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Poland

Currently, apart from the TAURON Group, there are 3 big, vertically integrated energy groups: PGE, ENEA and ENERGA.

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According to 2016 data, in the electricity generation subsector, consolidated energy groups (PGE, TAURON, ENEA, ENERGA) hold 58% of the market. Smaller but important players include EDF Polska Centrala sp. z o.o. (EDF) (8%), ENGIE Energia Polska S.A. (ENGIE) (7%) and Zespół Elektrowni Pątnów-Adamów-Konin S.A. (ZE PAK) (6%).

In 2016, the TAURON Group was the second largest electricity producer in Poland. In terms of installed capacity and electricity generation, it was second only to PGE. PGE’s market share of domestic electricity generation is approx. 37%, while TAURON’s is approx. 10%.

The third largest power utility in Poland is ENEA with a market share of approx. 9%; as a result of the takeover of the Połaniec Power Plant from ENGIE in 2017, the capacity of ENEA Group’s generation assets rose from 3.3 to 5.8 GW.

ENERGA, in turn, in 2016 had the biggest share of RES as a percentage of the energy it generated in the Polish market – over 30%.

TAURON Group’s generation assets are concentrated in southern Poland. This region is also where the hard coal deposits used for firing the Group’s power plants and CHP plants are located. Locating the generation assets in the vicinity of coal deposits optimizes the costs of transporting this commodity.

TAURON Group’s generation assets are in 90% fired with hard coal, with 10% of these units being modern and highly efficient. Wind power plants account for 4% of the Group’s installed capacity, and hydropower plants for nearly 3%, while biomass-fired generation units account for 2.4%.

The TAURON Group is the biggest distributor of electricity in Poland. The share of TAURON Dystrybucja in the distribution of electricity to end users in 2016 was approx. 39% (among the top 4 distributors). The Group’s distribution networks cover over 18% of Poland’s landmass.

The TAURON Group is the leader in the Polish market in terms of the number of distribution customers and the volume of distributed electricity.

It should be emphasized that distribution activity, due to the specifics of this segment (concession activity), is a source of stable and predictable revenues, constituting a significant part of the overall Group’s consolidated revenues. The electricity distribution geographic area where companies from the Distribution Segment and the Sales Segment have historically operated is characterized by significant industrialization and population density, thereby driving the demand for electricity among households and businesses. The number of customers in the Distribution Segment is nearly 5.5 million.

The TAURON Group is the second largest seller of electricity in Poland, after the PGE Group. In 2016 the Group’s retail sales of electricity totaled 32 TWh. In 2015 the retail electricity sales volume was approx. 35.9 TWh. The number of the Sales Segment’s customers is approx. 5.3 million.

Various energy groups in the electricity sales segment are geographically linked primarily to the geographic areas in which their distribution companies (DSOs) operate – this applies in particular to customers in the household and small business groups. Additionally, broader and more open competition between the groups is limited by the obligation to submit household tariffs to the President of the Energy Regulatory Office for approval. Price tariffs limit the possibility of price positioning in the product offers, thereby affecting their attractiveness to customers. These limitations do not apply to business and institutional customers. Among TAURON Group’s main competitors in this segment, one can see, on the one hand, an upward trend regarding retail sales volume and, on the other hand, a downward trend of the results in this area, which may be a consequence of the assumptions adopted in the trading strategies of these groups.

Europe

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ENEL

Fuel mix:
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Electricity production / including RES [TWh]

262 / 86

Main strategic directions:
  • Growth mainly in RES and distribution network
  • Simplification of the Group structure
  • Active portfolio management (e.g. disposal of inefficient assets)
  • Payment to the owners – dividend payments

EDF

Fuel mix:
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Electricity production / including RES [TWh]:

584 / 61

Main strategic directions:
  • Development of heating networks
  • Increase in the share of renewable sources in the fuel mix: by 2030, doubling the installed capacity in RES
  • Reduction of OPEX, CAPEX, sale of inefficient assets

 

E.ON

Fuel mix:
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Electricity production / including RES [TWh]:

