2005 F ORTUNE GLOBAL 500 AND FORTUNE 1000 ENERGY & …€¦ · 20, 2004 through June 15, 2005, including annual reports and, for American companies, 10-K forms. The quality of the

2005 Energy and Utilities Industry Report 1www.roberts.mckenna.edu

CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER

2005 F2005 F2005 F2005 F2005 FORTUNEORTUNEORTUNEORTUNEORTUNE G G G G GLOBALLOBALLOBALLOBALLOBAL 500 500 500 500 500 ANDANDANDANDAND F F F F FORTUNEORTUNEORTUNEORTUNEORTUNE 1000 1000 1000 1000 1000

ENERGY & UTILITIES SECTORS

Corporate Environmental and Sustainability ReportingCorporate Environmental and Sustainability ReportingCorporate Environmental and Sustainability ReportingCorporate Environmental and Sustainability ReportingCorporate Environmental and Sustainability Reporting

PPPPPACIFICACIFICACIFICACIFICACIFIC S S S S SUSTUSTUSTUSTUSTAINABILITYAINABILITYAINABILITYAINABILITYAINABILITY I I I I INDEXNDEXNDEXNDEXNDEX S S S S SCORESCORESCORESCORESCORES

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 andSustainability Reporting, Pacific Sustainability Index Scores.Claremont, CA, Roberts Environmental Center, Claremont McKennaCollege Price: $20.00

2 2005 Energy and Utilities Industry Report www.roberts.mckenna.edu


Publications from Roberts Environmental Center

The Roberts Environmental Center publishes analyses ofcorporate environmental and social reports—togethercalled sustainability reports—on the web and in specialreports.

We also write books about environmental andsustainability reporting, the first of which is Clean, Green,and Read All Over: Ten Rules for Corporate Environmentaland Sustainability Reporting, available from ASQ Press,and publish articles in academic technical journals.

For more information please visit our web site at:www.roberts.mckenna.edu.

TTTTTo order additional copies of this reporto order additional copies of this reporto order additional copies of this reporto order additional copies of this reporto order additional copies of this report, please contact:

Dr. J. Emil Morhardt, DirectorRoberts Environmental CenterClaremont McKenna College925 N. Mills AvenueClaremont, CA 91711-5916USA

909-621-8190, Fax [email protected]

The goal of corporate report analysis conducted by the Roberts Environ-mental Center is to acquaint students with environmental and social issuesfacing the world’s industries, and the ways in which industry approachesand resolves these issues. The data presented in this report were collectedby student research assistants and a research fellow at the RobertsEnvironmental Center. Copyright 2005 © by J. Emil Morhardt. All rightsreserved.

ContentsCorporate Environmental & Sustainability Report-ing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Company Rankings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The Pacific Sustainability Index (PSI) . . . . . . . . . . . .4

The PSI Scoring System . . . . . . . . . . . . . . . . . . . . . .4Environmental vs. Social Scores . . . . . . . . . . . . . . .4Intent, Reporting, and Performance. . . . . . . . . . . 4More Environmental than Social Reporting . . . . . .4Distribution 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 PSIScores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Analysts’ Comments . . . . . . . . . . . . . . . . . . . . . . . . . . 10Adams Resources & Energy . . . . . . . . . . . . . . . . . . . . 10American Electric Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Black Hills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Calpine. . . . . . . . . . . . . . . . . . .10Centrica . . . . . . . . . . . . . . . . . . . . . . . . .10Chubu Electric Power . . . . . . . . . . . . . . . . . . . . . . . . . . .10Constellation Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Dominion Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Duke Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Dynegy . . . . . . . . . . . . . . . . . . . . . .11Edison International. . . . . . . . . . . . . . . . . . . . . .11El Paso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Electricite de France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Endesa. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .11Enel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Exelon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Ferrellgas Partners. . . . . . . . . . . . . . . . . . . . . . . . . . 12First Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Gasunie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Gaz de France . . . . . . . . . . . . . . . . . . . . . . . . .12Gazprom. . . . . . . . . . . . . . . . . . . 12Iberdrola . . . . . . . . . . . . . . . . . . . . .12Kansai Electric Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Korea Electric Power . . . . . . . . . . . . . . . . . . . . . . 12Kyushu Electric Power. . . . . . . . . . . . . . . . . . . . . . 12MDU Resources Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Mirant. . . . . . . . . . . . . . . . . . . . . . . . . . 13National Grid Transco. . . . . . . . . . . . . . . . . . . .13ONEOK. . . . . . . . . . . . . . . . . . . . . . . . . .13PG&E Corporation. . . . . . . . . . . . . . . . . . . . . . . . .13Plains All American Pipeline . . . . . . . . . . . . . . . . . . . .13Public Service Enterprise Group . . . . . . . . . . . . . . . . . . . .13Reliant Energy . . . . . . . . . . . . . . . . . . . .13RWE . . . . . . . . . . . . . . . . . . . .14Southern . . . . . . . . . . . . . . . . . . . .14State Grid . . . . . . . . . . . . . . . . . . . .14Suez . . . . . . . . . . . . . . . . . . . .14Tohoku Electric Power. . . . . . . . . . . . . . . . . . . . . . . . . .14Tokyo Electric Power . . . . . . . . . . . . . . . . . . . . . . . . .14TXU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14UGI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14USEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Veolia Environnement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Vattenfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15Williams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15WPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Roberts Environmental Center, Claremont McKennaCollege, and The Claremont Colleges. . . . .. . . . . 15

Director’s Comments . . . . . . . . . . . . . . . . . . . . . . . . . 16



During the past decade, large corporations have begun toreport voluntarily on the environmental issues affectingtheir companies and on how they deal with them. The

addition of social issues to these reports has resulted in some firmsdesignating them “sustainability reports.” Some firms producethese reports yearly, others only occasionally, and some not at all.We obtain these reports and any additional information exclusivelyfrom corporate web sites.

This report covers all of the companies in the energy andutilities sectors of the 2004 Fortune Global 500 and all energycompanies from the Fortune 1000 list, whether or not they

Energy and Utilities Company PSI RankingsEnergy and Utilities Company PSI RankingsEnergy and Utilities Company PSI RankingsEnergy and Utilities Company PSI RankingsEnergy and Utilities Company PSI Rankings

produced formal environmental or sustainability reports. It isbased on all environmental and social information available ontheir web sites during the period of our analysis from October20, 2004 through June 15, 2005, including annual reports and,for American companies, 10-K forms. The quality of theenvironmental and social reporting was characterized bystudents at the Claremont Colleges using the Roberts Environ-mental Center’s Pacific Sustainability Index (PSI).

Corporate Environmental and Sustainability Reporting

2005 FORTUNE GLOBAL 500 AND FORTUNE 1000

ENERGY & UTILITIES SECTORS

The overall PSI score includes all 140 environmental and socialtopics. Because both environmental and social performancescores, which make up 35 percent of the total possible score,tend to be low, the overall scores are seldom above 50 percentfor any company. Nevertheless, there is a very large range ofscores among these companies on the Fortune lists.

1 National Grid Transco (Britain)

2 Iberdrola (Spain)

3 Tokyo Electric Power (Japan)

4 RWE (Germany)

5 Vattenfall (sweden)

6 Endesa (spain)

6 Kansai Electric Power (Japan)

8 PSEG (USA)

8 Électricité de France (France)

10 PG&E Corp. (USA)

11 Centrica (Britain)

11 Mirant (USA)

13 Chubu Electric Power (Japan)

14 Gaz de France (France)

15 Veolia Environnement (France)

15 Exelon (USA)

17 Enel (Italy)

18 Gasunie (Netherlands)

19 SUEZ (France)

20 Duke Energy (USA)

21 Calpine (USA)

21 Kyushu Electric Power (Japan)

21 Dominion Resources (USA)

24 Southern (USA)

25 TXU (USA)

26 American Electric Power (USA)

27 Constellation Energy (USA)

27 USEC (USA)

27 Dynegy (USA)

30 FirstEnergy (USA)

30 Edison International (USA)

32 Wisconsin Public Service (USA)

32 MDU Resources Group (USA)

34 Tohoku Electric Power (Japan)

35 Reliant Energy (USA)

36 Black Hills Corporation (USA)

36 Williams (USA)

38 Plains All American Pipeline (USA)

39 Oneok (USA)

40 Adams Resources & Energy (USA)

40 Gazprom (RussIA)

40 Ferrellgas Partners (USA)

40 El Paso (USA)

40 UGI Corporation (USA)

45 Korea Electric Power (South

Korea)

46 State Grid (China)

0 10 20 30 40 50 60 70

State GridKorea Electric Power

UGI CorporationEl Paso

Ferrellgas PartnersAdams Resources and Energy, Inc.

