Materiality Analysis

Materiality Analysis at NTPC

Materiality assessment is a foundational and integral aspect of our Sustainability Disclosures and strategies formulation. It enables us to gather insights on the relative importance of specific Environmental, Social and Economic issues and their impact on value creation. We conduct this exercise on regular time intervals (gap of 3-4 years) owing to significant change in business processes, external environment, geographical expansion, global trends etc. A structured methodology has been adopted for materiality assessment with engagement with both internal and external stakeholders.

NTPC’s Materiality Assessment Process

We undertook a materiality assessment in FY 2018-19 through M/s Deloitte. A four-step process was adopted which is outlined below:

1. Identification

A bucket list of relevant material issues was compiled from various following sources:

  • Stakeholders’ perspective (Internal and external) through ongoing engagement
  • Risk Management Committee (RMC) findings
  • Material issues identified by global and Indian power utilities
  • GRI Electric Utilities Sector Disclosures
  • Laws, Regulations, International agreements
  • Global mega trends

2. Shortlisting

The identified issues were analysed objectively on the basis their relevance and significance to NTPC by functional heads. A priority list of 26 most common issues were shortlisted and their boundary was mapped across the NTPC’s value chain. These issues were further clustered into Social, Environmental, and Business & Governance categories.

3. Prioritisation

Material Topics were prioritised on the basis of their (X,Y) score as described below:

Y-Score: Influence on stakeholder assessment & decisions

We engaged with our priority stakeholders through a representative sample size at corporate, region and site levels to get their feedback on the shortlisted issues. The response from all stakeholders were consolidated and finally a score was given.

  • Conducted focus group discussions and primary surveys at 20 NTPC locations on shortlisted 26 topics. These topics were discussed with stakeholders and they were asked to rate each of the topics based on its importance to the stakeholders. These mainly included local suppliers, communities 7 employees.
  • Conducted online/ offline surveys to gather response from customers and investors.
  • Used secondary research to assess the importance of issues from the perspective of Government, Regulators etc.

X-Score: Significance of economic, environmental & social impacts

An internal assessment system was developed to quantify the impacts of issues. This quantification has been done in terms of various factors such as cost, risk etc.

  • Finally, materiality matrix was developed based on the scores of each material issue

4. Senior management validation

NTPC’s senior management reviewed the materiality matrix and set the threshold for materiality. As a result , 7 of the 26 material issues, with an overall score above the threshold limit by both the stakeholders perspective and significance of impacts were prioritised as the most important material issues.

NTPC materiality Map

For description of material issues please click.

Materiality Assessment driving our Sustainable Business Strategy

The material issues falling under the priority zone have been chosen as the focus areas for NTPC’s Sustainability Strategy. All identified and selected focus areas are mapped across three themes namely as Progressive Business for Governance and Business issues, Greener Environment for environmental issues and Enriched Lives for social issues. Although each concerned issue may have overlapping with varying degree across all the 3 themes, this categorisation intends to highlight the maximum impact or influence in a relevant theme.

As a progressive business, NTPC has set short-term (1-3 years) and long-term (10-15 years) goals for identified focus areas as part of its sustainability strategy. The identified focus areas have been united into a Sustainability Plan with clear programmes, targets and key performance indicators (KPIs) for each aspect. This plan also include clear reporting and communications on progress, allowing for a meaningful dialogue with stakeholders and a consistency of focus that makes reporting more robust. Its effective implementation will involve providing guidance to employees following extensive consultation and putting in place systems of governance, external feedback and regular review. Also, this plan is taken up alongside a supportive policy and specific activities spread across different functions and locations.

The Sustainability Plan will lead to identification of measurable benefits - alongside long-term risks and opportunities – will ensure that our strategy is resilient, and creates real value for the company and society.

NTPC’s sustainability plan has been named as “The Brighter Plan 2032” setting short-term goals to 2022 and long-term goals to 2032 in seven focus areas representing the most significant sustainability issues and opportunities being faced by NTPC: Community Development, Water & Biodiversity Conservation, Decarbonisation & Air emissions control, Circular Economy, Health and Safety, Strong Finance & Ethics and Sustainable Supply Chain.