The Group's CSR vigilance approach

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Within the general framework of its missions, in 2020, the CSR Division, along with the other Divisions concerned, redefined the Group’s CSR policy and strengthened its processes to assess and manage risks incurred by ENGIE’s activities and its sphere of influence.
Actions were taken to avoid or mitigate the identified risks. Annual performance reviews are conducted to measure the state of progress of the action plans and to adjust them.

 

Identification of environmental and societal risks

For several years, the Risks Division has been implementing an Enterprise Risk Management (ERM) process to escalate the risks incurred by the Group’s activities from the sites to head office and to assess their materiality. This process identifies and assesses most environmental and societal risks. Major risks are escalated to the top of the Group, i.e., to the Executive Committee, then to the Audit Committee of the Board of Directors, which is tasked with the Group’s annual risk review.
In addition, the examination of Group projects before they are launched demands systematic environmental and societal impact studies and an analysis of the main risks incurred by the project ,according to a list of investment criteria, which include the consequences in terms of:

  • climate change,
  • biodiversity,
  • water,
  • stakeholder commitment,
  • acceptance of the project.

 

Environmental risks

Amongst the escalated environmental risks, the Group has identified, on the one hand, climatic risks, their contribution to climate change and their impact on its activities, and on the other hand, other environmental risks related to the potential damage that activities could cause to the environment.

 

Climate risks

ENGIE is well aware of its responsibilities regarding climate change, which is why it considers its emissions of CO2 and other greenhouse gases to be a major issue. Consequently, a preliminary action plan has been deployed, with international targets and commitments, and detailed reporting.
After adopting the universal Paris agreement on the climate at COP21 in December 2015, COP22, 23, 24 and 25 have drawn up the road maps of the signatory States in detail. Even if much work remains to be done on the conditions of implementation of the agreement, the 1.5°C report of the Intergovernmental Panel on Climate Change (IPCC), published in October 2018, highlights the need to speed up national policies to combat CO2 emissions. The Group is actively preparing for this. 

 

ENGIE is aiming to achieve carbon neutrality of all its direct and indirect greenhouse gas emissions, after the deduction of captured emissions, by 2045. The Group has also set itself a target for avoiding or reducing its customers’ emissions. 
The Group’s climate road map is based on four strong convictions regarding decarbonisation scenarios:

  • Today, the Group’s gas-fuelled energy production assets, or thermal assets, are essential to the security and the balance of the energy systems to which they belong. 
  • In an electricity mix dominated by intermittent renewable energies, the need for flexible solutions to balance the carbon-neutral energy system will increase significantly (a four-fold increase by 2035, according to the IEA in its Net Zero Emissions scenario). 
  • Only thermal assets can offer this flexibility from week to week and between seasons. While pumped storage energy transfer stations can help to supplement these thermal assets, their potential remains limited. Also, batteries are not suited to these time scales. 
  • Gas-powered thermal assets could be totally decarbonised by 2040-2045, thanks mainly to biomethane and renewable hydrogen. These convictions have led ENGIE to adopt a “well-below 2°C” road map, which is in the process of being certified and sets a target of greenhouse gas emissions from energy production (electricity, heat and cold) - scopes 1 and 3 - of a maximum of 43 Mt CO2eq in 2031.

ENGIE has also set itself a new target for the reduction of carbon intensity of 230 g CO2eq/kWh in 2025, then 158 g CO2eq/kWh in 2032. This commitment amounts to reducing the carbon intensity of our energy production by 55% between 2017 and 2030. By way of comparison, a 1.5°C road map by 2030 would entail reducing carbon intensity by 78%. A reduction of this scale would only be possible by selling off many of our assets. These thermal assets could not be shut down without endangering the security of the electricity grid to which they are connected. Therefore, they would continue to emit greenhouse gases. Consequently, ENGIE considers that it is more virtuous to remain a key player in thermal production, while committing to the decarbonisation of these assets using the various technologies (biomethane, carbon capture, and hydrogen, depending on the development of the technology), whose regulatory framework is currently changing at a fast pace (especially in the EU), in order to make the corresponding investments. But it will take about 20 years to fully industrialise these technologies in order to achieve decarbonisation by 2040-2045.
ENGIE’s strategy to reach its net zero carbon target by 2045 is based on several pillars. 

