Environmental and societal risks may impact the Group’s social and societal responsibilities and harm its reputation. In accordance with the French Law of March 27, 2017 on the Duty of Vigilance, ENGIE has produced a vigilance plan covering these risks.
In 2017, ENGIE produced a vigilance plan in accordance with the French Law of March 27, 2017. This plan relates to the impacts of the activities of the Group, its suppliers and subcontractors on human rights and fundamental freedoms, human health and safety, and the environment. To monitor its implementation and to evaluate and publish its results, ENGIE implemented a specific governance structure with a Vigilance Committee jointly coordinated by the Ethics & Compliance Department and the CSR Department.
In addition, as part of its overall mission, in 2017, the CSR Department redefined the Group's CSR policy in conjunction with the other relevant departments and strengthened its risk assessment and management processes for ENGIE's activities and its area of influence.
Actions are implemented to prevent or reduce identified risks. Annual performance reviews are used to measure and adjust the status of action plans.
1. Identifying environmental and societal risks
For several years, the Group has implemented an Enterprise Risk Management (ERM) process led by the Risk Department to provide cascade feedback from sites to headquarters on risks affecting the Group's activities and to assess their materiality. Most environmental and societal risks are identified and assessed through this process. Major risks are reported to senior Group management, that is, the Executive Committee, and then to the Audit Committee of the Board of Directors in charge of the Group's annual risk review.
In addition, appraisal of the Group's projects prior to launch requires the implementation of systematic environmental and societal impact studies, and an analysis of the main risks involved in the project based on a list of investment criteria, including impacts on:
- climate change,
- stakeholder engagement,
- project acceptance.
Among the main environmental risks reported, the Group has identified climate risks linked to global warming, and other environmental risks linked to the potential damage caused by its activities to the environment.
The impact of climate change on the Group can be addressed according to the typology developed by the TCFD (Task Force on Climate-related Financial Disclosure), a body mandated by the G20 Financial Stability Board (FSB) and which defined in 2017 a new financial reporting framework on climate risks, namely:
- carbon-related price increases, taxes, standards and legal obligations
- increased fines, insurance costs, etc.
- non-compliant technology investment losses
- higher costs from failure to anticipate new technology roll-outs
- changing consumer patterns and lower demand for energy
- energy price volatility
- drop in listing price or rating downgrade, availability of financing
- litigation or class actions
- loss of production (drought, floods, hurricanes and the like)
- asset destruction
Other environmental risks
Taking into account the specific characteristics of the environmental field and the diversity of underlying risks, an environmental risk analysis of ENGIE's industrial activities is carried out each year as part of a Group approach called integrated and concerted environmental management. This approach, led by the CSR Department, updates the risks and the list of industrial sites most exposed in terms water, biodiversity and air quality as reflected in NOx, SOx and particles, soil quality, waste management and adaptation to global warming.
Based on 2018 data, the map below summarizes the risk analysis results.
Societal risks are also mapped for industrial activities, in particular through dialogue with stakeholders in all Group entities. This Group approach, led by the CSR Department, is based on a 2020 Group target, a toolbox, training and an evaluation system.
Among the main societal risks, the Group has identified the following:
- the impact of its activities on local populations and the possible need for reparation or compensation;
- human rights violations, due in particular to environmental causes;
- the societal impact of the termination of some of our activities, notably thermal power stations
CSR risks in the supply chain
Environmental and societal risks are also increasingly taken into account in the selection and regular evaluation of suppliers and subcontractors in conjunction with the Strategic Sourcing & Supply Department, responsible for purchases excluding energy. Energy purchasing is the individual responsibility of the relevant Business Units.
Supply chain activities are analyzed according to the following risks:
- environmental damage
- infringement of international rules
- human rights violations
- impact on local populations
- use of limited resources
- waste treatment
These risks are reflected in standard clauses incorporated into contracts to ensure that they are properly taken into account by suppliers and subcontractors. If necessary, the Group enters into a dialogue with them to support this process.
2. Actions undertaken and related goals
For all identified risks, actions are taken in consultation with stakeholders at the most appropriate levels.
From 2018, awareness and training sessions on understanding the law and the Group's vigilance plan are offered for top management and all employees.
If an incident occurs, the procedures implemented provide for:
- all relevant actors within ENGIE to be informed and mobilized
- discussions with all the stakeholders, particularly NGOs specialised in advocacy
- remediation without waiting for court decisions.
In order to measure the progress of risk reduction and prevention actions, five CSR goals were defined in 2016 with a 2020 target. The results have been published since 2016 for the first two and from 2019 for the last three.
For the stakeholder engagement objective, a self-assessment system has been deployed in order to coordinate the evaluation system which is implemented in all Group entities. This assessment is designed with the support of AA1000, a well-known international institution in CSR; and guarantees the implementation of an efficient approach. CSR Direction supervises the compilation of the data and supports operations for the achievement of the objective.
3. Performance review processes
As part of its duty of vigilance, the Group has formed a Vigilance Committee which meets around three times a year to measure the status of its actions and evaluate the results obtained under this plan.
This committee, jointly coordinated by the Ethics & Compliance Department and the CSR Department, brings together the Group's functional departments concerned by the duty of vigilance, in particular the Strategic Sourcing and Supply Department, responsible for purchases excluding energy, the Risk Department and the main Business Units at greatest risk, in particular the GEM Business Unit responsible for centralized energy purchases.
This committee analyses incidents or controversies, validates the results and decides on improvement actions, in particular with a view to achieving the goals set.
Each year, the Ethics, Environment and Sustainable Development Committee of the Board of Directors reviews the vigilance plan, any sticking points or improvements, and possible incidents.
In accordance with the law, the vigilance plan and results are published in the Reference Document.
In addition, each year, the Audit Committee of the Board of Directors reviews the Group's main risks.
4. Examples Implemented in the Field
In the management of their activities, operational projects integrate structuring of dialogue with stakeholders according to the Group methodology.
For example, within the frame of the renovation of LPG storage tanks in Ajaccio in South of Corsica (only in french), the project shared online information about its industrial activities; environmental preservation actions as well as the progress of construction works. The residents and local environmental associations have been informed particularly through a number of informative meetings and exchange. The project shares the progress of the construction (only in french).
Hazelwood Power Plant was shut down in March 2017 and ENGIE has since been rehabilitating the site. The plant is being decommissioned and the mine will be transformed into a lake.
Decommissioning is expected to be completed in the first half of 2018. Plans to rehabilitate the adjacent mine are currently the subject of extensive consultations with regulators, the local community and other stakeholders. The plant employed 750 people. In terms of worker transfers, ENGIE has worked with labor union organizations and local authorities to develop and implement a worker transfer program to best guarantee the employment of redundant workers in other power plants in the Latrobe Valley.
Stakeholder communication and engagement tools include a dedicated website, quarterly community forums, stakeholder information, information sessions for stakeholders, media coverage, advertisements, and public information stands.
ENGIE remains committed to local communities through its large-scale long-term partnership program, focusing on youth development, education and other support activities in the Latrobe Valley.
Likewise, the Group rehabilitated an industrial site in a new biodiversity space in the Hénâ region of Belgium (only in French).