There is heightened demand for transparency and expectation that leadership adopt holistic, long-term approaches to managing environment, social and governance (ESG) performance. Companies are judged on performance and how well they link tangibles (such as financial capital and physical assets) with intangibles (such as reputation, brand, customer loyalty, risk management, trust and credibility) and show bottom line benefits.
There is no one-size-fits-all approach to sustainability governance, but AEP believes it is fundamental to building and strengthening sustained business value. Good governance ensures transparency, fairness and accountability and gives us a structured way to manage the challenges of a changing society.
Through AEP’s Enterprise Sustainability Council and with oversight from executive management and the Committee on Directors and Corporate Governance of the Board of Directors, we have clear guidance on our ESG responsibilities for sustainable business development. The Council is made up of some of AEP’s top leaders and decision-makers, representing functional units from across the company.
Executive sponsors of the Enterprise Sustainability Council include the Chairman, President and CEO; Executive Vice President, General Counsel and Corporate Secretary; Chief Administrative Officer; and Executive Vice President of External Affairs.
The Council provides a forum for key decision-makers to come together and reflects the maturity of sustainability and the reporting process at AEP. It is embedded in AEP’s business strategy, supporting our culture and our values.
In 2017, the Council helped develop AEP’s Strategy for Sustainability Development, which laid the foundation for setting new sustainability goals. The Council also provided oversight for the development of our sustainability goals. Their leadership, expertise and focus on continuous improvement helped us identify the focus areas for goal-setting. Employees from across the organization helped develop the goals. Through research, benchmarking and engagement with leaders, we developed sustainability goals that are aligned with our corporate strategy to create shared value for AEP and our communities.
In addition to the Council, the Committee on Directors and Corporate Governance of the Board of Directors reviews the Corporate Accountability Report annually. The Committee provides feedback and develops the Board statement supporting AEP’s commitment to sustainable business development and performance accountability; the statement is published in this report each year. The combined governance from the Board of Directors and the Enterprise Sustainability Council, along with process improvements initiated in 2017, help us ensure that our disclosure undergoes a disciplined review and validation process that is more efficient and effective.
While these issues are discussed by the Board of Directors throughout the year, we formally report to the Committee on our sustainability-related activities twice per year. In addition, the Lead Director of AEP’s Board of Directors participates in our annual outreach to engage with investors on important governance, environmental and social matters.
The governance structure we have in place supports AEP’s commitment to transparency and addressing stakeholder concerns.
|Chief Customer Officer||Enterprise Security|
|Information Technology||Regulatory Services|
|Corporate Communications||AEP Energy|
|Supply Chain & Procurement||Human Resources|
|Ethics & Compliance||Environmental Services|
|Economic & Business Development||Customer & Distribution Services|
|Corporate Planning & Budgeting||Resource Planning |
|Technology Business Development||Transmission|
|Safety & Health||Public Policy|
|NERC Compliance ||Investor Relations|
|Continuous Improvement||Real Estate & Workplace Services|
Learn more about AEP's Corporate Governance
Learn more about climate risk governance in our report: American Electric Power: Strategic Vision for a Clean Energy Future.