 

  • A complete exit from coal in the short term 

The Group intends to totally abandon coal in Europe by 2025, and in the rest of the world by 2027. ENGIE will prioritise the closure or conversion of its power plants, while taking the social consequences of its decisions on employees and local communities into consideration, in an effort to make a just and fair transition. In 2021, ENGIE finalised the sale of the Jorge Lacerda complex in Brazil, which includes a 0.7 GW coal-fired power plant, and shut down the Tejo power plant in Portugal. In the medium term, ENGIE intends to significantly increase its production of renewable energy, with a renewable capacity target 50 GW in 2025 and 80 GW in 2030, compared with 34.4 GW at the end of 2021. This will enable the Group to reach a proportion of 58% of renewable capacity in its energy production in 2030, by commissioning 4 GW of solar and wind capacity per year between 2022 and 2025, and 6 GW per year between 2026 and 2030. These developments will demand investments of €6 to €7 billion in 2021-2023, up 20% on the period between 2018 and 2020, and the capital employed for the renewables activities should double between 2019 and 2025. 

 

  • The long-term development of renewable gas 

ENGIE intends to gradually decarbonise gas, thanks to biomethane, green hydrogen and CO2 capture techniques, in order to reach its target of 100% of renewable gas by 2045. These technologies will have to receive the necessary public funding in order to become competitive. The development of renewable gas will support that of renewable electricity capacity, which is intermittent by nature, and will optimise investment in a carbon-neutral energy system. Biomethane is part of the circular economy, allows for the deployment of decentralised solutions and creates local jobs. It can be injected into all of the existing infrastructures. Renewable hydrogen, which is produced from renewable energies by electrolysis, will play a key role in decarbonising high-temperature industrial processes and transport. This energy source will have to progress from local production to a European market by benefiting from the conversion of the existing gas infrastructures. This scaling-up will require partnerships and the development of the sector, with market mechanisms and the involvement of the public authorities in particular.

 

  • The decarbonisation of customers and suppliers

ENGIE is committed to supporting 250 of its preferred suppliers, and eventually 1,350 of its major suppliers, in their bid to become certified or aligned with the Science-Based Targets by 2030. This target will cover 20% of total expenditure, with the goal to eventually reach 80%. At the same time, the Group’s involvement in international working groups, like the World Business Council for Sustainable Development (WBCSD ), or the Net Zero Initiative, has enabled it to build a new indicator to measure the decarbonisation of enterprises and public organisations with its peers and NGOs. On the basis of this indicator, ENGIE has set itself the goal of making a 45 MtCO2eq contribution to the decarbonisation of its customers by 2030. In 2021, the Group made a 28 MtCO2eq contribution to the decarbonisation of its customers.

Regarding adaptation to climate change, the Group’s renewable and thermal assets are both exposed to climate change, which can cause damage and shut-downs of production and supply. These outages can last a few hours or days, or even longer, if the production facilities or the transmission networks are damaged. The goal consists of limiting the impacts and protecting the facilities, personnel and customers by taking adaptive actions.
Along with the internal operatives and experts, ENGIE has identified the types of climate-related incidents that impact its facilities and activities: 

  • temperature rises, 
  • heat waves, 
  • drought, 
  • floods, 
  • extreme wind.

ENGIE has also entered a partnership with a renowned meteorological institute (the Institut Pierre Simon Laplace, one of the experts of the IPCC), which has enabled us to obtain precise details and maps of these five types of climate-related impacts between 2030 and 2050. A tool has been developed to rank the exposure of our assets and activities to these climate-related events. We are currently working on an adaptation plan (creation of channels of systematic reporting of impacts, verification of the level of exposure of our assets, analysis of the adaptive actions that could be taken to limit exposure). ENGIE is collaborating with local authorities on this subject. In 2021, a map of the impact of climate change on the production of solar, wind and hydro energy was produced. The Group will conclude this analysis in 2022 with a study of the impacts on thermal activities, the biomass and biogas supply chain and heating and cooling networks.

