NS group is the largest public transport operator in the Netherlands employing up to 20,000 people and with 2014 revenues of 3.3 billion euros.
The company is aware of the value it offers to the society but at the same time its operations create negative externalities. Such negative externalities will need to be mitigated to reach the ambitious target of becoming a positive impact company. In order to do this in the most effective way, it must quantify the negative and positive value it creates. For example, when it comes to environmental impact, it gives us insight that by offering climate neutral, reaching 0g CO2 and zero air pollution per passenger-kilometer, and stimulate customers to take the train more often instead of the car, NS can create business value and the most positive environmental impact at the same time.
NS conducted an environmental and social-economic impact analysis in cooperation with the external auditor KPMG in order to mitigate such negative externalities with a view to achieve the long-term goal stated above.
It developed a methodology based on externalities throughout the customer journey and the material issues according to stakeholders in order to keep aligned with stakeholders’ value.
The project team was composed by professionals from NS and KPMG with different backgrounds in corporate finance, sustainability, operations and other functions.
- First step was to identify the material externalities which resulted in a long list of themes important to the stakeholders
- Second step was to create a short list by drawing the company’s material externalities based on the GRI G4 materiality guidelines and the principles of Integrated Reporting and classify them as positive or negative
- Third step was to quantify the externalities in financial terms by using all the available data and metrics
We managed to calculate our positive and negative externalities and intend to integrate the results in strategic decision-making and investment decisions.
This will not only let us focus on achieving the financial and operational results, but also on increasing the positive sides and lowering the negative sides of the social impact by identifying and implementing relevant initiatives. For instance in 2014, this was already important in the decision to run half our electric trains on sustainably generated energy from 2015, and all of them from 2018 onwards.
The challenge such a methodology poses for an organisation like NS is the fact that this is, for a large, important part unpaved territory. There are methods to quantify and to monetize, but not a generally accepted method that is applied consistently especially when it comes to social impact. The costs of inventing the wheel in this domain can be significant which forms a threshold to start the process.
Detailed information on the positive and negative impacts calculated.
Information on the process in the latest annual report.