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Sustainability reporting in Eskom |
What sustainability means to EskomSouth Africa’s sustainable economic growth depends on reliable, cost-effective energy. Increasingly, the competitiveness of any economy is based largely on the availability of a sustainable energy mix. This is particularly significant, if not critical, for the South African economy – the structure of the economy, its resource base and its beneficiation manufacturing are highly energy-intensive and energy-dependent. Eskom’s six-year business plan details a significant increase in generation capacity to unlock economic potential in a wide range of sectors such as mining, manufacturing and agri-business. By diversifying the sources of energy, Eskom will make a meaningful contribution to the sustainability of energy supply and to better environmental management. Eskom is a “leading indicator” of investment and job creation for sectors such as mining and energy-intensive manufacturing that depend on a reliable supply of energy. Climate changeAt present, South Africa has no obligations to reduce greenhouse gas emissions, but is committed to sustainable development policies and measures. South Africa must contribute to global efforts to combat climate change, while ensuring the sustainability of its economy and society. Eskom supports this national approach in the form of a six-point climate change plan. This plan centres around diversification into technologies other than coal, energy efficiency initiatives, innovation through research, demonstration and development, adaptation to the negative impacts of climate change, and investment through carbon market mechanisms. Eskom needs to balance its economic, financial, operational, environmental and social performance imperatives to stay sustainable. This balance requires alignment between Eskom and its stakeholders, including government as a shareholder, in terms of expectations and a shared vision for Eskom. Sustainability governanceThe board sustainability committee deals with integrated sustainability issues and approves or recommends policies, strategies and guidelines, particularly on climate change, environment, health, nuclear issues, quality and safety. The executive management committee (Exco) guides the implementation of Eskom’s sustainability strategy including environmental management and climate change development issues and occupational health and safety matters. It also reviews sustainability strategies for consideration by the board. Measuring sustainability performanceEskom had itself evaluated by SAM Research AG against the Dow Jones sustainability Indices (DJSI) in 2010. The score reflects Eskom’s performance across economic, environmental and social criteria compared to its industry average (calculated as the average score of all assessed companies eligible for the DJSI world, regional indices or country indices). The values for the total score, the dimension and the criteria scores are on a scale from 0 to 100%. Eskom scored above average with a score of 62 against an average score of 53. The economic dimension scored 67 against the average of 58, while the environmental dimension scored 50 against the average of 46. In the social dimension, Eskom scored 71 against the average of 56. The score for codes of conduct/compliance/corruption and bribery was 88 against an average of 70, and environmental and social reporting scored 93 and 100 against averages of 66 and 61 respectively. In 2010, Eskom also had itself assessed against the Johannesburg Stock Exchange Socially Responsible Investment index’s 2010 sustainability criteria, which range from the environment and society to economic sustainability and good corporate governance. According to the report Eskom “achieved a performance level that not only complies with the minimum requirements for inclusion in the index, but which is also very close to the best performer level in the category for companies with a high environmental impact”. Eskom’s own sustainability performance indexEskom’s own sustainability performance index was developed in 2002/2003 through stakeholder meetings with experts. Material issues that affect Eskom’s sustainability were identified, and 20 key performance indicators were defined and clustered to capture financial (operating profit before tax and return on average capital employed), environmental (legal compliance), social (broad-based black economic empowerment and electrification) and technical performance (the energy available factor to customer service and the reserve margin). Eskom’s overall performance was 2.6 (2010: 2.5).The index shows three years of declining performance, two years of stabilising performance and this year a score of 2.6 – DSM targets were achieved, financial performance improved and the total number of system minutes lost also improved. Areas with lower scores were safety, environmental legal compliance, energy availability and the reserve margin. The centre of excellence for enterprise performance management (part of the Finance and Group Capital division) is taking the sustainability index forward. The centre will ensure the right range and depth of performance indicators to measure whether the corporate strategic objectives for sustainability are being achieved. Sustainability reportingIdentifying and choosing material issuesEskom has identified the material issues to report on by analysing the views and expectations of both employees and stakeholders. What are the significant economic, environmental and social impacts of the business? What are the significant risks to the company? And what are the key challenges facing our society? An issue is material if it has an impact that could substantively influence Eskom’s assessments and decisions and those of its stakeholders. There is much that could be reported on in relation to Eskom’s sustainability. To this end, numerous external sources were reviewed, including:
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