 

Other environmental risks

In view of the specifics of the environmental spectrum and the diversity of the underlying risks, the environmental risks to which ENGIE’s industrial activities are exposed are analysed every year, as part of a global approach in the Group. This process, which is owned by the CSR Division, identifies and updates the risks to all our activities and draws up a list of the most exposed industrial sites in terms of water, biodiversity, air quality (NOx, SOx and particles), soil and waste management. The map below shows a summary of the results of the risk analysis, based on the data for 2021.

Mapping of environmental risks

Societal risks

The societal risks of our industrial activities are mapped out by talking to the stakeholders in all of the Group’s entities.

In the ENGIE Group, dialogue with stakeholders is one of the cornerstones of project management and the continuation of its activities, with a view to durably creating shared value. Consequently, ENGIE maintains continuous and proactive dialogue with all the stakeholders in its industrial activities. The Group helps its operational entities to expand and structure their practices, on the basis of the existing processes. This support ranges from the definition of strategies for dialogue, to their operational deployment in the project teams.

This support is based on a Group-wide methodology that can be adapted to the strategic, technical and geographic specifics of the operational activities. This methodology is based on international standards, such as ISO 26000, AA1000, the World Bank’s IFC (International Finance Corporation) and the Equator Principles.
It consists of raising awareness and training employees in the structure of dialogue with stakeholders, in collaboration with ENGIE University, the Group’s training organisation. 

 

For more information, go to the “Stakeholder engagement: the Group methodology” page on our website. 

 

Environmental and societal policies

Environmental and societal risks are regularly analysed throughout the company. The environmental and societal policies are implemented in every GBU and regional hub, and on every site. Their implementation is monitored using targets and action plans that are reviewed every year. This review process guarantees that we fulfil our obligations in terms of environmental and societal diligence.

 

Environmental policy

The major environmental risk to the Group is the climate, followed by biodiversity, water and pollution. These global and local environmental risks are analysed every year at head office and locally, in order to draw up a list of sites that are “at risk”. 
The environmental policy takes this risk analysis fully into account. Controlling CO2 emissions is a major challenge for the Group, which has developed a specific action plan. This plan is completed by international targets and commitments that are reported in detail. The environmental policy also aims to launch action plans to avoid, reduce and, if necessary, offset the environmental impacts of the Group’s activities. 
The ENGIE Group environmental policy specifies:

  • the Group’s environmental challenges.
  • the steps the Group has taken to address these challenges and improve its performance.
  • the governance that supports its implementation.

It is completed by five theme-based policies (the climate, biodiversity, water and the circular economy) that define in detail the specific commitments and targets in these fields.

 

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Societal policy

While it cannot be denied that our projects have a strong impact on communities, it is also increasingly true that citizens now want to be considered as stakeholders in their own right, and they are demanding more consultation and involvement in projects that impact them. 
ENGIE has responded proactively to these two observations, even before recent regulatory changes, by placing societal issues at the very heart of its business model. ENGIE has written its commitment to having a positive impact on people into its articles of association, in the form of its corporate purpose. The Group has extended its societal policy by gradually incorporating societal factors as a means of optimising its business.
The societal policy defines: 

  • The societal challenges facing the Group
  • The steps taken to address these challenges
  • The governance that oversees the implementation of the Group’s societal policy

 

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The incorporation of CSR in investment decisions

The process to implement CSR at ENGIE allows the climate-related, environmental and societal dimensions to be taken into consideration throughout the life cycle of a project, from the pre-development phase, to construction, operation, maintenance and dismantling.
 
It guarantees the quality and transparency of the CSR information submitted to the decision-making committees, it clearly identifies the main CSR-related risks and opportunities and it also enables them to be addressed throughout the project’s life cycle.