GazpromOneok

Plains All American PipelineWilliams

Black Hills CorporationReliant Energy

Tohoku Electric PowerMDU Resources Group

Wisconsin Public ServiceEdison International

FirstEnergyDynegy

USECConstellation Energy

American Electric PowerTXU

Southern CompanyDominion Resources

Kyushu Electric PowerCalpine

Duke EnergySUEZ

GasunieEnel

ExelonVeolia Environnement

Gaz de FranceChubu Electric Power

CentricaMirant

PG&E Corp.Electricite de France

Public Service Enterprise GroupKansai Electric Power

EndesaVattenfall

RWETokyo Electric Power

IberdrolaNational Grid Transco



The Pacific Sustainability Index (PSI)1

The PSI Scoring SystemThe PSI Scoring SystemThe PSI Scoring SystemThe PSI Scoring SystemThe PSI Scoring System

The Pacific Sustainability Index (PSI) comprises a list of 140topics that should be addressed in corporate environmentaland sustainability reports.1 The topics were derived from theISO 14000 family of international environmental standards,from reporting guidelines, including those of the GlobalReporting Initiative (GRI), and from a variety of othersources. The philosophy of the PSI is described in detail inour book, Clean, Green, and Read All Over, published by andavailable from the American Society for Quality Press2. Eachof the topics has a maximum score of either two or threepoints. The overall scores are presented in the graph on pagethree. The overall score is calculated as a percentage of themaximum possible score.

Visual Cluster AnalysisVisual Cluster AnalysisVisual Cluster AnalysisVisual Cluster AnalysisVisual Cluster Analysis

For the first time we have tried using a visual clusteringtechnique (the histograms on the opposite page) to illuminate thepatterns of reporting of specific topics.

Environmental vs. Social ScoresEnvironmental vs. Social ScoresEnvironmental vs. Social ScoresEnvironmental vs. Social ScoresEnvironmental vs. Social Scores

In addition to the overall score, we have subsetted the PSIinto its environmental and social components and reportedeach of these independently in graphs on pages six andseven. The subsetted scores are also calculated as percent ofmaximum possible score for each subset.

Intent, Reporting, and PerformanceIntent, Reporting, and PerformanceIntent, Reporting, and PerformanceIntent, Reporting, and PerformanceIntent, Reporting, and Performance

Both environmental and social subsets of scores reflect intent,reporting, and performance. Intent scores are derived fromtopics in the PSI that reflect a stated willingness to performwell, to monitor that performance, and to report it. Reportingscores reflect presentation in the report of data on specificenvironmental and social topics, but not on how good thatperformance was—they indicate transparency in reportingindependent of success in making improvements. Perfor-mance scores reflect better performance on specific environ-mental and social topics than in the previous reporting period,better performance than peer companies, or both.

Overall ScoreOverall ScoreOverall ScoreOverall ScoreOverall Score

The PSI has a total of 140 topics, 80 of them on environmen-tal issues and 60 on social issues. The overall score is thepercentage of the maximum possible score on all 140 topics.

Environmental Intent ScoreEnvironmental Intent ScoreEnvironmental Intent ScoreEnvironmental Intent ScoreEnvironmental Intent Score

Scores from PSI topics 1-27, 54, and 55. These topics reflect afirm’s comitment to environmental reporting.

Environmental Reporting ScoreEnvironmental Reporting ScoreEnvironmental Reporting ScoreEnvironmental Reporting ScoreEnvironmental Reporting Score

Scores from PSI topics 28-53. These topics reflect reportingof environmental performance without reflecting the quality ofthat performance.

Environmental Performance ScoreEnvironmental Performance ScoreEnvironmental Performance ScoreEnvironmental Performance ScoreEnvironmental Performance Score

Scores from PSI topics 56-80. These scores reflect improvedenvironmental performance, or performance better than theaverage of a firm’s peers, or both.

The pie diagram below shows the quantitative distribution ofpossible points for the 140 topics in the PSI scoring system.Environmental topics make up a little more than half of thetotal and social topics the remainder. Environmental andsocial intent topics make up 41 percent, reporting topics makeup 24 percent, and performance topics make up 35 percent ofthe total possible score. Two thirds of the possible perfor-mance score requires that firms compare their performance tothat of their peers and do better than peer average. Becausefew companies compare themselves to their peers, theperformance scores tend to be low, and drive down the overallscores.

Combined Environmental ScoreCombined Environmental ScoreCombined Environmental ScoreCombined Environmental ScoreCombined Environmental Score

Scores for all 80 environmental topics in the three categoriesabove.

Social Intent ScoreSocial Intent ScoreSocial Intent ScoreSocial Intent ScoreSocial Intent Score

Scores from PSI questions 81-108, 124, and 125. They reflect afirm’s commitment to social reporting.

Social Reporting ScoreSocial Reporting ScoreSocial Reporting ScoreSocial Reporting ScoreSocial Reporting Score

Scores from PSI questions 109-123, reflecting amount ofreporting of social performance without reflecting the quality ofthat performance.

Social Performance ScoreSocial Performance ScoreSocial Performance ScoreSocial Performance ScoreSocial Performance Score

Scores from PSI topics 126-140. These scores reflectimproved social performance, or performance better than theaverage of a firm’s peers, or both.

Combined Social ScoreCombined Social ScoreCombined Social ScoreCombined Social ScoreCombined Social Score

Scores for all 60 social topics in the three categories above.

Distribution of Possible PSI ScoresDistribution of Possible PSI ScoresDistribution of Possible PSI ScoresDistribution of Possible PSI ScoresDistribution of Possible PSI Scores

ENVIRONMENTAL TOPICSEnvironmental Reporting

Environmental Performance

Social Intent

Social Reporting

Social Performance

S O C I A L T O P I C S

Environmental Intent

1PSI scoring sheets are available on our web site2http://www.qualitypress.asq.org/perl/catalog.cgi?item=H1145



VVVVVISUISUISUISUISUALALALALAL C C C C CLLLLLUSUSUSUSUSTERTERTERTERTER A A A A ANNNNNALALALALALYYYYYSISSISSISSISSIS

Multivariate data of the sort produced by the PSI is difficult to summarize. Here we have created histograms of the percentage of totalpossible score in all 11 environmental categories (the upper histogram for each company) and all 11 social categories (the lowerhistogram for each company). Some categories have many possible points, others just a few, but in this display all are consideredequal and the height of the bars represents how well the report did in terms of each of 21 categories.

