CEOs on ESG: Pedro Pizarro


Edison International

Fortnightly Magazine - November 15 2022

The S in ESG cuts a wide swath across any corporate entity. With that in mind, Public Utilities Fortnightly went right to the top, talking with leaders at two major utilities and a DOE Director, to find out what the S really means for the energy and utilities industry.

It means a lot, as social impacts most programs, for example, playing a part in fairly reducing environmental pollution, creating clean-energy jobs in disadvantaged communities, and increasing energy resilience for everyone. The list goes on.

Edison International CEO Pedro Pizarro and Ameren Executive Chair Warner Baxter have a lot to say here. DOE's Deputy Director-Energy Justice Tony Reames does too. LMI expert Larry Glover co-moderated here along with PUF's Steve Mitnick and Lori Burkhart.

PUF's Steve Mitnick: Talk about the S at Edison International, but also industry wide.

Pedro Pizarro: We're part of our community. We've been here for about a hundred and thirty-five years. We're here for the long haul. That needs to include representing the community, mirroring the community. Particularly in Southern California, which is such a diverse region.

As a company, we make sure we are reflecting that diversity. If you look at a higher level, the industry's embraced this. It was accelerated in 2020 after the murders of George Floyd and Ahmaud Arbery. Those horrible events catalyzed a different discussion at a national level.

We had our industry wide EEI initiative in 2020 on integrating workforce development and DEI priorities, putting forth a strategic initiative with member companies committed to implementing at least three actions to support industry goals. As of June of last year, we had a one hundred percent participation rate across the membership base.

As for Edison International, we're a diverse company. It starts with our board. There are eleven of us on the board, and eight are diverse. Of the ten independent directors, half are women. We have ethnic and racial diversity and LGBTQ identification. More broadly across our entire team, almost seventy one percent of the workforce is diverse.

Frankly, we're not perfect. We've pushed in the last few years being transparent about where we are and what we're doing. If you take a look at the DEI reports we've been putting out, you'll see how we're working this into the company fabric.

We're one of the few companies providing information on pay. We break down pay statistics by racial and ethnic group and by gender. On pay for a given job, you'll see one hundred cents on the dollar across these groups.

When you look at the average that all women make versus all men or all Latinos versus our overall population, you'll see a difference driven by representation. We have representation that mirrors the availability in the market, but we know that market needs to do more to catch up to what our communities look like.

We get surveys from employees and see high trust scores. But we've also seen signals in our surveys that not everything was perfect. Toward the end of 2019, while there were high trust scores, those among our Black and African American employees were lower, and we decided to dig deeper.

We partnered with a group called the Networkers. They are our business resource group for Black and African American employees. We also brought in an outside expert who helped facilitate over a dozen listening sessions focused on our Black and African American employees.

I sat in on one or two of those and found there's more work we need to do.

We developed ten commitments to focus on employees, suppliers, our broader charitable giving, and the community. We made those public because we want to be transparent.

Those commitments included our Edison Lineworker Scholarship, with an initial focus on attracting Black and African American candidates, an underrepresented group in the profession in comparison to the population in our service area. We've had two cohorts. The most recent cohort includes twelve Black scholars, including our first female scholar.

We also launched a program initially focused on Black and African American employees to do a career accelerator, which is coaching and mentorship. We've now brought in other groups.

Larry Glover: Are you representative of the challenges in the industry or do you feel like you are wrapping your arms around all this and getting a bit ahead of what will come behind you?

Pedro Pizarro: We all have a lot to learn from each other. That's the good news. That's one of the things I love about EEI. This is an industry that works together, and we share practices. There's a lot to be proud of.

We have the benefit of being in a diverse community. But with that benefit comes responsibility.

There are areas where I feel like we are helping lead the way, for our industry and the economy as a whole. This is not an electric sector issue; this is a U.S. economy issue.

There's more that can be done in the economy. We have probably the favorite thing that I do at Edison — our Edison Scholars Program. Every year, we give thirty high school seniors in our service area a scholarship over the course of their four years of college.

Up until now, we've given them forty thousand dollars over four years. Next year, we're increasing the amount to fifty thousand over four years. The students are a diverse group, often times the first in their families to attend college.

We can help move the needle a bit with programs like this, but let's not kid ourselves. We're one company of thirteen thousand in a state of thirty-five million people, where we serve about fifteen million residents.

We can't solve the issues in education in primary schools through high school. We can't solve the issues of systemic racism. But what can we do?

We can mind our shop and make sure we're doing everything we can inside our walls. We can reach outside our walls with things like scholarship programs. Importantly, we can engage, communicate, talk with others, and be an example.

We've pushed transparency, good and bad, and that is a unique practice. Over time, hopefully more people will do that. We can learn from others' examples. If one company does this, two companies do this and ten companies do this, before you know it, the whole economy is moving.

PUF's Steve Mitnick: Talk employee base and recruiting, making employees feel comfortable, and also contractors relating to diverse customer communities.

Pedro Pizarro: Let's start with our population. I mentioned fifteen million residents. Of those, about one-third of our residential customers qualify for low-income assistance. Our footprint covers a bit under forty percent of California.

We have something like forty-six percent of California's diverse communities within our footprint. People think of LA as an affluent area, and it has some affluent parts. It's got a lot of needy parts too.

This is about the S more than the E, but let me connect them. When you think about climate change and its impacts, those impacts are disproportionately affecting low-income communities of color.