11.6 / 11.6

Main strategic directions:
  • Development of RES (photovoltaics, wind) (improving the cost efficiency of assets (wind, photovoltaics, hydropower plants) and work on new technologies)
  • Investments in distribution networks (including work on energy storage facilities and distribution solutions for decentralized generation systems)
  • New solutions for customers
  • Energy efficiency, distributed energy generation

ENGIE

Fuel mix:
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Electricity production / including RES [TWh]:

346 / 68

Main strategic directions:
  • Simplification of the corporate holding portfolio – concentration on growth and disposal of half of its coal assets
  • Efficiency improvement
  • Enhancing the Group’s flexibility

ENDESA

Fuel mix:
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Electricity production / including RES [TWh]:

69.8 / 6.4

Main strategic directions:
  • Decarbonization of the energy mix by 2050
  • Strengthening its position in smart grids and preparation for growth in this area
  • Profitable and innovative customer service
  • Further efficiency improvement

RWE

Fuel mix:
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Electricity production / including RES [TWh]:

216 / 10.8

Main strategic directions:
  • Enhancing financial strength
  • Improvement of efficiency and competitiveness
  • Introduction of corporate culture focused on efficiency, enhancing competitiveness through more efficient processes and organization
  • Input in sustainable transformation of the European energy system: among others securing the power supply through flexible and efficient power plants, development of RES, further development of distribution infrastructure, strengthening the sales position using innovative products and services

CEZ

Fuel mix:
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Electricity production / including RES [TWh]:

61.1 / 3.6

Main strategic directions:
  • Leader among companies owning conventional generation assets
  • Broad range of products and services adapted to customer needs
  • Enhancing and consolidating its position in Europe

EnBW

Fuel mix:
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Electricity production / including RES [TWh]:

52.7 / 8.2

Main strategic directions:
  • Customer orientation
  • New idea for the energy market, energy and security
  • Doubling the share of RES capacity from 19% (in 2012) to 40% in 2020
  • Development of the network for security of the energy system
  • Innovative products for home and business (energy management, optimization)
  • Mitigation of risks through restructuring of the generation assets

VATTENFALL

Fuel mix:
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Electricity production / including RES [TWh]:

119 / 41

Main strategic directions:
  • Leader in sustainable production (in 2016-2020, increase of installed capacity in renewable sources by over 2,300 MW)
  • Economically viable actions (ROCE ≥9%)
  • Employee engagement

IBERDROLA

Fuel mix:
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Electricity production / including RES [TWh]:

137.3 /33.5

Main strategic directions:
  • Balanced risk profile – more than 80% of investments in regulated segments
  • Penetrate new geographic markets
  • Operating efficiency – “flattening” costs to an optimum level
  • Reduction of headcount to 27 thousand
  • Financial strength – reduction of debt to EUR 25 billion, improvement of economic ratios

PGE

Fuel mix:
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Electricity production / including RES [TWh]:

53.7 / 2.2

Main strategic directions:
  • Building shareholder value and key role in ensuring Poland’s energy security
  • Leader in generation actively leveraging development opportunities
  • Reliable and active provider of utilities and services
  • The most efficient and flexible energy group in Poland
  • Leader in development of new business models and operating segments

ENEA

Fuel mix:
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Electricity production / including RES [TWh]:

13.6 / 0.6

Main strategic directions:

The Company has defined 15 strategic objectives under the following outlooks:

  • Owner (strong market position, customer relationships, financial security, high margins, innovation)
  • Customer (customer support, attractive value for money, product targeting, reliable and innovative supplier, matching offering)
  • Processes (optimization, product matching, efficient cooperation with the customer)
  • Development (modern corporate governance, sustainable investments)

ENERGA

Fuel mix:
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Electricity production / including RES [TWh]:

3.9 / 1.2

Main strategic directions:
  • Development of modern energy infrastructure allowing for a stable revenue base, depending mainly on the quality of provided services rather than only on purely market-related factors. The infrastructure will respond to future challenges of the Polish energy system and its development will make it possible to balance the interests of different stakeholders of the ENERGA Group
  • Business model focused on the customer, supporting efficient customer value management on the basis of a consistent product and service offering