National Grid Iberdrola Tokyo Electric RWE Endesa Vattenfall

Électricité de France PG&E Mirant Centrica Chubu Electric Gaz de France Veolia Exelon

Enel Gasunie Duke Energy SUEZ Calpine Dominion Kyushu Electric Southern

American Electric TXU Constellation USEC Dynegy Wisconsin

Edison Tohoku Electric Black Hills

MDU Resource FirstEnergy

Reliant Energy

Gazprom

Williams Plains All American Oneok Ferrellgas Partners

Adams Resources UGI Corporation El Paso Korea Electric State Grid

Public Service Kansai Electric

Company ProfileVision and Commitment

StakeholdersPolicy and Management

Aspects and ImpactsPerformance Indicators

Initiatives and MitigationsPerformance Comprehensiveness

Costs and InvestmentsGoals and Targets

Quantitative Performance

Upper charts show environmental scores

Lower charts show social scores

KEY:



EEEEENVIRNVIRNVIRNVIRNVIRONMENTONMENTONMENTONMENTONMENTALALALALAL R R R R REPOREPOREPOREPOREPORTINTINTINTINTINGGGGG S S S S SCCCCCORESORESORESORESORES

EEEEENVIRNVIRNVIRNVIRNVIRONMENTONMENTONMENTONMENTONMENTALALALALAL I I I I INTENTNTENTNTENTNTENTNTENT S S S S SCCCCCORESORESORESORESORES

Highest Ranked Scores

1 RWE

2 National Grid Transco

3 Gaz de France

4 PSEG

5 Tokyo Electric Power

5 Gasunie

7 Endesa

7 Électricité de France

9 Vattenfall

9 Kansai Electric Power

10 Iberdrola

10 Chubu Electric Power

EEEEENVIRNVIRNVIRNVIRNVIRONMENTONMENTONMENTONMENTONMENTALALALALAL P P P P PERFERFERFERFERFORMANORMANORMANORMANORMANCECECECECE S S S S SCCCCCORESORESORESORESORES

Environmental Reporting1 Iberdrola


1 Kyushu Electric Power

4 PSEG


6 national Grid Transco


7 Exelon


7 Vattenfall

8 Mirant

9 Gasunie

9 PG&E Corp.

10 Enel

Environmental Performance



3 Iberdrola

4 Kyushu Electric Power


6 Exelon

7 PSEG

8 Mirant

8 Centrica

10 Endesa

Environmental intent scores include topicsabout the firm’s products, environmentalorganization, vision and commitment,stakeholders, environmental policy andcertifications, environmental aspects andimpacts, choice of environmentalperformance indicators and those used bythe industry, environmental initiatives andmitigations, and environmental goals andtargets.

Environmental reporting scores are basedon the degree to which the companydiscusses its emissions, energy sources andconsumption, environmental incidents andviolations, materials use, mitigations andremediation, waste produced, and waterused. They also include use of life cycleanalysis, environmental performance andstewardship of products, and environmen-tal performance of suppliers and contrac-tors.

Environmental performance scores arebased on whether or not the firm hasimproved its performance on each ofthe topics discussed under the headingof environmental reporting, and onwhether the quality of the performanceis better than that of the firm’s peers.Scoring for each topic is one point ifperformance is better than in previousreports, two points if better thanindustry peers, three points if both.

Environmental Intent

0 20 40 60 80 100

State GridFerrellgas Partners

Korea Electric PowerUGI Corporation

El PasoAdams Resources and Energy, Inc.

Plains All American PipelineOneok

GazpromDynegy

Reliant EnergyWilliams

MDU Resources GroupBlack Hills Corporation

USECDominion Resources

FirstEnergyTohoku Electric Power

Wisconsin Public ServiceConstellation EnergyEdison International

American Electric PowerDuke Energy

CalpineTXU

SUEZMirant

Kyushu Electric PowerSouthern

EnelVeolia Environnement

ExelonCentrica

PG&E Corp.Chubu Electric Power

IberdrolaKansai Electric Power

VattenfallÉlectricité de France

EndesaGasunie

Tokyo Electric PowerPublic Service Enterprise Group

Gaz de FranceNational Grid Transco

RWE

0 20 40 60 80 100



WilliamsKorea Electric Power

UGI CorporationOneok

GazpromPlains All American Pipeline

Black Hills CorporationDynegy

MDU Resources GroupEdison International

Reliant EnergyUSEC

Veolia EnvironnementTohoku Electric Power

Wisconsin Public ServiceConstellation Energy

SUEZSouthern Company

FirstEnergyDominion Resources

TXUDuke Energy

CalpineGaz de France

American Electric PowerCentricaEndesa

RWEEnel

PG&E Corp.Gasunie

MirantVattenfall

Electricite de FranceExelon

Chubu Electric PowerNational Grid TranscoKansai Electric Power

Public Service Enterprise GroupKyushu Electric Power

Tokyo Electric PowerIberdrola

0 5 10 15 20 25 30



WilliamsKorea Electric Power

UGI CorporationOneok

Plains All American PipelineBlack Hills Corporation

Edison InternationalWisconsin Public Service

GazpromDynegy

MDU Resources GroupAmerican Electric Power

Constellation EnergyFirstEnergy

Reliant EnergyVeolia Environnement

Tohoku Electric PowerChubu Electric Power

Gaz de FranceDominion Resources

SUEZGasunie

USECDuke Energy

RWEEnel

VattenfallSouthern Company

CalpinePG&E Corp.

National Grid TranscoTXU

EndesaCentrica

MirantPublic Service Enterprise Group

ExelonElectricite de France

Kyushu Electric PowerIberdrola

Tokyo Electric PowerKansai Electric Power



SSSSSOCIALOCIALOCIALOCIALOCIAL R R R R REPORTINGEPORTINGEPORTINGEPORTINGEPORTING S S S S SCORESCORESCORESCORESCORES

SSSSSOCIALOCIALOCIALOCIALOCIAL I I I I INTENTNTENTNTENTNTENTNTENT S S S S SCORESCORESCORESCORESCORES

SSSSSOCIALOCIALOCIALOCIALOCIAL P P P P PERFORMANCEERFORMANCEERFORMANCEERFORMANCEERFORMANCE S S S S SCORESCORESCORESCORESCORES

Social Intent

1 Gaz de France

2 Vattenfall


4 RWE

5 PG&E Corp.


5 Veolia Environnement



8 Endesa

Social Reporting1 Iberdrola


3 Endesa

4 PSEG

5 Vattenfall

5 RWE


7 Mirant

9 PG&E Corp.


Social Performance


2 Centrica

3 Endesa


5 Iberdrola

6 Mirant

6 PG&E Corp.

8 RWE

9 Vattenfall

9 Gasunie

Social intent scores include topics about thefirm’s financials, employees, safetyreporting, social management organization,social vision and commitment, stakeholders,social policy and certifications, socialaspects and impacts, choice of socialperformance indicators and those used bythe industry, social initiatives andmitigations, and social goals and targets.

Social reporting scores are based on thedegree to which the company discussesvarious aspects of its dealings with itsemployees and contractors. They also includesocial costs and investments.

Social performance scores are based onimprovement, performance better than thesector average, or statements of compliancewith established social standards. Centricaachieved such high scores because of its verystrong statements supporting various humanrights.

Highest Ranked Scores

0 20 40 60 80 100

GazpromState Grid

Korea Electric PowerAdams Resources and Energy, Inc.

UGI CorporationWisconsin Public Service

Tohoku Electric PowerKyushu Electric Power

OneokPlains All American Pipeline

Reliant EnergyTXU

Ferrellgas PartnersBlack Hills Corporation

El PasoConstellation Energy

FirstEnergyWilliams

American Electric PowerUSEC

MDU Resources GroupSouthern Company

Edison InternationalDynegy

GasunieDominion Resources

CalpineExelon

Duke EnergySUEZ

CentricaPublic Service Enterprise Group

Kansai Electric PowerEnel

MirantIberdrola

EndesaElectricite de FranceTokyo Electric Power

Veolia EnvironnementChubu Electric Power

PG&E Corp.RWE

National Grid TranscoVattenfall

Gaz de France

0 20 40 60 80 100 120


UGI CorporationTohoku Electric Power

Reliant EnergyTXU

El PasoFirstEnergy

Edison InternationalGazprom

Adams Resources and Energy, Inc.Kyushu Electric PowerBlack Hills Corporation

American Electric PowerDynegy

Plains All American PipelineConstellation Energy

Ferrellgas PartnersSouthern Company

WilliamsWisconsin Public Service

OneokUSEC

CalpineDominion Resources

MDU Resources GroupGasunie

ExelonEnel

Gaz de FranceSUEZ

Duke EnergyCentrica

Chubu Electric PowerKansai Electric Power

Electricite de FranceVeolia Environnement

PG&E Corp.Mirant

Tokyo Electric PowerRWE

VattenfallPublic Service Enterprise Group

EndesaNational Grid Transco

Iberdrola

0 10 20 30 40 50


UGI CorporationTohoku Electric Power

Reliant EnergyTXU

El PasoFirstEnergy

Adams Resources and Energy, Inc.Kyushu Electric PowerBlack Hills Corporation

American Electric PowerDynegy

Constellation EnergyFerrellgas Partners

WilliamsWisconsin Public Service

OneokDominion Resources

MDU Resources GroupEdison International

GazpromGaz de France

USECCalpine

EnelTokyo Electric Power

Plains All American PipelineSouthern Company

ExelonChubu Electric Power

SUEZDuke Energy

Electricite de FrancePublic Service Enterprise Group

Kansai Electric PowerGasunie

VattenfallRWE

PG&E Corp.Mirant

IberdrolaVeolia Environnement

EndesaCentrica

National Grid Transco



Use of Social Reporting Indicators

The PSI evaluates the coverage of 15 social indicators to determine the PSI social reporting score. This graph shows the total sector-wide scores for each of these. The most commonly discussed is the human environment around power production facilities. Training and education is the next most discussed social topic. In general, the social topics covered in the