Our utility programs have a big tilt toward making sure they help those who need it most. Our Charge Ready program, the four hundred thirty-six-million-dollar program to help get more than thirty thousand chargers installed across our communities, has about half of that program going toward low-income and disadvantaged communities.

We filed an application last December to invest around six hundred seventy-seven million dollars in installing one-quarter million heat pumps across our territory. A big share of that is targeting low-income disadvantaged communities.

On our philanthropic side, we give at least twenty million dollars a year out of shareholder funds, not customer funds, to help nonprofit organizations across our communities, with a significant amount of the money going toward environmental and social justice communities.

On the supplier and contractor side, we've hit forty percent spend in some years. It's been a little lower the last couple of years because wildfire insurance has become a big part of our cost base.

We have not been able to find diverse suppliers for wildfire insurance. But around thirty-eight percent of spend last year, worth $2.4 billion, went toward diverse businesses.

It's not just about the money we're spending, but it's about the role that we can play in helping to grow small and diverse businesses in our area. We have educational programs to help train diverse suppliers, contractors, and subcontractors that help them compete in our competitive solicitations for suppliers.

It's not just spending money; it's helping build diverse businesses and creating other jobs. It's helping to build diverse communities, so it's a powerful way we can engage with that broader world outside our walls.

Larry Glover: The challenge the industry often has is defining the S in ESG and what that social impact means. How do you define that and how do you see that and your role in building that?

Pedro Pizarro: You can define S through a number of metrics. We're looking at impact in the community. We have employees, a team that reflects our community, but more important, we're engaging with the community through NGOs, through community-based organizations.

We have a Community Advisory Panel at SCE where customers get to speak directly and sometimes bluntly about what our programs need to look like. That's like the charging program I mentioned earlier, Charge Ready, which was shaped by voices from the community saying, it's great you want to do this, but let us help get you out of your ivory tower a bit. The program would be more helpful if you include this or that.

I'm going to give you one other way to think about it that connects to the E piece. We put out a white paper earlier this year called, "Adapting for Tomorrow." It is about climate change but not about mitigation.

It's about adaptation. Meaning, there's some level of climate change that's locked in already, no matter what we do. We're trying to keep it from getting worse, but it's going to be bad. It's about preparing for what's coming.

The connection to the S is that the paper was based on work we did through a PUC proceeding in California. We were the first utility to make a filing called the Climate Adaptation Vulnerability Assessment.

That had us take a number of the global climate models, use the science, and it told us what we can expect in terms of regional impacts. We found that by 2050, we expect to see sea level rise an average of two to three feet. It's huge. If you think of the hottest one percent of days that we have today, by 2050, those will be seven times more prevalent and at least as hot, if not hotter.

Part of the work we did to prepare the filing was to engage with community organizations on what they are feeling. How are their communities preparing? There is a law in California that requires local governments to develop climate adaptation and vulnerability assessments.

Only about one-quarter of our local governments prepared assessments. We're going to have some big decisions that need to be made at a societal level — are we going to keep our coastal communities where they are and build a big seawall or are we going to move them inland and, if so, what do we do with our wires? This is going to the E, but it goes to the S, because we're going to have some tough societal choices around how we adapt to climate change.

One of the big points we made in the Adapting for Tomorrow paper was we need partnerships with our communities because we can't figure this out alone. We can have a great plan for what we do with infrastructure, but if our community is going to decide not to rebuild after a wildfire, or move away from the coast, then who cares about our infrastructure? 

That speaks to the S piece. S is about a longer-term discussion about how we as a society deal with what's coming our way.

PUF's Steve Mitnick: Where is diversity going? Industry wide, where do you think in 2035 with the E, and also with the S?

Pedro Pizarro: I'll give you longer term. It's something we talk about in terms of reflecting our diverse heritages and having pride in that, but it's not a problem we can fully solve in the short term. Here's where I'd like it to head in the long term.

What that means is we have equality and opportunity. We have the ability for folks to rise based on merit because they have equal opportunities.

That may take more than ten years. It's not just about individual companies making sure they have the doors wide open and the ability for talent to step up regardless of background.

Through 2030 at Edison, I want to see that we have more diverse line workers as a result of our program. I want to see more of the Edison Scholars come back as interns and as full-time employees.

I want to see us continue to grow diverse leaders for the company. I want to see more companies across the economy being as transparent as we are in terms of pay, employee sentiment, the good, the bad, what needs to be worked on, and making commitments transparent.

No one community looks like Southern California, but ours doesn't look like Chicago or Des Moines. The work that needs to take place has a local character because it's linked to that local community and its needs. How can electric power companies engage as partners with a broader community?

Larry Glover: For community engagement, to solve this problem of the S, who do you invite to be partners?

Pedro Pizarro: A lot of people. It's the folks we're inviting now. I mentioned our Community Advisory Panel. We also have a Government Advisory Panel. It's similar but pulls in mayors and city council people who have their finger on the pulse of their constituents and communities.

We also have a Business Advisory Panel and a Small Business Advisory Panel.

It's not all local. We work with national-level organizations because we want to make sure our perspectives fit into what is needed across the country. We want to make sure our local actions are contributing to progress at the national level.

We like to make sure we're communicating as broadly as possible with our customers and communities. That takes many forms. That's from social media, digital messages to the occasional TV spot, to more important, having our government relations folks working in the communities, with the local Chamber of Commerce, and doing community fairs.

You develop relationships, trust, and credibility that then fosters two-way discussions. Because now you're getting the call back or the relationship with the local group that might then help us think about the next program to drive the clean-energy transition.


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