Report of the Supervisory Board

In performing its duties, the Supervisory Board focuses on long-term sustainable value creation and how Stedin achieves its goals, taking into account the interests of all its stakeholders. This year, the main focus was on addressing the challenges inherent in the energy transition. Considerable time and attention were devoted to the projects launched by Stedin to strengthen its capital position by attracting new shareholders (municipalities, provinces and the State).

Strategy

More focus has been created on the three strategic spearheads In Stedin’s Multi-Year Strategic Plan 2027 (Construction, Utilisation and Management), with the ambition being to achieve grid access for all. Progress on the realisation of this strategy was a key priority for the Supervisory Board in 2023. 

Financing of the energy transition

The energy transition poses huge challenges, resulting in a significant financing requirement. This financing requirement is met in various ways. In 2023, the financing requirement was once again a frequent topic of discussion within the Supervisory Board and between the Supervisory Board and the Board of Management. The Supervisory Board is therefore very pleased that the earlier decision by the central government to reserve funds in the national budget for an investment in Stedin of € 500 million in 2023 has resulted in a share issue to the Dutch State for the same amount. This is an important step. Given its substantial future financing requirement, it is essential that Stedin continues to seek a broader basis of contributions towards its financing. The Supervisory Board furthermore notes that regulations and the new method decision are lagging behind the current reality. That reality is that Stedin wants to and indeed needs to undertake investments far more proactively and that the current regulatory regime fails to adequately take this into account. Fortunately, in preparation for the new regulation period, the Netherlands Authority for Consumers and Markets (ACM) launched a consultation on this with parties involved, including the grid managers. Cooperation on all fronts is of great national importance in this regard, as this issue concerns the sustainable future of the Netherlands and the costs of the energy transition come before the benefits.

Site visit

During the annual two-day session, we also took the opportunity to visit a large, newly built transformer station in Houten-Oost. What is special about this station is that it was built entirely for sustainable generation (solar and wind power). Prior to the station visit, the draft investment plan was explained and the main external developments and their impact on Stedin’s construction task were discussed. The entire process was explored in depth: from the political level to the creation of energy infrastructure. The enormous drive of Stedin’s employees to achieve the social task was particularly evident.

Stakeholder management and the role of the Supervisory Board as a ‘social antenna’

The Supervisory Board fulfils an important role in acting as Stedin’s ‘social antenna’ and ensuring that decision-making takes careful account of the interests of society in general and those of our stakeholders in particular. Stedin is a grid company, or network company, also in a figurative sense. This means that effective collaboration with all stakeholders is crucial. Stedin cannot do it alone; it needs a wide range of parties to achieve its goals. According to the Supervisory Board, this collaboration is quite successful. Stedin maintains intensive contacts with companies and all the municipalities in its coverage area. They know where to find Stedin, and vice versa. In the dialogue with the regulator ACM, Stedin’s position was likewise clearly highlighted, and possibilities for improvement were addressed, including in relation to the compensation of network losses. Stedin interacts with stakeholders effectively and on all fronts, while ensuring visibility of its interests.

Climate, Energy Transition & Sustainability

In 2023, factors such as geopolitical unrest and the resulting increase in energy prices continued to accelerate the energy transition. The pace of decision-making and implementing measures is therefore being raised at the global, European and national level. In that connection, the Supervisory Board observes that the grid managers, and hence Stedin also, have a pivotal role in facilitating the acceleration in the energy transition. That requires Stedin to be in a position to make the right investments on time, to finance those investments in a responsible manner and to operate in a regulatory environment that permits it to fulfil its new role. Crucially, capacity expansion of Stedin’s grids is required in the short term to enable it to facilitate the energy transition and prevent grid capacity turning into a limiting factor. Unfortunately, Stedin had to declare a state of congestion in several parts of its coverage area. Overall, however, the situation in the Stedin area is relatively stable and we are keen to keep it that way, in the interest of society as a whole. With a future-proof grid and grid management approach, Stedin has a huge impact on sustainability efforts in its coverage area. It goes without saying that Stedin also assumes responsibility for reducing its own impact on the climate through sustainable business operations. This is shown, for example, by its actions to electrify its vehicle fleet and reduce its own environmental footprint.

