● Talent
● Culture
● SHAPES
● Corporate Environmental Footprint Report
● Biodiversity Report
● Greenhouse Gas Report
Corporate Governance
● About Us
● Report on Tax Transparency of the Iberdrola
group
● Innovation Report
● Shareholders and investors
● Corporate Governance
Access the annual reports for financial year 2020
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 provides information on other specific
reports where more information of interest can
be accessed.
Integrated Report 2021www.iberdrola.com Integrated Report / February 2021
4
Letter from the Chairman & CEO
Ignacio S. Galán
Chairman & CEO of Iberdrola
in renewable energy, smart grids and storage,
our model has enabled us to cement our position
as a world leader in the energy industry, and
Iberdrola is now one of the three largest electricity
companies worldwide and the company with the
largest weight on the Spanish stock exchange.
Outlook 2020-2025
In November 2020, Iberdrola unveiled the most
ambitious investment plan in its history, totalling
75,000 million euros until 2025. 51% of this
amount will be allocated to promoting clean
energy, with the aim of doubling the group’s
renewable capacity in only 5 years and reaching
60,000 MW by the end of the period. Electrical
grids, the backbone of the ecological transition,
will receive the second-largest share of the
investment, accounting for 40% of the total, in
order to grow that our base of grid assets by
150%. The remaining 9% will be invested in
new products and services that address the
needs of our customers in a context of ever-
growing electrification of energy uses along with
increased digitalisation.
The plan will also help to strengthen the group’s
internationalisation: the organic investments in
all our markets are in addition to the integrations
of PNM Resources in the United States, Aalto
Power in France, CEB-D in Brazil, and Infigen in
Australia, as well as the entry into new countries
like Sweden, Japan and Poland through the
acquisition of a portfolio of offshore wind projects.
The year 2020 has marked a turning point in
terms of the convergence towards sustainable
development worldwide. The plans devised
to overcome the health and economic crisis
coincide in their focus on a transition to safer,
cleaner and more competitive energy systems
as the best way of jump-starting the economy
and creating quality jobs. The European Union
has once again shown its leadership in this field
by embracing the Green Deal, approved at the
beginning of the year, as one of the main tools
for recovery on the Continent.
This scenario confirms Iberdrola’s pioneering
commitment to the generation of sustainable
value for the triangle formed by shareholders,
employees and society. Based on investments
Iberdrola is committed to the creation of sustainable value
for shareholders, employees and society.
Integrated Report 2021www.iberdrola.com Integrated Report / February 2021
5
will further increase the investment in innovation,
currently coming to 300 million euros per year.
These initiatives fit within our Governance and
Sustainability System, which endorses the best
corporate governance practices.
In view of all of the foregoing, Iberdrola sees the
coming years as an opportunity to strengthen its
sustainable enterprise, in order to continue to
create value for our shareholders, our employees
and the society we serve.
investment
The unprecedented pace of
envisioned in the plan, together with the focus on
operational efficiency, will enable us to achieve
gross operating profits (EBITDA) of 15,000
million euros and net profits of 5,000 million euros
in 2025, while maintaining financial strength and
increasing shareholder remuneration in line with
results until reaching 0.56 euro per share.
Enhancing the social dividend
In this environment of change, Iberdrola reaffirms
its commitment to contribute to the United
Nations 2030 Agenda by generating a growing
social dividend for the benefit of all.
We will boost the business of more than 22,000
local suppliers with our purchases of goods
and services (which came to 14,000 million
euros worth of orders awarded only in 2020), by
increasing the 400,000 jobs we already provide
on a worldwide basis, and by extending our
sustainability policies to at least 75% of our main
suppliers by 2025.
Over the next five years we expect to see
almost 20,000 new hirings in the group, and
we will deepen our commitment to professional
development by further increasing the number
of training hours per employee, which already
stands at four times the European average.
Along these lines, we will intensify our efforts to
promote gender equality, with a view to reaching
the target of 30% of women in management
positions in comparison with the current 20%.
The expected growth in business will also enable
us to continue increasing our tax contribution,
currently standing at approximately 7,500 million
euros.
In the environmental area, we will continue to
reduce our emissions (which now come to only
98 g/kWh and are thus two-thirds lower than
the European average), achieving emission
neutrality in Europe by 2030.
In order to continue to foster the company’s
sustainability, efficiency and competitiveness,
we will strengthen our commitment to R&D and
Integrated Report 2021www.iberdrola.com Integrated Report / February 2021
6
Contents
1. Iberdrola today
2. Business model
and strategy
Iberdrola, the utility of the future
1.1
1.2 Company performance
1.3 Key figures
1.4 Presence by areas of activity
1.5 Key milestones of 2020
1.6 External awards / recognitions
9
10
12
14
27
28
30
2.1 The future of energy
2.2 Value chain
32
2.3 A successful consolidated business
34
model
36
2.4
2.5 Capital management
40
2.6 Strategic foundations 2020 – 2025 42
45
2.7
46
2.8 Comparative results and awards
Iberdrola, an ESG+F leader
Iberdrola and COVID-19
3. Iberdrola’s primary
businesses
3.1 Regulatory environment
3.2 Networks
3.3 Renewables
3.4 Wholesale and Retail
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
50
53
57
61
66
68
70
72
74
76
Integrated Report 2021www.iberdrola.com
Integrated Report / February 2021
5. A framework of trust
5.1 Governance and Sustainability
System
5.2 The three-line model
5.3 Risks
5.4 Ethics
5.5 Sustainable development
7
82
88
90
93
94
6. About this report
6.1 About this report
96
Notes:
•
•
•
•
•
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 are
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; $M: millions of dollars; £M: millions of pounds sterling; R$ Brazilian reais.
IFRS-11 is not being applied in the operational indicators (installed capacity, output, etc.).
Integrated Report 2021www.iberdrola.com
1. Iberdrola today
8
1. Iberdrola today
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
9
1.1 The utility of the future
With a history of over 170 years, the Iberdrola group today is a global energy leader, the leading wind
energy producer and one of the world’s largest electricity companies by market capitalisation1.
The group supplies energy to almost 100 million people in dozens of countries, with over 600,000
shareholders, a workforce of over 37,000 and assets of more than 122,000 million euros1.
We lead the energy transition towards a sustainable model through our investments in renewable
energy, smart grids, large-scale energy storage and digital transformation to offer the most
advanced products and services to our customers.
Key figures of the group
55,111
MW
Total installed capacity
34
Millions
of consumers2
International
presence
34,923
MW
Total renewable
installed capacity
162,842
GWh
Net production
1,206,783
Km
Power lines
224,998
GWh
Distributed energy
9,246
M€
Gross investments4
Approximately 400,000
People5 - Direct, indirect and induced employment
37,127
People - Direct
employment
7,475
€M
Direct tax
contribution
14,071
€M
Purchases3
(1) At year-end 2020.
(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) Volume awarded during the year. Amount invoiced in 2020: €8,494 million.
(4) Net total investments for financial year 2020 were €8,436 million.
(5) Data from a Study of Iberdrola’s Impact, prepared by PwC, for financial year 2019.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
10
1.2 Company Performance
Revenues (€M)
EBITDA (€M)
Net profit (€M)
36,438
35,076
33,145
7,808
7,319
10,104
10,010
9,349
3,014
2,705
2,804
3,611
3,406
31,263
29,215
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Total installed capacity (MW)1,3
Total net output (GWh)1,3
Distributed energy (GWh)²
55,111
52,082
151,714
145,605
142,466
137,549
162,842
233,409
233,541
229,920
230,151
224,998
48,447
47,049
46,694
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Assets (€M)
Employees¹
Consumers (millions)4
123,025
122,518
37,127
35,374
34,082
34,255
34,078
33.0
33.0
34.4
33.9
33.6
110,689
106,706
113,038
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
(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) All data for Production and Installed Capacity include the power stations in which Iberdrola has a stake, based on its percentage interest.
(4) 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.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
11
Own emission-free installed
capacity (%)
Own specific CO2 emissions
(t/GWh)
79.2
77.0
76.8
136
131
73.5
73.0
112
110
98
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Water use / overall
production (m3/GWh)
Gender diversity
(% women on workforce)
24
23
23
23
23
604
597
583
573
434
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Injury rate¹
1.8
1.8
Hours of training per
employee trained²
54.86
53.40
1.4
1.3
1.2
45.25
45.24
41.82
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Injury rate: (number of accidents with leave*1,000,000) / hours worked.
(1)
(2) The exceptional situation caused by COVID-19 has significantly reduced face-to-face training. Thanks to a tremendous effort, a large part of training
activity has been adapted for delivery by remote means, which has led to a considerable increase in the proportion of on-line training hours.
Integrated Report 2021www.iberdrola.com 12
Δ
Annual
average
2016-
2020
(%)
3.1
4.2
2016
2017
2018
2019
2020
26.7
23.4
26.7
27.7
30.2
9.3
9.0
8.6
9.4
10.9
27.7
31.2
26.9
26.6
26.7
(0.9)
3.77
4.49
3.653
3.74
3.5
(1.8)
42.0
43.5
43.73
44.7
43.2
21.5
19.7
21.53
21.5
23.5
19.1
17.2
20.23
20.0
21.3
7.3
7.8
8.43
9.2
9.7
0.7
2.2
2.8
7.4
EBITDA margin
(EBITDA/revenues)
(%)
Net profit margin (Net
Profit/Revenues) (%)
NOE/Gross margin
(%)
Adjusted net financial
debt / EBITDA
(multiple)
Financial leveraging
(%)
Funds from
Operations (FFO)/
Adjusted net financial
debt (NFD) (%)
Retained cash flow
(RCF/NFD) (%)
Return on equity
(ROE) (%)
Stock market performance
2016
2017
2018
2019
2020
Δ
Annual
average
2016-
2020
(%)
40
40,811
44,898
58,404
74,296
17.0
6,362
6,318
6,398
6,362
6,350
(0.0)
6.23
0.42
6.46
7.02
9.18
11.70
17.0
0.44
0.47
0.53
0.55
0.286
0.317
0.331
0.356
0.405
7.0
9.1
Stock market
capitalisation (€M)
Number of shares
at end of period
(millions)
Share price (€)
Earnings per share
(EPS)
Dividend per share
(DPS)3
Dividend yield (%)
4.59
4.91
4.72
3.87
3.46
(6.8)
Total dividend
(including cash
payments) (€M)
1,966
1,996
2,077
2,247
2,517
Payout ratio (%)
72.7
71.2
68.9
66.0
73.9
6.4
0.4
Share price / net
earnings per share
(PER)
14.66
14.55
14.90
17.15
21.79
10.4
1. Iberdrola today
1.3 Key figures
Financial performance (€M)
Financial ratios
20161
2017
2018
2019
2020
Revenues
29,215
31,263
35,076
36,438
33,145
Consolidated
gross margin
Consolidated
Ebitda
Networks
(Regulated)
Ebitda
12,916
13,364
15,435
16,263
16,145
7,808
7,319
9,349
10,104
10,010
4,082
4,228
4,915
5,262
4,778
Spain
1,603
1,520
1,709
1,711
1,612
United
Kingdom
United
States
Brazil
Renewables
Ebitda2
Spain
United
Kingdom
United
States
Brazil
Mexico
International
Wholesale
and Retail
(liberalised)
Ebitda2
976
886
919
987
1,000
1,270
1,334
1,331
1,330
1,087
233
489
955
1,234
1,079
1,500
1,755
2,446
2,386
2,586
497
267
564
25
52
95
616
392
530
66
53
99
919
518
573
129
65
242
736
525
591
125
86
323
698
758
592
111
93
334
2,247
1,464
2,038
2,469
2,565
Spain
1,521
1,001
1,558
1,469
779
108
51
525
294
(3)
436
307
92
638
(26)
110
64
762
(25)
(105)
13
29
28
84
(141)
(78)
(41)
250
59
790
0
(1)
84
(3,254)
(4,606)
(3,910)
(4,227)
(4,474)
4,554
2,713
5,439
5,877
5,536
(903)
(937)
(1,156)
(1,300)
(991)
United
Kingdom
Brazil
Mexico
International
Other
businesses
Ebitda
Corporation
Ebitda and
adjustments
Amortisation/
depreciation,
provisions and
other
Operating
profit (EBIT)
Financial
results
Results from
equity-
accounted
investees - net
of taxes
Results from
non-current
assets
Profit before
Tax (EBT)
Minority
interests
Net
attributable
profit
49
(29)
56
(51)
(5)
--
48
279
9
203
513
3,748
2,026
4,348
4,729
5,053
Income tax
(905)
1,397
(959)
(914)
(1,083)
(138)
(366)
(323)
(348)
(341)
(25.4)
Δ Annual
average
2016-2020
(%)
3.2
5.7
6.4
4.0
0.1
0.6
(3.8)
46.7
14.6
8.8
29.8
1.2
45.4
15.6
36.8
3.4
(0.9)
(4.0)
--
16,0
--
66.0
0.0
(8.3)
5.0
(2.3)
80.6
7.8
(4.6)
2,705
2,804
3,014
3,466
3,611
Total assets
106,706
110,689
113,038
123,025
122,518
Equity
40,687
42,733
43,977
47,195
47,219
Gross
investments
Funds from
Operations
(FFO)
Adjusted net
financial debt
5,009
6,632
6,173
8,158
9,246
6,311
6,479
7,328
8,060
8,193
29,230
32,856
34,149
37,769
35,142
(1) For purposes of this report, 2016 is not re-stated due to the
discontinuation of the engineering business, which only appears as
such beginning in 2017.
In financial years 2017 and following, hydroelectric production activity
is classified within the Renewables business.
(2)
(3) Data adjusted due to the effect of potential accumulator derivatives on
treasury shares (€50 million at 31/12/2018).
Statement of Non-Financial Information. Sustainability Report
Quarterly Results Report Consolidated
Annual Financial Statements
7.5
3.5
3.8
16.6
6.7
4.7
Integrated Report 2021www.iberdrola.com 13
Δ
Annual
average
2016-
2020
(%)
1.0
(0.5)
(3.0)
0.9
1.6
--
1.8
5.1
(2.3)
0.6
--
2.2
0.3
(0.4)
(4.6)
--
(9.8)
9.6
4.2
4.2
9.8
1. Iberdrola today
Operating performance
Social performance
2016
2017
2018
2019
2020
Total Installed
Capacity (MW)1
47,049
48,447
46,694
52,082
55,111
Net Own Capacity
42,707
43,811
42,058
45,702
47,965
Third-party
Capacity
Net production
(GWh)1
4,342
4,636
4,636
6,380
7,146
142,466
137,549
145,605
151,714
162,842
Net Own Output
112,069
105,239
115,134
114,030
123,463
Net Third-party
Output
Distributed
energy (GWh)
30,397
32,310
30,471
37,684
39,378
229,920
230,151
233,409
233,541
224,998
Km. of lines
1,117,444
1,156,611
1,173,672
1,191,513
1,206,783
Δ
Annual
average
2016-
2020
(%)
4.0
2.9
13.3
3.4
2.5
6.7
(0.5)
1.9
Consumers (millions)3
Electric power
Spain
United Kingdom
United States
Brazil
IEI
Gas
Spain
United Kingdom
United States
2016
2017
2018
2019
2020
29.0
10.2
3.2
2.2
29.0
10.2
3.0
2.2
29.5
10.1
3.0
2.3
29.8
10.1
2.8
2.3
30.1
10.0
2.8
2.3
13.4
13.6
13.8
14.0
14.3
-
4.0
0.9
2.1
1.0
-
4.0
1.0
2.0
1.0
0.3
4.1
1.0
2.0
1.0
0.1
0.6
4.2
1.0
1.9
1.0
0.2
0.7
4.3
1.1
1.9
1.0
0.3
Environmental performance
IEI
-
-
2016
2017
2018
2019
2020
73
72
74
70
77
74
77
72
131
136
112
110
79
75
98
Δ
Annual
average
2016-
2020
(%)
2.1
0.9
Number of employees
34,082
34,255
34,078
35,374
37,127
Permanent contracts (%)
98.4
99.4
99.0
99.1
99.6
Employees with collective
bargaining agreement (%)
79.3
77.2
78.9
78.7
77.9
Employee turnover (%)
7.3
7.8
10.7
6.6
6.1
Diversity (men/women)
76/24
77/23
77/23
77/23
77/23
Injury rate (IR)9
Hours of training (millions
of hours)6
1.8
1.4
1.8
1.5
1.4
1.6
1.3
1.8
1.2
2.0
(7.0)
Hours of training per
employee trained (h)6
45.3
41.8
45.2
54.9
53.4
764,386,296
760,201,810
706,835,480
764,408,401
770,867,957
0.2
2,262
2,240
2,133
3,712
5,116
22.6
527
513
550
700
671
6.2
Funds for social
development (€M)7
Contributions to society
(€M)
Rural electrification
programmes (€M)
106.7
341.2
243.1
92.4
125.9
57.7
63.0
53.5
52.3
83.8
49.0
278.2
189.6
40.1
42.0
(3.8)
Investments in R&D (€M)
211
246
267
280
293
General procurement (€M
billed)8
Purchases from local
suppliers (%)
7,508
8,648
7,753
8,717
8,494
84
88
85
89
89
8.5
3.1
1.5
82
80
80
83
78
(1.5)
573
597
604
583
434
(6.7)
15,637
15,020
13,328
12,928
13,136
(4.3)
4,504
3,415
2,544
2,082
2,001
(18.4)
16,853
23,460
24,334
21,799
31,300
16.7
0.047
0.038
0.023
0.011
0.008
(35.5)
0.140
0.113
0.085
0.3635
0.375
27.9
Own emission-
free installed
capacity (%)4
Own emission-
free output
(%)4
Own specific
CO2 emissions
(t/GWh)4
Fuel
consumption
(GJ)
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)5
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
All data for Production and Installed Capacity include the power stations in which
Iberdrola has a stake, based on its percentage interest.
Since 2018 subtransmission in the United States and Brazil is recorded as
distribution network. Until then it was recorded as transmission network.
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.
Calculated on own production.
Change in method for calculating NOx emissions in Mexico.
The exceptional situation caused by COVID-19 has significantly reduced face-to-
face training. Thanks to a tremendous effort, a large part of training activity has
been adapted for delivery by remote means, which has led to a considerable
increase in the proportion of on-line training hours.
Increase in contribution to society in 2020 due to the company’s effort in the fight
against COVID-19.
Amount awarded in 2020: €14,071 million.
Injury rate (IR) = (number of accidents with leave*1,000,000) / hours worked.