PSI, largely derived from the SA8000 standard and similar documents, were addressed much less frequently than the environmentaltopics.

Considering the costs associated with properly managing these issues, one might expect an accounting of them, but there isalmost none.

Only a few companies addressemployee working hours: Centric,Tokyo Electric Power, and RWEdescribe programs of flexibleworking hours; Chubu ElectricPower describes a process by whichit discovered work-hour problemsand paid 6.5 billion Yen in backwages. More discuss employeecompensation and a few addresstheir non-use of illegal child labor,forced labor, and corporalpunishment. We imagine that mostcompanies on this list have verystrong policies against the latter items;publishing these policies would raisetheir PSI scores.

Use of Environmental Reporting Indicators

The PSI evaluates the coverage of the 24 environmental performance indicators used by the energy and utilities sectors. This graph shows the total sector-wide scores for each of these. Not surprisingly, for the energy and utility sectors gaseous emissions to air are the most widely reported topics, with greenhouse gas emissions nearly as frequently reported as those

of other gaseous pollutants. This sector is also focused on issues regarding protection of the natural environment, the consumptionof energy, and environmental costs and investments. Also not surprisingly, unreported for this sector is use of packaging materialssince its products (mainly electricity and natural gas) are characteristically unpackaged.

It is a little surprising to us that only a handful of companies is doing life cycle analysis (LCA): Kyushu Electric Power isusing it as part of an EcoLeaf certification effortand Veolia Environnement and Électricité deFrance are using it to explore the balancebetween production of electricity and creation ofenvironmental impacts.

We also had assumed that given thecontentiousness surrounding the recentapplication in the United States of cap andtrade regulations to mercury emissions frompower plants, that soil contamination wouldhave been more widely discussed.

Few companies in this sector producetheir own fuel, so raw materials managementis seldom discussed, and only occasionally isproduct stewardship viewed as an issue:Constellation Energy, for example, discussesthe issues associated with disposing ofstreetlights which have high lead and mercurycontent, and PG&E Corporation discussesdemand-side management.

0 20 40 60 80

Life Cycle AnalysisSoil Contamination

Product StewardshipUse of Hazardous Material

Environmental Product PerformanceSupplier performance

Emissions to WaterWater Consumption

Total Waste Disposed ofNon-hazardous Waste Produced

Geographic VariationUse of Green Materials

Incidents & ViolationsRecycling of MaterialsRemediation Activities

Hazardouse Waste ProducedWaste Recycling

Hazardous EmissionsEnergy Sources & Consumption

Environmental InvestmentsEnvironmental Costs

Natural Environment ProtectionNon-greenhouse Gas Emissions

Greenhouse Gas Emissions

Total sector score for the specific topic

0 10 20 30 40 50 60

Employee Working Hours

Social Costs

Use of Corporal Punishment

Use of Illegal Child Labor

Employee Compensation

Use of Forced Labor

Geographic Health & Safety Data

Advancement Opportunities

Suppliers' Performance

Incidents & Violations

Employee's Freedom of Association

Social Investments

Employee Discrimination

Training & Education

Human Environment Protection

Total sector score for the specific topic



Third Party Validation

UN Global Compact, Universal Declaration of H

uman Rights

SA 8000 Certified

UN Basic Principles on the Use of Force

ILO Core Labor Standards

OECD Guidelines for Multi-N

ational Enterprises

AA 1000

ISO 14001 or EMAS

GRI Guidelines

1

1 Open circle if the company acknowledges some guidance from the GRI guidelines. Donut shape when report is "in adherance" with the 2002 or later GRI guidelines, solid circle if the report is "in accordance" with the 2002 or later GRI guidelines.

É

Use of Voluntary Guidelines and Third Party Verification

Several companies have chosen to have their reportsverified by third parties, but none has asserted thatthis verification is done in accordance with the AA 1000

verification standard, a standard that perhaps will never become anaccepted one.

Most companies are in the process of, or have completed,adoption of an International Organization for Standardization(ISO) 14001 environmental management system. None has signedon to the SA 8000 social accountability standard, the basis formuch of the socioeconomic scoring in the PSI.

Ten companies formally subscribe to the United NationsGlobal Compact Universal Declaration of Human Rights; fivesubscribe to the Organization for Economic Cooperation andDevelopment Guidelines for Multi-National Enterprises; foursubscribe to the International Labor Organization Core LaborStandards; and one to the United Nations Basic Principles onthe Use of Force—all guidelines with components similar tothose of the SA 8000 standard. The Global Reporting Initiative (GRI) SustainabilityReporting Guidelines are an important part of the basis forthe PSI, but only two of these companies have written theirreports in accordance with them. Five others report that theyare in adherence with the guidelines, and seven acknowledgesome guidance from the GRI guidelines.

There is a general overall trend of better PSI scores with increasing company size, but there are many smaller firms with very high scores—indeed the highest score is from National Grid Transco, a third the size of the largest firm, China’s State Grid. The latter has the lowest score resulting from no attempt at all to report on environmental or social issues on theWorld Wide Web. Regressions of overall PSI scores onrevenue are highly statistically significantfor energy and utility companies combinedand for each independently if State Grid isexcluded (as it is for both of the regressionlines on the graph). Whether State Grid istruly an outlier is open to question,however, since its geographical neighbors,Russia (Gazprom) and Korea have alsofailed to produce much information despitesignificant amounts of revenue. It remainsto be seen whether environmental andsustainability reporting will take holdthroughout Asia as they clearly have inEurope. Our choice of a combination of FortuneGlobal 500 and Fortune 1000 (American)companies to analyze results in the smallestcompanies in this analysis being all American.It would be interesting to see whetherincluding equally small European andJapanese companies altered the slopes of theregression lines.

Relationship Between Revenue and Overall PSI Score

0 10000 20000 30000 40000 50000 600000

20

40

60

Revenue ($M, from 2003 Hoover's)

Ove

rall

PSI S

core

s

Energy companies

Utility companies

National Grid Transco

EndesaVattenfall

MirantPG&E Gaz de France

Chubu

Kansai

Iberdrola

Tokyo RWE

Électricité de France

Suez

EnelExelonVeolia Environnement

PSEG

Gasunie

Calpine Kyushu

SouthernTXU

AEPConstellationFirst Energy

Edison Tohoku

Dominion Resources

ReliantWilliams

Plains All American PipelineGazprom

KoreaAdam Resources

Ferrellgas

El Paso

Dynegy

Onoak

Black HillsMDU

WPS

UGI

Regression line of energy companies

Regression line of utility companies

Centrica

State Grid



The solid bars in the small graphs accompanying the report-specific comments show the overall environmental (E) PSI scores,the overall social (S) PSI scores, and the total (T) PSI scores aspercentages of the total possible scores in each category. Thelighter bars are the sector averages and are the same in all graphs.