FORTUM

Fuel mix:
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Electricity production / including RES [TWh]:

73 / 20.8

Main strategic directions:
  • Growth of profitability
  • Increase in photovoltaics and wind
  • Development of solutions for sustainable cities
  • Initiation of modern projects in the power sector

TAURON

Fuel mix:

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Electricity production / including RES [TWh]:

16.8/1.3

Main strategic directions:

Ensuring financial stability

  • Efficiency improvement program
  • Strategic initiatives
  • Investment return improvement

Development of a strong Group based on three pillars

  • Relations with customers as a platform for long-term growth
  • Stable base of regulated businesses
  • Efficient conventional assets

Implementation of a new operational model  supporting Strategy execution

  • Innovative organizational culture
  • Organisational culture based on
White certificates white certificates "White" certificates "white" certificates Certificates confirming the saving of a specific quantum of energy as a result of completing investments to enhance energy efficiency.
Biomass biomass Denotes a biodegradable fraction of products, waste and residue from agricultural and forestry production and related branches of industry, including fishing and aquaculture, and biogas and a biodegradable fraction of industrial and communal waste.
Sub peak power generation units sub peak power generation units Power generation units used during a period when the power system has a higher demand for capacity. Power generation units in this class are used from 2000 to 4000 hours a year.
Peak power generation units peak power generation units Power generation units used only during a period when the power system has the highest demand for capacity. Power generation units in this class are used fewer than 2000 hours a year.
Blue certificates blue certificates "Blue" certificates "blue" certificates Certificates confirming the generation of energy from agricultural biomass.
CAPEX Capital expenditures.
Red certificates red certificates "Red" certificates "red" certificates Certificates confirming the generation of energy in highly-efficient coal co-generation.
Net debt net debt Liabilities for loans and borrowings less cash and cash equivalents.
Dividend dividend Portion of a company’s net earnings per share designated for payment to shareholders.
EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization.
Electromobility electromobility Using electric vehicles, both individual vehicles such as an electric car, electric scooter, electric motorcycle and electric bicycle and public transport means: trams, trolleybuses and trains. The assumptions for the Electromobility Development Plan and the domestic framework for the policy of alternative fuel infrastructure development call for there being one million electric vehicles on Polish roads by 2025. TAURON is conducting research and analyses on developing, promoting and disseminating electromobility among Polish nationals, developing the electromobility industry in Poland and in particular collaborating in launching and implementing the findings of scientific and technical work in this area. Moreover, jointly with PGE, Energa and Enea, TAURON has submitted an application to the Office of Competition and Consumer Protection to receive a permit to establish a company called ElectroMobilityPoland to create grounds for developing electromobility.
EMAS EMAS Eco Management and Audit Scheme, an EU instrument to encourage all types of organizations to improve their environmental protection constantly. Functions on the basis of Regulation (EU) no. 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organizations in a Community eco-management and audit scheme (EMAS). The EMAS requirements constitute guidelines for organizations to structure their environmental protection duties, optimize costs and effectively manage energy and resources. EMAS is also a system for reporting an organization’s environmental impact making it easier to conduct dialogue in this area with stakeholders. Registration in the EMAS system means that an organization has satisfied the most rigorous environmental requirements.
Prosumer energy prosumer energy Generation of electricity, chiefly for one’s own needs and on a small-scale in installations harnessing renewable energy sources. Households and businesses that do this are called prosumers, meaning that they simultaneously play the role of energy producer and consumer.
Energy from distributed sources energy from distributed sources energii ze źródeł rozproszonych energetyka rozproszona rozproszone wytwarzanie generacja rozproszona energetyki rozproszonej generacji rozproszonej distributed energy Generation of energy by small generation units or facilities connected directly to distribution grids or located in the user’s electrical energy grid that usually generate electricity from renewable energy sources or non-conventional sources, frequently in cogeneration with the generation of thermal energy (distributed cogeneration). The following parties, for instance, may be part of a distributed generation grid: prosumers, energy cooperatives and municipal power plants.
