Many large carbon emitters see disclosure of their greenhouse gas emissions as risky business. They can quickly end up on lists of “top emitters” and labelled as climate villains. In reality, leading energy providers like the American integrated power company NRG are committed to full disclosure because of the increasing business benefits of being transparent. As this interview explores, part of running a successful energy business is disclosing the full extent of past emissions, and having a public plan to continue to reduce those emissions in line with the Paris Accord. Tim Nixon, Reuters Breaking Views in conversation with Laurel Peacock, Director of Sustainability, NRG.
1. Is the Paris accord an opportunity or threat to your business?
The Paris Agreement is a significant signal in the path towards decoupling the global economy from GHG emissions. In 2015, NRG was a strong supporter and we reaffirmed our support again in 2017 by being one of the more than 2000 organizations to sign the ‘We Are Still In’ declaration which demonstrates commitment to following through on the promise of the Paris Agreement and America’s contribution to it. The risks of climate change are real, but so are the opportunities. In creating a low carbon economy there will be capital unlocked and jobs created in all sectors—we are already seeing this in the power sector. In 2017 renewable energy jobs surpassed 10 million globally [source] and is forecasted to continue to increase as more renewable energy goals are set by cities and companies, and costs of implementation continues to decline.
2. There is increasing emphasis on transparency from global emitters. What is your reaction?
We see the momentum toward greater transparency and accountability as a positive market force. Companies that are planning for the long-term and building climate risk into their decision making will be the companies that are the most resilient for their shareholders. Large emitters need to be held accountable. We recognize that in the U.S. this type of reporting is still ‘voluntary’ unlike other countries who have integrated reporting. As a U.S. based company we are proud of our commitment to enhanced transparency with sustainability reporting. At the end of the day we see the trend of increased transparency continuing, and feel it is prudent to report now, unlike some non-reporting companies that will play catch up down the line.
3. Does transparency help engage customers? Drive trust?
Transparency absolutely builds trust with customers and other key stakeholders like investors. If a company isn’t reporting on something, often stakeholders will suspect they’re hiding something. Our commercial and industrial customers want to know that we are driving sustainability within our own 4 walls and working towards creating an energy future. With investors, we proactively engage on delivering the most decision-useful information about our key environmental, social and governance issues. ’If you don’t measure it you can’t manage it’ is a relevant adage that comes to mind. We believe we manage our business with the utmost responsibility and are proud to tell that story.
4. What do you currently disclose on your environmental footprint?
We disclose key metrics in our Sustainability Report including the SASB Table including: GHG emissions (scopes 1, 2, & 3), air emissions, water withdrawal, consumption, discharge, coal combustion residuals. We also participate in the CDP Climate and Water questionnaires and just received the Leadership Level in Climate for 2018, only 1 of 3 power companies to do so in North America.
5. The U.S. market has diverse levels of disclosure from significant emitters. How does non-disclosure from competitors affect your own decision-making process on disclosure?
We are focused on reporting key information for our operations because we believe that tells a more complete story about how we are thinking about the long-term implications of decarbonisation. We see it as advantageous to be able to tell our story, backed up by science and verified data, as investors increasingly integrate ESG factors into their analysis. We see reporting emissions information as table stakes in order to be a competitive player in this market.
6. How do you engage with your sector peers on the relevance of measurement and decarbonization to your business? What is your message?
NRG is a member of the EPRI (Electric Power Research Institute) Energy Sustainability Interest Group (ESIG) through which we are able to share best practices and align on the most decision useful metrics with our peer companies. I’m also the co-chair of the Voluntary Reporting Working Group within ESIG which specifically focuses on reporting information to our key stakeholders. We believe that the aligning on key industry metrics to report on as an industry will create concise, credible and comparable information that allows all of us to demonstrate our progress.
7. As one of the first signatories, will you stay aligned with the Science Based Target Initiative?
We agree with the urgency for decarbonization and are currently reviewing our goals based on newly-available science. As the SBTi just released their updated criteria and recommendations on April 19th, we also intend to review our SBT to ensure that it remains valid.
About Tim Nixon: Tim is the founder of Thomson Reuters sustainability and a contributing author and collaborator with Reuters Sustainable Business. He is also Global Head of Partnership & Policy at Yale-based Constellation Research.
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