Adams Resources & Energy, Inc. 2003 10-K

Report and 2005 web pages

The annual report of Adams Resources & EnergyInc. is very clear and simple but fails to providemuch information beyond financial positions andother external factors affecting the company.Statements pertaining to the environment and

health & safety are strictly limited to a confirmation of compliancewith the necessary oil and gas industry regulations. No otherreports were found and the website gives only a company history,recent press releases, and contacts.-Adidjaja

AEP 2001-2002 Corporate Environmental

Performance Report and An Assessment of

AEP’s Actions to Mitigate the Economic

Impacts of Emissions Policies

AEP’s current corporate website provides verylimited quantified information with theexception of the out-of-date CorporateEnvironmental Performance report for 2001-2002. Most program and policy summaries are

vague. The old report is in a question-and-answer format with thequestions being provided by CERES guidelines (though not allquestions are answered). The report gives a decent account ofenvironmental performance, though it would be much clearer ifthe question and answer format were abandoned. Most of thequestions (when answered) are answered in a way that seems as ifAEP is doing the bare minimum. There is little discussion ofmajor policies or environmental information management. There isno social information or any information on stakeholderinteraction.-Janes

Black Hills Corporation 2003 Annual Report,

2004 Form 10-K, and 2005 web pages

Black Hills Corporation does not currentlypublish a formal corporate environmental orsustainability report. We gathered minimalsustainability information from the company’sannual report, 10-K report, and all applicable

documents on the company’s web pages. The score is slightlyhigher than for most companies that do not have a formal report ora specific section on their web pages dedicated to sustainabilityissues, since the 10-K report meticulously includes information onenvironmental protection activities, environmental cost andinvestment. The visionary statement in the company’s annualreport addresses the environmental and social aspects of thecompany.-Adidjaja

Calpine 2003 Annual Report, Form 10-K, 2005

web pages, and 2005 Code of Conduct

The information Calpine provides in its reportsand web pages highlights its commitmenttowards clean, renewable energy. Calpine faresbetter than most companies in the energy sectorby providing information about its general

visions and policies as well as its efforts to reduce environmental

impacts by producing geothermal and natural gas energy(both of which emit less greenhouse gas than coal or oil). In

addition, Calpine provides some useful information about itsemissions of greenhouse gases compared to its peer average in theUS. However, the reports lack discussion of other specificenvironmental or social information and fail to report onperformance in the previous period.-Tedsen

Centrica 2005 Corporate Responsibility

Report and web pages

In general, Centrica’s Corporate Responsibilityweb pages do a commendable job of showingCentrica’s commitment to social as well asenvironmental sustainability. Centrica couldimprove its reporting by comparing its

quantitative data with those of other companies in the industry.Furthermore, more attention could be given to the internalprocedures for determining environmental and social impactsand aspects as well as the resulting initiatives. Nevertheless,Centrica has done an excellent job showing its transparency inmost areas of the PSI scoring.-Heilmayr

Chubu Electric Power 2004 Annual

Environmental Report

Chubu’s 2004 Annual Environmental Reportprovides much general information and manygoals and objectives. From its policies andinvestments, Chubu Electric Power appears to bevery environmentally and socially focused.

Although the report is well done in its description of and use ofvisuals for environmental and social management, it needs tosupport its claims with more detailed quantitative data that showsimprovements in relation to previous years and compares itself tothe rest of the industry.-Janes

Constellation Energy 2002 Environmental


Constellation Energy’s 2002 EnvironmentalProgress Report and web pages leave muchroom for improvement. In the environmentalarena, the company should discuss itsenvironmental impacts and aspects as well as

those of the energy industry in general. It should include moreenvironmental indicators (such as emissions to water and soil,waste production, energy consumption, water consumption, etc.)and not only compare them to previous years but also to industryaverages. Furthermore, it should provide more information onemployee relations, including the status of women in thecompany, health and safety figures (lost workdays, accidents,fatalities, etc.), and explicit commitments to meet minimum wagestandards. The company could also better describe its relationswith environmental and social stakeholders. For example, howdoes it define its stakeholders, how is dialogue with stakeholdersestablished, what information is obtained, and how is it used?-Sears

Dominion Resources 2005, For the

Environment: A Matter of Commitment, 2004

10-K, and 2005 web pages

Dominion Resources’s current reporting doubledits previous PSI score. The current report’sscope treats the entire company rather than justone of its subsidiaries and there is more

Analysts’ CommentsAnalysts’ CommentsAnalysts’ CommentsAnalysts’ CommentsAnalysts’ Comments

0 20 40 60 80 100

TSE Black Hills

0 20 40 60 80 100

TSE Calpine

0 20 40 60 80 100

TSE Centrica

0 20 40 60 80 100

TSE Adams Resources

0 20 40 60 80 100

TSE Chubu

0 20 40 60 80 100

TSE Constellation Energy

0 20 40 60 80 100

TSE Dominion Resources

0 20 40 60 80 100

TSE AEP



discussion of environmental intent and much moreenvironmental data. -Adidjaja

Duke Energy 2003 Environment, Health & Safety,

and Community Relations Report and 2005 web

pages

Though Duke Energy has not released a newEnvironment, Heath, & Safety (EHS) Reportsince the 2003 publication, the company’soverall PSI score has increased due to newresources available on their web site. The 2005

Charter clearly outlines the corporate agenda and the EHSManagement System, and lays out business planning,implementation, measurement and improvement. However, Dukecould be more detailed with its environmental and socialreporting. The company should discuss more of itsenvironmental aspects and impacts beyond greenhouse gasemissions. While the Code of Business Ethics is an informativesocial policy document, the company could more specificallydescribe its treatment of employees. Duke compares someaspects of its environmental and social performace to industryaverages, which is very useful and seldom done by othercompanies. For further credit, it should show this comparisonmore consistently. -Sears

Dynegy 2003 Annual Report and 2004 web pages

Dynegy Corporation could considerablyimprove its reporting by incorporating moreenvironmental information. There are a coupleof blurbs on the side-margin of the company’sannual report that mention the company’s

commitments to the environment and the community, and someinformation about environmental projects and initiatives is alsoavailable through the company’s online web-casts. But most ofthe information appears to cover the bare minimum of what thelaw requires. -Adidjaja

Edison International 2004 10-K Report and 2005

web pages

There has not been much inclusion of newinformation since the last time we analyzedEdison International’s sustainability reporting,and little evidence of improvement in theirenvironmental and social practices. It would be

extremely helpful to integrate the performance data from allsubsidiaries into one report. Some performance data displayedon the web pages is anecdotal and very sketchy.-Adidjaja

El Paso Code of Conduct, 2004 10-K Report, and

2005 web pages

The environmental, health, and safetyinformation gathered from El Paso 2005 WebPages, Code of Conduct, and the 2004 10-Kreport is very minimal and does not illustrateany commitment to the environment and its

stakeholders. The 2005 web pages do not have any kind ofquantitative data on either environmental or social aspects. Whileclimate change was one of the major issues discussed in ElPaso’s previous reports, the current report does not even mentionthe company’s air emissions. This company appears to bedecreasing, rather than increasing, its environmentaltransparency.-Adidjaja

Electricité de France 2003 Annual

Sustainable Development Report and 2005 web

pages

Electricité de France shows that it has made aclear corporate commitment to environmentalsustainability. Its 2003 Annual SustainableDevelopment Report, which follows GRIguidelines, is clean, readable, and is informative

as to the merging of EDF Group’s business, environmental, andemployee welfare policies. However, EDF’s reporting lackedquantitative data for certain environmental and social areas ofperformance, especially a comparison with the rest of theindustry. EDF does show improvement in some areas, butneeds a more comprehensive demonstration of the company’soverall progression.-Tedsen

Endesa 2003 Sustainability Report and 2005 web

pages

Endesa has left no doubt about its commitmentto the environment and community. Thecompany has proven itself to be a leader insustainability in the energy sector in Europe andLatin America. From the implementation of

renewable energy technology to numerous community initiatives,Endesa went above and beyond what was required. Endesasupplies a wealth of information which is almost overwhelmingat first glance. An index of GRI indicators helps readers navigatethe many pages of Endesa’s reports. While the mass ofinformation is wonderful, it would be useful if Endesa couldcondense some of it into a more reader-friendly format, perhapsbeginning with a condensed section of quantitative graphs. Thereport is lacking in certain social data scored by the PSI, and inquantitative comparison with performance of peers . Still,Endesa’s commitment remains impressive and one to befollowed.-Tedsen

