Independent Assurance Statement

Scope and objectives

RWE npower commissioned Two Tomorrows (Europe) Limited to undertake independent assurance of its 2010 Corporate Responsibility Report as published at www.rwenpowercr.com.

The assurance process was conducted in accordance with AA1000AS (2008). We were engaged to provide Type 2 assurance, which covers

• evaluation of adherence to the AA1000APS (2008) principles of inclusivity, materiality and responsiveness (the Principles); and
• reliability of specified sustainability performance information.

The performance information included in scope was all data and claims in the report, with checking processes prioritised according to materiality with the following exclusions: financial information taken from annual reporting processes and any data already submitted to regulatory audit or other third party check. We based our prioritisation on the materiality of issues at a consolidated corporate level.  

We used the Global Reporting Initiative (GRI) Quality of Information Principles as Criteria for evaluating performance information.

Responsibilities of the directors of RWE npower and of the assurance providers

The directors of RWE npower have sole responsibility for the preparation of the Report. In performing our assurance work, our responsibility is to the management of RWE npower, however our statement represents our independent opinion and is intended to inform all of RWE npower’s stakeholders including its management. We were not involved in the preparation of any part of the Report. In addition to this contract, we have provided verification of RWE npower’s submission to the Green Energy Supply Certification Scheme. This is the fifth year that we have provided assurance for RWE npower. We adopt a balanced approach towards all RWE npower stakeholders.

Our team is comprised of Jon Woodhead, Dave Knight, Vicky McAllister and Anne Euler. Further information, including individual competencies relating to the team, can be found at: www.twotomorrows.com

Basis of our opinion

Our work was designed to gather evidence with the objective of providing moderate assurance as defined in AA1000AS (2008). We undertook the following activities:

• Review of the current sustainability issues that could affect RWE npower and are of interest to stakeholders;
• Interviews with selected directors and senior managers responsible for management of sustainability issues and review of selected evidence to support issues discussed;
• Interviews with a range of stakeholders to get structured feedback to the 2009 CR report;
• Review of information provided to us by RWE npower on its reporting and management processes relating to the Principles;
• Review of RWE npower sustainability data and information reported to RWE for use in the RWE Annual Report and Accounts;
• Site visit to the recently commissioned combined cycle gas turbine Staythorpe power station, in Nottinghamshire, to review source data and implementation of strategy at this site;
• Review of supporting evidence for key claims in the report;
• Review of the processes for gathering and consolidating data and, for a sample, checking the data consolidation.

Findings

We reviewed and provided feedback on drafts of the Report and where necessary changes were made. On the basis of the work undertaken, nothing came to our attention to suggest that the Report does not properly describe RWE npower’s adherence to the Principles or its performance.

Observations

Without affecting our assurance opinion we also provide the following observations.

On balance, the coverage of material issues has improved compared to previous years, for example, on customer service. There have also been improvements with the presentation of performance data. The ‘Targets and Performance’ section enables progress to be seen over a three year period. Together with the links to initiatives in these areas and to future targets, this enables report users to be able to track performance more easily within a longer term context. We recommend that RWE npower builds on this approach, in particular to help explain the implications for the energy industry of national and international CO₂ emissions reductions and the importance of energy policy and market reform. More balanced coverage of areas where RWE npower has not performed as well (as well as those where it has) would improve the credibility of disclosures.

Inclusivity concerns the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability.

• During the last year, RWE npower adapted the way it engages with stakeholders through introduction of a new corporate responsibility (CR) governance structure, including three Sub-Committees covering: ‘Low Carbon Economy’, ‘Customers’, and ‘Community Involvement and Employee Engagement’. In turn, its engagement has focussed around these three strategic themes, for example through the new Customer Stakeholder Council. This is commendable, has been well received by stakeholders and provides stronger links between stakeholder issues and the company. We recommend that future reports include coverage of how these groups have influenced decision making.
• In terms of internal engagement, this new structure for managing Corporate Responsibility has helped to align business priorities and stakeholder expectations. We recommend that future reporting includes information on how the CR governance structure and business strategy teams are working together and the implications of a shared ‘one company’ approach.

Material issues are those which are necessary for stakeholders to make informed judgments concerning RWE npower and its impacts.

• We welcome the increased coverage of tariffs this year, including reporting on the summary tariff ‘families’ and how customers are kept informed about tariff changes. In response to evidence that customers are still confused by tariffs across the energy industry, RWE npower has developed a set of tariff guides, which are available on the website. We recommend that future reports cover how many customers have accessed the guides and any feedback on how useful they have found them.
• There is extensive information about RWE npower’s transition towards a low carbon economy. Identifying the Critical Leadership Characteristics of a sustainable energy company is a useful new approach. We recognise that the process of energy market reform is not concluded, but believe that there is now a need to set out RWE npower’s vision for how investment will reduce carbon emissions after 2025. A more certain policy environment would enable the company to set out an investment timetable and emissions reductions targets out to 2050. This would help stakeholders to understand how the industry is moving towards a low carbon economy, taking into account UK and European targets and the anticipated evolution of market conditions.
• The inclusion of information on plans to switch from coal to biomass at Tilbury Power Station for the remains of its ‘opt out’ period provides a useful indication of efforts to reduce CO₂ emissions and use more sustainable fuels at scale. We recommend further reporting of the implications of large scale biomass generation in future reports.

Responsiveness concerns the extent to which an organisation responds to stakeholder issues

• We welcome the increased emphasis on demand management in RWE npower’s reporting. This includes improving energy efficiency for its industrial and commercial customers and its own operations. Our assurance indicated that it is still difficult to engage with domestic customers on demand management and we recommend that RWE npower provides more commentary on how it attempts to raise awareness of the issues and increase the uptake of energy efficiency services.
• The customer section includes a range of information on efforts to achieve improvements to customer service and related performance data. We recognise that there is a time lag between RWE npower’s investment to improve customer service, and we recommend that in next year’s report RWE npower describes how implementation of new systems has led to improvements in customer service performance and survey results.
• As recognised in the report, RWE npower needs to continue to develop effective ways to engage with customers and wider society on how its investment strategy will achieve a balance between commercial and regulatory imperatives and meeting sustainability challenges.
  

Performance information

• Information provided on KPI’s, targets and plans this year has been improved, with past performance alongside current performance and a link to future targets and explanatory pages provided. This enables long-term trends to be more clearly seen and clarifies the links between historical trends, recent performance and how they map onto future targets and expectations. We recommend that the industry and governmental context is provided alongside this ‘RWE npower’ perspective to reflect external expectations of performance.
• In particular this is relevant for the transition to a low carbon economy. We recommend that emissions data, both by KWh generated and absolute numbers, should be reported against a trajectory and timeframe linked to national and international targets.

Two Tomorrows (Europe) Limited
London
June 2011

Two Tomorrows (Europe) Limited trading as Two Tomorrows is an international corporate sustainability agency. We deliver deep insight, strategic advice and pragmatic support to major companies, enabling them to create long-term value by doing business sustainably. www.twotomorrows.com