We updated the materiality analysis in the final quarter of 2021, adopting a dual materiality approach. This means considering both the positive and negative impacts issues may have on society, the environment, and the company's long-term value creation, competitiveness, or business continuity.
The update to the materiality used the Sustainability Strategy, Corporative Strategy, higher purpose of "improving lives through sustainable and competitive energy,” changes in the environment and the needs and expectations of internal and external stakeholders as main points of reference.
The materiality analysis process involves the following stages:
- A documentary review of international references and relevant internal inputs from GEB was carried out to identify Internal and External Stakeholders.
- The documentary review included corporate policies, procedures and reports from GEB and its subsidiaries, reports from leading companies in the sector and international standards.
- Once the stakeholders/sub-stakeholders were identified, a workshop was held to prioritize them under the attributes of dependency and influence.
- As a result, the following stakeholders were prioritized: - -Investors and shareholders ü Customers ü Employees Government
Local communities
Suppliers and Contractors
Senior Management and Board of Director
Partners
Subsidiaries - The process took the AA1000 Stakeholder Engagement Standard 2015 as a reference.
- All potentially relevant issues were identified both for the Company and internal and external stakeholders to define GEB’s material issues. These topics were consolidated and grouped into a short list of aggregate topics, which is called the “universe of topics.”
- Eighteen internal documents and 29 external documents were consulted to define the universe of GEB topics. They reflect the challenges and opportunities of the industry, international standards, trends and risks, among others.
- A universe of potentially material issues was formed from the review of inputs and the identification and comparison of topics.
- A list of a total of 518 topics was obtained.
- The 518 topics were grouped in a universe of 17 topics
- To define the importance of the impacts of the identified issues, they were assessed using the Group’s strategic risks, positive and negative impacts on the environment, society and the creation of long-term value, and the organization’s opportunities as a reference.
- Each potential material issue was assessed on a 5-level impact/risk scale: very high, high, medium, low, and minimal.
- In addition to this, it was analyzed based on the GEB strategic risk matrix, identifying the main associated risks and impacts for the organization in terms of growth, reputation, income, etc.
- In order to identify the most relevant topics for stakeholders and prioritize the issues, we consulted the following stakeholders:
- Media and opinion leaders - Board of Directors
- Government
- Trade and industry associations
- Academia
- Clients
- Investors
- Subsidiaries
- Suppliers and Contractors
- Local communities - Employees
- Credit risk and ESG analysts
- Financial institutions - The 13 stakeholders were consulted through 8 interviews, 6 dialogues and 171 surveys.
- Each group evaluated the different issues, taking the following into account:
- The main impacts (social, environmental, economic and governance) that are most significant (positive and negative) for GEB and its subsidiaries.
- The main critical risks/challenges (social, environmental, economic and governance) GEB and its subsidiaries are facing now and in the long-term.
- The main opportunities (social, environmental, economic and governance) identified in the context that would help increase the positive impacts of GEB and its subsidiaries.
- · After rating the importance of the assessed risks and impacts and prioritizing them based on stakeholders' feedback, we defined the organization’s material issues.
- The result of this exercise is presented in the following materiality matrix:
Integrating Material Issues with the GEB Risk System:
Risk management at GEB and its subsidiaries is framed in its strategic priorities and is consistent with the cultural attributes, capacities, roles and responsibilities, ensuring fulfillment of the Corporate Risk Management Policy, which establishes the framework for action and the commitments made in this regard, as well as the understanding and application of the Comprehensive Risk Management Model, which is based on the application of international management standards.
GEB’s material issues are those its stakeholders consider important and that, given the magnitude of their economic, social and environmental implications, determine the direction, priorities and scope of the company’s management. These issues also guide the objectives, goals and actions of the Group, its subsidiaries, and the work teams transversally.
Taking this into account, since material issues are strategic, they are integrated into the company's risk management system and are regularly monitored.
The following is a list of GEB's material issues and its relation to strategic risks:
| Material Issue | Associated Strategic Risks |
| Shared Prosperity | Non-continuity of the business |
| Environmental Performance | - Loss of profitability, feasibility and business continuity due to |
| Innovation and digital transformation | Loss of competitiveness and/or reliability of the business operation due to inadequate digital transformation |
| Economic Performance | Participation in non-strategic investments |
| Human resource management | Not having the appropriate and motivated human capital to develop the strategy |
| Operational excellence and service quality | Non-continuity of the business |
| Occupational safety, health and well-being | Occupational accidents in the operations and activities performed by GEB and its subsidiaries Not having the appropriate and motivated human capital to develop the strategy |
| Ethics and Transparency | Lack of continuity in the strategy or failure to implement the corporate governance practices · Breach of the ethical and/or regulatory framework in terms of compliance by GEB |
| Risk Management | Non-continuity of the business |
| Corporate Governance | Lack of continuity in the strategy or failure to implement the corporate governance practices |
| Climate Change | Loss of profitability, feasibility and business continuity due to Inadequate climate change management |
| Responsible supply chain management | Non-continuity of the business |
| Energy transition and low-carbon development | Participation in non-strategic investments · Financing restrictions and/or increase in borrowing costs Loss of profitability, viability and business continuity due to inadequate management of climate change Failure to fulfill the business plan |
| Customer experience | Effects on GEB's reputation |
| Cybersecurity and information security | Loss of confidentiality, integrity or availability of the Company's information assets and/or cyberassets |
| Human Rights | Violation of human rights by GEB, or by a GEB employee, partner or contractor |
| Brand protection and reputation | Violation of human rights by GEB, or by a GEB employee, partner or contractor |
Validation and Approval of the Materiality Exercise:
- We presented the external and internal stakeholder engagement process, the materiality update, and its results to GEB’s Presidential Committee for review and approval.
- Additionally, in an extraordinary meeting on January 19, 2022, the Corporate Governance and Sustainability Committee of the Board of Directors validated the results under the item entitled "Follow-up on the results of the stakeholder dialogues and materiality exercise conducted by GEB in 2021."