Statement of Non-Financial Information. Sustainability Report
Quarterly Results Report Consolidated
Annual Financial Statements
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
14
1.4 Presence by areas of activity
Iberdrola in Spain
Francisco Pizarro photovoltaic power plant - Cáceres, Spain
Local brand
Operating brands
Primary brands
26,635
MW
Installed capacity
270,129
Km / Power lines
9,594
Employees
Key figures 2020
17,411
MW
Renewable installed capacity
88,390
GWh
Distributed energy
59,854
GWh
Net production
11.1
Millions of consumers1
2,100
€M Gross investments
3,380
€M Direct tax contribution
(1) Total number of electricity and gas customers.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
15
209
Wind farms
6,292 MW
19
Cogeneration plants
353 MW
5
Nuclear plants
3,177 MW
5
2
2
21
20
164
Hydroelectric plants
10,018 MW
5
56
3
20
29
1
4
3
3
5
13
13
4
2
7
13
56
2
1
2
13
12
13
9
2
2
14
Photovoltaic
plants
1,100 MW
8
2
7
8
2
28
2
8
2
2
8
Combined cycle gas plants
5,695 MW
Principal offices
Projects under construction
Electricity distribution
Area of influence
Batteries
Integrated Report 2021www.iberdrola.com14 4 1 2 1. Iberdrola today
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Iberdrola in the United Kingdom
East Anglia ONE offshore wind farm - North Sea, United Kingdom
Local brand
Operating brands
Primary brands
2,864
MW
Installed capacity
110,264
Km / Power lines
5,563
Employees
Key figures 2020
2,864
MW
Renewable installed capacity
31,738
GWh
Distributed energy
6,677
GWh
Net production
4.7
Millions of consumers1
1,349
€M Gross investments
630
€M Direct tax contribution
(1) Total number of electricity and gas customers.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
17
41
Wind farms
1,950 MW
5
30
2
2
2
Offshore wind farms
908 MW
3
1
Underwater power line
425 MW
2
2
Batteries
6 MW
4
Principal offices
Projects under construction
Electricity distribution
Area of influence
Integrated Report 2021www.iberdrola.com1 2 3 3 1. Iberdrola today
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Iberdrola in the United States
El Peñascal wind farm - Texas, USA
Primary brands
Local brand
Operating brands
RENEWABLES
NETWORKS
8,822
MW
Installed capacity
170,821
Km / Power lines
7,031
Employees
Key figures 2020
7,982
MW
Renewable installed capacity
38,012
GWh
Distributed energy
22,122
GWh
Net production
3.3
Millions of consumers1
2,616
€M Gross investments
935
€M Direct tax contribution
(1) Total number of electricity and gas supply points.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
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1
Cogeneration plants
636 MW
3
2
2
10
6
3
2
2
2
4
Photovoltaic plants
130 MW
9
Hydroelectric plants
118 MW
5
Batteries
13 MW
2
3
2
6
4
5
5
6
5
3
4
6
68
Wind farms
7,721 MW
3
Combined cycle gas plants
204 MW
Principal offices
Projects under construction
Electricity distribution
Area of influence
Integrated Report 2021www.iberdrola.com4 4 21 transmission line (NECEC) 1. Iberdrola today
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Iberdrola in Brazil
The Baixo Iguazú hydroelectric plant - Paraná, Brazil
Primary brands
Local brand
Operating brands
4,079
MW
Installed capacity
655,569
Km / Power lines
12,814
Employees
Key figures 2020
3,546
MW
Renewable installed capacity
66,857
GWh
Distributed energy
13,122
GWh
Net production
14.3
Millions of consumers1
1,092
€M Gross investments
1,984
€M Direct tax contribution
(1) Total number of electricity supply points.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
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17
Wind farms
516 MW
2
11
15
3
12
3
1
Combined cycle gas plant
533 MW
8
Hydroelectric plants
3.031 MW
Principal offices
Projects under construction
Electricity distribution
Area of influence
Integrated Report 2021www.iberdrola.comtransmission lines27 1 9 1. Iberdrola today
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Iberdrola in Mexico
Hermosillo solar photovoltaic power plant - Sonora, Mexico
Primary brands
Local brand
Operating brands
3,527
MW
Own installed capacity
Key figures 2020
1,222
MW
Own renewable installed capacity
7,146
MW
Third-party installed capacity
103
MW
Third-party renewable installed capacity
18,138
GWh
Own output
39,378
GWh
Third-party output
1,307
Employees
449
€M Gross investments
243
€M Direct tax contribution
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
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Principales instalaciones en México
3
Photovoltaic plants
642 MW
12
Combined cycle gas plant
2,103 MW own
7,043 MW for third parties
2
2
4
4
2
3
3
5
Cogeneration plants
202 MW
2
2
6
9
Wind farms
682 MW
Projects under construction
Principal offices
Area of influence
Area with projects under construction
Integrated Report 2021www.iberdrola.com2 1 1. Iberdrola today
24
Iberdrola Energía Internacional
Wikinger offshore wind farm - Baltic Sea, Germany
Primary brands
Operating brands
2,038
MW
Installed capacity
3,550
GWh
Net production
Key figures 2020
1,795
MW
Renewable installed capacity
3,540
GWh
Net renewable production
1.0
Millions of consumers1
818
Employees
1,641
€M Gross investments
303
€M Direct tax contribution
(1) Total number of electricity and gas customers.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
25
1
Offshore wind farm
350 MW
41
Wind farms
1.414 MW
11
5
3
7
4
4
19
1
Battery plant
31 MW
4
Photovoltaic plants
31 MW
2
Combined cycle gas plant
243 MW
Principal offices
Projects under construction
Electricity distribution
Area of influence
Integrated Report 2021www.iberdrola.com2 1 5 9 1. Iberdrola today
26
Installed capacity and production by country and technology
Installed capacity (MW)1 2
Spain
United
Kingdom
United States
Brazil
Mexico
IEI
Total
2020
2019
2020
2019
2020
2019
2020
2019
Own
For third-
parties
2020
2019
2020
2019
2020
2019
2020
2019
Renewables
17,411
16,526
2,858
2,520
7,982
7,521
3,546
3,546
1,222
Onshore wind
6,292
6,005
1,950
1,906
7,721
7,259
516
516
579
860
492
103
103
103
103
1,795
1,414
350
Offshore wind
908
614
Hydroelectric
9,715
9,715
Mini-hydroelectric
303
Solar and others
1,100
306
500
6
0
-
Nuclear
3,177
3,177
Combined cycle
5,695
5,695
Cogeneration
Coal
Total
353
-
353
874
118
118
3,031
3,031
143
143
642
368
31
204
636
204
636
533
533
2,103
1,946
7,043
6,277
243
202
346
26,635
26,624
2,864
2,520
8,822
8,361
4,079
4,079
3,527
3,152
7,146
6,380
2,038
965
55,111
52,082
965
609
350
6
-
34,923
32,042
18,574
16,890
1,258
964
12,864
12,864
303
306
1,923
1,018
3,177
3,177
15,820
14,654
1,191
1,335
0
874
Net electricity production (GWh)1 2
Spain
United
Kingdom
United States
Brazil
Mexico
IEI
Total
2020
2019
2020
2019
2020
2019
2020
2019
Own
For third-
parties
2020
2019
2020
2019
2020
2019
2020
2019
Renewables
25,919
22,191
6,677
4,640
19,371
17,478
10,681
10,674
1,658
1,424
Onshore wind
11,617
12,491
3,581
3,706
18,930
16,953
1,878
1,993
929
693
218
218
227
227
3,540
2,665
68,064
2,249
1,379
39,402
59,299
37,443
Offshore wind
3,097
934
1,283
1,277
4,380
2,211
Hydroelectric
13,111
9,082
120
179
8,803
8,680
22,034
17,941
Mini-hydroelectric
Solar and others
682
509
618
0
Nuclear
24,316
23,738
321
346
729
731
8
9
1,568
682
618
1,086
24,316
23,738
Combined cycle
7,216
9,697
6
3
2,440
3,334
14,841
9,233
39,160
37,281
10
63,673
59,547
Cogeneration
2,166
2,500
2,745
3,477
1,640
2,848
Coal3
Total
237
349
59,854
58,474
6,677
4,640
22,122
20,959
13,122
14,007
18,138
13,505
39,378
37,508
3,550
2,665
162,842
151,758
6,550
237
8,825
349
(1) All data for Production and Installed Capacity include the power stations in which Iberdrola has a stake, based on its percentage interest.
(2) Totals may vary due to rounding of decimals.
(3) Coal-fired electricity production prior to the final closure of coal-fired power plants in Spain.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
27
1.5 Key milestones of 2020
At the Davos Forum, Ignacio Galán highlighted
the role of electrification for the success of the
Green Deal.
Plan to accelerate recharging infrastructure in
Spain, with an investment of over €150 million,
to reach over 150,000 recharging points over
the next 5 years.
Inauguration of the Núñez de Balboa
photovoltaic power plant, the largest in Europe
to date.
Signing of a collaboration agreement with
Mazda for the promotion of electric mobility in
Spain.
Presentation by the EU of the Green Deal.
Agreement for the development of the largest
portfolio of offshore wind farm projects in
Sweden, with a total of 9 GW.
Inauguration with Fertiberia of the largest
green hydrogen plant for industrial use in
Europe.
January
February
Member of the Global 100 Most Sustainable
Corporations and Bloomberg Gender Equality
indexes.
Presentation of 2019 results:
Record net profit of €3,406 million.
March
April
May
Launch of the plan to combat COVID-19:
• Award of procurement contracts totalling
€2,900million
• Guarantee of electricity supply
• Donation of healthcare material
• Plan to assist customers with bill payments
Mobilisation of 1,000 volunteers in social
initiatives to combat COVID-19.
Acquisition of the French renewables company
Aalto Power.
June
Startup of the Cavar wind farm (Spain).
Signing by Avangrid Renewables of an energy
supply agreement with Apple.
July
Iberdrola celebrates eleven consecutive years
as a member of the FTSE4Good index.
Award of the contract for the construction of
three new wind projects in Greece.
Award of a new hybrid project (photovoltaic
with storage) in Portugal.
Acquisition of a Japanese developer to
develop the 3.3 GW offshore wind portfolio in
that country.
4,000 volunteers participate in the company’s
International Volunteer Day.
First company to achieve the worldwide
AENOR certification of its action plan against
Covid-19.
Signing of a strategic collaboration agreement
with SEAT and Volkswagen Group for the
promotion of electric mobility in Spain.
August
Inauguration of the East Anglia ONE offshore
wind farm in the United Kingdom, the
company’s largest to date.
September
Commencement of the 2021 Iberdrola Social
Program (Fundación Iberdrola España), aimed
at mitigating the negative impact of COVID-19
on the most vulnerable groups.
Acquisition of PNM Resources, a power
company operating in New Mexico and Texas
(USA), with approx. 790,000 supply points and
2.8 GW of installed capacity.
October
Iberdrola launches a plan to invest €75,000
million by 2025 as a decisive contribution to
the economic recovery.
Signing of a strategic collaboration agreement
with Porsche for the promotion of electric
mobility in Spain.
November
Acquisition, through Neoenergia, of the Brasilia
distributor CEB-Distribuição, which supplies
electricity to 3 million people.
December
Construction of Iberdrola’s first hybrid
solar-wind plant in the world begins
in Australia.
Completion of largest issue in its history
in record time, in the amount of
€3,000 million.
Publication of the first Diversity and Inclusion
Report, covering the company’s strategic
initiatives in this area.
Presentation of the Trees programme for the
reforestation of 8 million trees by 2030.
Iberdrola reforms its governance and
sustainability system, based on ESG
standards.
Acquisition of a stake in the Polish market for
the joint development of offshore wind projects
of up to a total of 7.3 GW.
Integrated Report 2021www.iberdrola.com 1. Iberdrola today
28
1.6 External awards / recognitions
Only European electric utility included for
the past 21 years.
Iberdrola classified as Prime.
Iberdrola selected in 2020.
Selected for the index for the last
11 years.
A- rating in CDP Climate Change Index
2020.
Iberdrola chosen as CDP Supplier
Engagement Leader.
Iberdrola selected AAA.
Iberdrola classified as top utility and top
10 in the world in the 2020 Sustainability
Reporting Performance report.
Iberdrola selected for Forbes 2020
Global 2000: World’s Largest
Public Companies.
Iberdrola included in the
leading indices.
Iberdrola second-place utility
worldwide in the EI Green Utilities
Report 2020.
Iberdrola selected in various Euronext
Vigeo Eiris indices.
Gold EcoVadis Medal, Iberdrola as one of
the companies with the best performance.
Classified as “Silver Class” in the
electricity sector.
Among the 500 most valuable
brands globally.
Iberdrola among the 10 best-ranked
companies in mercoEMPRESAS 2020 and
mercoRESPONSABILIDAD Y GOBIERNO
CORPORATIVO 2020.
Iberdrola included in the
Fortune 500 index.
Iberdrola included in the STOXX Global
ESG Leaders index and in the most
important indexes.
Iberdrola among the 10 best-rated
companies.
Only Spanish electric utility included in all
editions.
Iberdrola among the highest
rated utilities.
Iberdrola among the top 5 of the world’s
50 most influential electric utilities.
Iberdrola included in the index.
Iberdrola 2020 disclosure score above
the average.
Iberdrola ranked as the leading
Spanish company in the first edition of
the OpenODS Index, with the highest
score among Ibex-35 companies.
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
29
2. Business model and strategy
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
30
2.1 The future of energy
Combat 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.
The year 2020 saw the fifth anniversary of the Paris Agreement, in which it was agreed
to limit the increase in the global temperature to less than 2ºC by the end of the century
and to continue the efforts to limit the increase to 1.5ºC, with a commitment to reach
peak GHG emissions as soon as possible and begin to reduce them until achieving
carbon neutrality. Since then a total of 189 countries have signed this Agreement.
The energy sector is an important player, responsible for over 75% of CO2 emissions,
for which reason its contribution is essential to achieving the Paris Agreement’s
decarbonisation targets, and neutrality by 2050.
Current energy context
According to the IPCC1, achieving this goal will require a 45% reduction in emissions by 2030 compared to
those in 2010 and achieving zero net emissions by 2050. This puts electricity from renewable sources at the
epicentre of decarbonisation, with the need to electrify sectors like transport and buildings, in which polluting
energies still play a predominant role.
Increase in electricity demand
(IEA),
Several bodies, including the International Energy
Agency
progressive
emphasise
electrification of the economy will cause global
demand for electricity to increase over the period,
reaching 41,000 TWh2 by 2050.
that
TWh
23,000
x2
41,000
28,000
Electrification of final demand
2020e
2030e
...
2050e
Electricity’s share of total energy consumption is thus
expected to rise from 20% this year to 37% by 20502.
Mass use of renewable resources
This electrification of consumption will require 2.5
times current renewable capacity, to around 7,000
GW, by the end of this decade3, in order to replace
existing thermal capacity and meet the demand
arising from new uses like transport, buildings and
industry, etc.
24%
37%
2030e
...
2050e
+ 9% CAGR
+ 4,100 GW
+ 4% CAGR
+ 8,500 GW
7,000
2030e
15,500
2050e
20%
2020e
2,900
2020e
(1) Special Report of the Intergovernmental Panel on Climate Change (IPCC) on Global Warming of 1.5 ºC.
(2) Source: Data calculated internally based on the Sustainable Development scenario in the International Energy Agency’s World Energy Outlook 2020.
(3)
Bloomberg New Energy Finance (BNEF) (2020). New Energy Outlook.
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
31
Electricity generation
The progressive reduction in the costs of investment and operation of the various renewable technologies will
favour an increase in their share of the energy mix, leading to an increase in the installed capacity of these
technologies, estimated to be some 4,100 GW over the decade, mainly in solar photovoltaic and wind.
X 3
X 4
X 7
Solar PV
2,400
~4,100
GW
Onshore wind
1,000
Offshore wind
200
Hydro 350
Other 50
Biomass 100
Growth in installed capacity, 2030 vs 2020¹
Additional capacity in 2030 by technology (GW)¹
Power transmission and distribution
The electrification of the economy accords an essential role to an efficient, smart and flexible electricity
transmission and distribution infrastructure, capable of integrating more renewable energy and meeting new
requirements in terms of connectivity, digitalisation and demand management.
276,000
+ 60%
437,000
+ 90%
829,000
Period 2010-2020
Period 2020-2030
Period 2030-2040
Annual average investment in grids ($M)²
Uses of electricity
The challenge of decarbonisation means that electrification from renewable sources is an increasingly
necessary option in every sector, which means that electricity demand will grow rapidly in those sectors that
implement it as the most efficient solution for reducing their CO2 emissions.
21%
58%
43%
4%
1%
44%
33%
33%
28%
2020e
2030e
...
2050e
2020e
2030e
...
2050e
2020e
2030e
...
2050e
% supplied by electricity to
the transport sector
% supplied by electricity to
the buildings sector
% supplied by electricity to
the industrial sector
An innovative use of renewable electricity generation will be the production of green hydrogen through the
use of electrolysers. Green hydrogen will enable progress on two fronts: emissions reduction in sectors that
currently consume hydrogen, produced by processes that emit CO2, and the adoption of hydrogen in sectors
that are difficult to electrify (such as heavy, air and sea transport).
(1) Source: Data calculated internally based on the Sustainable Development scenario in the International Energy Agency’s World Energy Outlook 2020.
(2) Source: Sustainable Development scenario in the International Energy Agency’s World Energy Outlook 2020.
Integrated Report 2021www.iberdrola.com
2. Business model and strategy
32
2.2 Value Chain
Generation of electricity and
green hydrogen
Electricity production1
Electric networks 2
162,842
GWh
(1) of 2020 net output
4,400
(2) At 31 December 2020
17,871km
of transmission lines
994,971km
of distribution lines
Integrated Report 2021www.iberdrola.com * % of 2020 own net output55%5% Electricity generation and Green hydrogenRenewableof transmission linesof distribution linesConventional thermal Cogeneration20%Combined cycleproduction20%Nuclear Electricity production*Electric grids*Construction, operation and maintenance of generating plants, and purchase/sale of energy on wholesale markets. Overhead lines:*At 31 December of 2020 Transmission and distribution of electricity4.400High- to medium-voltage transformersubstationValue ChainConstruction, operation and maintenance of electrical lines, substations, transformer centres and other infrastructure, to bring electrical power from production centresto the end user.17.165km956.744kmGWh162,842 2. Business model and strategy
33
of electric
power
.
,
192,707
.
Integrated Report 2021www.iberdrola.comof transmission linesof distribution linesUnderground linesRetail sale of electricity and gasSupply to end users of electricity, gas, products and complementary services.1,5 millionsMedium- to low-voltage distributiontransformersBrazilSpainIEIUnited StatesUnited Kingdom34,4millions42%32%3%10%14%Consumers1.234km189.237km 2. Business model and strategy
34
2.3 A successful and well-established business model
Iberdrola firmly believes that the transition to a carbon-neutral economy by 2050 is technologically
possible, economically feasible and socially necessary. Decarbonisation of the economy is a
tremendous opportunity to create wealth, generate employment and improve both the condition of
the planet and people’s health. The group is therefore committed to leading the energy transition, a
path it took 20 years ago and that has led it to invest €120,000 million since then, to which it will add
a further €75,000 million between 2020 and 2025. This commitment will be fulfilled by promoting:
Power decarbonisation
Networks system integration
Demand electrification
Offshore
wind
Solar
PV
Onshore Pumped
wind
Hydro
Battery
Storage
Automation
Smart
grids
HVDC
DSO
model
Transport Buildings
Industry
Heat
pumps
Electric
vehicles hydrogen
Green
“After 20 years anticipating the energy transition, our business model makes us
a key agent in the transformation of the industrial fabric. With our experience,
our engagement with society and our financial strength, we are advancing a
model for long-term sustainable capable of meeting the current challenges of
society.”
-Ignacio Galán, chairman & CEO of the Iberdrola group-
+ Renewables
With one of the industry’s largest portfolios
(>90 GW)
Renewable installed capacity (GW)
32
~44
~60
+ Networks
Increasingly smart networks.
Regulated assets
~38,000
~2,000
~36,000
~47,000
~4.000
Additional
investment in
transmission
~43,000
Regulated
assets
30,400
30,400
2019
2022e
2025e
2019
2022e
2025e
+ Customer services
New solutions for its customers.
+ Innovation
Which responds to the demands detected:
storage, green hydrogen, etc.
Contracts (millions)
tons of green H2
~15,000
42
30
50
33
~60
36
Others
(X2)
Electricity
(20 %)
2019
2022e
2025e
0
2019
~1,000
2022e
2025e
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
35
Two decades of growth based on strong strategic foundations that drive future
growth
Geographical
diversification
Countries with
high rating
and ambitious
climate policies.
Energy
transition
Enabling
decarbonisation
and
electrification.
Efficiency
Continuous drive
for excellence.
Portfolio
optimisation
Contributing to
the environmental
and financial
sustainability
of our business
model.
Innovation
Laying
foundations for
the future.
And an economic / financial model that enables us to accelerate the creation of
value for all
● Investment is concentrated in the regulated businesses or businesses with long-term contracts,
which provide recognised and recurring cash flows.
● The selection of countries takes into account the stability of the regulatory environment applicable
to the industry and their long-term credit rating.
● The dividend policy is focused on a strong and growing return in line with the increase in the
company’s results.
● The principal finance instrument is Green Finance, which ensures transparency on the impact and
use thereof, in line with EU Taxonomy, which allows for sufficient liquidity to be maintained.
● This will enable Iberdrola to maintain its credit ratios within the established limits.
In low-risk countries
and businesses
ESG+F
In line with EPS increase
Adequate liquidity
and diversified funding sources
Financing
investment for
growth
Enabling a
sustainable dividend
policy
65-75% payout
Floor of €0.40 / share up to 22
and €0.44 / share up to 25
Maintaining a
strong financial
position
Credit ratios to support a BBB+,
Baa1 rating
Growing cash flow
generation
Iberdrola’s business model allows it to:
● Satisfy the expectations of its Stakeholders, and with regard to ESG+F.
● Accelerate the growth of its renewable activities, mainly offshore wind and photovoltaic, in order to
meet its decarbonisation target.
● Maintain a strong financial position, which allows Iberdrola to meet its investment targets.
● A sustainable, certain and growing dividend policy, which allows shareholders to participate in the
objectives achieved.
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
36
2.4 Iberdrola, an ESG+F leader
Differentiating elements of the company
•
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,
the
management bodies and the organisation as a
whole.
internalised
by
• Sustainable development policies, which
respond to the expectations of the Stakeholders
and guide the strategy of the company.
• Advanced risk control system, to maintain an
optimal risk / opportunity balance.
Energy model: more electricity,
healthier, more accessible
Our raison d'être
Central
management body
Corporation
Networks
Business
Wholesale
and Retail Business
Renewables
Business
Value chain /
Page 32
Capital /
Page 40
Management of Financial / Manufactured / Intellectual /
Human / Natural / Social and Relational capital
Framework of
trust
Purpose
and Values
Strategy
• A pioneering and leading strategy that integrates an ESG+F focus to satisfy the expectations of all of its Stakeholders.
• Responsible management of the company’s capital.
• 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.
The Iberdrola group has formulated a differentiating, authentic and relevant corporate purpose that contributes to a greater
connection of the company with people, society as a whole and its Stakeholders. To achieve this purpose, our corporate
values have evolved into three concepts that inspire our entire strategy.
