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December 06, 2001
Global Energy Providers Score Well in Corporate Responsibility Ratings
    by William Baue

New study by German research firm Oekom identifies several trends developing worldwide in the power delivery sector.


Oekom Research AG, a social and environmental research firm based in Munich, Germany, recently released a study in which it assessed 20 international electricity and gas supply companies in terms of their corporate social and environmental performance.

Oekom grades companies much as teachers grade students, on a letter-based system ranging from A+ to D-. Oekom rates companies in three categories: Environmental Ratings, Social Cultural Ratings, and Corporate Responsibility Ratings (CRR), which combine the first two categories. Oekom gathers its information predominantly from surveys completed by the companies.

According to Oekom analyst Evelyn Bohle, who conducted this study, global energy providers fared well overall in Corporate Responsibility Ratings. Two-thirds of the companies reviewed were found to demonstrate a commitment to environmental and social concerns. The three companies that tied for the top rating of B- included Canada-based Westcoast Energy (ticker: WE), UK-based Powergen (PWG), and Austria-based Verbund.

Regarding corporate social policies and performance, the energy sector received above-average ratings on issues such as employee benefits, compensation and overtime pay, training, and retirement pensions. Bohle attributed this excellent social performance to the high rate of unionization in the energy industry. As with the CRR, three companies shared the top grade of B- in the Social Cultural category: Canada-based TransAlta (TA), UK-based Centrica, and Westcoast Energy.

Energy companies performed even better on the environment scorecard, with Verbund and Germany-based Bewag both earning a flat B. Westcoast Energy followed close behind with a B-. Bohle identified two variables affecting the environmental performance of energy companies: their energy mix and their use of cogeneration.

The former term refers to the energy sources from which companies generate power, with gas delivering the best efficiency of the fossil fuels. An identical quantity of coal produces half as much calorific value as gas, but releases significantly more carbon dioxide. The use of renewable resources, such as the sun, wind, biomass, and water, obviously scored higher environmental ratings. The only exception to this rule involved hydro-electric dams, which can sometimes impact river ecology significantly.

Cogeneration utilizes waste heat created by power production to generate more power. Companies that use this system typically operate twice as efficiently as conventional power stations. Top performer Westcoast Energy also stood out in this area, operating three cogeneration power stations at about 66 percent efficiency. Germany-based RWE (RWEG) also uses cogeneration in its Ruhr-region power facility.

Bohle discovered one area where the energy industry disappointed: transparency. When asking where companies obtained the power they sold, she found “only patchy information,” especially when it came to the sources of nuclear-generated energy. However, Bohle also reported a counter-trend. In October, the Austrian government mandated that companies must provide detailed information to their end customers revealing their energy sources.

Contracting is another positive trend Bohle noted. Contracting, in the industry jargon, refers to when a power company finances heating system and electrical appliance upgrades, allowing consumers to spread payments over time at a set interest rate. However, relatively few companies offer contracting—only Bewag, Verbund, Powergen, Austria-based EVN, and UK-based Scottish and Southern Energy.

The rate of participation in Oekom’s survey was “exceptional,” according to Bohle, with only one out of twenty invited companies—U.S.-based Nicor (GAS)—declining to provide information.

 

 
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