CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER 2005 FORTUNE GLOBAL 500 AND FORTUNE 1000 ENERGY & UTILITIES SECTORS Corporate Environmental and Sustainability Reporting PACIFIC SUSTAINABILITY INDEX SCORES J. Emil Morhardt Elgeritte Adidjaja Guillermo E. Cuevas Jennifer C. Goodward Robert F. Heilmayr Kelly A. Janes Joseph R.D. Russell Elizabeth M. Sears Elizabeth A. Tedsen Elizabeth A. Thomas Morhardt, J. E., E. Adidjaja, G.E. Cuevas, J.C. Goodward, R.F. Heilmayr, K.A. Janes, J.R.D. Russell, E.M. Sears, E.A. Tedsen, E.A. Thomas (2005) Energy and Utilities Sector: Corporate Environmental and Sustainability Reporting, Pacific Sustainability Index Scores. Claremont, CA, Roberts Environmental Center, Claremont McKenna College Price: $20.00 www.roberts.mckenna.edu 2005 Energy and Utilities Industry Report 1 CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER Contents Corporate Environmental & Sustainability Report- ing. 3 Company Rankings . 3 The Pacific Sustainability Index (PSI) . .4 The PSI Scoring System . .4 Environmental vs. Social Scores . .4 Intent, Reporting, and Performance. 4 More Environmental than Social Reporting . .4 Distribution o f Possible PSI Scores . .. 4 Visual Cluster Analysis . .5 Environmental & Social PSI Scores . 6 Use of Environmental and Social Indicators . .8 Voluntary Guidelines and Third Party Verification. 9 Relationship between company size and overall PSI Scores . .9 Analysts’ Comments . 10 Adams Resources & Energy . 10 Publications from Roberts Environmental Center American Electric Power . .10 Black Hills. .10 Calpine. .10 Centrica . .10 The Roberts Environmental Center publishes analyses of Chubu Electric Power . .10 corporate environmental and social reports—together Constellation Energy. 10 Dominion Resources. .10 called sustainability reports—on the web and in special Duke Energy. 11 reports. Dynegy . .11 Edison International. .11 El Paso . .11 We also write books about environmental and Electricite de France . .11 sustainability reporting, the first of which is Clean, Green, Endesa. .. .11 Enel. 11 and Read All Over: Ten Rules for Corporate Environmental Exelon . 11 and Sustainability Reporting, available from ASQ Press, Ferrellgas Partners. 12 First Energy. ..12 and publish articles in academic technical journals. Gasunie . .12 Gaz de France . .12 Gazprom. 12 For more information please visit our web site at: Iberdrola . .12 www.roberts.mckenna.edu. Kansai Electric Power. 12 Korea Electric Power . 12 Kyushu Electric Power. 12 To order additional copies of this reportreport, please contact: MDU Resources Group . 12 Mirant. 13 National Grid Transco. .13 Dr. J. Emil Morhardt, Director ONEOK. .13 Roberts Environmental Center PG&E Corporation. .13 Plains All American Pipeline . .13 Claremont McKenna College Public Service Enterprise Group . .13 925 N. Mills Avenue Reliant Energy . .13 Claremont, CA 91711-5916 RWE . .14 Southern . .14 USA State Grid . .14 Suez . .14 Tohoku Electric Power. .14 909-621-8190, Fax 909-607-1185 Tokyo Electric Power . .14 [email protected] TXU . .14 UGI . .14 USEC . .14 Veolia Environnement . .14 The goal of corporate report analysis conducted by the Roberts Environ- Vattenfall . .15 mental Center is to acquaint students with environmental and social issues Williams . .15 facing the world’s industries, and the ways in which industry approaches WPS . .15 and resolves these issues. The data presented in this report were collected by student research assistants and a research fellow at the Roberts Roberts Environmental Center, Claremont McKenna Environmental Center. Copyright 2005 © by J. Emil Morhardt. All rights College, and The Claremont Colleges. .. 15 reserved. Director’s Comments . 16 2 2005 Energy and Utilities Industry Report www.roberts.mckenna.edu CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER 2005 FORTUNE GLOBAL 500 AND FORTUNE 1000 ENERGY & UTILITIES SECTORS Corporate Environmental and Sustainability Reporting uring the past decade, large corporations have begun to produced formal environmental or sustainability reports. It is report voluntarily on the environmental issues affecting based on all environmental and social information available on Dtheir companies and on how they deal with them. The their web sites during the period of our analysis from October addition of social issues to these reports has resulted in some firms 20, 2004 through June 15, 2005, including annual reports and, designating them “sustainability reports.” Some firms produce for American companies, 10-K forms. The quality of the these reports yearly, others only occasionally, and some not at all. environmental and social reporting was characterized by We obtain these reports and any additional information exclusively students at the Claremont Colleges