“To continue building together each day a healthier, more
accessible energy model, based on electricity”
This Purpose expresses:
• The company's commitment to well-being of people
and the preservation of the planet.
• The commitment to 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.
•
Iberdrola’s drive for the development of clean energy.
• The determination to build an energy model based on
more electricity.
• The conviction that an energy model based on more
electricity is also healthier, as people’s health and
well-being depend on the environmental quality of their
surroundings.
• We aspire to achieve a new energy model that is more
accessible for all, one that favours inclusiveness,
equality, equity and social development.
• The desire to continue building that model in
partnership with the key players.
To achieve this Purpose, Iberdrola’s corporate values
have evolved into 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.
Governance and Sustainability System / Page 82
Sustainable Development / Page 94
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
37
A strategy that integrates all ESG aspects:
environmental, social and governance
Year after year, Iberdrola's achievements show that its sustainable business model creates value for all its Stakeholders.
Over the past two decades, the ESG aspects have formed an integral part of the company's strategy. Iberdrola implements
its commitment by providing transparency on ambitious, relevant and measurable objectives that represent the company’s
Outlook 2020-2025 ESG
priorities in terms of its contribution to sustainable development.
E
S
G
Leader in ESG
2020
2022e
2025e
Emissions per kWh
Biodiversity: reforestation
gCO2/kWh
Trees, in Million
98
-
~100
<70
2.5
8
Water consumption
3
m /GWh
434
<500
<420
Smart Grid implementation
% of HV and MV grids
70
75
83
Smart meters
R&D investment
Number, in Million
14,9
16.7
21.2
Million Euros
293
330
400
Training hours
Hours / employee year
Customers: smart services
Number, in Million
53
9
>55
>55
12
18
Jobs supported
Contribution to employment
~400,000 >400,000 >500,000
Women in leadership positions
% of management positions
22
25
~30
Gender pay gap
Electricity for All
Foundation
% women / men ratio
+7,3%
+/-2%
+/-2%
Beneficiaries, in Million
Beneficiaries, in Million
8
-
11.5
1.3
14
1.4
Best practices in Governance1
Inclusion in Corporate Governance System
Cybersecurity
Suppliers
Annual number of security assessments
1.200
1,800
2,000
% of supplier with sustainable policies
47%
70%
75%
1
A leader in Corporate Governance for years in accordance with the highest national and international standards for listed
companies: (Recognition for 7 consecutive years as a Spanish company with best Corporate Governance practices by the World Finance
Corporate Governance Awards)
Listed and non-listed country sub-holding companies and subsidiaries also have the highest international standards.
Ongoing review of corporate governance system:
(Ongoing implementation of best-in-class Diversity & Inclusion policies)
Compliance System reflects best practices and international standards:
(Included in the list of World Most Ethical Companies since 2014, published by the Ethisphere Institute (USA))
(ISO 37001 and UNE 19601 in force)
(Compliance Leader Verification issued by Ethisphere Institute (USA))
(Award for the best compliance system 2018 -2019 awarded by Expansión)
At the end of the 2020-2025 period, investments in R&D will rise to 400 million euros, we will have contributed to the
maintenance of 500,000 jobs around the world, tripled our activities regarding cybersecurity and ensured that 75% of our
suppliers have sustainability policies. We also expect to hire 20,000 people and we will continue to increase the hours
of training per employee, which is already four times the European average. On the environmental front, our strategy
of investing in clean energy and networks will make us carbon-neutral in Europe by 2030 and will reduce our global
CO2 emissions by 86%, to 50g/kWh.
Extracted from the Capital Markets Day 2020, November 5 (PPT) by the company.
Further information in www.iberdrola.com
th
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
38
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. These 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 8.2 million by year-end 2020.
A global renewable leader: close to 35,000 MW
installed by the end of 2020.
Special rates for vulnerable groups in 2020 to mitigate
the effects of COVID-19.
Social programs offered by the various foundations.
Provide over 90,000 free meals for indigent people in
Spain.
Distribute over 10,000 food parcels in Mexico’s most
vulnerable communities.
Iberdrola contributes to reducing the noxious effects
on health of greenhouse gases with its commitment to
reduce these gases.
Goal: Over 90% of workers in Europe to be covered
by OHSAS 45001 / ISO 18001 certification.
Goal: Training for our employees: more than 55 hours
of training per employee trained in 2022.
Scholarship and research grant programme continues
during the 2020-2021 academic year.
Goal: Promotion of women to important positions, to
reach 30% by 2025.
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.
Goal: 50% reduction in water use / production
intensity ratio by 2030 compared to 2019.
Pollution prevention programs for facilities.
Goal: Over 500,000 jobs (direct, indirect and induced
employment) by 2025.
Approximately 400,000 direct, indirect and induced
jobs throughout the world1. More than €34,000 million
in impact on the GDP of the countries in which it does
business1.
Goal: €400 million annually in R&D by 2025.
Iberdrola is the European Union’s leading private
sector utility by volume of investments in R&D2.
Iberdrola has set the following targets:
Be carbon neutral by 2050 and reduce its
emissions to 50g of CO2/kWh at the global level by
2030.
Reduce greenhouse gas (GHG) emissions of
absolute scope 1, 2 and 3, approved by the SBTi
initiative.
1.3 million beneficiaries of the Iberdrola foundations’
programs over the 2020-2022 period.
A total of 10,000 volunteers participated in the
Corporate Volunteering Programme in 2020.
Iberdrola has developed a Sustainable Mobility Plan
with the ultimate goal of contributing to a rational use of
the means of transportation.
Goal: Install over 150,000 electric vehicle charging
points in Spain by 2025.
Goal: 70% of providers to have sustainability policies
by 2022.
Goal: Reduce the use of paper by increasing electronic
billing. 70% of bills to be electronic.
Monitoring of marine mammals at the East Anglia
ONE wind farm for the installation of noise mitigation
measures, with the aim of preserving the marine
ecosystems.
Acoustic insulation techniques (bubble curtains) during
the construction of offshore wind projects.
Goal: Promote biodiversity through reforestation, by
planting over 2.5 million trees by 2022, reaching 20
million by 2030.
Overhead Lines Improvement Project, in which 30,234
supports have already been adapted for birdlife
protection.
Goal: Obtain independent external certifications
or validations of the compliance systems of the
holding company and of all of the country subholding
companies of the group by 2022. The company
has renewed the UNE-ISO 37001 and UNE 19601
certifications regarding anti-bribery and compliance.
Goal: Promotion of the SDGs in the supply chain,
by launching conceptual capsules, journeys, videos
and information aligned with the groups sustainability
strategy.
Recognised as a LEAD participating company in the
United Nations Global Compact.
(1) Data from a Study of Iberdrola’s Impact, prepared by PwC, which is based on 2019 figures. Includes indirect and induced impacts.
(2) According to data from The 2020 Industrial R&D Investment Scoreboard prepared by the European Commission.
Integrated Report 2021www.iberdrola.com Aldeadávila hydroelectric plant
(Salamanca, Spain)
2. Business model and strategy
40
2.5 Capital management
The Iberdrola group holds valuable assets for the implementation 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 resources that
the company already has
or obtains in the capital
markets.
Create value for shareholders
through sustainable growth.
Manufactured
capital
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.
Intellectual
capital
Intangible, knowledge-based
assets.
Consider innovation as a
strategic element of the
company.
Human
capital
Employee knowledge, skills,
experience and motivation.
Ensure the availability of
a committed and qualified
workforce.
Offer a diverse, inclusive and
balanced work environment.
Natural
capital
Natural resources potentially
affected by the company’s
activities.
Ensure a sustainable use of
natural resources and contribute
to combating climate change.
Social and
relationship
capital
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.
• Balanced and diversified
growth.
• Strength of the financial
structure.
• Operational excellence.
• Sustainable results and
dividends.
• Power generation assets.
• Power transmission and
distribution assets.
• Encourage a circular economy
of assets.
• Other assets.
• Promotion of R&D.
• Digitalisation for efficiency and
development of new products
and services.
• Disruptive technology and
business models.
• Global human resources
management.
• “Zero accidents” programme.
• Talent management.
• Diversity, equal opportunity and
reconciliation.
• Climate change.
• Preservation of biodiversity and
natural capital.
• Management of environmental
footprint.
• Operational 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.
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
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Social dividend as an increase in the value of capital
The social dividend created by Iberdrola’s strategy and business model translates into an increase
in the value of its capital, which in turn feeds back into a cycle of value creation, thus efficiently
interconnecting the operations of the businesses and the capital of the company.
The chart below shows the 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.
External context
Balanced growth, finan-
cial strength, sustainable
dividend
Record net profit of €3,611
million in 2020.
Diverse workforce
within a stable and safe
environment
Almost 400,000 direct, indirect
and induced jobs.¹
Strengthen trust and
connection with the
community
More than €34,000 million of
contribution to the GDP of the
countries.1
Promotion of R&D
115% increase in R&D
investment over the last 10
years.
Fight against climate change and
protection of biodiversity
50% reduction in specific
CO2 emissions by 2030
compared to those of 2007.
98 g/kWh in 2020.
Supply of safe and com-
petitive energy, business
focused on networks and
renewables
Record gross investment of
€9,200 million in 2020.
(1) Data from a Study of Iberdrola’s Impact, prepared by PwC, which is based on 2019 figures. Includes indirect and induced impacts.
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
42
2.6 Strategic foundations 2020-2025
Market conditions
In the face of the economic, social and health crisis caused by the COVID-19 pandemic, the debate over
the importance of the climate, the environment and biodiversity for people’s health has intensified. Major
institutions and social and political leaders are proposing that the recovery is an opportunity to drive the
transition towards a new socioeconomic model that is climate-neutral, resilient, sustainable and inclusive. This
is known as the Green Recovery, a vision to which the Iberdrola group is fully committed.
The transformative tendencies of the energy sector are intensifying, while action in the fight against climate
change is growing around the world:
● The urgent need to drive decarbonisation, a key element of which is widespread use of renewable
energy and investment in electrical networks.
● The gradual green electrification of energy uses and demand for new services will empower
customers, putting them at the centre of the transition.
● Innovation and technological progress will accelerate a reduction in the cost of renewables, which,
together with greater digitalisation and efficiency, will allow for the acceleration of electrification.
Challenges and opportunities
Challenges
Opportunities
● Higher demand for cleaner and more sustainable
energy within a scenario of decarbonisation of the
entire economy.
● Management of higher electricity consumption
due to the electrification of the economy, which
will require increased grid usage.
● Management of a competitive scenario
for
electricity prices over the medium and long term.
● Implementation of a historic investment plan
aimed at strengthening the company’s business
model, based on more renewable energy, more
networks, more storage and more smart solutions
for its customers.
● Reaching higher levels of efficiency both in
production and in the improved use of electricity
by customers, by innovating to improve the
technology and digitalisation in operations.
● Strong and diversified business model in all
areas: by businesses (continually adjusting units
and products to compete in different scenarios),
geographies and technologies and market access.
● Global expansion by countries and businesses,
focused on those with ambitious climate and
energy targets.
and
● Proven management
implementation
capabilities, with a track record of growth based
on preservation of know-how, focus on customers
and ESG, and an efficient combination of a
global model with local capabilities. The company
will continue to strengthen its leadership in the
environmental, social and governance areas
(ESG) through 2025.
● Tremendous experience
the development
and construction of renewables and networks
(maintaining control of key activities and
operations to ensure growth), as well as in retail
sales.
in
● Leader in efficiency, based on digitalisation,
the exchange of best practices and exploiting
economies of scale, as well as a culture of
innovation.
● Green hydrogen is becoming a new growth
opportunity, as a strategic vector for the industrial
segment and for sectors that are difficult to
decarbonise.
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
43
Growth vectors 2020-2025
Investments: growth and acceleration
United States:
United Kingdom:
In renewables, the Vineyard I (800 MW) and Park
City (804 MW) offshore wind projects are progressing
according to plan, with startup dates in 2024 and
2025 respectively. In addition, over 5,000 MW of
solar photovoltaic and onshore wind capacity will be
placed into operation during the period. In Networks,
construction of the $950 million New England
Clean Energy Connect (NECEC) transmission line
continues, with placement into operation in mid-2023.
There are also multiple growth opportunities, totalling
more than €11,000 million Added to all this will be
the assets of PNM Resources, as the acquisition is
expected to be formalised in the second half of 2021.
Brazil:
The company has acquired a lot in the electricity
transmission line auction held in December 2020,
which is in addition to the eleven lots won in the
2017, 2018 and 2019 auctions. ANEEL also plans
to hold auctions in the 2021-2025 period, which
present a tremendous opportunity for more than
44,000 million reais of organic growth in Brazil. In
January 2021 the Brazilian competition regulator
CADE approved Neoenergia’s acquisition of the
electricity distribution arm of Companhia Energética
de Brasilia. In renewables, installed capacity in wind
and photovoltaic projects will increase by 2,700 MW
over the 2020-2025 period.
The East Anglia ONE offshore wind project was
brought into operation in 2020, and new offshore
wind auctions are being held.
Over 1,700 MW of onshore wind and photovoltaic
capacity will also be placed into operation.
Spain:
7,500 MW of renewable capacity is expected to be
added over the 2020-2025 period. Of this, almost
6,500 MW will be photovoltaic, the main projects being
Francisco Pizarro, Ceclavín, Arenales, Puertollano
and Campo Arañuelo.
This is in addition to the construction of the largest
green hydrogen plant for industrial use in Europe,
with 800 MW
International:
Installed capacity will increase by nearly 7,000 MW
over the period, notably due to the growth in solar
and onshore wind in Australia, together with the St.
Brieuc (France) and Baltic Eagle (Germany) offshore
wind projects. More than 1,100 MW in hydroelectric
capacity will also be added in Portugal.
Efficiency in operations and investments
● Over the years, Iberdrola has maintained a constant focus on operational excellence as well as on the
efficiency of its investments by optimising processes, standardisation and capturing synergies over
the lifetime of the investment.
● Building on the progress made last year, efficiencies of almost €1,500 million are expected to be
achieved over the 2020-2025 period, of which €1,000 million will be in 2023-2025.
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
44
Strategic foundations
In confronting this scenario, Iberdrola will rely on the strategic foundations that have formed the basis of its
sustained growth over the past two decades: increasing geographical diversification towards countries with
strong credit ratings and ambitious climate policies, continuing with a full commitment to the energy transition
as agents of decarbonisation and electrification of the economy, continually maximising operational excellence,
optimising the portfolio with regard to the environmental and financial sustainability of our business model, and
promoting innovation to lay the foundations for the future.
These strategic foundations will allow Iberdrola to accelerate the creation of value for all Stakeholders under
the new scenario, and also put the group in a unique position to capture the unprecedented opportunities of
the energy transition. This will lead to an Iberdrola that is more efficient, more sustainable, more international,
more profitable and ultimately better prepared to continue responding to these trends and to drive the recovery
in the economy and in employment.
Balanced growth
The company will carry out a number of initiatives to implement this strategy, which are described below:
● The policies on decarbonisation and technological progress play an important role, as they drive
significant investments in renewable generation, as do the deployment and strengthening of networks,
which have an essential role in the integration of both large-scale and distributed renewable generation,
as well as helping to increase the electrification of energy demand and the requirement of new services.
● In light of these forecasts, the company has launched a historic investment plan of up to €75,000
million (gross) over the 2020-2025 period (6 years), of which €68,000 million are organic investments
and €7,000 million for the acquisition of PNM Resources.
● Annual organic investment thus increases from an average €7,000 million in 2017-2019 to an average
of €10,000 million in 2020-2022 and €13,000 million in 2023-2025.
● 75% of total organic investment (€50,000 million) is allocated to growth, of which 70% is assured up
to 2025 (close to 90% in networks and 60% in renewables).
● Investment is concentrated in countries with climate ambitions and A ratings. Geographically, 85% is
allocated to Europe and the United States and, overall, more than 83% to countries with A ratings.
● In terms of businesses. the present plan strengthens the commitment to invest in networks and
renewables. Thus, 51% of this organic growth, more than €34,000, will be allocated to renewables,
concentrated mainly in the United States, the countries of Iberdrola Energía Internacional (European
countries other than the United Kingdom and Spain, and Australia) and Spain. 40%, more than €27,000
million, will be allocated to networks, with growth centred mainly in the United States and Brazil.
Gross organic investment by business and country 2020-2025
Gross organic investment of the Businesses
Gross organic investment by country
9%
40%
51%
21%
16%
16%
11%
2%
34%
Renewables Networks Liberalised
United Kingdom United States Mexico Brazil
IEI (Europe and Australia) Spain
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
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2.7 Iberdrola and COVID-19
In 2020, the COVID-19 pandemic has battered social and economic fabrics around the world.
The Iberdrola group reacted immediately to ensure the continuity and quality of the electricity supply from its
operations, and the safety and health of its workforce, customers and providers.
It launched a global action plan with a broad approach, demonstrating its commitment to all its Stakeholders,
implementing initiatives in its capacity as an electricity operator, but also as a corporate citizen.
Workforce
Customers
Quality of service
• Continuous reporting to its
• Communication actions (payment
workforce about the status of
the pandemic and the measures
taken.
• Work-life balance and remote work
measures.
• Distribution of masks and personal
protection equipment.
Etc.
•
arrangements, etc.).
• Payment arrangements for
electricity and gas bills.
• Strengthening of digital and
telephone customer service
channels.
• Etc.
• Energy management plan to
ensure energy supplies.
Installation of back-up operation
centres.
•
• Reinforcement of energy service at
over 350 healthcare centres.
• Etc.
Suppliers and subcontractors
Society in general
Donation of healthcare materials
•
• Continuation of activity and
payments to providers.
Iberdrola has advanced orders in
the amount of 7,000 million euros
and increased its investments in
2020 to 10,000 million euros.
• Meetings with suppliers and
subcontractors to confirm the
that business activities will be
maintained.
• Volunteer activities: Countless
activities by our volunteers, like
making masks, keeping company
with the elderly by telephone, and
donation of tablets so that hospital
patients can stay connected.
Innovative actions, such as the
promotion of the The day after will
be... platform in partnership with
the United Nations.
•
• Donation of healthcare materials
valued at 30 million euros: 400
ventilators, 4.6 million masks,
120,000 PPE gowns and 20,000
pairs of protectives goggles.
• Special customer service plan for
hospitals. Increase in requests for
generators.
• Donation of 8,000 blankets for field
hospitals and care homes.
• Etc.
• Social media campaigns.
• Etc.
The company’s global action plan included over 150 measures to ensure supply in all territories and to all its
customers, as well as reinforcing the service for hospitals, health centres and other essential infrastructure.
Integrated Report 2021www.iberdrola.com
2. Business model and strategy
46
2.8 Comparative results and awards
Comparative analysis1
Comparative financial variables 2020
Comparative performance of total
shareholder return
Growth in EBITDA
Return
(%)
Average
Comparables2
Eurostoxx
Utilities
Iberdrola
CAGR (%)
31-Dec-10 /
31-Dec-20
Average
comparables2
Iberdrola
31-Dec-10 /
31-Dec-20
-5.1%
3.6%
19.0%
58.53%
155.48%
Iberdrola’s performance
Growth in market capitalisation
Total growth
(%)
Average
comparables2
Iberdrola
31-Dec-10 /
31-Dec-20
-0.8%
134.9%
Iberdrola has increased its assets by more than 30%
and its revenues by approximately 10% over the last
10 years. It has also improved its EBITDA by more
than 30% and its Net Profit by more than 25%, and
shareholder remuneration has increased by more
than 20%, improving its 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
comparables2
Eurostoxx
Utilities
Iberdrola
31-Dec-10 /
31-Dec-20
-16.3%
14.09%
102.8%
Iberdrola
31-Dec-10
31-Dec-20
Assets (€M)
Revenues (€M)
EBITDA (€M)
Net Profit (€M)
Dividends3
(€/share)
Net Debt /
EBITDA
93,701
30,431
7,528
2,871
0.334
4.23
122,518
33,145
10,010
3,611
0.405
3.51
(1) 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 2020 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.
Integrated Report 2021www.iberdrola.com 2. Business model and strategy
47
Awards / Recognitions:
For the company:
To the chairman:
● Leadership in Energy Transition Award, awarded
by S&P Platts: 2019.
● Social Silver Medal of the Ministry of the Interior
for its collaboration during the pandemic: 2020.
● Best Corporate Governance in Spain (World
Finance): 2020.
● World’s Most Ethical Company Index (Ethisphere
Institute): 2020.
● National Innovation and Design Awards 2019, in
the Innovative Career category.
● 2020 Customer Award in the United Kingdom,
which recognises leadership in fulfilling the
SDGs, at the virtual event RELX SDG Inspiration
Day.
● Gold Seal for transparency in its Greenhouse
Gas Inventory in Brazil: 2020.
● Global Performance Excellence Award (GPEA)
2020 awarded by the Asia-Pacific Organization
for Excellence in Mexico.
Other awards / Page 28
● One of the 100 CEOs included in the Brand
Finance Brand Guardianship Index 2021 (2021).