Safety

The Supervisory Board notes that all the efforts that have been made in the past few years in the field of safety have clearly produced results for all those involved, including customers and the environment. The safety ratios were good in 2023. The Supervisory Board monitors safety within the company via a periodic dashboard. Safety awareness in a broad sense is given considerable attention within the company, through the execution of the multi-year safety programme HRO (High Reliability Organisation). The Supervisory Board endorses the importance of this programme for a company such as Stedin.

Despite all these efforts, a gas explosion took place in a shopping centre in Zoetermeer, in February 2022, in which three people were injured. The incident was investigated by the State Supervision of Mines (SodM) and Stedin took appropriate action based on the findings.

Feasibility of the energy transition

The Supervisory Board is concerned about the current lack of materials and technical staff. Due to tensions on the commodities markets, parts have become more difficult to obtain. Some projects are incurring delays due to the shortages, although fortunately we see that many other projects are still perfectly on schedule. Stedin has also made good progress with strategic personnel planning, clearly identifying the areas where the organisation should anticipate shortages of technical staff in the years ahead. Training capacity for those areas has been doubled. Stedin also actively invests in people. The In-house training school is amongst the many resources available to Stedin for providing its own training programmes. We are therefore proud that 140 employees were trained as fitters in 2023.

Supervisory Board’s role as employer

In 2023, the Supervisory Board conducted performance reviews with the members of the Board of Management. Amongst the topics addressed were the progress of the annual plan, achievement of the strategy and personal development.

Other important topics

In addition to the topics highlighted above, the Supervisory Board devoted attention to the following topics:

• Preparations for the shareholders’ meetings

• Double materiality analysis

• Sustainability (ESG and CSRD)

• Grid congestion

• Cyber security

• Approval of investment plan and annual plan

Composition, working method and meetings

The Supervisory Board held six regular meetings in 2023 and one specifically dedicated to the half-year report. The regular meetings were always preceded by a consultative meeting of the Supervisory Board behind closed doors. The full Board of Management attended the Supervisory Board meetings. The agendas for the meetings were prepared by the secretary, in consultation with the Board of Management and the chair of the Supervisory Board.

Chair Doede Vierstra’s term ran until 20 September 2023; he was reappointed at the shareholders’ meeting on 26 May 2023 by the Annual General Meeting for a second four-year term.

Composition of the Supervisory Board and schedule of appointment and retirement

Attendance rate of Supervisory Board members at meetings

Committees

The Supervisory Board has two committees, the Audit Committee (AC) and the combined Selection, Remuneration and Appointments Committee (SRA Committee). The committees prepare decision-making for the Supervisory Board in the area of responsibility concerned and advise the Supervisory Board. All members of the Supervisory Board have access to the documents as well as the draft and finalised minutes of the committees. In the next Supervisory Board meeting to be held, feedback from the committees is provided by the chairs of the AC and SRA committees and decision-making takes place.

Audit Committee

Theo Eysink chairs the Audit Committee. The regular topics discussed in the Audit Committee are the internal risk management and control systems, cybersecurity, treasury, internal audit, financial developments, ESG and compliance. In this year's meetings, extensive attention was also given to long-term financing and the further development of control information. It is standard practice that the meetings, of which seven were held in 2023, are attended by the CFO, the Internal Audit manager and the external auditor Deloitte. The Compliance Officer and the Corporate Risk Manager attend as guests at least twice a year. The Terms of Reference of the Audit Committee are posted on the Stedin website.

Selection, Remuneration and Appointments Committee

Hanne Buis is the chair of the Selection, Remuneration and Appointments Committee. This committee met five times in 2023. Attention was paid to the reappointment of the chair of the Supervisory Board for four years, effective 20 September 2023, continuing education of Supervisory Board members, self-assessment, compliance and integrity. The Selection, Enumeration and Appointments Committee also discussed Stedin’s diversity policy. The remuneration policy for 2023 for the members of the Board of Management and Supervisory Board, which complies with limits under the Senior Executives in the Public and Semi-Public Sector (Standards for Remuneration) Act. (Wet normering topinkomens, WNT), is presented in Remuneration report for 2023. The terms of reference of the Selection, Remuneration and Appointments Committee have been posted on the Stedin website.

