AEP Sustainability - Materiality

Material Sustainability Issues

Materiality matters when disclosing performance. We cannot address every issue, nor should we. To most effectively manage our resources and focus on the material issues to our business and our stakeholders, we must focus on what is most relevant to our financial and nonfinancial success. That is what our stakeholders expect of us and how we are best able to respond to their needs and concerns.

AEP defines material issues as those that reflect our most relevant economic, environmental and social impacts and contributions because they can:

  1. Have a significant impact on the company’s finances and/or operations;
  2. have or may have a significant impact on the environment or society now or in the future; and/or
  3. substantially influence the assessments, decisions and actions of our stakeholders.

The evolution of corporate sustainability reporting has become more detailed and complex as stakeholders demand deeper levels of transparency. By staying true to this definition, we are able to focus on the most important ESG actions and issues. Our integrated reporting is one way we demonstrate the connections between financial and nonfinancial performance, as well as our commitment to transparency. AEP has been reporting in this way for more than a decade.

In 2020, our intent is to undertake a new materiality assessment. Led by our ESG committee, under the auspices of our Enterprise Sustainability Council, we will seek input from our internal and external stakeholders, use big data and artificial intelligence to help us identify and validate current and emerging issues, and prioritize those issues on which we should be focusing. This effort will provide critical input to the development of our corporate strategy and disclosure, as well as meet growing stakeholder expectations. The timing of this work may be affected by our focused response to the COVID-19 pandemic.

In addition, we will participate in an industrywide priority issue assessment, led by the Electric Power Research Institute (EPRI). It will be the third such assessment at the industry level. EPRI’s deep understanding of the utility industry coupled with the vast research through their Priority Assessment will provide AEP with broader perspectives and insights as we develop our own materiality assessment.

AEP’s Priority Sustainability Issues

Sustainability Pillar Issues
Environmental

Air Emissions
Clean Energy Transition
Energy Efficiency
Energy Reliability and Resilience
Environmental Performance
Greenhouse Gas Emissions
Sustainable Procurement Practices
Waste
Water

Social

Employee Safety and Health
Engagement and Collaboration
Job Satisfaction
Public Safety and Health

Economic

Community Support and Economic Development
Economic Viability of Electric Utilities
Energy Reliability
Energy Affordability
Skilled Workforce Availability

Per AEP’s 2017 materiality assessment. Issues not listed in priority order.