● Management Leadership Award (Spanish Quality
Association): 2020.
● Alfonso de Salas Award for Economic Personality
of the Year (El Economista): 2020.
● Honour Award at the 7th Castilla y León Awards
for Best Manager (Castilla y León Económica):
2020.
● Award for professional career (Forinvest): 2020.
● One of the 30 most influential leaders in the fight
against climate change (Bloomberg): 2019.
● One of the five best-performing CEOs in the
world and top CEO the utilities sector (Harvard
Business Review): 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
(2013) and
(2011), Strathclyde
Salamanca
Edinburgh (2011).
To other members of the company:
● Best utility in the area of Investor Relations (IR
Magazine): 2020.
Integrated Report 2021www.iberdrola.com Cimiche II Wind farm
(Canary Island, Spain)
3. Iberdrola’s primary businesses
49
3. Iberdrola’s primary
businesses
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
50
3.1 Regulatory environment
United Kingdom
European Union
•
•
•
In the framework of the Communication on A European
Green Deal, which is a package of measures to be
implemented over the next 5 years to efficiently
transform the European Union into a carbon-neutral
economy by 2050, consultations and studies have
been launched to modify the legislation and in
particular to set a legally binding zero net emissions
target for the EU by 2050. This will strengthen the
2030 emission reduction target to at least 55%, as
adopted by the European Council in December 2020,
(as compared to the current 40%), and the targets for
renewable energy and energy efficiency (currently
32% and 32.5%, respectively) will subsequently be
revised.
In parallel, the Commission has published various
strategies for the Green Deal’s regulatory priorities.
These include the New European Industrial Strategy
(reforms to state aid, determination of key projects
of European interest and a border carbon pricing
adjustment mechanism), Renovation Wave (energy
renovations
in buildings), Hydrogen Strategy
(objective of 40 GW of electrolysers by 2030), and
Strategy on Energy System Integration (commitment
to electrification and the efficient development of clean
hydrogen in niche sectors), Offshore Wind Strategy
(objective of 60 GW installed by 2030, infrastructure
planning, and market integration model) and the
Offshore Renewable Energy Strategy (electrification
of transport, with 30 million zero-emission cars by
2030).
The launch of the debates and studies coincided
with the COVID-19 crisis and the EU’s response.
A Recovery Plan has been approved that will involve
€750,000 million to support the countries most affected
by the crisis (Spain is to receive approximately
€140,000 million) through direct aid and credits,
especially for the energy (Green Deal) and digital
translations.
•
•
Following the United Kingdom’s formal exit from the
EU on 31 January 2020, negotiations on its future
relations with the EU continued throughout the year,
resulting in a trade and cooperation deal (including
a section on energy) shortly before the end of the
transition period on 31 December 2020 and the
effectiveness of its exit.
After the government amended the Climate Change
Act in 2019 to introduce a new legally binding objective
“net zero emissions” target for 2050, it announced in
December 2020 a Nationally Determined Contribution
under the Paris Agreement, to reduce the UK’s
emissions by at least 68% by 2030 compared to 1990
levels. To make progress with this scale of ambition,
the UK Government published in late 2020 a ‘Ten
Point Plan for a Green Industrial Revolution’ and an
Energy White Paper which start to set out long-term
decarbonisation plans for the UK.
Spain
•
•
•
•
•
•
to
In January 2020 Spain sent
the European
Commission its National Integrated Energy and
Climate Plan (Plan Integrado de Energía y Clima)
(PNIEC) proposing ambitious national goals
for
decarbonisation of the economy by 2030, which has
been well received by Brussels.
A Draft Law on Climate Change and Energy Transition,
a tool for incorporating the objectives of the PNIEC
into the legal system, has begun to be processed,
and the 2050 Decarbonisation Strategies and the
Renewable Hydrogen Roadmap, among others, have
been published.
To offset the effects of the pandemic, the government
has published various legal provisions to protect
domestic consumers, the industry and companies,
including compensation to reduce the impact on the
electricity sector.
The CNMC has published the Circular on toll
methodology. The application of the new access tariffs
is pending government approval of the methodology
for calculating and allocating charges.
The Ministry has approved the Royal Decree regulating
access and connection to the network, though the
CNMC has still to publish the Circular establishing
capacity assignment standards, among other things.
A hearing was held on the draft bill creating the
National Fund for the Sustainability of the Electricity
la Sostenibilidad
System (Fondo Nacional para
del Sistema Eléctrico) (FNSSE), which will allow
for the cost of the policies to promote renewables,
cogeneration and waste (RECORE) to be shared
among all energy sources (oil, gas and electricity).
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
51
United States and Canada
• On 7 November 2020 Joe Biden was declared the winner of the US presidential election, defeating Donald Trump, and
was sworn in as President on 20 January 2021. The Biden administration has set out an ambitious agenda to address
what they call the climate crisis, and is moving quickly using executive orders and other executive powers. In the first
days in power, the administration returned to the Paris Agreement, revoked the executive order allowing the Keystone
XL oil pipeline, set goals for a carbon-free electricity industry by 2035, began reshaping the way environmental impacts
are considered, and began to reverse previous regulations that are inconsistent with these goals.
The administration also plans to leverage the federal government’s purchasing power to support the use of electric
vehicles, renewable energy contracts and the development of new technologies. Following this initial activity, the
administration will face challenges, as any legal changes will have to go through the regulatory process.
Mexico
• During 2020 changes in energy policy and regulation
have been promoted in the country that are contrary
to foreign private investment and the development of
renewables. In this context:
•
In May 2020 the CRE approved an increase in
the transmission rates for renewable and efficient
cogeneration plants (transition stamp), and in the
transmission rates for conventional technologies.
In May 2020 two regulations on reliability were
published. Due to the pandemic, the National Energy
Control Centre published a Resolution to Guarantee
the Reliability of the National Electricity System,
establishing strategies and measures prohibiting
pre-operational tests of wind and photovoltaic plants.
The Energy Secretariat subsequently published a
Policy on Reliability, Security, Continuity and Quality
in the National Electricity System. The Policy provides
for changes regarding hedging contracts, existing
generation permits and new requests, and new
interconnection requirements.
In October 2020 the CRE published a modification of
the rules for self-supply and cogeneration companies
dedicated to Electricity Generation. It prohibits the
registration of load centres that have entered into a
basic supply contract under the Electricity Industry
Law (Ley de la Industria Eléctrica) (LIE), preventing
changes in beneficiaries. It also restricts the rights of
permit-holders to return to the previous system after
they have migrated to the Wholesale Electricity Market.
•
Brazil
•
The COVID-19 pandemic affected all segments of the
electricity market, giving rise to various government
measures to ensure supply and avoid the financial
collapse of the industry. The most significant measure
was the creation of a finance mechanism in the
form of a bank credit known as the COVID Account,
guaranteed by tariff credits to the distributors, which
will allow for maintaining payment flows between
distribution, transmission and generation companies.
• Resolution No 895, which sets out the regulations
under Law 14,052/20 providing for the renegotiation of
the hydrological risk assumed by the hydro generators
since 2012, was approved on 3 December 2020.
The outstanding financial value will be quantified and
reimbursed by the granting of a concession. Once all
required actions stipulated in the ANEEL timetable
have been completed, the short-term market, where
there had been a deficit in the settlements, will return
to normal operation.
•
The short-term market price will be hourly (PLDh)
beginning in January 2021.
Integrated Report 2021www.iberdrola.com Maintenance of electricity supply during
the Filomena storm (Spain).
•
•
3. Iberdrola’s primary businesses
53
3.2 Networks
Regulatory environment
Spain
United States
1 January 2020 saw the beginning of the second
regulatory period
the activity
(2020-2025)
of electricity distribution, which establishes a
remuneration rate for the distribution activity at
6.003% for 2020 and 5.58% for the remaining years.
for
• New tariff conditions entered into force in February
2020 for the electricity distribution company CMP
(Maine), with a recognised ROE of 9.25% (with
a temporary adjustment based on four customer
service metrics) and an equity percentage of 50%.
The CNMC has approved the value of the 2020 Global
Ratios Index (IGR) for companies engaged in the
transmission and distribution of electrical energy. The
IGR measures the financial prudence of regulated
activities, weighting 5 financial ratios. i-DE broadly
meets all ratios, so the 2020 IGR is 1.
• Royal Decree 23/2020 was published in 2020,
increasing the investment limit from 0.13% to 0.14%
of GDP for the period 2020-2022.
United Kingdom
•
In December 2020 a final decision on the new RIIO-T2
regulatory framework was approved for transmission
activities, and will enter into effect from April 2021 until
March 2026. It establishes a cost of equity of 4.25%,
a cost of debt of 1.82% and an annual TOTEX of
£1,433 million (nominal). Companies may appeal this
decision to the Competition Market Authority in the 20
working days following publication of the terms of the
new license on 4 February.
• Ofgem continues the process of designing the RIIO-
ED2 regulatory framework for transmission, which will
be applicable from 2023.
• During 2020, SP Transmission Ltd. as well as SPD
Ltd. and SPM Plc continued to do business under the
RIIO-T1 and RIIO-D1 tariff frameworks, complying
with all investment and quality goals agreed with
Ofgem.
•
•
In November 2020 new tariff conditions were
approved for the distributors in New York state
(NYSEG and RG&E), with retroactive effect to 17
April 2020 and valid until 30 April 2023. A ROE of
8.8%, an equity percentage of 48% and a $4,275
million four-year investment plan were recognised.
The Federal Energy Regulatory Commission
(FERC) approved changes to the formula for the
recovery of New England transmission providers
costs in tariffs (Formula Rate). This represents
significant improvements in the automatic recovery
of costs, such as the elimination of volume risk for
transmission companies. The changes will take
effect for tariffs as from 1 January 2022.
Brazil
•
•
In March 2020 ANEEL approved the new methodology
for the annual definition of the regulatory distribution
WACC.
There was a regular annual readjustment in April for
Coelba, Cosern and Celpe, the application of which
was postponed until the end of June in order to avoid
increasing rates during the COVID-19 pandemic, with
a tariff asset being created to be recovered at the next
tariff revision. The increase in tariffs mainly reflects
the change in the General Price Index and recognises
the improvement in supply quality. The Elektro
readjustment was carried out in August as normal.
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
54
Objectives, risks and principal activities
Objectives
Significant risks
•
•
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 digitalisation of our assets.
Lead the energy transition towards a cleaner model favouring
a more efficient integration of renewable energy (centralised
and distributed) and the deployment of electric vehicles and
heat pumps, through the use of smart grids.
•
•
impacts on supply as a result of
Operational risks:
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.
Principal activities 2020
•
•
•
•
Spain: Investments are planned to meet the decarbonisation and electrification targets of the Integrated National Energy and Climate
Plan, with a focus on digitalising the Low Voltage network.
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. Progress on projects under the Green Economy Fund in
Scotland to favour decarbonisation and accelerate the deployment of electric vehicle recharging infrastructure.
United States: Permits for the New England Clean Energy Connect (NECEC) project awarded in 2018 have been obtained, 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 2023.
Brazil: In December 2020 Neoenergia was awarded lot 2, with 2,000 million reais of investment, in the auction by the Brazilian
regulator ANEEL for the construction of a 1,000 km transmission line and a substation in the states of Bahia, Espirito Santo y Minas
Gerais. This brings the total won by Neoenergia in auctions since 2017 to 12 projects with a total investment of approximately 10,000
million reais. The acquisition of licences and construction of these projects is proceeding according to plan, with the placement into
service of the first sections of the lot 4 line from the April 2017 auction during 2020.
Customer service
•
In response to the COVID-19 pandemic, there have been
additional inspections of the network and reinforcement
of facilities using generators to ensure the supply of
electricity to essential facilities, especially hospitals, in our
distribution areas.
The customer service channels have also been reinforced,
disconnections of customers have been suspended and
customers are being offered payment arrangements.
Spain has seen the launch of the DATADIS online
platform, which enables customers to use a common
channel to access private information on the electricity
consumption of all their supply points, even if they are
from different distributors.
In the United States, 2020 was a year with strong storms
in all of our distribution areas, and restoration of supply
required tremendous efforts. The distributors Avangrid
CMP, NYSEG and UIL have received an award from the
Edison Electric Institute in recognition for their response
to some of the 2020 storms (Nor'easter and Isaias).
i-DE has earned the ISO 10002:2018 certification, which
recognises that it has an effective and efficient system for
attending to complaints and claims.
The roll-out of mobile apps for all our distributors in the
United States has been completed. The apps improve the
user experience, facilitating self-service and simplifying
online processes.
•
•
•
•
•
Operational excellence
•
The adjusted evolution of operating expenses continues in
order to maintain and improve efficiency ratios in all countries.
• New plans and models continue to be developed to end
fraud in electricity consumption in Spain and Brazil, and also
to comply with the parameters defined by the regulators. In
addition, Iberdrola has been declared the winner of the Big
Data Talent Award 2020 for its project on the use of advanced
data analysis for the identification and reduction of non-
technical losses.
•
•
Digitalisation of the network and Flexibility
•
ScottishPower Networks has announced its biggest flexibility
services auction to date, for the period between 2023 and
2028 (corresponding to the ED2 regulatory period), for
900 MW of active power and 38 MVAr of reactive power in
Scotland, England and North Wales.
i-DE was a winner at the 2020 enerTIC Awards in the Smart
Data Center category, with the e-LVIS project, and in Intelligent
IT Infrastructures, with the Intelligent Transformation Centre
project.
Iberdrola has announced the launch of the Global Smartgrid
Innovation Hub (located in Bilbao), a global centre of
innovation in smart grids to lead the energy transition. It will be
inaugurated in mid-2021 and will bring together the innovative
potential of over 200 professionals in the development
of R&D projects related to the electricity networks of the
future. Over 120 innovation projects have been identified,
with a value of €110 million, related to digitalisation, data
processing, new consumption models, electric mobility and
self-consumption. The Hub has the support of the Biscay
Provincial Government.
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
55
Key figures of the Networks Business
Spain
United
Kingdom
United States
Brazil
Total
Item
Unit
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Gross margin
EBITDA
Distributed
energy
Supply Points
(Electricity)1
€M
€M
1,964
2,117
1,302
1,311
2,775
2,875
1,575
1,828
7,615
8,131
1,612
1,711
1,000
987
1,087
1,330
1,079
1,234
4,777
5,262
GWh
88,390 93,509
31,738
33,711
38,012
38,441
66,857
67,879 224,998
233,541
Millions
11.2
11.1
3.5
3.5
2.3
2.3
14.3
14.1
31.3
31.0
Gas supply
GWh
--
--
--
--
--
--
--
59,134
64,234
--
1.0
1.0
--
--
--
--
59,134
64,234
1.0
1.0
Millions
€M
554
536
567
736
1,589
1,435
905
916
3,614
3,624
Supply Points
(Gas)
Gross
investments
Workforce
No. of people
3,544
3,574
2,958
3,000
5,699
5,375
12,308
11,287
24,509
23,236
• IFRS 11 has been applied to the financial information.
(1) Supply points in Spain include Conquense and other small distributors.
Quarterly Results Report
Outlook 2020 - 2025
• Over the 2020-2025 period, investment will exceed €27,000 million (including PNM and awaiting the inclusion of
CEB’s investments in Brazil), laying the foundations for higher growth in every country, where approximately 90% of
the investments are already assured.
•
•
The spread of electric vehicles, the integration of distributed renewable generation, the electrification of the economy
and the resilience and digitalisation plans in the United States and Brazil are vectors for growth.
The supply quality target (-25% compared to 2017) was achieved two years ahead of schedule in 2020, while a new
target for a further 10% improvement in the duration of power outages has been set for 2025, thus continuing to
improve customer satisfaction.
Gross investment of €27,000 million between 2020 and
2025, with heavy investment in the United States
Growth in asset base in all countries,
to €47,000 million, by 2025
21%
17%
17%
23%
18%
44%
40%
20%
Spain United Kingdom United States Brazil
Spain United Kingdom United States Brazil
Integrated Report 2021www.iberdrola.com Fernando de Norhona photovoltaic
plant (Brazil)
3. Iberdrola’s primary businesses
57
3.3 Renewables
Regulatory environment of the business
Spain
Brazil
• Royal Decree 960/2020 regulating the new
financial regime for renewable energy (régimen
económico de energías renovables) (REER)
was published on 4 November and includes
a very flexible tariff framework, based on the
recognition of a fixed price for energy (€/MWh).
On 11 December the first auction was called for
3 GW (with at least 1 GW wind and 1 GW PV)
and a contractual duration of 12 years, in which
new installations or extensions of existing ones
located in mainland Spain could participate. This
auction took place on 26 January 2021, with an
award to Iberdrola of 300 MW of photovoltaic
energy.
United Kingdom
•
In 2021, offshore auctions are expected, as
are CfD (contracts for difference) auctions, with
strong demand.
United States
• The Democratic victory in the presidential and
congressional elections point to a more favourable
environment for renewable development.
•
In December 2020 Congress published a
package of omnibus funds that include:
1) Extension of PTCs and ITCs for onshore
wind projects begun in 2021.
2) A 2-year extension of ITCs for solar
projects.
3) A new 30% ITC for offshore wind projects
beginning construction before 2025.
• State (RPS) and corporate (IRP / RfP) interest in
renewables remains, with their own objectives.
• Due to weak demand in 2020 and the interruption
of auctions in December due to COVID-19, the
timetable for auctions for new and existing energy
has been revised (Implementing regulations No
435-436/2020) for years 2021-2023.
• There are regulatory advancements for the
inclusion of offshore technologies and solutions
for hybridisation and storage.
International
• The other countries within the International scope
in which Iberdrola has a presence (Australia,
France,
Japan,
Italy, Germany, Poland,
Sweden, etc.) are also setting more ambitious
decarbonisation targets which, together with the
appropriate regulatory developments, will drive
the development and construction of renewable
projects in the various technologies.
The business will engage in
sustainable growth, mainly
based on onshore wind, offshore
wind, photovoltaic, hydroelectric
and pumped storage investments
in the countries that are most
important to the group.
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
58
Objectives, risks and principal activities
Objectives
Significant risks
• Occupational safety and health.
• Efficiency in operations to optimise the operation
• Regulatory risk: changes in regulations in the
countries in which it operates.
of assets.
• Efficiency in development and construction costs
to maximise the competitiveness of all renewable
projects.
• Profitable growth from various technologies in
strategic countries for the group, and in new
countries of interest.
• 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.
• Development of a robust portfolio that covers the
• Technological and cybersecurity risks affecting
company’s growth plan.
the facilities.
Principal activities 2020
•
2,890 MW of new installed capacity1 was added during the year:
• Onshore wind: 287 MW in Spain, 468 MW in the United States, 88 MW in Mexico, 670 MW in Australia
(Infigen), 118 MW in France (Aalto Power), 44 MW in the United Kingdom and 16 MW in Greece.
• Offshore wind: 294 MW in the United Kingdom, which complete East Anglia ONE (total of 714 MW).
• Photovoltaic solar: 600 MW in Spain, notably Ceclavín, and 274 MW in Mexico.
• Batteries: 6 MW in the United Kingdom and 25 MW in Australia.
• There are also approximately 7,000 MW under construction, of which more than 1,800 MW are onshore
wind in Spain, the United States, Brazil and Mexico, and more than 2,800 MW are photovoltaic solar in
Spain, the United States, the United Kingdom, Brazil, Australia, Italy and Portugal. Batteries are also being
installed the United Kingdom and Spain. Construction of the Tâmega hydroelectric complex, with 1,158
MW, continues in Portugal.
• Following the construction of the 714 MW East Anglia ONE project in the United Kingdom, offshore wind
continues to grow with the construction of the 496 MW St. Brieuc project in France and the 476 MW Baltic
Eagle project in Germany, the 800 MW Vineyard project and 804 MW Park City project in the United
States, and the development of the other projects in the portfolio.
Load factor and
availability
Maximising the load factor of
facilities and availability, through
operating and maintenance
measures, as well as other
external factors, optimising
production.
Operation and
maintenance costs
Continuous improvement
in efficiency through
global standardisation and
systematisation processes,
exploiting digitalisation
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, together
with the new development
agreements in Japan and
Sweden.
(1) The new additional renewable capacity is 2,881 MW, due to the disposal of 9 MW from the Iberdrola portfolio.
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
59
Key figures of the Renewables Business
Spain
United
Kingdom
United
States
Brazil
Mexico
IEI
Total
Item
Unit
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Gross
margin
€M
1,218
1,251
957
678
893
852
145
174
118
113
428
378 3,758 3,446
EBITDA
€M
698
736
758
525
592
591
111
125
93
86
334
323 2,586 2,386
Load factor1
Gross
investments
%
18.0
15.9
28.5
24.8
29.4
29.1
33.0
29.0
25.2
29.5
30.5
31.6
23.2
21.3
€M
1,173
766
597
907
1,027
1,397
166
87
242
129 1,555
50 4,760 3,335
Workforce
No. of
people
1,731
1,567
549
418
939
752
352
225
139
136
461
257 4,171 3,355
• IFRS 11 has been applied to the financial information.
