Clearway Energy Group recently released our annual Environmental, Social, and Governance (ESG) Report for 2022, which highlights our company’s progress toward our ESG goals and celebrates our ESG milestones and accomplishments. ESG has been in headlines recently as some critics have sought to ban companies from considering ESG factors in their financial decision-making. We talked to Noelle Chantarasap, Clearway’s sustainability ESG manager, about why having ESG goals is good business, and what’s next for the future of ESG, both at Clearway and beyond.
Can you explain what ESG is and how it’s evolved as a business practice?
ESG refers to a group of metrics used to measure how sustainability practices create value for businesses and stakeholders, especially investors. ESG as a practice emerged a few years ago when investors were looking for a more tangible way to measure the financial value that can be gained through sustainability practices. ESG shows us that when companies are intentional about treating the environment, employees, and our communities with respect and grace, it has positive business outcomes.
ESG practices have been under attack recently and there are efforts across the country to bar companies from considering ESG factors in investing. What’s the deal?
We’re seeing attacks on ESG practices happening in real-time. Just recently a group of attorneys general from 17 states filed a motion with the Federal Energy Regulatory Commission (FERC) to dispute BlackRock’s ability to use shareholder voting power to influence how utilities operate by reducing reliance on fossil fuels and cutting harmful emissions. BlackRock is the world’s largest asset manager, and the fact that they’re measuring climate change as a risk shows the importance of ESG to bottom-line decisions.
What ESG’s detractors don’t acknowledge is that failing to measure environmental, social, and governance metrics is simply short-sighted business planning – preventing investors and others from getting information about how companies are managing risk and compliance. For example, by accounting for greenhouse gas emissions and conducting climate analyses, companies can better manage risk and reduce costs associated with unexpected weather events caused by climate change. The American Meteorological Society recently collaborated with Fortune 500 companies to conduct a comprehensive assessment of climate change risks and opportunities in an attempt to more effectively communicate climate risks to the private sector. From a business perspective, this is like planning for any other risk. Major energy operations around the world account for risks like terrorist attacks or severe weather events like hurricanes, so why would we treat climate risks any differently?
In the energy sector, we’ve already seen the financial impact of severe weather events on operations. Here at Clearway, we are in the process of working these events into our forecasting to mitigate financial losses and disruptions to our operations. By factoring in the impact of a changing climate, we can better prepare for unprecedented weather events and reduce the financial burden of damages caused by them. So, ESG reporting provides tangible and fact-based information that investors and others can use to make informed decisions.
What would you say about why ESG is actually good business?
In addition to providing information about risk management and compliance, ESG reporting presents a unique opportunity for businesses to drive innovation and create value. For example, some innovative energy startups are pioneering new and efficient ways to recycle or repurpose old wind turbines, solar panels, and batteries. Equipment recycling is a huge priority for the renewable energy sector because it’s part of our cradle-to-cradle mandate, and new businesses are emerging all over the country that are dedicated to helping us figure it out. ESG drives innovation, creates value, and helps companies to gain a competitive advantage in the market.
How does Clearway prioritize ESG within its other corporate goals?
For Clearway, ESG is essential as it aligns with the company’s values and goals. I’m proud to work for a company committed to providing reliable and sustainable energy while maintaining its focus on transparency and accountability. By integrating ESG practices into the company’s operations, we’re helping show long-term value for stakeholders while minimizing our impact on the environment.
And when it comes to prioritizing ESG, we take a holistic approach. It not only helps us mitigate risks, but also attracts and retains talent and creates long-term value for our shareholders. By addressing environmental, social, and governance issues, we’re able to build a more resilient business that is better equipped to withstand challenges and capitalize on opportunities. Additionally, as a renewable energy company that is committed to sustainability, ESG is simply part of who we are and what we stand for. It’s not something that we see as an afterthought or a box to check, but rather a core part of our business strategy.
What’s something that’s not getting enough attention in the ESG space?
While climate change and emissions are often at the forefront of ESG discussions, we are very focused on biodiversity and regenerative development. This means we’re aligning our development activities with the regenerative capacity of the surrounding environment with practices like waste reduction and ecosystem restoration to promote biodiversity.
Clearway, however, has been extremely proactive on these issues. We are excited to roll out our forthcoming roadmap to promote regenerative development and biodiversity across our fleet. We also recently launched a regenerative development program that involves partnering with Non Governmental Organizations (NGOs) and experts to minimize and mitigate environmental impact during the project development phase and promote biodiversity in existing sites. It includes a toolbox to understand which approach works best for each site since different sites have different environments that require unique solutions.
What’s next for ESG at Clearway?
We’re currently working on a five-year ESG roadmap that outlines our priorities in six key areas: climate change and climate resilience, regenerative development, circular economy or waste life management, human rights, corporate citizenship or social responsibility, and supplier sustainability. Each of our ESG priorities is directly tied to business outcomes:
- Reliability and Resiliency of Electric Supply: Our focus on climate strategy and resilience and adaptation helps ensure that our operations can continue providing power in the face of extreme weather events and help us avoid costly disruptions.
- Environmental Impact: Our work on regenerative development and circular economy helps us minimize our local impact while creating societal and environmental returns.
- Strong Supply Chains: Our commitment to human rights, corporate citizenship, and supplier sustainability helps us build stronger relationships with our employees, suppliers, local communities and other stakeholders while promoting fair and ethical business practices.
To learn more about our ESG goals, progress, and priorities, I encourage everyone to check out our 2022 ESG report.