Theme impact

The most pressing ESG concerns for the power industry

Credit: Bert van Dijk/Getty images.

Powered by

Environmental, social and governance (ESG) concerns need to be at the core of any power company that wants to continue to provide quality services.

Companies from across the power industry widely promote their corporate social activities, and improving their environmental rating is at the top of many corporate agendas.

However, as more firms are called upon to confront social inequity, corruption, tax avoidance and a lack of security, the power industry will need to find ways to improve their governance.

Managing environmental sustainability issues will be critical for power companies this decade

Electricity generation is one of the primary drivers of climate change. Fossil fuel generation is responsible for significant pollution, such as air pollutants from coal-fired generation. At the same time, the wider power industry, including renewable energy, has a large land footprint, and companies need to consider biodiversity risks when planning projects. The use, or overuse, of natural resources is a risk that power companies need to manage, with many exposed to risks associated with fossil fuel depletion. Also, all power companies must ensure that local communities and governments are engaged in their land management.

The power sector, being a key industry responsible for carbon emissions, has a very important role to play in the move towards net-zero.

David Kurtz, head of energy, GlobalData

Emissions reduction is a key climate action strategy. Reducing emissions, chiefly by switching from fossil-fuel energy to renewable energy, is the most effective way for companies to make future-proof strategic decisions. Additionally, because renewable energy, especially solar energy, has dropped dramatically in price in the last decade, reducing emissions often implies increasing efficiency and reducing operating costs.

Carbon capture and storage (CCS) needs significant growth to contribute to net-zero emission. Retrofitting existing power plants is the most cost-effective option in the near term, especially in growing economies in Asia that are still heavily dependent on fossil fuels and coal. An increase in future hydrogen demand is also an incentive for additional CCS capacity. The formation of carbon capture, utilisation and storage industrial hubs and clusters will become more common and important to further incentivise new CCS capacity.

Social governance is in sharp focus in the power industry

The power industry is intertwined with the local communities in which it operates. Those lucky enough to have a consistent power supply rely on the power industry to provide the energy they need. Power plants and operations use up vast amounts of land, and engagement with communities and governments is key. The power industry provides many jobs, often high-skilled, and the transition towards renewable power is creating challenges for a shifting workforce.

The transition from conventional fossil fuel-based generation to renewables will lead the way for countries to meet their climate targets.

David Kurtz, head of energy, GlobalData

Power companies deal with a diverse workforce and customers, making social issues very important. Energy transition will bring about the challenges of reskilling and retraining the workforce. While on one hand, the growth in renewable energy will lead to significant job creation in these areas, there will also be job reduction in the fossil fuel-based industry.

Large-scale power projects involve the acquisition of large tracts of land and have an impact on the local ecology. Thus, companies must be sensitive to the demands of the local communities and ensure that they are involved in the key issues related to project development, especially those that will impact them.

Power utilities manage many customers, who get impacted by the quality and cost of power that they receive. Access to uninterrupted electricity improves the quality of life of customers so there is a social responsibility of power utilities to increase the electrification rate and bring the remote and marginalised communities in their ambit.

Power generation companies need to ensure that their operations remain safe and economically viable. The changing demographics of the employees is also forcing companies to adopt sustainable and clean technologies.

The importance of corporate governance in the power industry

Companies will need to be transparent in their disclosures and ESG reporting. Current qualitative information has been centred around sustainability, core values and net-zero emissions targets. These disclosures also discuss social impacts, such as community relations, workforce health and safety, biodiversity impact considerations and both near- and far-term stakeholder impact. While regulatory bodies will be responsible for ensuring proper disclosures and reporting, there will also be pressure from the customers and peer groups to adhere to these. Companies will need to adopt globally accepted standards and established reporting frameworks.

Companies are realising the importance of ESG disclosures and data-driven transparent reporting will help them manage the expectations of investors and policymakers.

David Kurtz, head of energy, GlobalData

There is a need for internal governance structures. It is important to recognise who within the company is responsible for ESG management and performance disclosure, and what is the internal governance structure. Board members need to understand the risks and opportunities for business with respect to sustainability. They also need to ensure a consistent narrative regarding the company's sustainability measures.

Power companies need to maintain social and gender diversity in the workforce. As women are taking up varied roles across sectors and organisations, the power sector needs to ensure that there is fair gender diversity in the workforce. Companies also need to maintain social diversity in the workforce.

GlobalData, the leading provider of industry intelligence, provided the underlying data, research, and analysis used to produce this article.  

GlobalData’s Thematic Intelligence uses proprietary data, research, and analysis to provide a forward-looking perspective on the key themes that will shape the future of the world’s largest industries and the organisations within them.

