ESG (Environmental, Social, and Governance) in Power – Thematic Research

Powered by

All the vital news, analysis, and commentary curated by our industry experts.

Managing environmental, social, and governance (ESG) issues are critical for power companies in 2021. Not only are investors, customers, and other stakeholders demanding lower carbon emissions, but companies that are not taking a holistic approach to sustainability will also fall behind. Events in 2021 have shown that those power companies without a credible ESG plan will face a backlash in the courts, boardrooms, and the public arena. This trend will intensify in the coming decade. Power companies bear much responsibility for climate change and its resulting social effects. Those that can prove they are doing something about it – not just greenwashing – will emerge as leaders.

What are the main trends shaping the ESG theme in the power sector?

Technology trends

The technology trends include hydrogen, carbon capture and storage (CCS), electrification, energy storage, and renewables. Hydrogen remains the most abundantly available and commonly known element in the universe. It will become a game-changer by being the source of cleaner power (zero-emission fuel) on a massive scale. Hydrogen is light, storable, energy-heavy, and does not produce direct carbon emissions or greenhouse gases (GHGs).

CCS technology is a potential answer to global carbon emission concerns, as it prevents the release of large amounts of CO2 emissions into the atmosphere from fossil fuel power plants. CCS technology comprises a three-step process where anthropogenic CO2 emissions are captured, transported, and stored in deep geological formations to prevent the release of hazardous gas into the atmosphere.

A key enabler of a decarbonized future is the universal provision of access to electricity. One of the UN’s Sustainable Development Goals (SDGs) posits that, by 2030, all populations worldwide should have access to electricity. As of 2019, 90% of people in the world have access to electricity, but this figure is only 46% in sub-Saharan Africa, according to World Bank data. Over 800 million people still do not have reliable access.

Energy storage systems (ESS) are used widely for storing energy intended for use later. ESS technologies can help manage power during peak load periods, enabling energy management, providing bridging power, and enhancing the quality and reliability of power. It also facilitates the integration of distributed renewable energy sources into the grid, which can be used to meet the demand.

It is expected that by 2030, almost 40% of the global demand will be powered by renewables. The trend over the next 10 years shows an increase in renewables due to increasing investments in clean technologies. From 2024 on, renewables are projected to lead the mix, overtaking coal-fired power generation.

Macroeconomic trends

The macroeconomic trends include the declining cost of renewables, diversification to manage emissions risk, environmental taxes, and sustainable financing through regulated taxonomy. The cost of renewable energy declined exponentially in the late 2010s and into the 2020s. Primary reasons for the decline include technological advancements and large-scale deployment. Despite the COVID-19 pandemic, in 2020, more than 260 GW of renewable energy capacity was added globally. This expansion can be explained by price competitiveness supported by favorable government policies.

The global effort to transform the power industry to more sustainable energy production based on renewable energies is already underway. It is driving the urgent need for divestment and diversification among utilities. Power companies are trying to maintain a strong operating and financial performance. They are also focusing on improving the quality of people’s lives and addressing environmental problems guided by the principles reflected in the UN’s SDGs.

Globally, governments have imposed various regulations on utilities related to air, water, and waste. Violation of these laws results in hefty penalties and, in some cases, cancellation of licenses. The additional cost aims to reduce emissions by motivating utilities to seek cleaner energy.

Considering ESG aspects while making investment decisions is a crucial trend being adopted across the power sector. It motivates investors to invest in sustainable themes. Recently, financial support for economic growth, taking into account social and governance factors, can be seen in the context of EU policy

What are the ESG challenges in power sector?

Environmental challenges

Environmental challenges include greenhouse gas emissions and pollution. Electricity generation is one of the primary drivers of climate change, with much of the industry reliant on carbon-intensive forms of generation. Fossil fuel generation is also responsible for significant pollution, such as air pollutants from coal-fired generation. The increased atmospheric concentration of greenhouse gases, such as carbon dioxide (CO2), traps heat from the sun and causes global temperatures to rise. The world has warmed by around 1°C since pre-industrial times, according to the International Panel on Climate Change (IPCC).

Wherever fossil fuels are burned, pollutants are released. Coal combustion is responsible for significant amounts of pollutants, including sulfur dioxide (SO2) and nitrogen oxides (NOx), which react with water and oxygen in the air to form acid rain. SO2 and NOx have detrimental effects on human health, including respiratory diseases, childhood asthma, and cardiovascular ailments. The World Health Organization estimates that 4.3 million deaths per year can be attributed to air pollution due to stroke, heart disease, lung cancer, and chronic respiratory diseases.