Purple certificates purple certificates "Purple" certificates "purple" certificates Certificates confirming the generation of energy from methane captured in mines.
grid parity Grid parity Signifies the equivalence of the production costs of renewable energy with the energy generated in conventional power plants.
TGE’s FCM Indices Towarowa Giełda Energii (TGE) is the power exchange running the following markets: electricity (Forward Commodity Market - FCM), Day-Ahead Market - DAM, Intraday Market - IDM) and gas (FCMg, DAMg) and the Property Right Market.
smart metering Smart metering Comprehensive and integrated information system encompassing electrical energy smart meters for users of energy, telecommunication infrastructure, central database and management system. Smart metering systems support two-way communication in real time between information systems and electronic electricity meters installed in customers’ locations. Moreover, they may automate the entire billing process for energy users - from obtaining metering data to processing and aggregating them to issuing invoices.
Stakeholder stakeholder stakeholders Natural or legal entity (individual, community, institution, organization, office etc.) which may affect the company or remain under the influence of its actions.
IoT Internet of Things – concept according to which clearly identified objects may directly or indirectly collect, process or exchange data via computer network.
Emergency Cold Reserve IRZ Mechanism introduced by the transmission system operator in 2016. It involves the TSO paying the owners of generation sources which are planned to be withdrawn for keeping them ready to run in response to the operator’s instruction during the anticipated periods of capacity shortage.
ISO 14001 PN-EN ISO 14001:2005 standard PN-EN 14001 standard One of the ISO standards used in managing environmental protection. This standard designated for all organizations regardless of their type and size defines the requirements whose satisfaction supports the achievement of environmental (for instance preventing the emission of pollutants) and economic objectives.
Covenant covenant Contractual clause, order or ban imposed on a borrower to minimize the risk of its invsolvency. Covenents most frequently constitute protection for sources of debt payment to creditors, e.g. by banning further borrowing or disposing of assets.
Aggregate aggregate Bulk organic or mineral material used mainly to produce construction mortar and concrete and build roads.
HV and MV Lines linii WN i SN sieci WN i SN HV - high voltage grid in which the voltage ranges from 110 kV. This grid is used to transmit electrical energy over large distances. MV - medium voltage grid, i.e. an electrical energy grid in which the electrical voltage ranges from 1 kV to 110 kV. Medium voltage is broadly used in electrical energy grids to transmit electrical energy over medium distances and switch energy. It is used as an intermediate voltage between high voltage and low voltage connected to end-users.
Customer loyalization customer loyalization Strategy to acquire and retain customers in this time of growing competition.
Micro-grid micro-grid Electrical energy micro-grid – set of generation equipment, electrical energy storage and receiver units connected in a joint network to ensure the reliable supply of electrical energy and minimize its cost.
Micro-cogeneration micro-cogeneration Technological process involving the cogeneration of thermal and electrical energy based on the utilization of small-scale equipment and medium capacities. Micro-cogeneration may be employed in all facilities in which there is a concurrent need for electrical and thermal energy. The greatest benefits from employing micro-generation are obtained in facilities in which the demand for these two types of energy does not oscillate much or is constant. That is why individual users, hospitals and educational centers, sports centers, hotels and public utilities are usually the most frequent users of cogeneration systems.
MSCI Emerging Markets Europe 10/40 Index Index comprising key companies listed on emerging markets in Europe.
MSCI Poland Index Index comprising more than 20 key companies listed on the Warsaw Stock Exchange.
Best Available Technology BAT The most efficient and sophisticated level of technology development and methods for conducting a given business. BAT are defined for various branches of industry. In the energy sector BAT forms the basis for determining borderline emission quantities, among others, to eliminate, or if that is not practicable, limit emissions and their overall environmental impact.
Sensitive user sensitive user According to the Act entitled Energy Law, a sensitive user is a person to whom a housing allowance has been awarded and who is a party to a comprehensive agreement or electricity sale agreement and who lives in the place where electrical energy is supplied.