  • The CSR check list for preliminary decisions: the check list of the criteria is based on a traffic light-type indicator. It measures the importance of the criterion represented by the question to the success of the project. It is advisable to use the check list of CSR-related criteria right from the preliminary decision stage in order to identify the potential risks and the points requiring particularly close attention and to define an appropriate development budget. These questions, which are aligned with the assessment matrix of the CSR-related criteria of investments, are a starting point for the collection of the data that is used to justify the score allocated in the matrix. 
  • The CSR matrix in the investment rating stage: by focussing on the material criteria for the Group, this matrix assesses the risks and opportunities of projects in relation to CSR-related questions. The assessment of each one of these nine criteria identifies the risks and opportunities to be addressed and managed.  Completing this matrix and meeting all the criteria that cover material CSR subjects for the Group enables ESG-related factors to be considered in the investment decision and supports the licence to operate of the project. 
  • Annual environmental and societal plans during construction, operation, maintenance and dismantling: these annual plans monitor the action plans that are implemented further to the risk analysis and make sure that the environmental and societal dimensions are addressed.

All these operational tools meet the demand to show due diligence and demonstrate the coherence of our corporate purpose.  

 

Governance

The Ethics, Environment and Sustainable Development Committee of the Board of Directors oversees environmental and societal issues in the Group.

 

Oversight of the CSR policy

Actions are taken on the appropriate level and in collaboration with the stakeholders for all the identified risks. 
In the event of an incident, procedures exist to:

  • inform and mobilise all the players concerned at ENGIE as quickly as possible
  • establish dialogue with the stakeholders and NGOs
  • take remedial steps, without waiting for any legal decisions.

In 2021, 37% of activities, projects, industrial sites and sites being dismantled were covered by an environmental action plan. The objective is to reach 100% by 2030.  

In 2021, 36% of activities, projects, industrial sites and sites being dismantled were covered by appropriate means of establishing dialogue and discussions. The objective is to reach 100% by 2030.
  
For more information, go to the “Stakeholder engagement: the Group methodology” page on our website. 
 
The process to incorporate CSR in investment decisions

In 2021, the process to incorporate CSR in investment decisions was reinforced, in response to the mechanism for recourse comprising members of civil society, enterprises and local authorities, tasked with supporting sensitive projects. This culture of listening and establishing dialogue is extended through our societal and environmental partners, which include France Nature Environnement, Emmaüs and the Fondation ONE (Océan Nature et Environnement). On the international stage, ENGIE is a member of the United Nations Global Compact, in the Global Compact Advanced category. 

 

Report on operational implementation

The management of the activities in operational projects includes the establishment of dialogue with their stakeholders according to the Group methodology.

LPG storage tanks in Ajaccio

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For example, as part of the renovation of the LPG storage tanks in the town of Ajaccio in southern Corsica: the project has set up actions to provide information on the industrial activity to the region, and actions for the preservation of the environment. Local residents and environmental associations were informed of the nature and schedule of the work a few months before it began during several information and discussion meetings. In addition, the project has set up a partnership with the Conservatoire des Espaces Naturels de Corse (Association for the protection of natural areas of Corsica) for the delegation of the management of its compensation sites. The University of Corsica is involved in the scientific reflection on the preservation of protected species.
The project provides continuous information on the progress of the project via its website and more directly through the frequent contacts and discussions that the project ensures with its stakeholders.

The Hazelwood power plant in Australia

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The Hazelwood power plant in Australia was shut down in March 2017 and since then ENGIE has been conducting a project to rehabilitate the site: The plant is being dismantled and the mine will be turned into a lake.

Dismantling activities at the plant are expected to be completed in the first half of 2018. The latest rehabilitation form for the adjacent mine is subject to extensive consultation with the regulatory authorities, the local community and other stakeholders.
The plant employed 750 people. Regarding the transfer of workers, ENGIE has worked with the unions and local authorities to develop and implement a worker transfer programme to best ensure the employment of laid-off workers at other power plants in the Latrobe Valley.
Communication and stakeholder engagement tools include a dedicated website, quarterly community forums, stakeholder briefings, media coverage, advertisements and public information booths.

Local communities

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ENGIE remains committed to local communities through its extensive long-term partnership programmes, focusing on youth development, education and other support activities in the Latrobe Valley.
Similarly, the Group has rehabilitated an industrial site into a new biodiversity area in Belgium, in the Hénâ region.