(1) The load factor includes all renewable technologies.
Quarterly Results Report
Outlook 2020-2025
•
Investments of €34,000 million, destined mainly to increasing the installed capacity in Spain, the United
States, the United Kingdom, Brazil and International.
• 28 GW are expected to be installed during the 2020-2025 period, including the St. Brieuc (496 MW), Baltic
Eagle (476 MW), Vineyard (800 MW) and Park City (804 MW) offshore wind farms, the Ceclavín (328
MWdc) and Francisco Pizarro (590 MWdc) solar photovoltaic plants, and the Tâmega hydroelectric plant
(1,158 MW).
• Operational excellence thanks to the life cycle management of assets through digitalisation, maximising
revenues and continuing with the advanced operation and maintenance model
Investment plan of €34,000 million during
the period
Accumulated new additional capacity in
the 2020-2025 period (GW)
20%
28%
12.4
15.2
5%
31%
1%
15%
Spain
Mexico
United States
Brazil
United Kingdom
International
2020-22
2023-25
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
61
3.4 Wholesale and Retail
Regulatory environment
Spain
Mexico
• The Hydrogen Roadmap, which
identifies
renewable hydrogen as a key solution for
decarbonising those industries that are difficult
to electrify, was approved in October 2020.
The document sets national objectives to be
reached by 2030, including the installation of
at least 4 GW of electolyser capacity, a 25%
minimum contribution of renewable hydrogen to
total consumption by the industry, and specific
minimums for the HGV fleet and hydrogen
refuelling stations. These objectives are aligned
with the European Hydrogen Strategy, which
sets milestones for three time horizons (2024,
2030 and 2050) and forms part of the policies
to achieve carbon neutrality in the EU by 2050.
United Kingdom
•
In October 2020 the government extended the
price cap applicable to customers with variable
rates, default tariffs or prepayment meters until
end 2021.
Brazil
•
Implementing regulation (Portaria) No. 465 to
expand the free market, which provides that from
January 2021 consumers with a capacity above
1.5 MW can purchase conventional energy from
any retailer, was published in December 2019.
Similarly, consumers with a capacity above 1 MW
can do so as from January 2022, and consumers
with a capacity above 0.5 MW can do so as from
January 2023.
•
In November 2020,
the CRE approved
resolutions to extend the term of legacy contracts
between CFE generation companies and CFE
(basic
Suministrador de Servicios Básicos
services supplier).
• The industrial basic supply tariff has remained
stable during 2020. On 17 December the update
of the final tariffs for basic supply for 2021 was
approved, together with the transmission and
distribution tariffs.
International
• During 2020, the geographical areas where
Iberdrola markets energy approved various
packages of emergency measures to combat the
COVID-19 pandemic, with the aim of extending
measures of protection for vulnerable customers,
providing for more flexible bill payments and
avoiding suspensions of supply.
•
•
In Italy, Decree Law no 162/2019, postponing
the liberalisation of the electricity and gas market
for domestic customers and micro-enterprises
until 1 January 2022 was published in January
2020. Resolution 491/2020/R/eel, regulating
the liberalisation of electricity tariffs for small
businesses as from 1 January 2021, was
published in December 2020.
the Portuguese parliament
In April 2020
extended the validity of the regulated electricity
tariffs for medium voltage until end 2021. The
special low voltage tariffs were extended until
year-end 2022 and other low voltage tariffs until
year-end 2025.
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
62
Objectives, risks and principal activities
Objectives
Significant risks
• Occupational safety and health.
• Development of growth opportunities and new
energy solutions, putting the customer at the
centre of the transition: electrification of energy
demand and new services.
• 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: Commodity prices and competition
• Competitive supply and excellence in service to
levels in liberalised markets.
• Technological and cybersecurity risks affecting
the security of the facilities or the information of
our customers.
customers.
• Operational
excellence
improvement in efficiency.
and
continuous
• Environmental management and protection of
biodiversity.
• Risk identification and minimisation.
Principal activities 2020
• Spain: Continuous development of products and services meeting the needs of customers
(Customised Plans, Smart services, Smart mobility, Smart solar, Smart home, Smart clima and Smart
Cities). Development of green hydrogen projects.
• United Kingdom: Responsibility is assumed for the supply of 375,000 new contracts with customers from
two retailers that ceased operations during 2020.
A cumulative total of 1.7 million smart meters has also been installed in the United Kingdom.
• Mexico: Completion of CC Topolobampo III (779 MW capacity) and 514 MW thermal under construction.
• Europe: Growth of retail activity and connection to customers through Smart Solutions, which has led to a
total of 9.3 million smart contracts worldwide during 2020.
Efficiency
Growth
• Digitalisation of processes
and services to improve the
customer experience.
• Optimisation of production
and increase in availability of
thermal facilities.
• Flexible operation to
participate in complementary
markets.
• Spain: development of the
largest complex in Europe
for green hydrogen for
industrial use, operational
in Puertollano (Ciudad
Real) in 2021. This is the
first milestone in a plan to
develop 800 MW of green
hydrogen with an investment
of 1,800 million euros by
2027.
• United Kingdom: continued
widespread deployment of
smart meters.
• Mexico: 3,500 MW of
installed capacity in the last
three years (largest private
sector electricity producer in
the country).
• Loyalty-building and
development of new
digital products and smart
solutions meeting the
needs of customers, which
promotes efficiency and the
consumption of renewable
energy.
• Expansion of retail activity
in Europe with sustained
growth due to an efficient and
established management
model.
Integrated Report 2021www.iberdrola.com 3. Iberdrola’s primary businesses
63
Key figures of the Wholesale and Retail Business
Spain
United
Kingdom
Brazil
Mexico
IEI*
Total
Item
Unit
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Gross margin
€M
2,916
2,932
798
684
EBITDA
Millions
1,469
1,558
250
110
89
59
92
913
935
77
45
4,794
4,688
64
790
762
0
(25)
2,568
2,469
Electricity
contracts
Millions
10.0
10.1
2.8
2.8
0.0
0.0
0.0
0.0
0.7
0.6
13.6
13.5
Gas contracts
Millions
1.1
1.0
1.9
1.9
0.0
0.0
0.0
0.0
0.3
0.2
3.3
3.1
Smart solutions
contracts
Millions
6.3
5.7
2.1
1.9
0.2
0.1
0.0
0.0
0.8
0.7
9.3
8.4
Contracts total
Millions
17.4
16.8
6.8
6.6
0.2
0.1
0.0
0.0
1.8
1.5
26.2
25.1
Gross investments
Millions
261
318
157
218
17
31
199
381
87
85
721
1,033
Workforce
No. of
people
2,602
2,646
1,413
1,552
164
128
982
997
282
191
5,443
5,514
• IFRS 11 has been applied to the financial information.
• * IEI- Iberdrola Energía Internacional.
Quarterly Results Report
Outlook 2020 - 2025
• Gross investment of more than €6,000 million during the period, for:
• Retail expansion in new markets and growth of smart solutions for customers, to reach 40
million contracts.
• Production of green hydrogen, as an alternative to decarbonisation in consumption niches
where electrification is not possible or competitive.
Gross investment 2020-2025 (€M)
Customer contracts in 2025 (million contracts)
20%
16%
1%
€6,000 M
19%
44%
10
10
40
Million
19
Mexico Brazil Spain IEI United Kingdom
Spain United Kingdom IEI
Integrated Report 2021www.iberdrola.com Oiz mountain wind farm
(Basque Country, Spain)
4. Our assets
65
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
Integrated Report 2021www.iberdrola.com 4. Our assets
66
4.1 Financial capital
Management approach
2020 Results
Outlook
Sustainable
Growth
via green
financing
Strength of
the financial
structure
Sustainable
results and
dividends
Operational
excellence
•
•
•
•
•
•
•
•
•
•
•
•
The company has an investment policy
consistent with its strategic vision and
financial policy. The main goals are:
•
•
Ensure a return on capital
through projects and
investments preferably in
regulated businesses or
renewable assets.
Increase geographical
diversification, with the aim
of becoming a leader in the
countries in which it operates.
For this purpose, and as one of the
pillars, green financing will be the
main instrument, due to its intrinsic
nature (responsibility, guarantee and
taxonomy).
•
•
•
•
•
•
Iberdrola considers financial
strength to be an essential
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 the
consolidation of strong 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.
Iberdrola offers its shareholders
and other Stakeholders, through
the bylaw-established social
dividend, an enterprise for the
long-term creation of value. The
confidence of its shareholders
allows Iberdrola to secure the
resources needed to move its
enterprise forward while offering
the shareholders an attractive
and sustainable return.
Notwithstanding the high
efficiency levels that have been
reached, the company believes
that there is still a margin
for improvement, helped by
investments in digitalisation and
innovation.
The implementation of best
practices in all areas will allow
for additional savings and an
increase in synergies at the
global level.
in Renewables
Gross investments of €9,246 million, of
which nearly 92% has been assigned to
the Renewables and Networks businesses.
This is a record figure, representing 13.3%
growth compared to 2019.
Investments
assets
increased approximately 43% compared
to 2019, mainly driven by the acquisitions
of Infigen in Australia and Aalto Power in
France.
In Generation, approximately 3.0 GW of
capacity has been placed into operation
since the beginning of 2020, 2.9 GW of
which is renewable.
Operating Cash Flow reached €8,192
million.
•
•
•
Iberdrola will accelerate its growth with gross
investments of €75,000 million1 over the
2020-2025 period, with an annual average
organic investment of €10,000 million in
2020-2022 and €13,000 million in 2023-2025
(compared to €7,000 million in 2017-2019).
90% of the organic investment will be in
regulated or renewable activities.
By businesses, Networks will absorb 40%,
or €27,100 million, increasing around 1.5
times the value of its regulated assets by
2025, to approximately €47,000 million. In
Renewables, the company will have some
60 GW by year-end 2025.
Investment in Europe and the United States
will account for 85% of the total (51% Europe
and 34% United States).
Gross margin of €16,145 million.
Reported net profit of €3,611 million
(+4.2%), excluding the impact of COVID-
19(-€238m), as well as the extraordinary
items booked in 2019 and 2020, adjusted
net profit would be €3,849 million (+9.7%).
Reported EBITDA of €10,010 million,
negatively impacted by exchange rates
(€487m). Excluding non-recurring effects,
adjusted EBITDA increased by 3.0%.
Adjusted net financial debt stood at
€35,142 million, down €2,395 million
during the year; operating cash flow, cash
inflow from the divestment of Siemens
Gamesa and the devaluation of currencies
as a result of changes in the exchange
rate, which cannot be managed at the
debt level, more than offset the group's
investment effort.
Liquidity of €17,500 million (including
subsequent events), which covers more
than 24 months of financing needs
(excluding the payment for the purchase
of PNM).
Shareholder remuneration of 0.42 euro per
share, equal to a dividend yield of 3.46%.
Flexible dividend offering tax benefits, the
repurchase of shares to avoid dilution,
adding the cash payment option.
Net operating expenses decreased 0.4%
to €4,314 million, +5.2% excluding the
exchange rate effect. This increase is
mainly explained by the effects of growth,
especially due to East Anglia ONE, Infigen
and Aalto Power.
•
•
•
•
•
•
•
•
Increase in investments, optimisation of capital and
the implementation of further efficiency measures
will allow the company to achieve its ambitious
goals:
•
EBITDA of approximately €15,000 million
by 2025, which means annual growth of
6-7% since 2019. Approximately 80% of this
EBITDA will come from the Networks and
Renewables businesses by 2025.
Net profit will reach approximately €5,000
million by 2025, increasing by €1,500 million
at an annual rate of between 6% and 7%
since 2019.
Active management of the liquidity position
to cover financing requirements equivalent to
18 months in the risk scenario.
FFO / Net Debt approximately 22%
throughout the period, reflecting the strong
financial position.
Due to the strength of the results obtained,
and maintaining its commitment to increase
shareholder return in line with results,
the Board of Directors will propose at the
General Shareholders’ Meeting remuneration
of €0.42 euros per share, an increase of 5%,
charged to 2020 profits.
In the plan, remuneration will continue to
increase in line with results. Therefore, a
rising floor is set for the dividend of €0.40
euros per share until 2022 and €0.44 euros
per share until 2025, although the results
forecasts point to a dividend per share of
approximately 0.53-0.56 euro per share in
2025.
The pay-out ratio is maintained at between
65% and 75%.
We anticipate a cumulative saving of €1,500
million between 2020 and 2025 as a result
of the improvements in progress, which will
have the effect of reducing the net operating
costs / gross margin ratio to below 25% by
2025.
Of this figure, €1,000 will materialise
between 2023 and 2025.
Integrated Report 2021www.iberdrola.com 4. Our assets
67
Create value for shareholders with sustainable growth
Gross margin by business 2020
EBITDA by business 2020
23%
30%
26%
26%
€16,145
million
47%
€10,010
million
48%
Wholesale and Retail Networks Renewables
Wholesale and Retail Networks Renewables
Gross investment by geographical area 2020
Gross financial debt 2020 by product type
18 %
23 %
5 %
12 %
€9.246
million
15 %
28 %
1%
17%
31%
12%
8%
4%
8%
18%
Spain United Kingdom United States Brazil
Mexico IEI
Diversification of investments, with a heavy concentration outside of
the euro zone.
EUR market bonds
Other Bonds
Structured
USD market bonds
Notes
Bank loans
GBP market bonds
Multilaterals
Structure of adjusted net debt broken down
by currency in 20201
Maturity of financial debt (€M)
10%
24%
€35,142
million
46%
20%
2
9
0
.
8
1
6
2
6
.
3
8
7
0
.
4
5
3
5
.
3
9
4
5
.
4
6
9
0
.
5
Euro Pound Dollar Reais and others
2021
2022
2023
2024
2025
2026+
Comfortable maturity profile. Excludes credit lines.
(1) Debt structured by origin of cash flow earned in each currency. Includes derivatives to hedge net investment.
Integrated Report 2021www.iberdrola.com 4. Our assets
68
4.2 Manufactured capital
Management approach
2020 Results
Outlook
Electric
power
generation
and green
hydrogen
assets
Power
transmission
and
distribution
assets
Other assets
•
•
•
•
•
Iberdrola's generation assets
are made up of more than
350 wind farms, almost 90
hydroelectric power plants
(in addition to the mini-hydro
plants), 16 photovoltaic
plants, 2 battery storage
plants, more than 50 thermal
power stations using various
technologies, mainly low-
emission combined cycles,
five nuclear plants, and other
facilities built and operated
following best practices.
Iberdrola's electricity
transmission and distribution
networks are made up of
approximately 1.2 million
kilometres of distribution and
transmission lines, more than
4,400 substations and over
1.5 million transformers, built
and operated to provide a
high-quality, reliable service
to 31.29 million electricity
supply points.
Iberdrola also has more than
45,000 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.
Iberdrola manages
approximately 1,323,000 m2
of offices and work centres
throughout the world, with
a total of 843 properties,
as well as a fleet of more
than 10,000 vehicles.
The properties, which all
follow the same corporate
standards for interior space,
are designed, built and
operated in accordance with
the strictest sustainability and
efficiency standards, as is
the fleet, which is gradually
transforming into an electric
and emissions-free fleet in all
markets.
•
•
•
•
•
•
•
•
•
•
The year 2020 ended with additional
installed capacity of 3,029 MW, of which
2,881 MW are renewable (2,890 MW
of new installed capacity, less 9 MW
retired), including the Ceclavín (Spain)
and Cuyoaco
(Mexico) photovoltaic
plants, the La Joya and Tatanka (United
States) wind farms, and the completion
of
(United
Kingdom) offshore wind
farm. The
acquisitions of Aalto Power (France)
and Infigen (Australia) also add a further
813 MW of operational capacity.
the East Anglia ONE
Construction
779 MW
Topolobampo III combined cycle plant in
Mexico has been completed.
the
of
In Spain, regulatory commitments
required the deployment of smart
meters for customers of less than
15kW (Type 5) after 2018, and the
deployment of these meters for Type 4
customers (15 kW to 50 kW) continued
during 2019 and 2020. In addition,
a roll-out of Type 3 (between 50 and
450 kW) has been launched and
completed. There are currently more
than 11.19 million smart meters.
There is continued deployment of
smart meters in the United Kingdom,
with more than 1.7 million installed.
In Brazil, Neoenergia placed into
service two 500 kV and 525 kV static
compensators at Ceará and Santa
Catarina during 2020, and construction
is advancing on almost 6,000
kilometres of transmission lines and 30
substations in 14 states.
The modernisation of spaces and the
update of assets at the new operational
centres continues (Valladolid,
Salamanca, Bilbao, Madrid, etc.).
A project has been launched for the
maintenance of Iberdrola’s villages and
rural residential assets in Spain.
Real estate consolidation continues
along the east coast of the United
States, with real estate activities in the
states of New York, Massachusetts,
Maine and Connecticut to improve the
efficiency and modernisation of the
asset portfolio.
Work has begun on the process of
internalising the main functions of the
Networks Business in Brazil.
Iberdrola is expanding its presence in
the rest of the world, with expansion to
France, Germany, Sweden, Australia
and Japan.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Construction of more than 1,800 MW
of onshore wind and over 2,800 MWdc
of photovoltaic continues. There is also
continued development of the 496 MW
Brieuc (France), 476 MW Baltic Hub
(Germany) and 800 MW Vineyard Wind
and 804 MW Park City (United States)
offshore wind farms.
In Spain, construction is underway on
the largest green hydrogen plant in
Europe for industrial use, with a 20 MW
electrolyser.
In Portugal, construction continues on
the 1,158 MW Tâmega hydroelectric
installation, with 998 MW planned to be
placed on line in 2021.
In Mexico, construction continues on
the 514 MW Tamazunchale II combined
cycle plant.
In Brazil, Neoenergia was awarded a
project in ANEEL’s December 2020
auction for the construction of over 1,000
kilometres of transmission lines, with a
planned regulatory investment of 2 billion
reais.
In the United States there is continued
progress on the New England Clean
Energy Connect (NECEC) project,
which involves the construction of a
233 kilometre HVDC transmission line
between Canada and New England,
with an investment of $950 million, and
which is expected to be placed into
operation during the second half of 2023.
Construction on the project had already
commenced as at the date of publication
of this report.
Progress continues on the digitalisation
of the network in order to lead the
transformation toward a Distribution
System Operator.
Following the acquisition of PNM in the
United States and CEB in Brazil in 2020,
the integration of which is expected
in 2021, the number of customers will
increase by 1.9 million (0.8 million in the
US and 1.1 million in Brazil).
During 2021 projects involving the new
operational centres will be completed and
the rural residential project will continue
in Spain.
Avangrid will continue with the
consolidation of its real estate portfolio
of offices in the various states in which it
operates.
Neoenergia expects to complete the
internalisation of the Networks Business,
opening numerous workplaces in the
areas in which it operates.
The new corporate headquarters in
Mexico City for approximately 500
employees is due to be occupied.
Iberdrola remains committed to the
modernisation of its workplaces and will
continue to develop new collaboration
spaces in its corporate buildings, in a
permanent process of efficiency and
continuous improvement.
The vehicle fleet will continue to be
converted into an electric fleet.
Integrated Report 2021www.iberdrola.com 4. Our assets
69
Offer a secure supply of energy that is competitive in cost and quality
Average availability factor of Iberdrola’s generation facilities (%)
Conventional
thermal¹
Combined cycle
Cogeneration
Nuclear
Hydroelectric
Wind
92
96
92
91
96
Iberdrola's
average:
92
2018
2019
2020
0
25
50
75
100
(1)
No availability factor is provided for the conventional thermal plants due to the cessation of activity at the coal plants in Spain in 2020.
Quality of electricity supply
Consumers (millions)
Average power outage
duration
Spain
TIEPI (min)
United
Kingdom
CML (min)
United States
CAIDI (h)
Brazil
DEC (h)
2020
2019
48
32
2
11
48
35
2
11
Power outage frequency
2020
2019
United States
United
Kingdom
NIEPI
(number)
CI (ratio)
United States
SAIFI (index)
Brazil
FEC
(frequency)
0.99
0.94
36.59
43.66
1.37
5.13
1.17
5.47
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.
34.4
32.9
33
2015
2019
2020
Consumers
Integrated Report 2021www.iberdrola.com 4. Our assets
70
4.3 Intellectual capital
Management approach
Principal activities 2020
Outlook
•
•
•
•
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.
Iberdrola is Europe’s leading private
sector energy company and second
in the world for R&D investment.
Innovation Report
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
customers.
Promotion
of R&D
Efficiency
and new
products
and
services
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 €70
million have been invested through the
programme worldwide.
Lines of activity:
•
Technologies favouring the
integration of renewable energies.
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.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
€293 million of R&D investment in 2020, a
4% increase over 2019.
Launch of the Global Smart Grids
Innovation Hub technology centre in Bilbao.
Development of the largest green hydrogen
plant in Europe for industrial use, and the
launch of Iberlyzer, for the manufacture of
electrolysers.
