AEP Sustainability - Materiality

Material Sustainability Issues

Reporting on AEP’s non-financial performance is as important as reporting on our financial performance. Our investors, business partners, suppliers, capital providers, customers and employees increasingly want to know about the direct impacts of AEP’s businesses, as well as broader environmental, social and governance (ESG) issues and trends. As stakeholders demand deeper levels of transparency, the evolution of corporate sustainability disclosure and reporting has become more detailed and complex. Because sustainability encompasses a wide range of 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.

AEP has a robust process for determining material sustainability issues and disclosure. This process ensures we are listening to our stakeholders and addressing issues that are most relevant for our business, as well as choosing the best approach for what we report. AEP defines material sustainability 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 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.

In 2017, we leveraged Datamaran’s Materiality Analysis tool – a business intelligence tool that uses big data and artificial intelligence to conduct real-time materiality assessments. This tool enabled us to identify and prioritize the ESG impacts, risks and opportunities most important to internal and external stakeholders by analyzing a universe of sources such as corporate reports, global regulations and initiatives, social media and online news. Internal and external stakeholders then completed a survey to validate the universe of issues.

Through the materiality assessment, our internal stakeholders identified Workforce Safety & Health, Data/Cyber Security and a Clean Energy Transition strategy as most important, while external stakeholders see Energy Efficiency, Stakeholder Dialogue & Engagement and Climate Change Strategy as most material. Important to all stakeholders is our commitment to addressing climate change and executing a strategy to transform our business for a clean energy future. We continue to view these topics as material in 2019, and we are making progress on their associated goals and strategies linked to operations and financial performance measurement.

We also take an industry view of priority issues through the Electric Power Research Institute (EPRI), with which we participated in publishing its second report on Priority Sustainability Issues for the North American Electric Power Industry in 2017.

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