SUSTAINABILITY & ESG STRATEGY
Today, the demand for environmental, social and governance (ESG) disclosure is growing at an exponential pace, as the view of a company’s non-financial performance has become as important as its financial health. From the cost of capital, credit scores and insurance rates to how shareholders vote, the state of corporate culture and the ability to attract and retain top talent, stakeholders want more transparency and engagement on ESG issues. There is no question the pandemic has further raised the stature of the “S” in ESG because of societal impacts and the role of corporations in sustaining our economic recovery.
Research has proven that companies with strong ESG performance realize short- and long-term value through enhanced growth, reduced costs, improved stakeholder relationships, increased employee satisfaction, and optimization of investment and capital expenditures. At AEP, we are integrating our sustainability practices and ESG initiatives into our corporate strategies and sharing our progress and goals with all of our stakeholders.
AEP’s Corporate Sustainability Strategy focuses on engaging diverse stakeholders and proactively sharing our goals, strategy, and progress, as well as integrating sustainability across the enterprise to drive shared value. In 2019, the fast-paced growth of ESG investing prompted an expanded and more granular focus on how we manage AEP’s ESG performance and disclosure. We established a cross-functional ESG Team to monitor new and emerging ESG issues and develop strategies for responding to them. Because ESG performance is also a business risk, AEP added it to our risk summary report, and we are integrating it with our corporate strategy.
AEP's ESG Strategic Objectives
- Conduct a materiality assessment to focus our disclosure and inform engagement
- Proactively communicate AEP’s ESG strategy
- Engage executives and the board on ESG initiatives
- Build a web-based ESG Data Center, to ensure full transparency
We continue to engage in industry efforts, such as the Edison Electric Institute (EEI) ESG/Sustainability Committee and the Electric Power Research Institute (EPRI) to influence standardized disclosure for the electric utility industry. We are mapping our disclosure to the Task Force for Climate-related Financial Disclosure (TCFD) and, in 2020, will map to the Sustainability Accounting Standards Board (SASB) framework.