Impairment losses impairment losses Losses because of the impairment of non-current assets taken in accordance with the regulations of international accounting IFRS (MSSF) standard.
Corporate Social Responsibility CSR Corporate Social Responsibility – business philosophy and management strategy calling for an organization to take responsibility for the impact exerted by its decisions and actions on society and the environment. Its foundations are rooted in ethical and transparent conduct, taking into consideration the expectations of stakeholders and cultivating good long-term relations with the overall environment. Corporate social responsibility is one of the key methods of achieving sustainable socio-economic development.
PV cells Photovoltaic cell (PV) – semi-conductor material in which the energy of solar radiation is converted into electrical energy.
omni-channel Omni-channel According to the omni-channel idea, the future of commerce is to conduct online sales while simultaneously encouraging customers to make traditional purchases. Online and offline sales during the digital revolution should fluidly penetrate one another.
Operating Capacity Reserve ORM Mechanism of providing operational reserves by the Centrally Discharged Units (JWCD), where they were able to deliver electricity to the system, but for market reasons were not used. It was implemented in Poland in 2014.
RES Renewable energy sources.
PM-RES Property rights to certificates of energy for electrical energy generated in RES.
Polygeneration polygeneration Parallel generation of energy and chemicals.
RESPECT Index Index consisting of companies listed on the Warsaw Stock Exchange to identify companies managed in a responsible and sustainable manner. It takes into account the quality of reporting, the level of investor relations, corporate governance and liquidity, among others, whereby it simultaneously constitutes a real point of reference to measure the attractiveness of companies as investments.
Balancing market balancing market The balancing market is what is referred to as a technical market. That means it is not a place to sell energy. Its purpose is the physical delivery of the energy purchase/sale agreements executed by participants and balancing the demand for electricity with its generation in real time in the national electrical energy system (KSE). The existence of the balancing market is indispensable for the energy market to function. Entities that buy energy have an obligation to participate in this market.
CATALYST Market Catalyst market Bond market. It is run on the transaction platforms of the Warsaw Stock Exchange and BondSpot.
SAIDI System average interruption duration index in the supply of electricity calculated in minutes per user. It is a reliability index whose value is the sum of the products of interruption duration in energy supply and the number of users affected by the consequences of such an interruption during a year divided by the total number of users connected to a grid.
SAIFI System average interruption frequency index of long interruptions in energy supply. It is a reliability index whose value is the number of users affected by the consequences of all such interruptions during a year divided by the total number of users.
Gangue gangue The rock that is extracted from a deposit of a given mineral that is considered to be unusable waste.
Smart City smart city Smart city is a project involving the implementation of specific solutions exerting a real impact on citizens. One example is supplying tools to urban residents to monitor energy consumption, among others. This is possible thanks to the special platform called eLicznik (eMeter). TAURON supplies smart meters, for instance, under the Smart City Wrocław project.
Smart Home smart home System to control a smart home. SMART HOME technologies control burglar alarms, temperature control and electricity supply systems. This is a real-time power consumption monitoring solution that TAURON offers via a platform to check readings from the smart power meter.
Smart grid smart grid Smart electrical energy grids to facilitate communication between participants on the energy market to supply energy services while cutting costs and enhancing efficiency and integrating distributed sources of energy, including renewable energy.
smart metering Smart metering Smart metering system – electronic system used to measure energy consumption obtaining more information than from a conventional meter, and to send and receive data through electronic communication.
small carbonate sorbent Small carbonate sorbent Fine carbonate sorbent (limestone powder) – is a product derived from the process of dehydrating and profound milling of limestone whose active ingredient is calcium carbonate, CaCO3. Fine carbonate sorbent is used in processes to desulfurize flue gas – to remove SOx.
Enterprise Risk Management System ERM Set of rules, standards and tools to accomplish the fundamental objective of risk management i.e. ensuring the security of the TAURON Group’s operations. This system is regulated by the document entitled Enterprise Risk Management System in the TAURON Group, defining the TAURON Group’s enterprise risk management framework and rules.
