1 Company

For Madrileña Red de Gas, one of the most important milestones for the 2023 financial year has been to rank first in Spain and second in Europe in the GRESB Sustainability Index. For the third consecutive year, the company was awarded the highest “five-star” rating.

In terms of the year’s main developments, those relating to the fight against corruption stand out. Madrileña Red de Gas has updated its Code of Ethics and created an internal channel for reporting possible irregularities that may occur within the company, thus incorporating the new legal requirements set out in Law 2/2023, regulating the protection of persons who report breaches of regulations and the fight against corruption.

For yet another year, Madrileña Red de Gas has identified the main risks to which it is exposed on a daily basis and established the necessary actions to manage these risks, such as the definition of an ambitious Cybersecurity Master Plan.

1.1 Board of Directors

Consilia Asesores, S. L. Chairman
(Pedro Mielgo, legal representative)
Chilei Kao Director
Suyu Wu Director
Simon Davy Director
Romain Thierry Victor Bruneau Director
Alexandre Pieyre Director
Kai Chen Director
Jan Matthijs Lakerveld Director
Shankar Krishnamoorthy Director
María Martín | Secretaria (non-board member)

 

1.2 Management Committee

Alejandro Lafarga CEO
Rafael Fuentes Legal Director
Inés Zarauz Financial Director
David Ortiz Expansion Director
Félix Blasco Network Operations Director
Glen Lancastle Director of Systems and Client Operations
María Vázquez Human Resources Director

1.3Regulatory framework

On 1 March 2023, the National Commission on Financial Markets and Competition (CNMC) published the calendar of regulatory circulars that may have an impact on aspects of energy policy that are expected to be processed in 2023.

In accordance with this timetable, in the development of its functions of supervision of the energy markets, the CNMC approved Circular 2/2023, of 28 February, which amends Circular 1/2020 of 9 January, establishing the methodology for the remuneration of the gas system technical manager.

In accordance with the provisions of its memorandum, the purpose of this Circular 2/2023 is as follows:

  • Modify Circular 1/2020, of 9 January, which establishes the method of remuneration for the gas system technical manager, altering the remuneration calculation and its financing quota from the calendar year to the gas year.
  • Adapt incentive-based remuneration to the provisions of Circular 6/2021 of 30 June and establish the criteria for settling incentives for the first regulatory period.
  • Introduce a technical adjustment to Article 9 “Regulatory account” of Circular 1/2020 of 9 January.
  • Adapt the procedure for settling the quota for financing the technical system manager’s remuneration to the provisions of Order TED/1022/2021, of 27 September.

Additionally, on 26 September 2023, Order TED/1072/2023, establishing the charges of the gas system and the remuneration and fees of the basic underground storage facilities for the gas year 2024, was published.

Finally, on 26 October 2023, the CNMC resolution was approved on the calculation, supervision and valuation of wastage balances in the gas system corresponding to the 2022 gas year and its effect on the remuneration of facility operators.

In addition, on 30 May 2023, the CNMC approved the resolution establishing the access tolls to the transmission networks, local networks and regasification for the 2024 gas year (RAP/DE/010/22).

As set out in its report, the purpose of this resolution is to detail and justify the calculation of prices for access tolls to the transmission, local networks and regasification networks, applicable from 1 October 2023, as established in Article 36 of Circular 6/2020, of 22 July, which establishes the method for calculating natural gas transmission, local networks and regasification tolls.

1.4 Prevention of criminal offences

The risk management system for the prevention of criminal offences by Madrileña Red de Gas, is based on the following general principles:

  • Legality.
  • Due diligence.
  • Integrity and responsible leadership.
  • Compliance monitoring.
  • Review and update.
  • Systematic risk management adapted to changes.

In accordance with the provisions of Law 1/2015, which further amends the Criminal Code and further regulates the criminal liability of legal persons, establishing the duty of commercial companies to implement effective crime prevention measures in their organisations within the scope of their activity, Madrileña Red de Gas has a robust criminal offence management system, consisting of:

  • A crime prevention policy.
  • A chart of criminal risks.
  • A prevention protocol of its own.

The person responsible for this system is the criminal compliance officer.

The action controls determine what information is required and how to act in the event of situations involving breaches of regulations and/or practices contrary to the values and principles established in the code of ethics and in the anti-corruption policy of Madrileña Red de Gas.

In this regard, Madrileña Red de Gas has a whistleblowing channel (managed by an independent supplier) through which any member of our organisation, regardless of their rank or responsibilities, as well as any customer, supplier or third party, can report, with the maximum guarantees of confidentiality and non-retaliation, any irregularity or behaviour contrary to the law or to the rules and procedures established by the company.

Madrileña Red de Gas has updated its whistleblowing channel and adapted its system for reporting irregularities, thus complying with the new Whistleblower Protection Act (Act 2/2023).