using the Roberts Environ- from corporate web sites. mental Center’s Pacific Sustainability Index (PSI). This report covers all of the companies in the energy and utilities sectors of the 2004 Fortune Global 500 and all energy companies from the Fortune 1000 list, whether or not they Energy and Utilities Company PSI Rankings 1 National Grid Transco (Britain) National Grid Transco Iberdrola 2 Iberdrola (Spain) Tokyo Electric Power 3 Tokyo Electric Power (Japan) RWE 4 RWE (Germany) Vattenfall Endesa 5 Vattenfall (sweden) Kansai Electric Power 6 Endesa (spain) Public Service Enterprise Group 6 Kansai Electric Power (Japan) Electricite de France PG&E Corp. 8 PSEG (USA) Mirant 8 Électricité de France (France) Centrica Chubu Electric Power 10 PG&E Corp. (USA) Gaz de France 11 Centrica (Britain) Veolia Environnement 11 Mirant (USA) Exelon Enel 13 Chubu Electric Power (Japan) Gasunie 14 Gaz de France (France) SUEZ Duke Energy 15 Veolia Environnement (France) Calpine 15 Exelon (USA) Kyushu Electric Power 17 Enel (Italy) Dominion Resources Southern Company 18 Gasunie (Netherlands) TXU 19 SUEZ (France) American Electric Power Constellation Energy 20 Duke Energy (USA) USEC 21 Calpine (USA) Dynegy 21 Kyushu Electric Power (Japan) FirstEnergy Edison International 21 Dominion Resources (USA) Wisconsin Public Service 24 Southern (USA) MDU Resources Group 25 TXU (USA) Tohoku Electric Power Reliant Energy 26 American Electric Power (USA) Black Hills Corporation 27 Constellation Energy (USA) Williams Plains All American Pipeline 27 USEC (USA) Oneok 27 Dynegy (USA) Gazprom 30 FirstEnergy (USA) Adams Resources and Energy, Inc. Ferrellgas Partners 30 Edison International (USA) El Paso 32 Wisconsin Public Service (USA) UGI Corporation Korea Electric Power 32 MDU Resources Group (USA) State Grid 34 Tohoku Electric Power (Japan) 35 Reliant Energy (USA) 0 1020304050607036 Black Hills Corporation (USA) 36 Williams (USA) 38 Plains All American Pipeline (USA) 39 Oneok (USA) The overall PSI score includes all 140 environmental and social 40 Adams Resources & Energy (USA) topics. Because both environmental and social performance 40 Gazprom (RussIA) scores, which make up 35 percent of the total possible score, 40 Ferrellgas Partners (USA) tend to be low, the overall scores are seldom above 50 percent 40 El Paso (USA) for any company. Nevertheless, there is a very large range of 40 UGI Corporation (USA) scores among these companies on the Fortune lists. 45 Korea Electric Power (South Korea) 46 State Grid (China) www.roberts.mckenna.edu 2005 Energy and Utilities Industry Report 3 CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER The Pacific Sustainability Index (PSI)1 The PSI Scoring System Combined Environmental Score The Pacific Sustainability Index (PSI) comprises a list of 140 Scores for all 80 environmental topics in the three categories topics that should be addressed in corporate environmental above. and sustainability reports.1 The topics were derived from the ISO 14000 family of international environmental standards, Social Intent Score from reporting guidelines, including those of the Global Scores from PSI questions 81-108, 124, and 125. They reflect a Reporting Initiative (GRI), and from a variety of other firm’s commitment to social reporting. sources. The philosophy of the PSI is described in detail in our book, Clean, Green, and Read All Over, published by and Social Reporting Score available from the American Society for Quality Press2. Each Scores from PSI questions 109-123, reflecting amount of of the topics has a maximum score of either two or three reporting of social performance without reflecting the quality of points. The overall scores are presented in the graph on page that performance. three. The overall score is calculated as a percentage of the maximum possible score. Social Performance Score Scores from PSI topics 126-140. These scores reflect Visual Cluster Analysis improved social performance, or performance better than the For the first time we have tried using a visual clustering average of a firm’s peers, or both. technique (the histograms on the opposite page) to illuminate the patterns of reporting of specific topics. Combined Social Score Environmental vs. Social Scores Scores for all 60 social topics in the three categories above. In addition to the overall score, we have subsetted the PSI into its environmental and social components and reported each of these independently in graphs on pages six and Distribution of Possible PSI Scores seven. The subsetted scores are also calculated as percent of The pie diagram below shows the quantitative distribution of maximum possible score for each subset. possible points for the 140 topics in the PSI scoring system. Intent, Reporting, and Performance Environmental