Material Sustainability Issues

In our view, reporting on AEP’s “sustainability performance” is just as important like financial disclosure, and benefits investors and other stakeholders, including business partners, suppliers and capital providers.

The evolution of corporate sustainability disclosure and reporting has become more detailed and complex, as stakeholders demand deeper levels of transparency. Stakeholders want to know more about the direct impacts of AEP’s business, as well as broader social, environmental and governance (ESG) issues and trends. Because sustainability considers a broader scope of actions and issues, our approach to integrated reporting is one way we emphasize the connections between financial and nonfinancial performance, as well as demonstrate a high degree of transparency.

Understanding which issues are most important to AEP and our various stakeholders also helps us to identify potential operational and strategic risks, and issues such as license to operate, regulatory requirements and brand value. We also take an industry view of priority issues. In 2017, the Electric Power Research Institute (EPRI) published its second report on Priority Sustainability Issues for the North American Electric Power Industry (which AEP participated in).

Also in 2017, AEP engaged with Datamaran, a business intelligence tool using big data and artificial intelligence, to help us identify and prioritize material issues by scanning the competitive, regulatory and media landscape. A focus group of internal and external stakeholders validated the universe of issues and shared their perspectives on relative importance, based on stakeholder interest, regulatory and policy trends, and societal and business imperative.

Stakeholder insights are being analyzed through the lens of AEP’s risk framework to help us categorize risk impacts and/or opportunities based on six sub-categories: reliability, compliance and legal, reputational, financial, safety, and strategic. Our analysis is also informed by our own ESG business intelligence gathering, peer company/industry research and stakeholder interviews and/or surveys.

Preliminary results indicate internal AEP stakeholders see Workforce Safety & Health, Data/Cyber Security and a Clean Energy Transition strategy as most important, while external stakeholders see Electricity Efficiency, Stakeholder Dialogue & Engagement and Climate Change Strategy as most material. What is commonly important to all stakeholders is that we address climate change and execute a strategy to transform our business toward a clean energy future.

When complete, the analysis will help inform our ongoing strategy for reporting, risk management and stakeholder engagement. In addition, the material issues analysis will also provide context for development of our new sustainability goals, which link strategy with operations and financial performance measurement.

2018 Priority Issues:

Sustainability PillarIssues
Environmental Air Emissions
Clean Energy Transition
Electricity Efficiency
Energy Reliability and Resilience
Environmental Performance
Greenhouse Gas Emissions
Sustainable Procurement Practices
Social Community support and economic development
Employee safety and health
Engagement and collaboration
Job satisfaction
Public safety and health
Economic Economic viability of electric utilities
Energy reliability
Energy affordability
Skilled workforce availability