We have been through a process during the past year to identify activities that Origin undertakes that are of most interest and importance both to our business and to our stakeholders.
Message from our Managing Director
It has been evident that access to energy is a key contributor to the development of strong and prosperous economies. Today, access to a reliable supply of energy is considered a basic right in most developed countries, and it underpins our modern standard of living.
The community at large has come to expect a reliable and competitively priced energy supply, and is increasingly expecting that this energy is produced and consumed on a more sustainable basis.
Origin produces and procures energy to supply to customers. In so doing, we often face complex choices as we try to meet the expectations of our stakeholders.
Each year, we use our Sustainability Report to explain to stakeholders how we are making these choices. In this year’s report, we have embarked on a new phase in our thinking about sustainability.
We have made an initial assessment of the activities Origin undertakes which are of most importance to our business and our stakeholders. The result is a list of what we call Material Aspects. We believe that if we manage these Material Aspects well, that is we comply with all obligations imposed upon us and those which we choose to impose on ourselves, we can be confident our business is being managed sustainably.
In this report, we identify and discuss our management of 16 Material Aspects. Over the course of the
next year, we plan to continue to identify and report on additional Material Aspects.
Creating value for our stakeholders
As a business, we believe it is important to create and sustainably distribute value among our key stakeholders. This year, there was a substantial increase in the value we distributed to key stakeholders. We distributed $15.1 billion, which was up from $13.1 billion in the prior year. The largest portion of this, $12.4 billion, is our net expenses. Our success as a business can bring important flow on benefits to other companies and the Australian economy, particularly as we pay for products and services from other businesses such as energy network providers, infrastructure owners, engineers and construction companies.
We distributed $1.1 billion to capital providers through interest and dividend payments, and $746 million to our employees through wages and shares. We distributed a significant part of the value we create to the Australian community through the payment of taxes and royalties to state and federal governments, and in the past year these accounted for $132 million. In addition, we distributed $6 million in the form of community investment, more than half of which was provided through our philanthropic foundation, The Origin Foundation.
There are many other, less tangible ways in which we deliver value, and I would now like to discuss some of our major activities as relevant to each of our stakeholder groups. In some areas we are proud of what we are already achieving, and in others we would like to do better.
We are proud of how we are helping customers to better manage their energy use.
There are many things we are doing to help our customers manage the rising cost of energy, including introducing new solutions that provide unprecedented visibility and control over energy use and costs.
In August 2012 we launched Origin Energy Manager, Australia’s first mass-market energy management solution providing customers in Victoria with almost real-time access to information about their energy use and allowing them to predict their next bill. This year we went a step further, launching an in-home Energy Monitor which can sit on the fridge and provides the same information at the touch of a button. These solutions are a direct response to the concerns many customers have raised about a lack of visibility of their energy use. By allowing bill predictions, these solutions allow customers to better manage their household budget and minimise the chance of surprise when the energy bill arrives. Over time, we expect some customers may use this information to change their consumption habits to help save on energy costs.
Yet we acknowledge we need to do better at explaining how the industry works and the drivers of price increases.
The cost of energy has increased significantly in recent years, driven primarily by investment in the network of poles and wires that deliver energy to customers, and the introduction of green schemes including the carbon price and Renewable Energy Target. As the leading energy provider in Australia, we acknowledge that the industry has not done enough to inform and engage consumers. In response, this year we launched an upgrade to how we communicate via digital and social media channels, driven by the premise ‘Knowledge is Power’.
We created a new knowledge hub – Energy Explorer – which contains easy to understand information on a range of energy topics, including the drivers of energy price increases. This activity represented a major change in how we engage with consumers, and it was evident in the response to the campaign that there is a genuine hunger for information about energy. We look forward to further improving our communication to customers in the future, and engaging them in Australia’s energy conversation.
We are proud of how we have listened to landholder feedback and improved our compensation framework for land access.