EIB backs Iberdrola’s innovation strategy
with 100 million euros in financing for R&D
projects.
New 2020-2023 R&D Plan, focused on
the decarbonisation of electricity and the
electrification of demand.
Development of domestic and international
R&D projects to promote sustainable
development, renewable energy and
emerging technologies.
The Iberdrola Customers App will allow for
monitoring Smart Solar self-consumption,
showing its production in real time and the
savings generated.
New functionalities in the Iberdrola Public
Recharge App for electric vehicles, such
as “pay-as-you-go”, a route planner, online
booking, and access to the largest public
recharging network in Spain, which also
includes recharging points in Europe.
There were more than 25 pilot projects with
start-ups in technological areas like Artificial
Intelligence, Big Data, Internet of things
(IOT), robotics and batteries in 2020.
Launch of 7 Start-up Challenges for the
start-up community, in areas like renewable
generation, onshore and offshore wind-
based and photovoltaic power generation,
electric mobility, and the construction and
maintenance of electrical power networks.
New Venture Builder initiative for investing
and creating electrification support
businesses from scratch (in areas like the
recycling of modules, wind-turbine blades
and batteries, and the circular economy)
and in sectors resistant to decarbonisation,
like industrial heat production and heavy
transport. Iberlyzer was the first project to
materialise.
Iberdrola will invest 75,000 million
euros by 2025, focusing its
innovation activities on:
•
More and smarter clean
generation.
More and smarter storage.
More and smarter networks.
More energy solutions for our
customers.
•
•
•
As a result of its commitment to
innovation, digitalisation and the
continuous search for excellence
and quality, Iberdrola has designed
unique products and services for its
customers.
In the future, Iberdrola will
maintain its commitment to energy
management for the home, through
smart devices that provide customers
with enhanced knowledge and
management of their consumption,
together with products related to
electric vehicle recharging.
Ensure Iberdrola’s access to the
energy technologies of the future.
Promote entrepreneurship and
the development of an innovative
business community in the energy
sector.
Creation of innovative companies
together with holdings in other
technology and industrial groups
and promotion of public-private
partnerships.
Form alliances with Iberdrola’s
key technology suppliers (Open
Innovation Ventures).
Investments in R&D (€M): 1st private energy company in Europe and 2nd in the world
246
267
280
293
% R&D investment by strategic areas
130
136
145
159
170
200
211
22%
22%
22%
34%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Renewables Networks Wholesale and Retail Systems
Integrated Report 2021www.iberdrola.com 4. Our assets
71
Highlight the value of the company's intangible assets
Smart
grids
Renewable
energy
Clean
generation
Customers
Main R&D research projects
•
The FLEXENER project has commenced in order to investigate new simulation technologies and
models in the areas of renewable generation, storage systems, flexible demand management and
operation of the distribution network.
• ONE NET and COORDINET continue to develop new flexibility tools and platforms in coordination with
•
•
•
•
•
•
•
•
•
electricity transmission and distribution companies and consumers.
ATELIER seeks to develop Positive Energy Districts in eight European cities, where smart solutions will
be tested.
The European FLAGSHIP project has been launched, involving the installation of the first generator of
more than 10 MW on a floating platform.
The ROMEO project has continued with the study and design of best practices and tools for optimising
the operation and maintenance of offshore wind farms.
The NextGEMS project has begun, with the aim of developing and applying high-resolution ground-
based systems for the prediction of extreme phenomena such as storms, based on two existing
production systems.
FLAGSHIP is a notable project which, through the creation of digital “twins”, enables the simulation
of operating environments that differ from the ones in the basic design of the plant, improving the
operational flexibility, reliability and efficiency.
The COATI project was launched for the development of software tools that would enable the
implementation of specific loading plans for spent nuclear fuel elements.
Iberdrola Energy Cloud, a virtual battery that stores a customer’s excess from the production of self-
produced solar power that is transmitted to the network from their residence.
Smart Solar for Homeowners Associations, in which residents’ surpluses and deficits are offset
between each other and they can see their savings on an app.
Smart Mobility Home, an integrated solution including purchase of a recharging point, installation, a
special rate under the Electric Vehicle Plan and an app to control it.
Green hydrogen, the energy vector of the future
Iberdrola has inaugurated what will be the largest green hydrogen plant in Europe
for industrial use, with an investment of 150 million euros. The plant, located
in Puertollano (Ciudad Real), consists of a photovoltaic solar plant, an ion-lithium
battery system and one of the world’s largest hydrogen production systems using
electrolysis. The hydrogen produced will be used at a Fertiberia ammonia factory.
This project between Iberdrola and Fertiberia contemplates the development of 800
MW of green hydrogen with an investment of 1,800 million euros by 2027.
Together with the Basque enterprise Ingeteam, Iberdrola has also founded
Iberlyzer, which will become the first large-scale manufacturer of electrolysers
in Spain.
Global Smart Grids Innovation Hub, a global innovation centre for smart grids
Iberdrola has launched the Global Smart Grids Innovation Hub, a centre that will
act as a platform driving innovation, combining its technological capacity with that
of providers, collaborators and startups around the world.
Iberdrola has already identified more than 120 innovation projects with a value of
110 million euros in this area.
The centre, which will come into operation in 2021, will be a collaborative space with
some 200 professionals to address the challenges of the networks of the future,
including digitalisation and new consumption models like electric mobility and self-
consumption.
Integrated Report 2021www.iberdrola.com 4. Our assets
72
4.4 Human capital
Global human
resources
management
Goal of
“accident
reduction”
Talent
management
Diversity,
equal
opportunity
and work-life
balance
Management approach
Principal activities 2020
Outlook
•
•
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•
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Achieve the goals of
competitiveness and business
efficiency in a climate of
social peace, fostering stable,
high-quality employment.
Harmonise human resources
processes and make
inroads with implementing
the Iberdrola culture in all
countries, respecting specific
local conditions.
Prioritise the safety of
individuals at the group’s
facilities and within its sphere
of influence, fostering a
progressive reduction in injury
rates and improving health
and safety conditions.
Replicate throughout the
group the best practices
identified in the area of
occupational health and
safety, fostering a culture of
excellence in management
and coordinating global
preventive activities.
Drive staff qualifications,
preparing employees 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.
Guarantee a social model
committed to professional
excellence and the quality of
life of our employees.
Foster a culture based
on meritocracy, equal
opportunity, non-
discrimination and the
promotion of diversity and
inclusion as a strategic
priority for sustainable growth.
Create a high-quality labour
environment by committing to
work-life balance.
Contribute to achieving the
SDGs for the 2015-2030
horizon through the Corporate
Volunteering Programme.
Management of an appropriate labour
relations framework that can be adapted to
suit business and social requirements.
Review of the human resources processes,
conforming them to the purpose and
values.
Improvements in the digitalisation of the
goals, training, mobility and on-boarding
process.
Cementing its role as a leading
communicator in the unique situation
experienced this year.
Obtain and / or maintain the OHSAS 18001
/ ISO 45001 certification.
Monitoring of proactive and reactive
indicators at the companies of the group.
ALWAYS ON campaign, based on safety
videos aimed at all employees and articles
(“Tribunes”) to the chain of command. The
campaign includes a leadership course for
managers.
A project for the complete digitalisation of
Health and Safety within a single tool has
begun.
Continue with implementation of the Zero
Accident Plan at Neoenergia to reduce the
accident rate.
Conversion to virtual format of training that
can be digitalised given the COVID-19
pandemic.
Design our strategic learning framework,
including the future capabilities map.
Assessment of high-potential employees
and design of individual development
plans.
Improvements to the design and
management of the succession plan.
Launch of the digital mentoring program
Training and awareness regarding the new
values-based behaviours model, with a
focus on the leadership group
New edition of the “Early Career”
international mobility programme.
Inclusion of Iberdrola in the 2020
Bloomberg Gender-Equality Index for the
third consecutive year.
Preparation of the first global report on
diversity and inclusion, and design of a
roadmap on this subject.
Establishment of a commission to drive
and monitor progress on Diversity and
Inclusion at the global level.
Launch of the “Volunteers against
COVID-19” program to respond to the
social and healthcare crisis caused by the
pandemic.
Corporate Volunteering Activities to
improve the quality of life and the
integration of vulnerable groups, care for
the environment and recovery of natural
spaces, and raise awareness of the SDGs.
•
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
Strengthen the commitment to
Sustainable Development, enhancing
ethical and responsible behaviours.
Transformation and digitalisation of the
human resources processes.
Drive cultural change, promoting the
adoption of the new values.
Identify and act on those moments that
are most important to our employees,
incorporating listening tools based on
their life cycle.
Continue assessing compliance with
global standards and implementing
improvement groups to promote safe
behaviours.
Complete OHSAS 18001 / ISO 45011
certification at those group companies
not yet certified.
Implement the new Global Accident Rate
scorecard tool.
Develop a Global Model for recognising
best prevention practices.
Implement a preselection and
performance assessment system for
subcontractors.
Consolidation of the high-potential
employee development plan according to
the 70:20:10 learning model.
Integrated management of the talent
pool, consisting of high-potential
and critical employees, combining
development and alignment with
remuneration.
Review of the portfolio of leadership
development programs (improved local /
global balance).
Consolidation of the mentoring platform
and programs.
Enhance the offer of training solutions for
the development of future capabilities.
Increase the number of women in
executive positions, reaching 30% by
2025.
Maintain salary equality between men
and women at the group level.
Provide training and raise awareness
about the value of diversity for the
organisation.
Continue to promote initiatives
contributing to the improvement of
diversity and the creation of an inclusive
culture within the group.
Continue to promote improvements in
people’s quality of life through social
action.
Promote the participation of vulnerable
groups in Iberdrola’s volunteer activities.
Continue to offer global volunteering
opportunities to meet social needs.
Integrated Report 2021www.iberdrola.com 4. Our assets
73
Ensure the availability of a committed, qualified and diverse workforce in a
safe and stable environment.
Geographic diversification of the workforce
Hours of training per employee trained1, 2:
2020: 37,127 employees
4% 2%
26%
15%
34%
19%
Spain
Brazil
United Kingdom
Mexico
United States
IEI
Social commitment
54.9
53.4
45.2
2018
Key figures / Page 12
2019
2020
Various corporate volunteer activities by employees around the world. (Photos: Brazil, Mexico and Spain).
Iberdrola committed to equality
Improvement in accident ratios (2017-2020)3:
0.56
Subcontracted personnel
Own personnel
0.30
0.28
0.34
0.33
0.22
0.21
0.21
Inclusive school for electricians in Brazil.
2017
2018
2019
2020
(1) The exceptional situation caused by COVID-19 has significantly reduced face-to-face training. Thanks to a tremendous effort, a large part of
training activity has been adapted for delivery by remote means, which has led to a considerable increase in the proportion of on-line training hours.
(2) Does not include training hours provided by the school for electricians from years prior to 2020 for professionals hired in Brazil during that year.
(3)
Injury rate (accidents with sick leave per average number of employees, multiplied by 100).
Integrated Report 2021www.iberdrola.com 4. Our assets
74
4.5 Natural capital
Management approach
Principal activities 2020
Outlook
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•
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•
•
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•
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 infrastructures that it
deploys by 2030, applying mitigation
hierarchy principles and avoiding
placement in protected areas.
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
that uses ozone layer-reducing
substances.
Promotion of awareness-raising
campaigns regarding air quality.
New GHG emissions-free facilities
(renewable, wind, hydroelectric, etc.).
Continuous improvement in
operational performance.
Implementation of actions to increase
energy efficiency.
Decrease in consumption of natural
resources.
Inclusion of environmental variable
in the design of infrastructure (Eco-
design).
Improvement in control and
management of waste generated.
Strengthen transparent dialogue
with Stakeholders in order to work
together in seeking solutions to
environmental problems.
Manage environmental compliance
by suppliers.
Transparently report on
environmental results and activities.
Optimisation of and innovation
in environmental management
systems.
•
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Protect the
environment
and stop
the loss of
biodiversity
Combat climate
change and its
effects
Guarantee
sustainable
modes of
production and
consumption
Revitalise
partnerships
with
Stakeholders
for sustainable
development
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Acquisition of ISO-TS 14072
Certificate for Corporate
Environmental Footprint (CEF) 2019.
Sustainable 2020 General
Shareholders’ Meeting: ISO 20121
certification as a sustainable event
for fourth consecutive year.
Renewal of all ISO 14001:2015
certificates. Expansion of i-DE scope
to construction; the commercial
business is certified in the UK.
Biodiversity Action Plans.
Environmental guidelines linked to
the SDGs.
Launch of the Iberdrola Trees
program.
Publication of the Biodiversity Report
2018-2019.
Biodiversity training and awareness-
raising campaign.
Active participation in We Value
Nature, Business for Nature
initiatives.
Emissions in Spain were 73 gr
CO2/kWh.
Certification of Neoenergia’s GHG
inventory under the ISO 14064
standard.
Approval of SBTi Targets regarding
the group’s emissions according to
1.5ºC.
Increased ambition in commitment to
reduce specific emissions.
Sustainable mobility plan: over 200
subsidies for the purchase of electric
vehicles for the workforce.
Innovative activities in environmental
management and control.
Efficient management of water
consumption.
Improvement in withdrawal and
consumption of inland water at all
generation facilities.
Improvement in reuse and recycling
of waste.
Active awareness-raising on the
circular economy.
Iberdrola’s Circularity Report based
on WBCSD indicators.
Preliminary report on Iberdrola’s
water scarcity footprint.
Public-private partnership with
the Basque Government on
environmental issues.
Participation in the European REEF
project to develop environmental
product footprints together with EDP.
Participation in Natural Capital’s
working group with companies in the
industry.
Establishment of the “The Day After”
partnership with ITD-UPM, REDS
and IS Global. Active participation
in the four work communities
that have been established:
Economy, Environment, Cities and
Cooperation.
Restoration, recovery, improvement
and maintenance of natural spaces
and habitats.
Integrate the concept of natural
capital.
New biodiversity plan for the group.
Update of environmental and
biodiversity policies.
Leadership in protection of
biodiversity.
Development of a climate change
adjustment strategic plan.
Offset of emissions using “sinks”.
Reduce emissions intensity to 50g
CO2/kWh by 2030.
Be carbon neutral by 2050 at the
global level and by 2030 in Europe.
Develop innovative projects to
reduce pollution.
Increase reduction activities
accompanying the supply chain.
Promote electric vehicles: install over
150,000 electric vehicle recharging
points.
Active participation in the SDGs
approved in September 2015
(prioritising goals 7 and 13).
Reduce the water use / production
ratio by 50% by 2030 compared to
2019.
Develop and drive new ecodesign
initiatives.
Analysis of life cycle.
Life Cycle Costing.
Promote responsible and sustainable
production in the supplier chain.
The circular economy as the
sustainable basis of the group’s
business.
Verification of Iberdrola’s Water
Footprint.
Integrated analysis of the corporate,
water and circular footprints.
Environmental transparency and
communication:
• Development of new
Environmental Product
Declarations (EDPs).
Communication of environmental
performance, development of
methodology.
Environmental communication plan.
Increased participation in
international forums.
Integrated Report 2021www.iberdrola.com 4. Our assets
75
The environmental dimension is a key factor in the concept of sustainability
Specific CO2 emissions from facilities
in Europe
(Carbon factor in g of CO2/MWh)
Fortum
Statkraft
Verbrund
27
27
32
European Carbon
Factor: 249g CO
/kWh
²
Intensity of emissions in Spain (g CO2/kWh)
185
73
52
57
74
79
93
113
- 62.6% vs
European average
2007
2020
Overall intensity of the group’s emissions
(g CO2/KWh)¹
301
EDF
PVO
Orsted
E.ON
Iberdrola¹
Drax
Vattenfall
Engie
EnBW
EDP
Enel
Naturgy
CEZ
A2A
RWE
PPC
148
204
235
244
296
301
360
391
591
895
0
100
200
300
400
500
600
European carbon factor 2019: 249 g CO2/kWh1 Source: “Climate
Change and Electricity: European carbon factor.” PwC France.
Dec. 2020.
(1) The figure of 93 g CO2 in this chart refers to emissions from Iberdrola’s
facilities in Europe during 2019. The other companies only include the
European space.
98
2007
1 Calculated on total own production.
Volume of recovered, reused or
recycled waste (t)
0
2
9
9
4
4
,
6
3
8
,
1
1
3
5
4
8
,
4
9
2
*
6
2
1
,
3
6
6
7
1
5
,
0
5
2
7.512
7.288
8.839
17.548
8.990
2015
2017
2018
2019
2020
(*) Increase as a result of the reuse of construction land at facilities in
the United States.
Key figures / Page 12
Integrated Report 2021www.iberdrola.com 4. Our assets
76
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 entities and organisations that make up its social
and relationship capital, and thus constitute a fundamental element for the sustainable performance of the company.
Stakeholders
Principles
Objectives
Workforce
Shareholders and financial
community
Regulatory entities
Customers
Suppliers
Media
Society in general
Environment
Responsibility
Transparency
Active listening
Participation and engagement
Consensus
Collaboration
Continuous improvement
•
•
•
Encourage the engagement
of the Stakeholders through a
strategy of close involvement in
the communities in which Iberdrola
operates and the creation of
shared sustainable value for all
Stakeholders
• Respond to the legitimate interests
of Iberdrola’s Stakeholders
Build trust among the Stakeholders
in order to build long-lasting, stable
and robust relationships
Encourage the recognition by
its Stakeholders of Iberdrola’s
commitment to diversity
• Contribute through all of the above
to maintaining the corporate
reputation in the various countries
and businesses
To meet its objectives in this area, Iberdrola has a Global Stakeholder Engagement Model based on the AA1000 Stakeholder
Engagement Standard 2015 (AA1000SES, 2015), on the AA1000 AccountAbility Principles 2018 (AA1000AP, 2018), and
on its four principles of inclusiveness, relevance, responsiveness and impact. This Model aims for all areas and businesses
of Iberdrola to 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
r
e
d
o
h
e
k
a
t
S
l
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
RISKS 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
channels and
create new
ones
The best
suited to each
stakeholder
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 MODEL
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 Iberdrola’s
Stakeholders and businesses. This Hub meets periodically, sometimes with the presence of outside experts.
Integrated Report 2021www.iberdrola.com
4. Our assets
77
Key figures
Through its Stakeholder Engagement Model, in 2020 Iberdrola has detected:
• Over 1,200 entities with which its has relations.
• Almost 6,000 relationship channels.
• Over 3,600 significant issues.
• Around 60 emerging trends.
The main trends and significant issues guide the company in its decisions and, in many cases, form part of the
Materiality
Iberdrola Sustainable Development Plan 2020-2022. They are also aligned with the latest Materiality Study
Materiality
performed by an independent firm based on external information sources.
matrix 2020
matrix 2020
Materiality
matrix 2020
Materiality
matrix 2020
Materiality matrix 2020
19
19
19
19
2
2
2
15
15
15
2
15
24
24
24
24
Occupational
safety and health
Occupational
Occupational
safety and health
Occupational
safety and health
safety and health
18
Economical
and financial
performance
Economical
and financial
Economical
performance
and financial
performance
Economical
and financial
performance
1
1
1
18
13
13
13
18
18
1
Energy
Energy
transition
transition
Energy
transition
Energy
transition
Connectivity,
Connectivity,
Digitisation and
Digitisation and
Connectivity,
Connectivity,
Cibersecurity
Cibersecurity
Digitisation and
Digitisation and
Cibersecurity
Cibersecurity
s
e
u
s
s
i
Climate
change
Climate
change
Climate
change
y
t
i
r
o
i
r
P
Climate
change
Diversity
Diversity
and equal
and equal
Diversity
opportunity
opportunity
and equal
opportunity
Diversity
and equal
opportunity
Socially
Socially
responsible
responsible
Socially
Socially
investment
investment
responsible
responsible
investment
investment
13
s
e
u
s
s
i
y
t
i
r
o
i
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s
t
s
i
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+
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d
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r
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f
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t
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r
e
d
o
h
e
k
a
t
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r
o
f
y
t
i
r
o
i
r
P
16
14
9
19
19
2
24
24
15
13
2
15
19
19
2
2
15
15
24
24
1
11
1
11
11
11
12
18
1
13
1
12
13
18
12
22
22
13
12
18
4
4
22
10
20
18
22
20
17 23
17 23
4
10
4
10
17 23
7
7
17 23
21
5
5
7
7
3
8
6
21
6
3
21
21
8
3
3
20
16
6
20
10
16
6
16
14
9
14
14
9
9
5
5
8
8
-
-
-
-
-
-
Priority for Iberdrola
Priority for Iberdrola
+
+
-
Environmental Dimension
Environmental Dimension
Priority for Iberdrola
Priority for Iberdrola
Economic Dimension
Economic Dimension
-
+
+
Social Dimension
Social Dimension
Priority
issues
Priority
issues
Priority
Priority
issues
issues
Significant
Significant
issues
issues
Significant
Significant
issues
issues
Significant issues
Significant issues
Significant issues
Significant issues
11 Innovation and new business models
11 Innovation and new business models
10 Circular economy
10 Circular economy
Other material issues
Other material issues
Other material issues
Other material issues
16 Availability and management of water
16 Availability and management of water
Environmental Dimension
Environmental Dimension
Economic Dimension
Economic Dimension
Social Dimension
Social Dimension
22 Vulnerable customers
22 Vulnerable customers
11 Innovation and new business models
11 Innovation and new business models
22 Vulnerable customers
4 Ethics and integrity (anti-corruption and free competition)
4 Ethics and integrity (anti-corruption and free competition)
22 Vulnerable customers
17 Customer satisfaction
17 Customer satisfaction
4 Ethics and integrity (anti-corruption and free competition)
4 Ethics and integrity (anti-corruption and free competition)
17 Customer satisfaction
10 Circular economy
7 Smart grids and supply quality
7 Smart grids and supply quality
10 Circular economy
7 Smart grids and supply quality
5 Responsible supply chain
5 Responsible supply chain
7 Smart grids and supply quality
5 Responsible supply chain
21 Human Rights
21 Human Rights
5 Responsible supply chain
21 Human Rights
23 Attraction, Development and Retention of Human Capital
23 Attraction, Development and Retention of Human Capital
12 Integration of renewable energies within the electric system
23 Attraction, Development and Retention of Human Capital
17 Customer satisfaction
12 Integration of renewable energies within the electric system
23 Attraction, Development and Retention of Human Capital
20 Impact on local communities
12 Integration of renewable energies within the electric system
12 Integration of renewable energies within the electric system
20 Impact on local communities
20 Impact on local communities
3 Transparency
3 Transparency
21 Human Rights
8 Green financing
3 Transparency
8 Green financing
3 Transparency
8 Green financing
8 Green financing
6 Public policy
6 Public policy
16 Availability and management of water
16 Availability and management of water
6 Public policy
14 Management of biodiversity
6 Public policy
14 Management of biodiversity
9 Management of natural capital
14 Management of biodiversity
9 Management of natural capital
14 Management of biodiversity
9 Management of natural capital
9 Management of natural capital
20 Impact on local communities
Best practices
To mitigate the effects of the COVID-19 pandemic, Iberdrola has carried
out numerous good practices for each Stakeholder group. Some of these
are shown below:
Global internal communication
campaign: The principles of engagement
with our Stakeholders.