Furthermore, in accordance with the new Law 2/2023, of 20 February, regulating the protection of persons who report regulatory infringements and the fight against corruption, the whistleblowing channel of Madrileña Red de Gas has been updated, in accordance with the advice and monitoring of the independent provider, and the management body has developed and approved policies and procedures, in order to update the internal system for reporting irregularities, in accordance with the aforementioned law. Specifically:

  • The irregularity reporting policy.
  • The irregularity reporting procedure.

Madrileña Red de Gas has updated its whistleblowing channel and adapted its system for reporting irregularities, thus complying with the new Whistleblower Protection Act (Act 2/2023).

In 2023, the risk related to criminal offences included in the company’s risk map was reassessed in order to detect conduct that may involve a breach of the relevant regulations and entail liability. As a result of this assessment, the annual compliance review report and the annual action plans are being drawn up with the needs identified. The relevant training on the prevention of criminal offences has also continued and is now provided on joining the company as part of the induction plan.

1.5Corporate risk management

Madrileña Red de Gas has a robust risk management system, one that is fully adapted to the company and with a comprehensive approach that enables it to identify, select and implement measures and/or controls to identify, prevent, impede, reduce or control these risks.

Risk management at Madrileña Red de Gas is not limited solely to identifying events that involve risks, but also any event that involve opportunities from which the company can benefit.

Thus, to ensure appropriate risk management, Madrileña Red de Gas conducts cross-cutting risk analyses in which the business units with the closest links to the processes affected by said risks are all involved. This analysis is validated by management through the Audit and Risk Committee, composed of representatives from the Board of Directors of each of the four shareholders, several members of the Management Committee and the risk management department.

The Audit and Risk Committee reports directly to the Board of Directors, which facilitates the overall monitoring of the risk map, elaborating on the most significant risks and their evolution, recommending improvements and supporting existing mitigation plans.

Risk management at Madrileña Red de Gas is not limited solely to identifying events that involve risks, but also any event that involve opportunities from which the company can benefit

The Madrileña Red de Gas risk map contemplates a broad range of risks, focusing on the ten material risks, the evaluation of which has been carried out by applying a criterion based on:

  • The probability of a risk occurring.
  • The impact of the combination of the effect on the current net worth and any reputational impact. The effect of the current net worth considers both the direct economic impact for the next 20 years and any possible sanctions.
Corporate risk map of MRG, 2023

This map covers emerging risks through periodical updates and establishes new monitoring processes to be added to existing ones. The action plans implemented play an important role in mitigating the consequences of these risks.

In this top 10, a new risk was added in 2023 relating to the new EU regulation on reducing methane emissions, as well as a financial risk. As information on their potential impacts has become available, a strategy has been developed to prevent and mitigate the possible consequences of these risks.

1.6Sustainability

After eight years of participation in the international GRESB Infrastructure Sustainability Assessment (www.gresb.com) and with an outstanding score in the two previous editions, in 2023 Madrileña Red de Gas surpassed its own records by reaffirming its position as sector leader in Spain with the highest possible score: 100 points out of 100.

Madrileña Red de Gas has also maintained its second place in the Europe-wide sector ranking and improved its ranking in the sector to occupy second place in the world ranking. Out of more than 680 participating companies from different sectors, MRG is ranked 17th in the global ranking

Madrileña Red de Gas has therefore renewed its highest rating of 5 stars, which it has obtained consecutively for the past three years, and which is obtained by only 20% of the participants with the best scores.

Madrileña Red de Gas has also maintained its second place in the Europe-wide sector ranking and improved its ranking in the sector to occupy second place in the world ranking. Out of more than 680 participating companies from different sectors, MRG is ranked 17th in the global ranking.

GRESB (Global Real Estate Sustainability Benchmark) is a global sustainability index that evaluates and rates the work of more than 500 funds and assets from different sectors to promote sustainable development under a worldwide environmental, social and corporate governance standard.

The results provide an insight into both the company’s performance compared to previous years and its level of maturity in ESG best practices (Environmental, Social and Governance), and in comparison with other companies in the same sector. The number of participants in the GRESB infrastructure assessment increased again in 2023 compared with the previous year. These figures reflect investors’ growing interest in sustainable business models and how important ESG factors are in decision-making processes.

The high score achieved by Madrileña Red de Gas in the GRESB assessment, together with the five-star rating, demonstrates the company’s strong commitment to implementing best practices in sustainability. MRG is also working to integrate the 2030 sustainable development goals into its strategy.

Furthermore, with the aim of improving communication and transparency in sustainability matters, the Madrileña Red de Gas website updates the most relevant policies, as well as the objectives defined and the performance achieved in each of the governance, environmental and social vectors, both through the results of indicators and through the different seals and verifications of business excellence (https://madrilena.es/sostenibilidad/).

Cadena de suministros

Annual Report and Sustainability Management Plan

For the third year running, in 2023 Madrileña Red de Gas drew up and verified its Annual Sustainability Report, prepared in accordance with the GRI (Global Reporting Initiative) standards, considering the versions in force and the sector standard for the “oil & gas” sector.