Social challenges

Social challenges include job insecurity and community impact. Approximately 40 million people are directly employed in the oil, gas, coal, renewables, bioenergy, and energy network industries globally. In the IEA’s pathway to net-zero carbon emissions by 2050, the agency estimates that by 2030 clean energy employment will have increased by 14 million, and oil, gas, and coal fuel supply employment will have fallen by 5 million. While this represents a net growth of 9 million jobs in the energy industry, many communities are reliant on fossil fuel jobs.

Various indicators suggest that around the world, socio-political acceptance of new renewable projects is high. Communities are aware that low-carbon energy is beneficial and would like to see their country’s energy mix reduce its carbon footprint. Policymakers are also likely to support low carbon energy due to its popularity. Successful implementation of such projects requires effective frameworks that engage not only markets and policymakers but also local communities.

Governance challenges

There is a sharp focus on the governance of power companies in 2021. More than ever, stakeholders, and the public more broadly demand that power companies take responsibility for their environmental impact. Investors are shunning companies that do not seek to improve green credentials, and social movements around climate change are informing populations about the effects of ever-increasing carbon emissions. Power companies have also been a target in the growing trend of cybersecurity attacks. The management of these risks should be high on the agenda of executives in the power industry.

Which are the leading companies focusing on ESG theme in power sector?

Leading power companies focused on ESG include Iberdrola, EDF, Orsted, Vestas, NextEra Energy, Enel, NRG and National Grid.

Market report scope

Outlook Year 2021
Key Players Iberdrola, EDF, Orsted, Vestas, NextEra Energy, Enel, NRG and National Grid

This report provides an in-depth analysis of the following. It provides:

  • GlobalData’s ESG framework which contains contributing factors to environmental, social and governance issues, with mitigating actions for each issue.
  • Technology and macroeconomic trends in the power industry. Certain technologies are enabling power companies to improve their ESG credentials and macroeconomic forces are compelling them to rethink ESG strategy.
  • GlobalData’s ESG action feedback loop describes how stakeholders are demanding action on ESG and the effect this has on company disclosures.
  • ESG challenges currently faced by those in the power industry and how companies can address them.
  • Case studies on ESG leaders and laggards in the power industry.
  • Detailed assessment of leading power companies and their competitive positions in the ESG theme.

Reasons to Buy

  • Develop long-term ESG strategies by identifying your company’s contributing factors then employing our recommended mitigating actions.

  • Protect against risk by exploring ESG challenges in the power sector, equipping your company with the knowledge of how to combat future ESG tests.

  • Identify current leaders in the power industry. Use this report’s assessment of current players in the power industry to inform potential investments or partnerships.

  • Avoid ESG failures and follow in the footsteps of ESG leaders by incorporating our case studies into your strategy.

  • Benchmark your company against competitors and justify key areas of investment by using GlobalData’s thematic scorecard, which ranks the top 40 power companies globally on the 10 most important industry themes.

AES
BP
Chevron
Dominion Energy
Duke Energy
EDF
Enel
Engie
E.ON
Exelon
Fortum
Gazprom
General Electric
Iberdrola
National Grid
NextEra
NRG
Schneider
Shell
Southern Company
Stem
Vattenfall
Xcel Energy

Table of Contents

Executive summary 3

GlobalData’s ESG framework 4

Contributing factors and mitigating actions 5

Trends 6

Technology trends 6

Macroeconomic trends 8

The ESG action feedback loop 10

ESG challenges in power 11

Environmental challenges 11

Social challenges 15

Governance challenges 18

Case Studies 20

Environmental 20

Social 21

Governance 21

ESG timeline 23

Companies 24

Sector scorecard 28

Power utilities sector scorecard 28

Glossary 31

Further reading 36

Our thematic research methodology 37

About GlobalData 39

Contact Us 40

Frequently asked questions

ESG (Environmental, Social, and Governance) in Power – Thematic Research thematic reports
Currency USD
$695

Can be used by individual purchaser only

$1,495

Can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company


Undecided about purchasing this report?

Enquire Before Buying Request a Free Sample

Get in touch to find out about multi-purchase discounts

reportstore@globaldata.com
Tel +44 20 7947 2745

Every customer’s requirement is unique. With over 220,000 construction projects tracked, we can create a tailored dataset for you based on the types of projects you are looking for. Please get in touch with your specific requirements and we can send you a quote.

Sample Report

ESG (Environmental, Social, and Governance) in Power – Thematic Research was curated by the best experts in the industry and we are confident about its unique quality. However, we want you to make the most beneficial decision for your business, so we offer free sample pages to help you:

  • Assess the relevance of the report
  • Evaluate the quality of the report
  • Justify the cost

Download your copy of the sample report and make an informed decision about whether the full report will provide you with the insights and information you need.