Go to article: Home | ESG moves up the agendaGo to article: ContentsGo to article: BriefingGo to article: ForewordGo to article: ESG is the most important theme of this decadeGo to article: A timeline of corporate ESGGo to article: PharmaGo to article: The most pressing ESG concerns for the pharma industryGo to article: Key trends impacting ESG performance in the healthcare sectorGo to article: Latest news: ESG in pharmaGo to article: Sustainable supply chains: Clinical trials in a new era of limited resourcesGo to article: Increase in DPI use could lead to decreases in greenhouse gas emissionsGo to article: Environmental sustainability innovation: Leading companies in anti-malarial compositionsGo to article: Deal activity related to ESG in the pharmaceutical industry since 2020Go to article: ESG hiring trends in the global pharmaceutical industry since 2020Go to article: ESG patent applications in the global pharmaceutical industry since 2020Go to article: Mentions of ESG in pharmaceutical industry company filings since 2020 Go to article: MedicalGo to article: The most pressing ESG concerns for the medical device industryGo to article: Key trends impacting ESG performance in the medical device sectorGo to article: Latest news: ESG in medical devicesGo to article: Q&A with GlobalData thematic analystGo to article: GlobalData highlights the need for ESG commitment by medical device companies Go to article: Environmental sustainability innovation: leading companies in biomedical 3D prinGo to article: Leading medical companies in the ESG theme Go to article: Deal activity related to ESG in the medical industry since 2020Go to article: ESG hiring trends in the global medical industry since 2020 Go to article: Mentions of ESG in medical industry company filings since 2020Go to article: ESG patent applications in the global medical industry since 2020Go to article: Sponsorship opportunitiesGo to article: MiningGo to article: The most pressing ESG concerns for the mining industryGo to article: Key trends impacting ESG performance in the mining sectorGo to article: Terran Industries Company InsightGo to article: Latest news: ESG in miningGo to article: Q&A with GlobalData thematic analystGo to article: “A powerful path towards reconciliation”: How Indigenous voices can be heardGo to article: Environmental sustainability innovation: Leading companies in solvent extraction processesGo to article: Leading mining companies in the ESG themeGo to article: Deal activity related to ESG in the mining industry since 2020Go to article: Hiring activity related to ESG increased by a CAGR of 124% in the mining industrGo to article: ESG patent applications in the global mining industry since 2020Go to article: Mentions of ESG in mining industry company filings since 2020Go to article: PowerGo to article: The most pressing ESG concerns for the power industryGo to article: Key trends impacting ESG performance in the power sectorGo to article: Latest news: ESG in powerGo to article: Q&A with GlobalData thematic analyst Go to article: Good governance: ESG needs at the Sofia projectGo to article: Environmental sustainability innovation: leading companies in floating platform Go to article: Leading power companies in the ESG themeGo to article: Deal activity related to ESG in the power industry since 2020Go to article: ESG hiring trends in the global power industry since 2020Go to article: ESG patent applications in the global power industry since 2020Go to article: Mentions of ESG in power industry company filings since 2020Go to article: GlobalData Thematic IntelligenceGo to article: DrinksGo to article: The most pressing ESG concerns for the consumer goods industryGo to article: Key trends impacting ESG performance in the consumer goods sectorGo to article: Latest news: ESG in drinksGo to article: Goldilocks and the EU green claims crunchGo to article: Should brands standardise packaging?Go to article: Environmental sustainability innovation: leading companies in plant-based milk substitutes Go to article: Leading alcoholic beverages companies in the ESG themeGo to article: Deal activity related to ESG in the beverages industry since 2020Go to article: ESG hiring trends in the global beverages industry since 2020 Go to article: ESG patent applications in the global beverages industry since 2020Go to article: Mentions of ESG in beverages industry company filings since 2020Go to article: BankingGo to article: The most pressing ESG concerns for the retail banking industryGo to article: Key trends impacting ESG performance in the retail banking sectorGo to article: News for ESG in retail bankingGo to article: Why ESG funds are full of fossil fuels (but that’s okay) Go to article: Digital banks are raising the bar on sustainabilityGo to article: Could advances in technology help banks increase their ESG potential?Go to article: Leading retail banking companies in the ESG theme Go to article: Deal activity related to ESG in the retail banking industry since 2020Go to article: ESG hiring trends in the global retail banking industry since 2020Go to article: ESG patent applications in the retail banking power industry since 2020Go to article: Mentions of ESG in retail banking industry company filings since 2020Go to article: News for ESG in private bankingGo to article: The wealthy are beginning to feel responsible: what next?Go to article: Leading wealth management companies in the ESG themeGo to article: Deal activity related to ESG in the private banking industry since 2020Go to article: ESG hiring trends in the global private banking industry since 2020Go to article: ESG patent applications in the global banking & payments industry since 2020Go to article: Mentions of ESG in private banking industry company filings since 2020Go to article: Next issue