Tauronet tauronet TAURON Group’s corporate intranet portal, one of the most important tools of communicating with employees. One of the largest platforms of its type in Poland at the time of publishing this report.
CCS Carbon dioxide capture, transport and geological storage technology.
CCU Capture and use (management) of carbon dioxide, eg. in the the chemical industry.
Smart Technology smart technology Control system in a smart home, among others - it is responsible for the safety and living comfort of residents.
Towarowa Giełda Energii S.A. Polish Power Exchange TGE Towarowa Giełda Energii (TGE) (Polish Power Exchange) is the only licensed power exchange in Poland. Presently, TGE runs the following markets: Day-Ahead Market (DAM), Commodity Forward Market with physical delivery (CFM), Property Rights Market for RES and Cogeneration. TGE also keeps a register of the Certificates of Origin for electrical energy produced in RES and in highly efficient cogeneration sources and the CO2 Emission Allowance Market.
Energy Regulatory Office ERO Government authority regulating the Polish energy market (electricity and gas, among others).
Coal winnings coal winnings The rock material taken from the mine face. It includes the mineral and gangue.
WACC Financial ratio - weighted average cost of capital.
WIBOR Warsaw Inter Bank Offered Rate Warsaw Inter Bank Offered Rate - interest rate used on the Polish interbank market for interbank loans.
WIG Index comprising all the companies listed on the Main Market of the Warsaw Stock Exchange that fulfill the basic criteria for inclusion in its indices.
WIG20 Index comprising the 20 largest and most liquid companies listed on the Main Market of the Warsaw Stock Exchange.
WIG30 Index comprising the 30 largest and most liquid companies listed on the Main Market of the Warsaw Stock Exchange.
WIG-Energy Sectoral index comprising companies participating in the WIG index and simultaneously classified in the energy generation sector.
WIG-Poland National index comprising only the domestic companies listed on the Main Market of the Warsaw Stock Exchange that fulfill the basic criteria for inclusion in its indices.
Underground mining pit underground mining pit Space created as a result of mining works.
Highly-efficient cogeneration high-efficiency cogeneration Generating electrical or mechanical energy and usable thermal energy in cogeneration to save the original energy used in the cogeneration unit in an amount no lower than 10% compared to the generation of electrical energy and thermal energy in separate systems or in a cogeneration unit with an installed electricity capacity under 1 MW compared to the generation of electrical energy and thermal energy in separate systems.
Green certificates green certificates "Green" certificates "green" certificates Certificates of origin, i.e. a document that confirms the generation of electricity with renewable energy sources. The green certificate system has been in force in Poland since 1 October 2005 (and has changed in the new RES Act).
Yellow certificates yellow certificates "Yellow" certificates "yellow" certificates Certificate certifying the origin of energy. Operators of cogeneration units fired with gaseous fuels or with a total installed power source of less than 1 MW may be compensated with yellow certificates.
TPA Third Party Access - TPA is one of the most important principles (besides unbundling) on which the deregulated energy market is founded. TPA gives an energy user the right to buy it from any energy seller of its choosing.
EUA CO2 emission unit.
IFRS International Financial Reporting Standards – standards and their interpretations approved by the International Accounting Standards Board (IASB).
RFX Request for proposal.
Global Reporting Index GRI Independent international organization whose mission is to create a joint global framework for communicating responsibility and sustainable development. The GRI guidelines are an international reporting standard for organizations regardless of size, business sector and venue. Their application gives a guarantee of consistency in terminology and indicators.
International Integrated Reporting Council IIRC The International Integrated Reporting Council is an organization whose purpose is to create globally accepted integrated reporting guidelines based on combining financial, environmental, social and corporate governance reporting in a clear, succinct, coherent and comparable format. It consists of global leaders such as the International Federation of Accountants (IFAC), the International Accounting Standards Board, the United Nations Environmental Program (UNEP), the International Organization of Securities Commissions, the World Business Council for Sustainable Development and the Global Reporting Initiative (GRI).
integrated reporting non-financial reporting standard International integrated reporting standard encompassing financial and non-financial data devised by IIRC.

GRI indicators