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The Edison Electric Institute ESG/Sustainability Reporting Template: A Model For Other Industries

Editor’s Note: the following is a guest blog post drafted by Eric Holdsworth, Senior Director – Climate Programs, at the Edison Electric Institute.

EEI’s member companies are leading the transformation to a lower-carbon economy through major capital investments in cleaner energy and smarter energy infrastructure. For example, since 2007, the mix of resources used to generate electricity in the United States has changed dramatically, with more than one-third of the nation’s electricity now coming from non-emitting resources. In addition, EEI member companies have undertaken a wide range of initiatives over the last 30 years to reduce, avoid, or sequester emissions, and, in 2017, power sector carbon dioxide emissions were 27 percent below 2005 levels. EEI’s member companies have also been at the forefront of ESG/sustainability reporting, being amongst the first industries to undertake sustainability and climate reporting.

Yet, despite this positive story, recent years have seen a sharp increase in the number of shareholder-initiated proposals focusing on environmental, social, and governance (ESG) disclosure issues and divestment initiatives tied to climate change. Many of these efforts have focused on exactly the kind of reporting and information — and GHG emission reductions efforts — that the industry has been undertaking for years.

To address these concerns and to better serve customers and investors, EEI assembled a broad working group of institutional investors and electric company officials from various disciplines, with the goal of helping member companies provide investors with more uniformity and better consistency for ESG/sustainability metrics.

Over the past two years, this working group helped to develop the EEI ESG/Sustainability Reporting Template, an industry-wide voluntary reporting template. Building upon the ESG information that EEI member companies publish on a regular basis, the template contains qualitative information — including ESG/sustainability governance and strategy — and quantitative information, including data on a company’s portfolio, emissions, and human and natural resources. The template also helps to provide investors with information on risks from stranded assets and regulatory issues, as well as opportunities for investments in clean energy.

The template addresses five key areas of focus investors have identified as crucial. In the qualitative section, users report on their ESG/sustainability governance and risk management strategies. The quantitative section contains information on the company’s generation portfolio, emissions — including reduction metrics — and human and natural resources. Where possible, the information reported is from publicly available sources.

The voluntary reporting template explicitly allows for flexibility in what is reported by each company, and member companies can choose if and how they want to incorporate this voluntary template into their reporting to support the needs of investors most appropriately. This initiative has had overwhelming member company support, with nearly half of EEI member companies currently participating in the pilot phase of reporting using the EEI Template. We anticipate that most EEI member companies will be using Version 1 of the EEI Template when it is released in mid-2018. Looking forward, the industry is working to expand the template to reflect reporting of natural gas-related emissions and metrics.

While many recent shareholder proposals have focused on environmental concerns — including calls for companies to conduct so-called “2 degree” analyses — there are also many other issues driving them. The Edison Electric Institute (EEI) and its member companies are actively engaged with investors and policymakers to ensure that stakeholders consider the significant activities and voluntary disclosures on ESG/sustainability electric companies already undertake. The EEI Template is the latest example of the industry’s leadership.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.