Enel 2003 Sustainabiltiy Report, 2003

Environmental Report, and 2005 web pages

Both of Enel’s reports provide information on awealth of environmental indicators, a number ofwhich are ignored by other utility companies.However, this information should besupplemented with comparisons to the industry

averages. Additionally, Enel could expand its social reporting byproviding numerical data as well as activities or case studiespertaining to employee treatment, minority employees, and unionrelations. -Sears

Exelon 2002/2003 Progress Report, 2004 10-K

Report, and 2005 web pages

Exelon’s reporting covers a broad array ofenvironment, safety, and community topicsincorporating discussion and data onperformance, programs, and activities. Thecompany shows clear commitment to

continuous improvement in its environmental and safety policy,however its approach to selection of quantitative metrics isscattered and non-systematic. On the environmental side,although the report covers most of the important areas ofenvironmental aspects and impacts, there is no discussion onhow these indicators were selected, their specific relationship tothe industry, and the company’s goals with respect toenvironmental performance. On the social side, there should be astronger social policy that states a more explicit standard of

0 20 40 60 80 100

TSE Duke Energy

0 20 40 60 80 100

TSE Dynegy

0 20 40 60 80 100

TSE Edison

0 20 40 60 80 100

TSE El Paso

0 20 40 60 80 100

TSE Electricite de France

0 20 40 60 80 100

TSE Endesa

0 20 40 60 80 100

TSE Enel

0 20 40 60 80 100

TSE Exelon



practice, i.e. “we do not practice illegal child labor,corporal punishment, etc.”-Adidjaja

Ferrellgas Partners 2004 Annual Report, 2004 10-

K Report, and 2005 web pages

Ferrellgas Partners does not currently publish aformal corporate environmental or sustainabilityreport and has very little information at allonline.-Adidjaja

First Energy Corp. 2004 Environmental Report and

2005 web pages

The First Energy publication titled “OurCommitment to the Environment” has almost noinformation on the company’s commitment tominimize impacts to the environment. Thediscussion is very sketchy and anecdotal, and

provides few examples of improvements that the company hasmade. There is scattered information on the company’s web pagesthat provides a little more social and environmental data.FirstEnergy should consider a more integrated and systematicapproach to measuring its performance and reporting itsprogress.-Adidjaja

Gasunie 2003 Safety, Health &Environment

Annual Report and 2005 web pages

This report gives a fairly transparent view ofenvironmental and social issues. Were theperformance data better than last year’sperformance, the PSI score would have beenmuch higher. There is very little discussion on

engaging stakeholders, and on the company’s social managementsystem and labor standards. Although the company website isinitially appealing, it was almost impossible to find the Safety,Health, and Environmental Annual report.-Adidjaja

Gaz de France 2003 Sustainable Development


Gaz de France provides an informative report ofits efforts in pursuit of sustainable development.While it follows GRI guidelines, it lacks muchquantitative information and is a little out of date.Gaz de France could increase its PSI score by

including more numeric data that relates to current and previousenvironmental and social performance, beyond carbon dioxideand nitrogen oxide releases, as well as that of its peers.-Janes

Gazprom 2003 Annual Report and 2005 web pages

Gazprom has an environmental report for 2002that is poorly translated from Russian to English.The report attempts to cover many relevantissues, however it is extremely difficult tounderstand. It does not specifically address the

issues but merely states the names of many policies andprograms. There is very little data and the data that is reporteduses confusing metrics. There is also frequent mention of ISO14001 standards but it is never clearly stated that Gazpromfollows these standards. The report would be significantlyimproved if it were better translated. From a better translation itwould be much easier to see other areas in need of improvement.-Fleischmann

Iberdrola 2004 Sustainability Report

This report addresses a broad range of issues with particularfocus on social sustainability concerns. Theformat, which incorporates financial,environmental, and social reporting is well done,although it results in a very lengthy document.The table of contents could have been broken

into more subcategories to provide for easier reference. Manycriteria of the PSI were met only through a cursory mention ofactivities, especially with regards to questions of socialsustainability.-Cuevas

Kansai Electric Power 2004 Environmental Report

The Kansai Electric Power Co. 2004Environmental Report was exceptional in manyrespects. The overall presentation and structureof the report made information concise and easilyaccessible. In addition, the section on employee

relations was quite remarkable when compared to other reports.One point to improve would be in providing information on therationale for certain environmental and social objectives.-Cuevas

Korea Electric Power 2005 web pages

Korea Electric Power offers almost noenvironmental or social policy or numbers ontheir English websites. Entirely focused oncustomer and shareholder satisfaction, the sitementions almost no responsibilities to its

employees, its communities or to the environment within which itfinds itself. KEPCO should attempt to report on more quantitativeenvironmental and social data as well as show a greatercommitment to corporate responsibility through more direct andpositive policy statements.-Heilmayr

Kyushu 2004 Environmental Action Report

Kyushu Electric Power Company’s 2004Environmental Action Report is well-organizedand transparent. The report compiles a significantamount of information about the company’senvironmental initiatives and performance into a

compact document that is easy to navigate. To be even moretransparent the company should consider publishing all of itsenvironmental performance data for the current year accompaniedby the data from a few years previous against which to referencethe current year and look for improvement. It seems that ingeneral the company’s environmental performance improved in2004. The Environmental Action Report was the onlysustainability reporting on the company’s website and was notintended to include social performance; because of this the socialscores were low.-Goodward

MDU Resources Group 2003 Annual Report, 2004

10-K Report, and 2005 Web Pages

MDU Resources Group’s annual report and webpages include very little information about itsenvironmental performance. In fact, like manyof its competitors, the company makes onlybroad statements about its commitment to the

environment on only a few pages on the website and in the annualreport. In addition, it does not provide any statements aboutsocial policy except to say that it tries to enhance the employeeenvironment to promote productive capabilities and commits to“perform all tasks with health and safety first.” However, theannual report does provide extensive information about thecompany’s social initiatives and efforts to enhance surrounding

0 20 40 60 80 100

TSE Ferrellgas Partners

0 20 40 60 80 100

TSE First Energy

0 20 40 60 80 100

TSE Gasunie

0 20 40 60 80 100

TSE Gaz de France

0 20 40 60 80 100

TSE Gazprom

0 20 40 60 80 100

TSE Iberdrola

0 20 40 60 80 100

TSE Kansai Electric Power

0 20 40 60 80 100

TSE Korea Electric Power

0 20 40 60 80 100

TSE Kyushu Electric Power

0 20 40 60 80 100

TSE MDU Resources Group



communities. For example, the company funds afoundation that contributes to “institutions, organizations,and programs” that promote the environment, education, art, etc.in communites where MDU conducts business. Nonetheless, thecompany reports very little on its environmental and socialactivities and performance. By adding this information to theannual report or by creating a separate report altogether, thecompany would greatly improve its PSI score.-Russell

Mirant 2003 Global Corporate Citizenship Annual


Mirant’s 2003 Global Corporate CitizenshipReport, Code of Ethics and Business Conduct,and web pages comprise a comprehensivepicture of Mirant’s values. The report was wellorganized and easy to follow but would be even

clearer if it expressed more of the rationale for valuingenvironmental and social standards and goals and how theseobjectives are beneficial to the company. The report does notadequately document the environmental aspects and impacts—orthe procedures to identify these—of the any of the company’soperation, products, or services. Mirant also demonstrates littleor no quantitative improvement in environmental performance.The document should report social performance indicators withcase studies, and document quantitative changes on an annualbasis. The company should also specifically state its socialpolicies on issues such as forced labor, child labor, and corporalpunishment. Mirant’s comparison of its air emissions to those ofthe industry as a whole is valuable as would be similarcomparisons for other quantitative environmental metrics.Graphs and tables were used well to clarify the text.-Thomas

