Trends in Utility Corporate Social Responsibility

Transparent reporting on a range of economic, social and environmental issues has become a crucial part of utilities' annual CSR reporting activities to investors, consumers, interest groups and the general public. The traditional reporting focus on governance, and health and safety has expanded in particular to cover issues of stakeholder engagement and climate change protection.



Report Highlights
Over 80% of EU citizens believe national energy production and consumption patterns hasten climate change. Utilities are the most visible energy participants, with direct consumer contact. They are likely to be held disproportionately responsible for what is perceived to be an energy-related problem. Out of a ranking of 64 of the world's largest companies (based on an extension of the Fortune Global 50), utilities rank highly in comparison with peers other industries. Centrica is unique in massively expanding the resources and CSR coverage it devotes to charitable activities. Other utilities, in particular EDF, tend to focus on more structural solutions to social issues, for example through company-organized programmes of international development assistance.


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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Corporate social responsibility (CSR) has expanded in scope, increasing the onus on utilities to respond to a range of issues 2
Corporate social responsibility has broadened to include a range of sustainable development and corporate governance issues 2
Corporate social responsibility has evolved in the last 10 years to include both environmental and non-environmental issues 3
Sustainable development emerged as a key non-core business focus for companies in the early 1990s 4
Corporate governance emerged as a dominant CSR issue in the early 2000s 4
Climate change is now a prominent feature of CSR reporting, driven by an increase in consumer awareness 5
Utilities may bear the brunt of increasing climate change awareness 6
Independent standard setting and accreditation are becoming common in the CSR field 7
Several organizations have developed international CSR standards and accreditation procedures 7
Large European utilities tend to be members of the United Nations Global Compact 8
Utilities outperform in independent assessments of corporate social responsibility 9
CSR has expanded to encompass an extensive list of sustainable development-related issues 10
The concept of sustainable development for energy utilities has evolved since the 1992 Rio Earth Summit 10
A range of environmental sub-issues have become standard parts of utility CSR programs and reporting 11
Social dimensions to sustainable development for utilities often form the core part of CSR programs and reporting 12
Increasingly, economic dimensions to sustainable development for utilities form an important part of CSR programs and reporting 13
Health and safety is traditionally the issue with the most extensive coverage in utility CSR reporting 14
Measurements of the changing focus of utility CSR reporting show a significant increase in the prominence of climate change issues 14
The single greatest focus in utility CSR reports tends to be health and safety 15
Since 2004, utility CSR reports have expanded in terms of the breadth and depth of issues they cover 16
Utilities have dramatically increased their coverage of climate change and stakeholder engagement in CSR reporting 17
The prevalence of climate change issues in utility CSR reporting has dramatically increased in recent years 17
Most utilities have dramatically increased the level of reporting focused specifically on biodiversity 18
Health and safety issues are a prominent, stable part of utility CSR reporting 19
In many utilities a focus on staff training and development has been stable or decreasing 20
Attention to profiling research and development activities differs significantly between utilities 21
Attention to charitable activities in CSR reporting varies greatly between utilities, with no trend emerging in recent years 22
A strong trend towards increasing the focus on stakeholder engagement is evident across the utility industry 23
Many utilities have dramatically increased their focus on the issue of ethical business practices 24
APPENDIX 25
Definitions 25
Datamonitor Consultancy 25
Ask the Analyst 25
Disclaimer 25

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Figure 1: Sustainable development concerns have coincided with the first wave of CSR reporting by energy companies 3
Figure 2: Almost 90% of EU citizens express concern over climate change 5
Figure 3: Over 80% of EU citizens believe national energy production and consumption patterns hasten climate change 6
Figure 4: Membership of the UN Global Compact among 30 leading European utilities 8
Figure 5: Independent CSR ranking of the world's largest companies, by industry 9
Figure 6: The concept of sustainable development for energy utilities can be broken into three dimensions 10
Figure 7: Environmental strategies for sustainable development 11
Figure 8: Social strategies for sustainable development 12
Figure 9: Economic strategies for sustainable development 13
Figure 10: Proportion of utility CSR reports focusing on certain leading issues 15
Figure 11: There has been a year- on year- increase in the incidence of most CSR issues being discussed in utility reports 16
Figure 12: Incidence of climate change issues being discussed in utility CSR reports 17
Figure 13: Incidence of biodiversity issues being discussed in utility CSR reports 18
Figure 14: Incidence of health and safety issues being discussed in utility CSR reports 19
Figure 15: Incidence of training issues being discussed in utility CSR reports 20
Figure 16: Incidence of research and development issues being discussed in utility CSR reports 21
Figure 17: Incidence of charity-related issues being discussed in utility CSR reports 22
Figure 18: Incidence of stakeholder engagement issues being discussed in utility CSR reports 23
Figure 19: Incidence of ethics and business practice issues being discussed in utility CSR reports 24

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