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 2016 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, and the GEM Business Unit, in charge of energy purchasing.
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 stakeholders and NGOs
- 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.
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.