• An independent consultant was engaged to assist with refreshing AGL’s approach to materiality to produce an outcome that is consistent with the requirements of both the GRI Standards and the International Integrated Reporting <IR> Framework, and that further aligns the material issues presented in the Sustainability Report with the key business risks presented in the Annual Report and recorded in AGL’s internal risk management processes.
• 20 potential material issues were identified through a consideration of AGL’s business risks, AGL’s scenario planning drivers, AGL’s strategy and key policies, consumer sentiment, stakeholder views expressed through a survey which was a preliminary component of the materiality review, industry analysis and global megatrends.
• 15 internal stakeholders and 15 external stakeholders were selected to ensure balance and coverage between themes and issues.

• Stakeholders completed a detailed survey ranking the 20 identified sustainability issues from 1 to 5 in order of importance from the perspectives of value creation, impact and performance across different time horizons. Stakeholders were also asked to identify which of the Sustainable Development Goals (SDGs) were of most relevance to AGL.
• Stakeholders also participated in detailed one-on-one interviews with the independent facilitator which enabled discussion of the issues ranked as most significant by each stakeholder. An important purpose of the interviews was to ensure that all stakeholders had a comparable understanding of the ranking criteria, a comparable interpretation of each of the issues that they were asked to rank, and to ensure that there were no further issues of concern that were missed from the list of sustainability issues.

• The survey and interview results produced a rich data set showing internal and external views of the importance of issues over multiple time horizons (short (1-2 years); medium (3-5 years); and long (5+ years)), and through several lenses (value creation/erosion; impact on society, the environment and the economy; and current performance).
• The results were specifically analysed to take into account both internal and external stakeholders’ views, and to assess their consistency with AGL’s strategy. In order to capture as broad a viewpoint as possible, internal and external stakeholders’ rankings were added together and viewed from the perspectives of both value creation and impact, and across all timeframes.

Figure 1, below, shows¹ the internal and external perspectives of how each sustainability issue may influence AGL’s ability to create value over the short-, medium- and long-term. Our consideration of all time frames ensures that longer-term perspectives are captured and prioritised. As noted above, the high-priority issues of Energy prices and affordability and Power station transition and closure were elevated as material issues by the SSCR Committee (as highlighted in the graphs below).

Figure 1

Figure 2, below, demonstrates² the alignment between stakeholders’ views of the impact an issue may have on the environment, society and the economy with the likely effect on AGL’s ability to create value into the future.

Figure 2

_{1. This figure plots the maximum score allocated across all time horizons (short, medium and long).}

_{2. This figure plots the maximum combined stakeholder scores over all time horizons (short, medium and long). The combined stakeholder score is the addition of internal stakeholder score and external stakeholder score.}

• Results were presented to the SS&CR Committee for validation and approval.
• The Directors of the SSCR Committee considered that the issues of Energy prices and affordability and the planned closure of the Liddell Power Station warranted special consideration in this report given ongoing customer feedback and the community and government concern surrounding these issues over FY18. Accordingly, the priority of these issues was elevated this year.

• 15 internal stakeholders were selected from the AGL Enterprise Leadership Team and other senior managers to cover the breadth of our operations. Directors of AGL's Board, and AGL's Chief Executive Officer, were also included.
• A broad range of external stakeholders participated in the process, including members of AGL’s Customer Council and other customer representatives, members of the investment community, the energy industry, regulators, environmental groups, and local community representatives.