Self-assessment and education

In 2023, the self-assessment was carried out under the guidance of Stedin’s HR Director. The outcomes were presented to the Supervisory Board during the offsite retreat in July and discussed a second time in September. The main outcomes of this process were shared with the members of the Board of Management. Among other things, this resulted in an in-depth session together with the members of the Board of Management on the topic of consensus-based collective management responsibility. The Supervisory Board is fully aware of the importance of its own continued development. The world around us is changing rapidly, and the Supervisory Board will have to change with it if it is to serve effectively in its role. In 2023, the Supervisory Board chose to further explore substantive topics such as the development in Grid Congestion, IT security and CSRD through various sessions.

Independence of members of the Supervisory Board

The articles of association and the terms of reference of the Supervisory Board include provisions on the independence of Supervisory Board members. The composition of the Supervisory Board is such that its members are able to operate independently and critically in respect of one another, the Board of Management and any particular interests involved. The Supervisory Board fully complies with the independence requirement for Supervisory Board members pursuant to the Corporate Governance Code. One permitted exception applies to one Supervisory Board member with regard to independence within the meaning of the Electricity Act and the Gas Act, as Annie Krist also serves as CEO of GasTerra. Supervisory Board members report their ancillary positions, if any, to the chair and the secretary of the Supervisory Board. None of the Supervisory Board members exceeds the maximum number of supervisory positions at large Dutch companies or major foundations. The topic of ‘ancillary positions’ was discussed last year in the Supervisory Board meeting on 29 September 2023. No material transactions occurred in 2023 that involved potential conflicts of interests between the company and Supervisory Board members.

Contacts with shareholders

In 2023, the contacts between Stedin and the shareholders were further intensified, mainly in connection with the process concerning the long-term financing. Within the Supervisory Board, the chair in particular was closely involved in this process, and consultation regularly took place with the other Supervisory Board members. A delegation of the shareholders’ committee was also regularly consulted on and involved in the process of the reappointment of Doede Vierstra as chair of the Supervisory Board. There were three shareholders’ meetings, including an extraordinary shareholders’ meeting on 8 December at which ordinary shares were issued to the Dutch State. All shareholders’ meetings were chaired by the chair of the Supervisory Board.

Contacts with the Works Council

In the context of broadly weighing up stakeholder interests, the Supervisory Board sets great store by good contacts with the Works Council. Two ‘tripartite consultations’ were also held in the past year. Besides the members of the Supervisory Board, these consultations included the members of the Board of Management and a delegation from the Works Council. The themes were diversity, inclusion and social safety, and the vision for the future of the energy system. This year too, there was pleasant collaboration between the Works Council, the Board of Management and the Supervisory Board. We are proud of the mature manner in which we enjoy a close relationship with the employees through employee participation. For more details about the Works Council, see the subsection ‘Stedin as an attractive employer’.

Recommendation to the shareholders concerning the financial statements

The financial statements were prepared by the Board of Management and audited by Deloitte Accountants B.V., which issued an unqualified opinion on them. The members of the Board of Management and the Supervisory Board have signed the financial statements. The Supervisory Board submits the financial statements 2023 to the General Meeting of Shareholders for adoption in 2024, together with the dividend proposal for the financial year 2023.

The Supervisory Board furthermore proposes to the General Meeting of Shareholders to discharge the Board of Management in respect of its management in the financial year 2023 and the Supervisory Board in respect of the supervision exercised over the Board of Management in the same financial year.

Word of thanks

The Supervisory Board wishes to thank the employees, management, the Works Council and the Board of Management for their considerable involvement, professionalism and commitment. We wish to thank the shareholders for their support and the trust they place in Stedin.

Rotterdam, 16 February 2024

The Supervisory Board

Doede Vierstra (chair)
Hanne Buis
Theo Eysink
Arco Groothedde
Annie Krist