• Workforce: Serological testing for the workforce.
•
Shareholders and financial community: Holding of General
Shareholders’ Meeting remotely.
• Regulatory entities: Donation of healthcare and preventive material.
• Customers: Protection of vulnerable customers and suspension of service
cut-offs.
Suppliers: €14,000 million in orders awarded in 2020.
•
• Media: Enhancement of information on coronavirus on corporate websites.
•
Society in general: Strengthening of service and establishment of
priority service channels for hospitals, health centres and other essential
infrastructure.
Environment: Boost to the Manifesto for a green recovery (Green Deal).
•
Principles of
Stakeholder relations
R E S P O N S I B I L I T Y
Act responsibly and build relationships
based on ethics, integrity, sustainable
development, and respect for human rights
and the communities affected by the various
activities of the group.
T R A N S P A R E N C Y
Ensure transparency in relationships and in
financial and non-financial communications,
sharing truthful, relevant, complete, clear
and useful information.
C O N T I N U O U S
I M P R O V E M E N T
Seek continuous
improvement, regularly
reviewing Stakeholder
engagement mechanisms to
ensure that they respond in
the most efficient way
possible to the needs of each
moment.
A C T I V E L I S T E N I N G
Practice active listening –
encouraging bi-directional and
effective communication –
and direct, fluid, constructive,
diverse, inclusive and
intercultural dialogue.
C O L L A B O R A T I O N
Promote collaboration with the Stakeholders,
in order to contribute to compliance with
our corporate purpose and values and
the achievement of the Sustainable
Development Goals.
C O N S E N S U S
Work towards consensus with the
Stakeholders, especially with local
communities and indigenous
populations, taking their viewpoints and
expectations into consideration.
P A R T I C I P A T I O N A N D E N G A G E M E N T
Encourage the participation and engagement of
the Stakeholders in all of Iberdrola’s activities,
promoting voluntary consultation processes or
similar channels of interaction in application of
the law of each country, and especially in the
planning, construction, operation and
decommissioning of the Group's power projects.
PRINCIPLES OF RELATIONS
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78
Community support and electricity access programmes
Primary programmes
Foundation programs 2020
Activities 2020
•
Contribution of over €83 million to the community, measured
according to the London Benchmarking Group (LBG)
international standard, in the countries in which Iberdrola
operates.
•
•
•
•
•
•
Volunteer activities. A total of over 10,000 volunteers have
participated in activities mainly centred this year on actions
to support groups affected by COVID-19.
Entrepreneurial support: €91 million of purchases from
companies in operation for less than 5 years, and €70 million
in venture capital for new initiatives with high technological
value.
Specific programmes and pricing for vulnerable groups in
Spain, the United Kingdom, the United States and Brazil.
Rural electrification programmes in Brazil, to which almost
€42 million has been allocated.
Programmes implemented by the foundations created by
Iberdrola in the principal countries in which it operates.
Development of the Electricity for All programme.
Electricity for All
•
The SDGs recognise energy as an engine for sustainable
development.
•
•
The Electricity for All programme is Iberdrola’s response
to the need to expand 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. The programme
had reached 8.2 million users by year-end 2020.
Foundation programs 2020
9%
27%
52%
Contribution by region (%)
Spain
United Kingdom
United States
Mexico and Brazil
12%
5%
14%
49%
14%
18%
Contribution by area (%)
Training and research
Art and culture
Institutional collaboration
Biodiversity and Climate Change
Social action
Activities 2020
•
Iberdrola has strengthened the operation of its foundations
in Spain, the United Kingdom, the United States, Brazil and
Mexico.
•
•
•
•
•
•
Overall investment dedicated to activities in all countries in
2020 reached a total of €11.9 million.
In the Training and research area, the promotion of equal
opportunity is being strengthened through the Research
Grants Programme programme and the inclusion of STEM
scholarships, with a special emphasis on women. Also of
note are the international mobility scholarships (Fundación
Carolina, Fulbright).
In Art and Culture, the aim is to protect and safeguard
artistic and cultural heritage, promoting conservation and
restoration and stimulating local development. The major
lighting projects have been at the Monastery of Guadalupe
and the Supreme Court in Spain and the façade of Câmara
Cascudo in Brazil. Exhibitions include The Prado in the
Streets and, lastly, the restoration of the statue of Nathan
Hale in the United States.
In Biodiversity and climate change, the aim is to protect
the environment and improve biodiversity to contribute
actively to the fight against climate change. This includes
reforestation of 43 hectares of fields in Chinchilla and
Valladolid with more than 25,000 native trees as part of the
Forest Defence-Iberdrola plan and the MIGRA programme
in Spain, Swift City in the United Kingdom, projects in
partnership with National Fish and Wildlife Foundation
(NFWF) in the United States, the project to preserve the
Cañón de Fernández park in Mexico and the CORALIZAR
project in Brazil.
In the Social Action area, Iberdrola is contributing to
sustainable human development by supporting the most
vulnerable individuals and groups. Over 100 partnerships
have been established in the five countries with an impact on
over 100,000 people.
The fight against COVID-19: In Spain, 840,000 euros
have been invested in the provision of 112,000 free meals
in Madrid and Biscay and the donation of 15 laptops and 57
tablets and of masks for the disabled. In the United States,
one million dollars has been donated in association with
national organisations and local networks and agencies
across the country, like the American Red Cross, Feeding
America and Americares. In Mexico, there have been
donations of 1.8 million units of healthcare materials in 19
states of the country, and more than 11,000 food parcels and
cleaning products in 75 communities. In Brazil, over 2 million
reais has been invested to provide resources (food, cleaning
products, etc.) to assist over 100,000 families.
Sustainability Report
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Corporate reputation
Soundness and strength of the brand
• 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.
€4,323 M
Value of the Iberdrola
brand according to Brand
Finance España 100 / 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:
Website
Twitter
Linkedin
Facebook
Youtube
Instagram
Pinterest
TikTok
Blog / Green
stories
Blog / Gente
que brilla (People
who shine)
Blog / Stop
cambio climático
(Stop climate
change)
Fintect
Reputation
•
Iberdrola considers reputation to be an intangible asset
of great value, which influences aspects as important
as the attraction and retention of talent, business
relations with customers, valuation of the company
in the capital markets, and integration within the
communities in which it does business, and therefore
the overall performance of the company.
• What Iberdrola currently is, does, communicates or
how it engages its Stakeholders leads to their opinions,
attitudes and behaviours, which go into making up the
company’s global reputation, which is also influenced
by the social perception of the electricity sector.
•
Iberdrola
reputation with a dual objective:
therefore manages and measures
its
Bring out opportunities that trigger
favourable
the
behaviour
Stakeholders towards the company.
of
the
Minimise and mitigate
reputational risks inherent to its
activities.
• Management: Reputation management is carried
out by all of Iberdrola’s areas and businesses,
and includes two key 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 activities of
Iberdrola’s areas
and businesses, 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; reputational risk
maps and assessment of the level of impact of
reputational risk.
•
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.
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5. A framework of trust
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5. A framework of trust
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5.1 Governance and Sustainability System
Always in the lead of international best practices, Iberdrola’s former Corporate Governance System
has evolved, based on ESG standards, with the contents being reordered to emphasis environmental
performance, social commitment and best corporate governance practices. Particularly notable is
the new pioneering Inclusion and Diversity Policy.
Board of Directors
Position
Director
Status
Date of last
appointment
Chairman & CEO
José Ignacio Sánchez Galán (Salamanca,
Spain, 1950)
Executive
29-03-2019
Expiry of
mandate
29-03-2023
Vice-Chair and
Lead Independent
Director
Juan Manuel González Serna
(Madrid, Spain, 1955)
Member
Member
Member
Member
Member
Member
Íñigo Víctor de Oriol Ibarra
(Madrid, Spain, 1962)
Samantha Barber (Dunfermline, Fife,
Scotland, United Kingdom, 1969)
María Helena Antolín Raybaud
(Toulon, France, 1966)
José Walfredo Fernández
(Cienfuegos, Cuba, 1955)
Manuel Moreu Munaiz
(Pontevedra, Spain, 1953)
Xabier Sagredo Ormaza
(Portugalete, Spain, 1972)
Independent
31-03-2017
31-03-2021
Other external
02-04-2020
02-04-2024
Other external
02-04-2020
02-04-2024
Independent
29-03-2019
29-03-2023
Independent
29-03-2019
29-03-2023
Independent
29-03-2019
29-03-2023
Independiente
29-03-2019
29-03-2023
Director – Business
CEO
Francisco Martínez Córcoles
(Alicante, Spain, 1956)
Executive
31-03-2017
31-03-2021
Member
Member
Member
Member
Member
Anthony L. Gardner
(Washington, D.C., U.S.A., 1963)
Sara de la Rica Goiricelaya
(Bilbao, Spain, 1963)
Nicola Mary Brewer
(Taplow, United Kingdom, 1957)
Regina Helena Jorge Nunes
(São Paulo, Brazil, 1965)
Ángel Acebes Paniagua
(Avila, Spain, 1958)
Independent
13-04-2018
13-04-2022
Independent
29-03-2019
29-03-2023
Independent
02-04-2020
02-04-2024
Independent
02-04-2020
02-04-2024
Independent
20-10-2020
2021 General
Shareholders’
Meeting
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.
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83
Corporate and governance structure
The Iberdrola group is structured on three levels that differentiate the functions of strategy, supervision
and control of the group as a whole (attributed to the holding company), those of organization and
coordination with regard to the countries (corresponding to the country subholding companies) and
those of the administration and effective management of each of the businesses (within the purview
of the head of business companies).
It is based on a system of checks-and-balances that avoids an accumulation of power:
• 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 of the businesses. They also have boards of
directors, which include independent directors, and
specific management teams.
•
•
•
Iberdrola’s Board of Directors, made up of a large
majority of independent directors (one of whom is
the vice-chairman and lead independent director),
focuses its activity on the determination, supervision
and monitoring of the policies, strategies and general
guidelines of the Iberdrola group. Especially important
is the supervision of the development and application
by the group companies of the new Governance and
Sustainability System.
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 to the head of business companies.
Corporate and governance structure
Iberdrola S.A. (holding company)
Board of Directors
Chairman &
CEO +
Management
team
Executive
Committee
Consultative Committees
Audit and Risk Supervision Committee
Appointments Committee
Remuneration Committee
Sustainable Development Committee
Country Subholding Companies
Iberdrola
España
Scottish
Power
Avangrid 1
Neoenergia 2
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).
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Ownership 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 70%
of the capital.
Foreign investors
Domestic institutional
investors
Domestic individual investors
Status at 31-12-2020
70%
8%
22%
Iberdrola in the vanguard of governance and sustainability
Strategy
Remuneration policy
The key elements defining Iberdrola’s
governance and sustainability strategy are:
Director Remuneration Policy approved by the shareholders at the
General Shareholders’ Meeting.
• Environmental performance.
•
The promotion of diversity, inclusion, equal opportunity
and excellence at all levels.
• Shareholder engagement.
• Active listening to the legitimate interests of the
Stakeholders.
• Social dividend and contribution to the Sustainable
Development Goals.
•
Zero tolerance towards corruption and fraud.
• Prudent and balanced management of risks.
Continuous improvement of its
corporate governance rules and
practices
On corporate governance matters, the Company
looks to the Good Governance Code of Listed
Companies, updated by the CNMV in June
2020, and generally accepted practices in the
international markets.
The aim of the Diversity and
Inclusion Policy is to achieve a
favourable environment that facilitates
and enhances diversity and inclusion
among the group’s professionals.
Executive directors’ variable remuneration tied to financial
and non-financial targets.
Clause on cancellation and reimbursement of variable
remuneration (malus and claw-back).
Operation of the Board
71.4% of the directors are independent.
System of checks and balances, including the vice-chairman and
lead independent director.
Gender diversity: five women on the Board, two of whom chair
board committees.
Diversity of skills, experience, nationality and origin.
Annual evaluation of the governance bodies with the participation
of an independent expert.
Sustainable Development and Corporate
Reputation
Sustainable Development Committee.
Monitoring of the group’s strategy and performance on
sustainable development and ESG objectives.
Climate Change Action Plan and adoption of
recommendations of
Financial Disclosures (TCFD).
the
the Tax Force on Climate-related
Value creation
Company.
for Stakeholders and reputation of
the
Governance and Sustainability System
Ethics / Page 93
Sustainable Development / Page 94
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85
Commitment to shareholders and
investors
•
•
•
The Iberdrola group has a industrial and financial model
based on balanced growth, focused on the networks
businesses, renewables and long-term contracted
assets, focused on the achievement of targets that
combine financial, environmental and social results.
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.
The company encourages shareholders’ participation
throughout
the General
Shareholders’ Meeting.
the year, especially at
Remuneration policy
•
The current Director Remuneration Policy was
approved by
the General
the shareholders at
Shareholders’ Meeting.
• Director remuneration
is aligned with strategic
objectives and shareholder return.
Remuneration model for the Board of Directors
Type of
remuneration
External
(non-executive)
directors
Executive directors
Fixed.
According to their
duties.
On market terms.
Short-term
variable.
Not applicable.
Tied to financial and
non-financial targets.
Office of the
Shareholder
Shareholders’
Club
Long-term
variable.
Not applicable.
Tied to multi-annual
targets payable in
shares (3-year accrual
period and payment
deferred over 3 years
following accrual).
Corporate
Governance
Roadshows
Engagement
Investor
Relations
Office
On-Line
Shareholders
(OLS)
Investor
Relations
App
All the resolutions of the 2020
General Shareholders’ Meeting were
approved with a majority vote in
favour of the Board of Director’s
proposals.
Parameters to which the annual variable remuneration of
executive directors is tied in 2021
Operational /
Financial
Net Profit.
Shareholder remuneration.
Financial strength.
Efficiency in costs.
Installed capacity.
Project portfolio.
Sustainable
Development
Female presence in management positions.
Presence on major international indexes.
Training.
Parameters to which the multi-annual variable remuneration
of executive directors is tied (Strategic Bonus 2020-2022)
•
•
•
•
Net profit.
Financial strength.
Total shareholder return.
Sustainable Development Goals (fight against climate
change, boost sustainability in the supply chain and
commitment to salary equality between men and women).
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Main activities of the Board of Directors
Key topics in 2020
Balanced growth
Review and presentation of results: level of achievement of the Outlook.
Approval of the budgets for financial year 2021.
Performance and expectations of each of the businesses of the group.
Analysis of the impacts of the measures taken to fight the COVID-19 pandemic.
Opportunities for investment in strategic markets: PNM Resources (United
States), Infigen Energy (Australia), Aalto Power (France), Acacia Renewables
(Japan), Svea Vind Offshore (Sweden).
Sustainable remuneration
of shareholders
Shareholder remuneration in line with Outlook 2018-2022.
Implementation of the Iberdrola Flexible Remuneration optional dividend system
and renewal for the next year.
Sustainability
Review of the risks and opportunities deriving from Climate Change.
Publication of the Statement of Non-Financial Information. Sustainability Report.
Monitoring of the targets for the reduction of greenhouse gas emissions.
Supervision of the group’s activities having an impact on Stakeholders, and
alignment with the Sustainable Development Goals.
Approval of the new Diversity and Inclusion Policy.
Modification of the General Sustainable Development Policy and of the Human
Resources Framework Policy.
Publication of the Fiscal Transparency Report.
Publication of the Diversity and Inclusion Report.
Analysis of Talent Management trends and best practices.
Financial strength
Approval of major financial transactions, prioritising the issuance of green
bonds.
Monitoring of key financial indicators.
Disposal of non-strategic assets: sale of the equity interest in Siemens Gamesa
Renewable Energy S.A.
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87
Control of corporate
risks
Review and update of Risk Policies and approval of guidelines on risk limits.
Monitoring of risk control and management systems and of level of compliance
with the Corporate Tax Policy.
Proposal to re-elect the statutory auditor and appointment of the provider assuring
the Statement of Non-Financial Information.
Corporate governance
and compliance
Reordering of the Corporate Governance System and transition to the
Governance and Sustainability System, based on environmental, social and
corporate governance standards (ESGs).
Holding of a fully remote General Shareholders’ Meeting.
Appointment and re-election of directors.
Selection and composition of the governance bodies.
Proposals for the appointment of independent directors at the various country
subholding companies.
Adaptation of the Corporate Governance System (now the Governance and
Sustainability System) to the update of the CNMV’s Good Governance Code of
Listed Companies.
Remuneration of the Board of Directors and of senior management.
Monitoring of contacts with shareholders.
The main objective of Iberdrola’s Board of Directors is to establish,
supervise and implement the strategy of the company and its group;
and to continuously review and update its Governance and Sustainability
System, and particularly its corporate policies.
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5.2 Three Lines Model
A principles-based model
The Internal Control System of Iberdrola and the companies of its group is configured by reference to international best
practices. The Three Lines Model, published on 20 June 2020 by the Institute of Internal Auditors, updates the previous Three
Lines of Defense Model, and is based on an assurance system combined around three lines, 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.
E
x
t
e
r
n
a
l
a
s
s
u
r
a
n
c
e
p
r
o
v
d
e
r
s
i
Governing body
Accounting to stakeholders for organisational oversight
Management
Actions (including managing risks) to achieve the organisational
objectives
Internal Audit
Independent assurance
First line roles: provision
of products/services to clients;
managing risk
Second line roles: experience,
support, monitoring and challenge
on risk-related matters
Third line roles:
Independent and objective assurance
and advice on all issues related to the
achievement of objectives
KEY:
Accountability,
reporting
Delegation, direction,
resources, oversight
Alignment, communication,
coordination, collaboration
Based on the document “The IIA’s Three Lines Model 2020. An update of the Three Lines of Defense”. IIA 2020.
Iberdrola adopts the Three Lines Model to ensure its
internal control system.
Principle 1: Governance
Principle 2: Governing body roles
Iberdrola’s governance has structures and processes that
enable:
to
though
• Accountability by
the Board of Directors
•
•
for organisational oversight
stakeholders
integrity, leadership and transparency.
Actions (including managing risk) by management to
achieve the objectives of the strategic plan through risk-
based decision-making and application of resources.
Assurance and advice by an internal audit function
to provide clarity and confidence and to promote and
facilitate continuous improvement through rigorous
research and insightful communication.
Iberdrola’s Board of Directors:
• Ensures that appropriate structures and processes are
in place for effective governance.
• Ensures that organisational objectives and activities
are aligned with the prioritised interests of the
stakeholders.
• Delegates responsibility and provides resources
to management to achieve the objectives of the
organisation while ensuring legal, regulatory and
ethical expectations are met.
• Establishes and oversees an independent, objective
and competent internal audit function to provide clarity
and confidence on progress toward the achievement
of objectives.