Over time we have listened closely to landholder feedback, and we also considered our own experiences, to revise our approach to compensating landholders for access to their land to develop our CSG activities in Queensland. The revised process, which includes a method to calculate fair compensation on a property-specific basis, helped us to sign 204 voluntary Conduct and Compensation Agreements (CCAs) with landholders for the Australia Pacific LNG project during the past year. Australia Pacific LNG now has agreements in place for more than 80 per cent of wells required for Phase 1 of the project. This reflects strong landholder support for our enhanced process, and our CSG development activities more broadly.
We will keep working hard to share the substantial economic benefits generated by our activities.
Through our investment in the $24.7 billion Australia Pacific LNG project, we continue to look for opportunities to share economic benefits with local businesses. The Australia Pacific LNG project has spent more than $12.3 billion on goods and services – the majority of which has been spent in Australia, often in regional locations. We are also creating substantial employment opportunities, with the project currently employing approximately 10,000 people at the peak of its construction activity. By providing employment and working with local suppliers where practicable, we can maximise the economic benefits of our development for the local, state and national economy.
We also acknowledge the impacts our developments can have on communities, and we are proud of many things we are doing to minimise these impacts.
The most substantial energy development in which we are currently involved is the Australia Pacific LNG project. Housing availability and traffic are two challenges that we are currently managing around our CSG activities in Queensland. In particular, we have implemented a range of initiatives to assist the community to gain access to affordable housing. We have provided rental assistance to those on low incomes to offset rising housing costs, and continue to work in partnership with not-for-profit Horizon Housing to build new affordable housing in Miles and Roma. We have committed more than $7 million to these projects to date.
As the public and political debate continues, we realise we need to do more to communicate the facts and address community concerns about CSG.
The development of energy projects, particularly low carbon fuels such as CSG, continued to be a focus of debate over the past year. This reflects the concerns of some in society about the potential social and environmental impacts of these energy developments. In many instances, the concerns associated with CSG – which is just natural gas from coal seams – have not been evidence based and have been either greatly exaggerated or misinformed. We therefore realise we must do more to convey the accurate facts about CSG development. Through our own activities and working in partnership with the industry body, the Australian Petroleum Production and Exploration Association, we have stepped up our efforts to address the misinformation in the current debate. One example is Australia Pacific LNG’s partnership with Queensland and Australian Rugby League legend Darren Lockyer where he shared his journey learning the facts about CSG. I encourage those interested in understanding the facts about CSG or following Darren’s journey, to visit aplng.com.au
We must continue to improve our safety performance so our people stay safe, and continue to promote diversity and inclusion in our workforce.
At Origin, safety is our first priority and part of the foundation of our approach to sustainability. In the past year, we improved our safety performance substantially with our TRIFR of 6.7 representing a 15 per cent improvement on the prior year. We have established a set of 11 Life Saving Rules that govern safe behaviours across our operations. These rules address the causes of 35 per cent of the potentially serious or catastrophic incidents in our business and we are putting considerable effort into embedding them across our workforce, and ensuring our people take accountability for their actions. We also continue to focus on safety observations in an effort to prevent unsafe actions and reinforce safe behaviours. We will target further improvements in safety performance over the next 12 months as we target a zero harm workplace.
In an effort to improve the representation of women in our workforce, Origin has also been an early adopter of gender diversity targets. We have put in place three voluntary targets, and while there are some areas we need to continue to improve, it has been particularly encouraging that the rate of appointment of women to senior roles across all of our operating business units increased by 15 per cent this year.
It was a more challenging year for our business in 2013, which was evident in our financial results. At the same time, over the past decade we have established the leading Australian integrated energy company and actions taken this year make us optimistic about our future prospects.
In closing, we understand that millions rely on the energy we provide every day. We are also cognisant of the need to lower carbon emissions from energy supply, while balancing this objective with maintaining reliability of supply and limiting the rising cost of energy. We take seriously the responsibilities associated with making these complex choices as we try to meet the expectations of our stakeholders.
We approach these challenges with confidence, knowing that our Compass will help us to make good decisions today, and every day.