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Business & Money

Investors are asking utilities questions about environmental and social risks. Answers can be a challenge.
Fortnightly Magazine - June 2004

Fitzgerald asks. "If you look at the GRI standards, there are sections that don't apply to all companies, and some elements are missing that are important for the electric sector," she says. One example is technology transfer, both within the United States and internationally. Fitzgerald points out that numerous new power plants are being built in developing countries. "If we don't transfer state-of-the-art environmental technology to them, they aren't going to use it," she says.

Such shortcomings might be inevitable in an ambitious effort like developing global sustainability reporting standards. The situation is improving, however, according to Juan M. Carrasquillo, assistant to the chairman and CEO at Wisconsin Energy Corp. in Milwaukee. "Like everything else, there is a learning curve," he says. "You are starting to see things happen toward better tracking of successful sustainability. The biggest question is how can analysts talk the bottom-line language in terms of sustainable strategies. That hasn't been as clearly defined as people might want."

Internal issues also have proved difficult. "The biggest challenge has been getting access to our performance information," Carrasquillo says. "We don't have an enterprise-wide performance-tracking system. Each business and department has its own scorecard. But for a large and comprehensive sustainability report, you need access to data on a daily basis, and we don't have that now. It's sitting on someone's Excel spreadsheet, and we can't get to it."

Wisconsin Electric is in the process of cataloging the locations of all that data, so the company can figure out how to automate the performance-measurement process and make it more manageable.

In general, companies are finding that sustainability reporting is a complex undertaking. "You need to commit the time and resources to accomplish the task," says Ed Fox, vice president of communications, environment and safety for Arizona Public Service in Phoenix. "The process of collecting and verifying data is improved through clear communication and through the use of topic-specific coordinators." In other words, the company assigns an officer to coordinate the effort to gather waste-related data, for example, and others on air emissions, health and safety, community relations, etc.

Fox notes that the process requires buy-in from the top down. "It takes a commitment throughout the company to provide the data," he says. "It is important to have executive-level commitment before initiating the process."

Carrasquillo echoes that sentiment. "Internal salesmanship is very important," he says. "In our case, it began as a directive from the CEO, and that made it a lot easier. But at first our own management was wondering why we were doing this." The company conducted a campaign to educate executives and directors about its motivations and goals for the program. "Doors begin to open if the stakeholders understand the vision and strategy," he says.

Taking Control

While investor concerns are driving the sustainability-reporting trend, the outcome is expected to be better performance. "It's not just about reporting, but also about improving our processes and the way we do business," Fitzgerald says. "We're taking a hard look at our progress on environmental stewardship. In the reporting process, some actions