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5. A framework of trust
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Principle 3: Management and first and
second line roles
Management’s responsibility to achieve organisational
objectives comprises both first and second line roles. The
management team and the professionals of Iberdrola and
its group are the direct managers of the entity’s risks. Thus,
the company’s Management is responsible for maintaining
effective control and for implementing procedures to control
risks on a continuous basis, based on the Internal Control
objectives of the COSO model (operational, reporting and
compliance – Committee of Sponsoring Organizations,
May 2013).
Significant risks facing Iberdrola’s primary businesses / Pages
54, 58, 62
The primary assurance functions within Iberdrola, within
their respective areas of responsibility, are: (i) the group’s
Risk Division, within the framework of its duties within the
Comprehensive Risk Control and Management System; (ii)
the Internal Assurance Division, belonging (like the Risk
Division) to the Risk Management and Internal Assurance
area, in its responsibilities relating to the internal risk
management and control systems in relation to the
preparation of financial information (Internal Control over
Financial Reporting System, or ICFRS) and non-financial
information (Internal Control over Non-Financial Reporting
System, or ICNFRS) and the SAP environment; (iii) the
Compliance Unit, which is responsible for proactively
ensuring the effective operation of the Compliance System
(notwithstanding which, in the financial and non-financial
information processes it is considered to have a third line
role as it provides independent assurance regarding the
risk of non-compliance with the legal framework); and (iv)
the Cybersecurity Division within the Corporate Security
Division, through the supervision, monitoring and reporting
of cybersecurity risks.
Comprehensive Risk Control and Management System / Page 90
Compliance Unit / Page 93
Principle 4: Third line roles
The Internal Audit area proactively ensures the proper
operation of the internal control, risk management and
governance systems, systematically auditing the roles
of 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 Iberdrola’s Audit and
Risk Supervision Committee (ARSC).
The Audit and Compliance Committees (ACC) and 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. These
regulations, approved by the Board of Directors, form part
of the Governance and Sustainability System and establish
the rules, duties, competencies and powers of Internal
Audit, as well as its framework of relations within the group.
The 2020 annual activities plans of Iberdrola’s Internal
Audit Area and of the Internal Audit divisions of the group,
with a risk-based focus, responded to the requirements
established by the ARSC and the respective ACCs of the
country subholding companies, and included:
• Half-yearly reviews of the operation of the most critical
ICFRS controls, as well as reviews of the various
cycles of financial information preparation, within the
framework of the revision of the entire ICFRS over a
5-year period.
• 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 the compliance programmes.
Iberdrola satisfactorily completed the Quality Assurance
evaluation performed by the Internal Auditors Institute of
Spain in 2020.
Principle 5:
Third line independence
Internal audit’s independence from the responsibilities
of management is critical to its objectivity, authority and
credibility. At Iberdrola this is established by: accountability
to the Board of Directors; unfettered access to people,
resources and data needed to complete its work; and
freedom from bias or interference in the provision of audit
services.
Principle 6:
Creating and protecting value
At Iberdrola, all of the roles are aligned with each other and
with the interests of the stakeholders, contributing to the
creation and protection of value.
External assurance providers
to strengthen
the
Regulators establish requirements
organisations’ controls and perform an
independent
oversight role. The powers of the ARSC and the ACCs
include striving to preserve the independence of the
statutory auditors, who provide assurance of the true
picture provided by Iberdrola’s financial information..
Audit Report on the Consolidated Financial Statements
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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.
• Attain strategic goals with controlled volatility.
• Ensure
the group’s corporate stability, financial
strength and reputation (Stakeholders).
• Contribute to meeting the SDGs, with a special focus
on goals seven and thirteen.
level,
the operational
Imbue a risk culture.
•
At
the Comprehensive Risk
Control and Management System is structured around
a Risk Committee and an independent specialised Risk
Management and Internal Assurance Division, functionally
reporting to the Audit and Risk Supervision Committee,
that analyses and quantifies the risks within the main
businesses and corporate functions of the group.
Board of Directors
Risk Policies
Audit and Risk
Supervision Committee
Active management
Duties of the Risk Division
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, under the internationally recognised three lines model,
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 regularly reported to the various
committees and externally.
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 environmental, societal
and governance (ESG) risks with significant reputational
consequences.
Operational risk is centrally managed through the group’s
corporate Insurance, Information Technology, Security and
Cybersecurity, and Occupational Safety and Health units.
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 Divisions 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.
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:
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91
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:
Liberalised Businesses of the Iberdrola group.
Specific risk policies of the businesses:
•
• Renewable Energy Businesses of the Iberdrola group.
• Networks Businesses of the Iberdrola group.
• Real Estate Business.
Insurance Policy.
Investment Policy.
Financing and Financial Risk Policy.
Treasury Share Policy.
Corporate risk policies:
• Corporate Credit Risk Policy.
• Corporate Market Risk Policy.
• Operational Risk in Market Transactions Policy.
•
•
•
•
• Risk Policy for Equity Interests in Listed Companies.
• Reputational Risk Framework Policy.
• Purchasing Policy.
•
• Cybersecurity Risk Policy.
• Occupational Safety and Health Risk Policy.
Information Technologies Policy.
General
Risk Policy
Approved by
the Board of
Directors
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, and companies with significant interests held by other shareholders, approve their own policies under their own
special framework of strengthened autonomy.
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, including liquidation
and replacement cost risks.
Business risks: deriving from uncertainty as to the behaviour of variables intrinsic to the business (characteristics of
demand, hydraulic resources, wind, solar, 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, pandemics, climate change, technological obsolescence, cybersecurity,
fraud and corruption, litigation, 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.
Given the multidimensional nature of the risks, the taxonomy defined in the system contemplates additional classification
variables for better monitoring, control and reporting of such risks. These additional categories include the classification of
risks into Structural Risks, Hot Topics and Emerging Risks, the latter being understood as potential new threats, the impact
of which is as yet uncertain and the probability of which undefined, but which are growing and could become significant for
the group.
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5. A framework of trust
92
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
Change in demand
Resource risks
Change in hydroelectric
resources - Spain
Change in wind
resources - group
Financial risks
Change in interest rate
Change in exchange rate
Other risks
Credit risk
Operational risk
Regulatory and political risk
Climate change risk
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 rates; or ii) fixed prices 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 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 (power from wind
farms with ROCs) risk
Mexico. The PPAs with the CFE do not have a market risk
Brazil. Integrated Wholesale, Renewables and Retail risk
United States. For windfarms exposed to the market
International. For windfarms exposed to the market
Wholesale, Retail and Renewables: moderate short-term impact, given the
nature of the group’s generation facilities and the structure of the long-term
power purchase agreements.
Networks: no impact, except for the Brazilian subsidiaries in between tariff
periods.
Possible impact of 1% reduction
in demand for each country
•
•
•
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
Mitigated thanks to the high number of facilities in operation and the
geographic dispersion thereof.
In the medium-to-long term, years with more wind are offset by years
with less wind.
Lower wind
output - group
Renewables
Business -
group
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.
This risk is mitigated by taking on debt and realising 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 +25 bps
increase
Possible impact
on financial
cost of 5%
increase in
currency
Group
financial
cost
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 levels slightly above 1% of total 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).
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.
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93
5.4 Ethics
Compliance System
Powers of the Unit
Iberdrola’s Compliance System is made up of all of the rules,
formal procedures and significant actions intended to ensure
the that the company conducts itself 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.
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
the Iberdrola group’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 implementation
and improvement of 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) training and communication
activities aimed at all professionals of the group, (iii) the
development and implementation of rules and controls to
minimise the risk of crime, particularly 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
Iberdrola obtained
In 2018
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 2020 Iberdrola renewed the certifications provided
by AENOR in 2017: UNE-ISO 37001 on anti-bribery
management systems and UNE 19601 on penal compliance
management systems. The companies of
the Spain
subgroup also renewed these certifications.
Iberdrola has been chosen for the seventh consecutive year
as one of the most ethical companies in the world, according
to the World’s Most Ethical Companies 2020 ranking
prepared by the Ethisphere Institute, thus recognising the
ethical leadership and conduct of 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 /
whistleblower channels
Identification and
evaluation of
compliance controls
Investigation of
grievances /
whistleblowing
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.
Compliance Unit
Iberdrola, S.A.’s Compliance Unit is a collective, internal and
permanent body, linked to the Sustainable Development
Committee of the Board of Directors, responsible for
proactively ensuring the effective operation of the group’s
Compliance System.
In addition, there is a Compliance Division linked to the
corresponding Audit and Compliance Committees at each
country subholding company and each head of business
company.
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94
5.5 Sustainable Development
The Iberdrola group has transformed its business model in recent years to make it more sustainable,
achieving development that meets the needs of the present without compromising those of future
generations.
Sustainable Development Plan: Energy to thrive
Iberdrola is firmly committed to sustainable development and to improving the quality of life of
people. Its contributions in the environmental, social and governance (ESG) areas are reflected in
numerous projects and activities that constitute the group’s 2020-2022 Sustainable Development
Plan: Energy to thrive. Using this plan, the company works towards all the Sustainable Development
Goals (SDGs) of the 2030 Agenda of the United Nations.
Thus, the more than 350 tasks in this plan constitute Iberdrola’s ESG objectives, a portion of which
were presented at Capital Markets Day 2020.
Priorities of the 2020-2022 Sustainable Development Plan Energy to thrive.
SUSTAINABLE DEVELOPMENT PLAN 20-22 “ENERGY TO THRIVE”
The “ Energy to thrivesd” Plan demonstrates Iberdrola’s commitment to fight against climate change and to the well-being of the society, through the development of more
than 350 actions at environmental, social and governance level. These responds the demands of our stakeholders and places the company on the highest standards at
sustainable development field.
E nvironmental
We led the energy transition for more than
two decades to combat climate change
through the innovation and the production
of clean energy.
2022 Main targets:
Green energy: we will increase
green energy consumption
with an additional 3,300 MW
Digitalization: 16.7 million
smart meters installed
Fight against climate change:
we will reduce our emissions until
100 g CO2/KWh
H2
Green Hydrogen: Projects
to produce more than 50
MW of green Hydrogen
Renewables: We will accelerate
investment in clean energy,
incorporating more than 12 GW
Water: reduction of water
consumption, up to
<500 m3/GWh
R&D: Research and
development
investments of 330 M €
Our networks: reaching up to 75%
of digitalized networks in HV & MV
Sustainable moblity: We will
install 150.000 recharging
points by 2025
Biodiversity: we will reforest
with 2.5 million trees,
reaching 8 million by 2025
Circular economy: 100% of
office waste will be recycled
and recovered
S ocial
We work for the universal access to energy,
contributing to improve people’s life quality,
creating employment and assisting those
most vulnerable.
2022 Main targets:
Training: We will increase
the number of employee
training hours up to 55
Sensitization: Support for
the initiative Universo Mujer
of CSD across 16 federations
Driver of employment:
creating more than 400.000 at
direct, indirect and induced level
Training an Education: More
scholarships and grants
reaching 33.000 beneficiaries
Access to energy: reaching
11.5 million people through
the Electricity for all program.
Safety: Achieve 99 % of
permanent contract
Social Action: To reach
1.3 million beneficiaries throw
the Social Foundations Program
Excellence: Iberdrola U
Universities Program, with
more than 40 initiatives
Equality: Reach 25% of
women in managerial positions
and maintain equal pay
Intelligent solutions: More
products and services tailored
to our customers, reaching up
to 12 million
G overnance
We develop the best practices at corporate
governance level, supporting the sustainable
financial market and promoting social responsible
practices in in the supply chain.
2022 Main targets:
Cybersecurity: More
than 1.800 Cybersecurity
analysis of per year
Responsible supply: To have
70% of our suppliers with
sustainability policies
Sustainable financing:
Maximize green financing,
currently above €15 billion
Implement best practices in the
Governance and Sustainability
System
Plans for 80% of suppliers
with identified needs for
improvement
Sustainable events: Increase in
the certification of sustainable
events, with at least 5 per year
Compliance: Continuous
improvement of the compliance
systems of the holding company
and the group's subholding
companies
New system for 100%
centralized purchases
Integrated Report 2021www.iberdrola.com 6. About this report
95
6. About this report
This report, which Iberdrola directs to both its shareholders
and all other Stakeholders, has been prepared adopting the
IIRC guidelines, and constitutes one more example of the
group’s interest in the area of transparency.
Integrated Report 2021www.iberdrola.com 6. About this report
96
6.1 About this report
by
Integrated Report
• This report has been prepared
in accordance with the reporting
framework
the
published
International Integrated Reporting
Council (IIRC) and in accordance
with the recommendations thereof,
taking
the
separate and consolidated annual
financial statements
formulated
by the Board of Directors, audited
and pending approval by
the
shareholders at
the General
Shareholders’ Meeting of Iberdrola.
consideration
into
• A multi-disciplinary
its business model,
team made
up of corporate businesses and
areas was created in order to
provide a complete view of the
group,
the
challenges and risks it faces, and
its social, environmental, financial
and
performance.
The participating organisations
guarantee the completeness of the
information included.
governance
• The content of this report has
been supervised by the company’s
Operating Committee. All operating
and financial figures were approved
by the Board of Directors at its
meeting held on 23 February
2021, after a favourable report
from the Sustainable Development
Committee, and
the strategic
forecasts were approved by the
Board of Directors on 20 October
2020 and published during Capital
Markets Day 2020.
has
channels
Material aspects identified
of
• Iberdrola
communication and dialogue with
its Stakeholders, developed
in
accordance with the principles of
the AA1000 Assurance Standard,
as described
the
Stakeholder Relations Policy and
in the Statement of Non-Financial
Information. Sustainability Report
2020.
in detail
in
• The
company also performs
materiality analyses
that help
identify matters of significance to
its Stakeholders, bringing to light
financial,
particularly
sensitive
social, and
environmental or
Iberdrola’s performance
• The group’s performance in recent
influenced by
years has been
external corporate
transactions,
which the reader should take into
account in order to properly interpret
transactions
this
and activities are described
in
the group’s public
information,
the
following being particularly
noteworthy:
report. These
(December 2015),
– In the United States, the integration
of UIL Holdings Corporation and the
initial public offering of the group’s
US subholding company, Avangrid,
together
Inc.
with the merger agreement for the
acquisition of 100% of the share
capital of PNM Resources, Inc. by
Avangrid, Inc. This latter agreement,
signed in October 2020, is subject to
acquisition of the required approvals
and authorisations.
inclusion of all
–
the
In Brazil,
the businesses
the group
that
had through Elektro Holding S.A.
within Neoenergia S.A., which thus
became the Iberdrola group’s country
subholding company in Brazil (August
2017), the initial public offering of
Neoenergia S.A. (July 2019) and the
award at public auction of 100% of the
share capital of the Brazilian company
CEB Distribuição S.A. to a wholly-
owned subsidiary of Neoenergia S.A.
(December 2020).
– Transactions finalised during 2020
included: in France, the acquisition
of 100% of the share capital of the
Saint-Brieuc offshore wind
farm
(March) and the purchase of the
Aalto Power renewables company
(July); in Sweden, the framework
agreement with Svea Vind Offshore
AB for the development of offshore
wind projects
in Japan,
the agreement with Macquarie’s
the
Investment Group
Green
acquisition of the local developer
Acacia Renewables
(September);
and in Australia, the acquisition of
98% of the share capital of Infigen
Energy Limited and Infigen Energy
RE Limited by Iberdrola Renewables
Australia Pty Ltd (October).
(June);
for
governance
corporate
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.
Information boundaries
• The information submitted covers
its subsidiaries
Iberdrola and
information
and affiliates. The
the
in
boundaries are defined
group’s
annual
consolidated
financial statements and Statement
of Non-Financial
Information.
Sustainability Report 2020.
Social and relationship capital / Page 76
Assurance
• This report has been subject to a
process of internal assurance, by
means of a limited review performed
by the Management of the Internal
Audit Area of Iberdrola.
• Although it has not been subject to
a process of independent external
assurance, a significant portion of
the information contained herein
relating to financial year 2020 and to
previous years comes from annual
financial reports and sustainability
reports, all of which have been
the subject of an external audit or
assurance for which the respective
certificates are available. The
comes
remaining
mainly
reports or
public presentations made by the
company.
from other
information
Information boundaries
• The information submitted covers
its subsidiaries
Iberdrola and
information
and affiliates. The
in
the
boundaries are defined
annual
consolidated
group’s
financial statements and Statement
of Non-Financial
Information.
Sustainability Report 2020.
Integrated Report 2021www.iberdrola.com 6. About this report
97
Legal disclaimer with respect to forward-looking
statements
• This document contains forward-looking information and statements about Iberdrola and its
affiliates. Such information or 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 information
or statements are reasonable, investors and holders of the Company’s shares are cautioned
that forward-looking information and statements are subject various to 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 information and 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 information
or statements. All the forward-looking information and statements hereby made are qualified by
the cautionary statement above and are based on information available on the date of approval
hereof. Except as required by applicable law, Iberdrola undertakes no obligation to publicly update
any statements or revise forward-looking information, whether as a result of new information,
future events or otherwise.
Integrated Report 2021www.iberdrola.com 6. About this report
98
Integrated Report, February 2021
Published by: IBERDROLA, S.A.Spain
© 2021 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 prior
approval of IBERDROLA, S.A.
Integrated Report 2021www.iberdrola.com 6. About this report
99
Glossary of terms and abbreviations
Term
AENOR
ANEEL
Definition
Spanish Association for Standardisation
and Certification (Asociación Española de
Normalización y Certificación). Pages 27, 93.
National Electrical Energy Agency (Agência
Nacional de Energia Elétrica). Pages 43, 51, 53,
54, 68.
BOVESPA
São Paulo Stock Exchange (BOlsa de Valores
do Estado de São Paulo). Page 83.
CEO
Chief Executive Officer. Page 47.
CfD
CFE
Contracts for Difference. Page 57.
Federal Electricity Commission (Comisión
Federal de Electricidad). Pages 61, 92.
Term
ITC
Definition
Investment Tax Credit. Page 57.
LBG
London Benchmarking Group. Page 78.
MVAr
Mega Volt Ampere Reactiv. Page 54.
NECEC
NYSEG
SDGs
New England Clean Energy Connect.
Pages 19, 43, 54, 68.
New York State Electric and Gas
Corporation. Pages 53, 54.
Sustainable Development Goals. Pages
38, 47, 72, 74, 78, 90, 94.
Office of Gas and Electricity Markets
(United Kingdom). Page 53.
CMP
Central Maine Power Company. Pages 53, 54.
Ofgem
CNMC
CNMV
COSO
National Commission on Markets and
Competition (Comisión Nacional de los
Mercados y la Competencia). Pages 50, 53.
National Securities Market Commission
(Comisión Nacional del Mercado de Valores).
Pages 84, 87.
Committee of Sponsoring Organizations of the
Treadway Commission. Page 89.
COVID-19
COronaVIrus Disease 2019. Pages 6, 11, 13, 27,
38, 42, 45, 50, 51, 53, 54, 57, 61, 66, 72, 73, 77,
78, 86.
OHSAS
Occupational Health and Safety
Assessment Specification. Pág. 38, 72.
UN
United Nations. Page 90.
GDP
Gross Domestic Product. Pages 38, 41, 53.
PTC
Production Tax Credit. Page 57.
CSD
Higher Council for Sport (Consejo Superior de
Deportes) Page 38.
RIIO
Revenue=
Incentives+Innovation+Outputs. Pages 53,
54.
EBITDA
ERM
ESG
FFO
Earnings Before Interest, Taxes, Depreciation
and Amortization. Pages 5, 10, 12, 46, 55, 59,
63, 66, 67.
Enterprise Risk Management. Pages 90, 91.
Environmental, Social and Governance. Pages 6,
27, 28, 35, 36, 37, 42, 82, 84, 87, 90, 94.
ROE
Return on equity. Pages 12, 53.
RPS
SBTi
Renewable Portfolio Standard. Page 57.
Science Based Targets. Pages 38, 74.
Funds from operations. Pages 11, 66.
ICFRS
GHG
Greenhouse Gases. Pages 38, 74.
ICNFRS
HVDC
R&D
IFRS
IIRC
IPCC
ISO
High Voltage Direct Current. Pages 34, 68.
Research + Development + innovation. Pages
38, 40, 41, 54, 70, 71.
International Financial Reporting Standards.
Pages 7, 55, 59, 63.
International Integrated Reporting Council.
Pages 3, 65, 95, 96.
Intergovernmental Panel on Climate Change.
Page 30.
International Standards Organization. Pages 38,
54, 72, 74, 93.
SPD
SPM
STEM
TCFD
Internal Control over Financial Reporting
System Page 89.
Internal Control over Non-Financial
Reporting System. Page 89.
ScottishPower Distribution. Page 53.
ScottishPower Manweb. Page 53.
Science, Technology, Engineering and
Math. Page 78.
Task Force on Climate-related Financial
Disclosure. Page 84.
UE
European Union. Pages 27, 35, 50, 61, 92.
WACC
Weighted average cost of capital. Page 53.
Integrated Report 2021www.iberdrola.com