National Grid Transco 2003 U.S. Environmental

Performance Report and 2005 web pages

National Grid Transco’s 2003 EnvironmentalReport and web pages have the highest scores inthis analysis and provide a good picture of thecompany’s dedication to environmental andsocial issues. The report’s main shortcomings

are that it is a little outdated and fails to compare 2003quantitative data against data from previous years. The reportalso does not compare its metrics to any industry benchmarks. Itshould also provide more information on organizational andmanagement systems for environmental and social issues, as wellas offer rationales for why the company may not be able toachieve its environmental and social goals. The company shouldexplain why it chose specific performance indicators to measureenvironmental and social issues. While the company shows adedication to recycling, it would be helpful if this data wereexplained in terms of life-cycle analysis or planning. Moretransparency would also be helpful with respect to fines,penalties, incidents and violations, and usage, mitigations, anddisposal of hazardous wastes.-Thomas

ONEOK 2003 Annual Report, 2004 10-K Report, and

2005 web pages

Oneok does not currently publish a formalcorporate environmental or sustainability report.We gathered minimal sustainability informationfrom the company’s annual report, 10-K report,and the few applicable documents on the

company’s web pages.-Adidjaja

PG&E 2005 First Annual Corporate

Responsibility Report

This report tackles many difficult challenges that the industryfaces, including emissions, energy consumption,and compliance issues, and does a good job ofaddressing demand-side power management.There is still much discussion needed, however,of the company’s internal environment and social

structure, procedures, background, and organization. Overallthough, the report successfully conveys the essentials ofcorporate responsibility reporting within the utility industry.-Adidjaja

Plains All American Pipeline 2004 web pages

Although they thoroughly cover the company’sbusiness strategy, commitments, principles, and agood intention to be socially and environmentallyresponsible, Plains All American Pipeline’s webpages discuss very little quantitative information

on environmental and social aspects of the company. The 2003 10-K report covers the environmental aspects of the company, such aswater, air emissions, solid waste, hazardous waste, and more, butnot in specifics. If these environmental topics listed in the 10-Kreport were discussed in greater detail, the PSI score of thecompany could be improved significantly.-Goodward

Public Service Enterprise Group 2003 Annual

Report, 10-K, and 2004 web pages

PSEG does not publish an environmental orsustainability report; therefore, the environmentalinformation used to score the report came eitherfrom the company’s web pages or from itsAnnual Report and 10-K. Nonetheless, PSEG

includes a great deal of information about programs the companyhas implemented to improve the environment. For example, itdevotes several pages to a comprehensive discussion of itsEstuary Enhancement Program in Delaware and New Jersey.-Thomas

Reliant Energy 2005 web pages

Reliant Energy does not have a formal corporateenvironmental or sustainability report. Theinformation gathered from the corporate 2005web pages is very minimal and covers littleinformation about the environmental and social

activities of the company.-Janes

RWE Group 2003 Corporate Responsibility Report

and 2003 Personnel Report

RWE’s 2003 Corporate Responsibility Report isvery impressive, open, and thorough. It does agood job of integrating environmental and socialinformation into one easy-to-read report ofreasonable length. However, social performance

information and data are less complete than the environmentaldata, particularly in terms of commitments to basic human rightsstandards that the company probably already endorses. The 2003Personnel Report is also extensive and thorough, showing strongattention to the company’s international workforce.-Russell

0 20 40 60 80 100

TSE Mirant

0 20 40 60 80 100

TSE National Grid Transco

0 20 40 60 80 100

TSE Onoak

0 20 40 60 80 100

TSE PG&E Corp.

0 20 40 60 80 100

TSE Plains All American Pipeline

0 20 40 60 80 100

TSE PSEG

0 20 40 60 80 100

TSE Reliant

0 20 40 60 80 100

TSE RWE



Southern Company 2004 10-K Report and 2005

web pages

This year’s PSI analysis includes thecompany’s 10-K reports and 2005 corporateweb pages. Although the progress reportappears to be in need of an update, thesedocuments give an overall impression of

environmental responsibility. There are only a few mentions ofsocial issues, namely diversity practice in the press releasessection, and workforce and demographic/labor-union issues inthe 10-K report. Social reporting is much less developed thanenvironmental reporting. -Adidjaja

State Grid 2005 web pages

As a recently listed emerging company fromChina on the Fortune Global 500 list, State GridCorporation has not posted much information onits web site.-Adidjaja

Suez 2003 Activities and Sustainable Development

Reports, 2003 Environmental and Social

Responsability Report and 2005 web pages

Suez publishes a comprehensive SustainabilityReport, an Environment and Social PerformanceReport, and an accompanying guidelineexplaining the procedures used in its reporting.While extensive quantitative data on

environmental and social indicators are given, the company’sperformance is not compared to that of its peers. Suez stands outfor its commitment to sustainbility; it would be even moreimpressive if it quantitatively defined its environmental and socialgoals and targets.-Goodward

Tohoku Electric Power Co. 2004 Environmental

Action Report

Tohoku Electric has plenty of room forimproving its environmental and socialreporting. The company needs to identify itsstakeholders, how and when communication isestablished, and what information is obtained

from such stakeholders. Tohoku needs to include a morecomprehensive discussion on its own environmental and socialaspects and impacts, as well as those of the industry.Environmental data should be expanded to include emissions tosoil and water, documentation of any incidents or violations,sources of water consumption, and the environmentalperformance of suppliers. Furthermore, in order to demonstratesustainability, the Company needs a thorough discussion of itssocial aspects and impacts, especially regarding employeerelations. Any data or discussions pertaining to minority andfemale employees, anti-discriminatory policies, commitments tominimum wage compensation, health and safety concerns, andother factors should be included. Both the environmental andsocial indicators should be compared to industry averages foroptimal credit.-Sears

Tokyo Electric Power 2004 Sustainability Report,

and 2005 web pages

TEPCO’s 2004 Sustainability Report is wellwritten and clearly formatted based on seriousconsideration of the 2002 GRI reportingguidelines. It is unusually open, especially withrespect to the difficulties of nuclear power

production and the recent challenges nuclear power has posed for

TEPCO. The company’s effects on the humanenvironment are also given much attention, and there is a

thorough presentation of environmental data.-Russell

TXU Environmental Review 2003: A Focus on Our

Commitment To Clean Air

This somewhat dated review provides carefuldocumentation of historic performance to showoperational improvement and corporateresponsibility to the environment. Although thereport does not cover all the environmental

aspects of the company, it does cover critical environmentalissues in the energy sector including air emissions, hazardouswaste, protection of the natural environment and landrehabilitation. TXU ranks well among its peers in air emissionsand continues to improve. There is no information on socialissues. The overall score would improve tremendously if moreinformation on social issues were included in the report.-Tedsen

UGI Corporation 2004 Annual Report, 2004 10-K

Report, and 2005 web pages

UGI Corporation does not currently publish aformal corporate environmental or sustainabilityreport nor does it make any relevant dataavailable on its web pages.-Adidjaja

USEC 2003 Annual Report and 2004 web pages

The USEC web site lacks both an environmentalor sustainability report and a health and safetyreport. As such, very little statistical data ismade available. The Code of Conduct and theAnnual Report have statements on

environmental and social commitment which are clear but notquantitative and the environmental goals are stated in broad termswith no specific targets.-Thomas

Veolia 2003 Sustainable Development

Performance and 2005 web pages

Veolia Environnement has reported verycomprehesively its goals and progress withrespect to corporate responsibility andsustainability. It is especially strong in thereporting of social responsibility, with two full

reports covering its multitude of social initiatives. It is also amember of the UN Global Compact, and the faithful reporting offair labor practices and human rights respect greatly improvesVeolia’s social reporting performance. The company also makesvery clear its commitment to environmental responsibility.However, its score in this section would be much improved bythe addition of more specific data on environmental performance,especially if the data were compared to past years or to industryaverages. Like many environmental service providers, Veolia’senvironmental performance data focuses almost entirely on thebenefits created by its services while neglecting to address thedata on the environmental impacts resulting from its operations.-Goodward

