Communicating on ESG: An Emerging Need for Utilities
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Many utility communicators and marketers have Earth Day (April 22) circled on their calendar. This year’s Earth Day, if history is any guide, promises to be busy. Employees will volunteer to pick up trash from streams, rivers and parks, plant trees and lead community workshops. Utilities will announce the closure of coal-fired power plants and the construction of renewable energy projects. Pledges to become GHG-free or have net-zero carbon emissions by some date — 2030? 2040? 2050? — will be made.
All of those activities are well and good, providing they spring from a sincere commitment to preserve and protect the environment. Decarbonizing is a long-term plan requiring steadfast commitment.
But there’s a more import Day of Reckoning for utilities, one whose impact is deeper and broader than Earth Day, Arbor Day (April 30), Bike to Work Day (May 21), World Environmental Day (June 5) or Energy Efficiency Day (October 6).
It’s ESG Day, which is to say, every day.
ESG an Emerging Trend
ESG is an acronym for Environmental, Social and Governance, a far-reaching but still-evolving set of criteria that are increasingly being used to shape a variety of business decisions:
- How can our company minimize the environmental impact of its operations?
- Which companies or industries will attract investors? Which will investors shun?
- How will the concerns of stakeholders and the broader society be factored in corporate decision-making?
- Extra challenge for shareholder-owned utilities: How can I do all of this without denting profits?
This is only a partial list, and there are as many flavors of ESG as Baskin-Robbins has varieties of ice cream. Suffice it to say that no energy conference — virtual or in-person — is complete without a speaker or panel discussion about ESG.
I would note that I have seen few if any conference sessions on ESG for electric or gas utilities. To date, most of the action has been focused on oil & gas companies and mining concerns. But I expect that will change.
ESG: An Evolution of Social License to Operate (SLTO)
I’ve blogged on specific issues that are discrete pieces of the evolving ESG field, such as clean energy communications, social license to operate, employee engagement and stakeholder engagement. I have authored articles for my journalism clients on renewable energy, energy efficiency programs, utility decarbonization and the growing importance of ESG with investors. And lately I have attended energy conferences where ESG issues have been discussed prominently. Like here. And here. And here.
Last year I published a piece on how some utilities were upping their game on environmental communications. I didn’t tackle the “S” and “G” of ESG in that piece, only the “E.” But it’s clear to me that the “S” and “G” are no less important than the “E” when it comes to ESG.
In retrospect, SLTO, clean energy communications, stakeholder engagement, decarbonization, investor relations, employee engagement and the rest are a subset of ESG — each piece able to stand on its own, telling part of the ESG story. But only part.
The Many Faces of ESG
I wish I had a cookie-cutter plan on ESG communications for utilities, but I don’t because it doesn’t exist. As an industry, utilities face too many different challenges. Utilities that own coal-fired generation in the Midwest, Southeast and West face different challenges than “pipes and wires” distributors. Utilities with a history of treating their employees or communities poorly have to undo those legacies, and that is a years-long endeavor. If your utility is owned by shareholders, you face an additional stakeholder group that is not faced by publicly owned utilities (POUs) or electric cooperatives.
Communications Tip of the Month: New problems require new thinking — and new perspectives! It is unlikely than an internal team, no matter how talented, can address all of the challenges raised by ESG. Your utility can avoid groupthink by forming an external advisory council in order to consider new challenges with new thinking.
And combination utilities, or stand-alone gas utilities, face still another ESG challenge: “building electrification,” a trend that started on the coasts but is unlikely to stay there. Here’s Standard & Poor’s take on the emerging trend. And combination utilities, or stand-alone gas utilities, face still another ESG challenge: “building electrification,” a trend that started on the coasts but is unlikely to stay there. Here’s Standard & Poor’s take on the emerging trend.
As interest in building electrification has grown, several states, including Arizona, Tennessee, Oklahoma and Louisiana have passed laws banning the enactment of building electrification laws or codes that aim to restrict or prohibit the use of natural gas in new or remodeled homes or buildings,
Adding Value by Broadening the Conversation
This can be a moment for utility communicators to shine. From my conversations with clients and colleagues, it seems that most if not all utilities have created one or more cross-functional teams to tackle some aspect of ESG, whether it goes by the name of “decarbonization,” “energy transition,” “building electrification” or something else.
Are the communications and/or marketing functions represented on those teams? If not, I recommend trying to wrangle an invitation. While communications and marketing should not try to drive the work of those teams, neither should those functions be considered an afterthought, a work group to contact after the “real work” has been completed.
By raising communications and marketing considerations on teams stocked with representatives of Operations, Engineering and Finance, communicators and marketers have the opportunity to broaden the discussion and consider options that may be overlooked by people who work in other parts of the enterprise.
Consider Creating a Community Advisory Group
For a utility trying to figure out how to move forward on ESG issues, now might be a perfect time to create an outside advisory council to broaden the range of stakeholder input. According to this article in Public Power magazine, about 10% of POUs have an advisory council, separate from their regulatory body, that can weigh in on utility issues and present community concerns.
I would have thought more than 10% of POUs would have had this kind of external advisory council, but the fact that some of the larger POUs have them means small and midsized POUs can reach out to their larger brethren to learn how these advisory groups work.
If two heads are better than one, as the adage goes, consider how much better 10 or 15 heads could be.
A few years back, a representative of Fayetteville (NC) Public Works Commission spoke at APPA conferences about the benefits that flowed after it created a community advisory group. Maybe now is the time to make a new friend in the Fayetteville PWC Communications & Community Relations Department?
Photo Credits: iStock
Keeping Employees Engaged
Your employees can be an important source of expertise and experience in addressing ESG challenges, but they won’t perform if they’re not engaged. Find out more here.
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