This new sustainability report includes the results of the first analysis from the perspective of dual materiality:

  • Impact materiality (sustainability issues that have an impact on people and the environment).
  • Financial materiality (sustainability issues or topics relevant to the company that affect its performance, position and development).

To this end, the opinion of stakeholders has been taken into account through a process of surveys and interviews.

Thus, based on the result of this materiality analysis and having evaluated the opportunities for improvement as identified by stakeholders, and by identifying the priority SDGs in terms of the company’s contribution capacity, an ambitious Sustainability Master Plan has been drawn up.

Year after year, Madrileña Red de Gas is maturing as an organisation when it comes to integrating sustainability into its business strategy. The different teams at MRG work to understand and incorporate sustainability concepts into the company’s business plans and processes. The elaboration and deployment of the Sustainability Master Plan is clear evidence of this effort.

The plan is structured in terms of strategic axes and lines of action, which, in turn, are deployed in a set of actions and goals. The lines and actions linked to each axis have clear purposes to address sustainability challenges, in terms of impacts, risks and opportunities.

1.7Cybersecurity

Madrileña Red de Gas is aware of the risks involved in the activities it has been developing relating to technology in recent years, such as how technology is integrated into the company’s business processes, the mass implementation of teleworking, massive data migration to the cloud and supply chain security.

Moreover, today’s cyber security landscape is in an era of constant change, which means that solutions that were considered advanced years ago are now basic.

Madrileña Red de Gas has a complete Cybersecurity Master Plan to guarantee an effective defence against cyber-attacks. The plan allows for:

  • Identify cyber-attacks.
  • Protect systems.
  • Detect and respond to threats.
  • Successfully recover from attacks.

In this context, the company’s cybersecurity maturity level was assessed once again in 2023, in accordance with Deloitte’s Cyber Industrial Strategy Framework (CISF) v2.0.

Thanks to the efforts made, each year Madrileña Red de Gas improves its maturity level, approaching the sector average.

To continue improving, the new Sustainability Master Plan defines the main courses of action (projects) to increase the maturity level, focusing on mitigating any weaknesses that could pose a greater risk to cybersecurity.

The list of actions to be undertaken by Madrileña Red de Gas has, in accordance with a priority criterion, been structured in three successive waves in order to progressively increase the maturity level in security matters in the 2024-2026 period. Each wave includes safety projects pertaining to the four different domains that encompass the main objectives.

  • Government
  • Protection
  • Surveillance
  • Resilience

In the area of cybersecurity, other key milestones in 2023 were:

  • Simulation before disaster recovery.
  • Network penetration testing.
  • Simulation of contingencies and incidents.
  • Training and awareness.

1.8Information security and personal data protection

During the previous financial year, Madrileña Red de Gas finalised the implementation and certification of its information security management system according to the ISO 27001 standard, a model that is fully aligned with the current integrated management system and into which the personal data protection management model has also been included.

The following activities are fully integrated within this management system:

  • Alignment of the goals considered within the annual objective, with the actions set out in the current Cybersecurity Master Plan.
  • Record of incidents relating to information security and data protection, the investigation of which helps to bring improvements to the information management system.
  • Publication on the website of the information security and personal data protection policies, as well as information on the processing of personal data intended for data subjects, the dissemination of which is reinforced through the various communications sent out to users.
  • Active management of the personal data protection officer’s mailbox, to which a significant number of requests have been received.
  • Awareness-raising and training activities for employees.
  • Interaction with bodies and authorities, such as the Spanish Data Protection Agency (AEPD) and the National Cybersecurity Institute (INCIBE).

Madrileña Red de Gas also has an appointed data protection officer, who is the highest authority in this area, a person responsible for the information security management system and a person responsible for technical security.

The information security management system ensures compliance with all requirements and guarantees the security of information and the protection of personal data throughout the entire Madrileña Red de Gas supply chain

The information security management system ensures compliance with all requirements and guarantees the security of information and the protection of personal data throughout the entire Madrileña Red de Gas supply chain.

To this end, the following actions have been carried out:

  • Update of the information security policy in supplier management.
  • Establishment of contractual clauses for information security and personal data protection.
  • Monitoring of performance in terms of information security and data protection of suppliers, through the information they provide on the Repro – Achilles portal.
  • Identification of the most sensitive suppliers from the point of view of information security.
  • Different actions to coordinate business activities regarding data protection by holding meetings, unifying criteria and good practice agreements.

Relevant developments compared to previous years include an increase of around 80% in the number of queries on personal data protection compared with the 2022 financial year, as well as seven incidents being recorded, none of which occurred at the level of a personal data protection breach.

The management indicator scorecard has also been further improved and a first executive report has been developed in line with the philosophy and guidelines of this type of integrated system reporting.

This report covers different sections: incident management, physical and environmental security, compliance, supplier relations, asset management, communications security, operations security, human resources security, and information security management system process indicators.