Vettenfall Group 2003 Sustainability Report and

2005 web pages

Vattenfall’s 2003 Sustainability Report, thecompany’s first such report, is an excellent start.Fundamentally, the report offers not juststatements, but analysis of what it means to be“responsible” in the corporate world. It is

uniquely and effectively structured as a response to the demands

0 20 40 60 80 100

TSE Southern

0 20 40 60 80 100

TSE State Grid

0 20 40 60 80 100

TSE Suez

0 20 40 60 80 100

TSE

Tohoku Electric Power

0 20 40 60 80 100

TSE Tokyo Electric Power

0 20 40 60 80 100

TSE TXU

0 20 40 60 80 100

TSE UGI

0 20 40 60 80 100

TSE USEC

0 20 40 60 80 100

TSE Veolia Environnement

0 20 40 60 80 100

TSE Vattenfall



of a variety of stakeholders in light of the company’sposition that “being socially responsible means balancingthe needs and wants of different stakeholders.” The report gives astrong breakdown of social and environmental issues bygeographic region and a realistic analysis of the current state andutility of renewable energy sources. However, figures for socialand environmental indicators could be more clearly displayed,and the social report is heavily slanted towards the quality ofservice, rather than the company’s community involvement. All inall, a very good start for this company’s social responsibilityreporting.-Russell

Williams Companies 2005 web pages

Williams does not publish a formalenvironmental or sustainability report. Itswebsite offers some data on social andenvironmental initiatives as well as outlining abasic environmental vision but does little

beyond this. Williams should try to give a better picture of itsenvironmental as well as social aspects and impacts, includingquantitative data.-Heilmayr

WPS Resource Corporation 2004 Environmental

Commitment, 2003 Community Involvment, and

Code of Conduct

WPS Resource Corporation published acommunity involvement report, anenvironmental report, and a code of conduct, allof which are very pertinent to the PSI Index.The problem is that much of the reports

consisted of stories regarding the company’s actions, rather thanfacts about policies, management, or pollutants. Very minimalquantitative data is given, which greatly weakens the reports. TheCode of Conduct does not provide any information aboutcompany policies regarding employees or their treatment. Thereports also fail to mention any efforts to consult withstakeholders. Greater focus on company policy would haveresulted in a much higher score. Furthermore, the10-K impliedthat the company managed some of its own resources but theimplications of this were never discussed within theenvironmental report. Also, a similar dilemma appearedsurrounding the company’s nuclear power production. At severalpoints throughout the environmental report nuclear power ismentioned as a side note but the full implications of this are neverdiscussed. WPS should clarify the environmental aspects of suchimportant subsidiaries.-Heilmayr

Roberts Environmental CenterRoberts Environmental CenterRoberts Environmental CenterRoberts Environmental CenterRoberts Environmental Center

The Roberts Environmental Center is an environmen-tal research institute at Claremont McKenna College(CMC). Its mission is to provide students of all thecolleges with a comprehensive and realistic understand-ing of today’s environmental issues and the ways inwhich they are being and can be resolved, and to identify,publicize, and encourage policies and practices thatachieve economic and social goals in the most environ-mentally benign and protective manner. The Center isfunded by an endowment from George R. Roberts(Founding Partner of Kohlberg Kravis Roberts & Co. andCMC alumnus), other endowments, grants, and gifts, andis staffed by faculty and students from the ClaremontColleges. Center staff are happy to consult with compa-nies wishing to improve the quality of their environmen-tal and sustainability reporting. Center students are oftenlooking for corporate summer internships and post-graduation positions, and the center director can aid firmsin finding the right student.

Claremont McKenna CollegeClaremont McKenna CollegeClaremont McKenna CollegeClaremont McKenna CollegeClaremont McKenna College

Claremont McKenna College, a member of the ClaremontColleges, is a highly selective, independent, coeduca-tional, residential, undergraduate liberal arts college witha curricular emphasis on economics, government, andpublic affairs.

The Claremont CollegesThe Claremont CollegesThe Claremont CollegesThe Claremont CollegesThe Claremont Colleges

The Claremont Colleges form a consortium of fiveundergraduate liberal arts colleges and two graduateinstitutions based on the Oxford/Cambridge model. Theconsortium offers students diverse opportunities andresources typically found only at much larger universi-ties. The consortium members include ClaremontMcKenna College, Harvey Mudd College, Pitzer College,Pomona College, Scripps College, Keck GraduateInstitute of Applied Life Sciences, and the ClaremontGraduate University—which includes the Peter F. Druckerand Masatoshi Ito Graduate School of Management.

0 20 40 60 80 100

TSE Williams

0 20 40 60 80 100

TSE Wisconsin Public Service



To the extent that anthropogenic greenhouse gasesare influencing the global climate, the energy andutilities sectors share a considerable amount of theresponsibility. Almost all electricity is made byburning fossil fuels which releases carbon dioxide(CO2)—a greenhouse gas that remains in theatmosphere-climate system for about a century.However all fossil fuels are not equal in this respect.

A recent study1 published in the British scientificjournal Nature estimates that switching from coal tonatural gas would mitigate climate change as long asgas-associated leakage of methane, the maincomponent of natural gas, from pipeline distributionsystems is kept below about 6%. Above that value,the leaked methane would itself contribute as muchto atmospheric warming as would the CO2 fromburning coal. If natural gas were used to replace oilin electricity production the leakage would have tobe less than 3%. The results of this study on Russianpipelines which supply much of Europe with naturalgas show that leakage is on the order of 1%, thusstrongly favoring natural gas over coal or oil ifreducing greenhouse gas production is worth theadditional cost.

Is it? The amount of global scientific effort nowbeing expended on climate change will sooner orlater resolve questions about its existence andanthropogenic origins. It is the energy and utilityindustry, however, that must implement means ofcarbon reduction and must analyze the costs andbenefits associated with each of them.

Such a summary analysis is provided in the chart onpage 25 of RWE’s 2003 Sustainability Reportshowing its costs associated with different means ofCO2 reduction. For RWE, the most cost-effectiveapproach is increasing the efficiency of existinglignite coal-fired plants which make up almost halfof their energy mix in Germany. Close on its heels isnuclear power overlapped a bit by combined cycle[gas fired] power plants (CCGT). New ligniteplants are as cost-effective at CO2 reduction as themore expensive of the CCGT plants. Renewablesare all more expensive than any of the fossil fuel or

nuclear options. Cost is obviously an importantconsideration.

But CO2 emission is not the only impact of powerproduction. Do the other environmental benefitsassociated with natural gas outweigh the cost andsecurity advantages in Germany of coal and nuclearfuels? How about in other countries? The Naturepaper doesn’t help in this regard: it is focused purelyon methane leakage and its consequences.

The choice of fuel mix is clearly a complex issue,certainly beyond the scope of short scientific papers,but, as RWE’s chart shows, at the heart of decisionson reducing environmental emissions and otherimpacts. Cutting through this complexity is importantif we are to understand why energy and utilitiescompanies make the decisions they do and what theimpacts on us will be. What would help is life cycleassessments of various energy mixes.

We imagine that the industry is routinely conductingsuch analyses, but it is not discussing them much inits environmental and sustainability reports. Wewould like to see more discussion of the full range ofcosts and benefits—economic, environmental, andsocial—of energy and utilities companies’ choice offuels for electricity generation.

1Lelieveld, J., S. Lechtenböhmer, S. S. Assonov, C. A. M.Brenninkmeijer, C. Dienst, M. Fischedick, T. Hanke. (2005) Lowmethane leakage from gas pipelines. Nature 434:841-842.

Director’s CommentsDirector’s CommentsDirector’s CommentsDirector’s CommentsDirector’s Comments

J. Emil MorhardtClaremont, California1 October 2005

Documents

2005 F ORTUNE GLOBAL 500 AND FORTUNE 1000 ENERGY & …€¦ · 20, 2004 through June 15, 2005, including annual reports and, for American companies, 10-K forms. The quality of the