Below is a sample report to understand what you are buying

See what our customers are saying

“The GlobalData platform is our go-to tool for intelligence services. GlobalData provides an easy way to access comprehensive intelligence data around multiple sectors, which essentially makes it a one-for-all intelligence platform, for tendering and approaching customers.

GlobalData is very customer orientated, with a high degree of personalised services, which benefits everyday use. The highly detailed project intelligence and forecast reports can be utilised across multiple departments and workflow scopes, from operational to strategic level, and often support strategic decisions. GlobalData Analytics and visualisation solutions has contributed positively when preparing management presentations and strategic papers.”

Business Intelligence & Marketing Manager, SAL Heavy Lift

“COVID-19 has caused significant interference to our business and the COVID-19 intelligence from GlobalData has helped us reach better decisions around strategy. These two highlights have helped enormously to understand the projections into the future concerning our business units, we also utilise the project database to source new projects for Liebherr-Werk to use as an additional source to pitch for new business.”

Market Analyst & Management, Liebherr-Werk

Your daily news has saved me a lot of time and keeps me up-to-date with what is happening in the market, I like that you almost always have a link to the source origin. We also use your market data in our Strategic Business Process to support our business decisions. By having everything in one place on the Intelligence Center it has saved me a lot of time versus looking on different sources, the alert function also helps with this.

Head of Key Accounts, Saab AB

Having used several other market research companies, I find that GlobalData manages to provide that ‘difficult-to-get’ market data that others can’t, as well as very diverse and complete consumer surveys.

Marketing Intelligence Manager, Portugal Foods

Our experience with GlobalData has been very good, from the platform itself to the people. I find that the analysts and the account team have a high level of customer focus and responsiveness and therefore I can always rely on. The platform is more holistic than other providers. It is convenient and almost like a one stop shop. The pricing suite is highly competitive and value for our organisation.

I like reports that inform new segments such as the analysis on generation Z, millennials, the impact of COVID 19 to our banking customers and their new channel habits. Secondly the specialist insight on affluent sector significantly increases our understanding about this group of customers. The combination of those give us depth and breadth of the evolving market.

I’m in the business of answering and helping people make decisions so with the intelligence center I can do that, effectively and efficiently. I can share quickly key insights that answer and satisfy our country stakeholders by giving them many quality studies and primary research about competitive landscape beyond the outlook of our bank. It helps me be seen as an advisory partner and that makes a big difference. A big benefit of our subscription is that no one holds the whole data and because it allows so many people, so many different parts of our organisation have access, it enables all teams to have the same level of knowledge and decision support.

Head of Customer Insight and Research, Standard Chartered

“I know that I can always rely on Globaldata’s work when I’m searching for the right consumer and market insights. I use Globaldata insights to understand the changing market & consumer landscape and help create better taste & wellbeing solutions for our customers in food, beverage and healthcare industries.

Globaldata has the right data and the reports are of very high quality compared to your competitors. Globaldata not only has overall market sizes & consumer insights on food & beverages but also provides insights at the ingredient & flavour level. That is key for B2B companies like Givaudan. This way we understand our customers’ business and also gain insight to our unique industry”

Head of Consumer Sensory Insights, Givaudan

GlobalData provides a great range of information and reports on various sectors that is highly relevant, timely, easy to access and utilise.  The reports and data dashboards help engagement with clients; they provide valuable industry and market insights that can enrich client conversations and can help in the shaping of value propositions. Moreover, using GlobalData products has helped increase my knowledge of the finance sector, the players within it, and the general threats and opportunities.

I find the consumer surveys that are carried out to be extremely beneficial and not something I have seen anywhere else. They provided an insightful view of why and which consumers take (or don’t) particular financial products. This can help shape conversations with clients to ensure they make the right strategic decisions for their business.

One of the challenges I have found is that data in the payments space is often piecemeal. With GD all of the data I need is in one place, but it also comes with additional market reports that provide useful extra context and information. Having the ability to set-up alerts on relevant movements in the industry, be it competitors or customers, and have them emailed directly to me, ensures I get early sight of industry activity and don’t have to search for news.

Senior Account Manager, TSYS
Go even deeper with GlobalData Intelligence Center

Every Company Report we produce is powered by the GlobalData Intelligence Center.

Subscribing to our intelligence platform means you can monitor developments at ESG (Environmental, Social, and Governance) in Power – Thematic Research in real time.

  • Access a live ESG (Environmental, Social, and Governance) in Power – Thematic Research dashboard for 12 months, with up-to-the-minute insights.
  • Fuel your decision making with real-time deal coverage and media activity.
  • Turn insights on financials, deals, products and pipelines into powerful agents of commercial advantage.