The Group's CSR vigilance approach

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Within the general framework of its missions, the CSR Division, along with the other Divisions concerned, has redefined in 2020 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 the reduction of its CO2 emission and other greenhouse gases (GHG) 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, the following COPs have clarified the roadmaps of the signatory States. Even if much work remains to be done on the conditions of implementation of the agreement, the report of the Intergovernmental Panel on Climate Change (IPCC) from February 2022, confirms that climate change is a threat to human well-being and the health of the planet and that short-term action is needed. The Group is actively preparing for this. 
ENGIE has set itself the goal of achieving Net Zero Carbon across its entire value chain (scopes 1, 2 and 3) by 2045, via a "well-below 2°C" trajectory certified by the Science Based Target initiative (SBTi) in February 2023. In this way, the Group will reduce its direct and indirect greenhouse gas (GHG) emissions by at least 90% by 2045 compared to 2017. At the same time, it intends to work on developing carbon sinks so as to neutralise its residual emissions over the long term, thus contributing to the right level of global carbon neutrality. The Group is also committed to supporting its customers in reducing their GHG emissions in order to accelerate the decarbonisation of its own value chain.
The Group’s climate roadmap is based on 4 strong convictions regarding decarbonisation scenarios:

  • The Group's gas-fired generation assets (CCGTs) are today essential to the security and balance of the energy systems of which they are a part. In 2022, for example, the gas assets played a central role in balancing the French electricity system, in a context of strong tension on supply.
  • In an electricity mix dominated by intermittent renewable energies, the need for flexibility solutions to ensure the balance of the energy system will increase significantly (they are multiplied by 4 in 2035 according to the IEA in its Net Zero Emission scenario). In the medium term, only thermal assets can provide this flexibility on an intra-week and inter-seasonal basis.
  • In the long term, the fleet of thermal assets will progressively decrease (end of life of power plants partly replaced by renewable generation) but the remaining assets will participate in the balancing of the system (peak assets). In addition, gas-fired power plants will be decarbonised by 2040-2045 thanks in particular to biomethane and renewable hydrogen.
  • Already certified according to a 2°C trajectory by the Science Based Target initiative (SBTi) since 2020, ENGIE received its new "well-below 2°C" certification at the beginning of 2023 with new targets for 2030. ENGIE has set a target for reducing the carbon intensity of energy generation and consumption (scope 1 and 2) that goes beyond the SBTi requirements with a commitment of -66% over the period 2017-2030 instead of the -55% required by the SBTi.
    However, the forecasts for the use of gas-fired power plants do not, for the moment, allow ENGIE to commit to a 1.5°C trajectory, which would require a 78% reduction in carbon intensity over the same period. Such a reduction could not be achieved without the sale of assets. Indeed, the latter could not be closed, under penalty of jeopardising the security of the electricity system to which they contribute. They would therefore continue to emit GHGs. ENGIE is thus playing its role as an industrial company committed to the energy transition, by remaining at this stage a key player in thermal production resolutely committed to decarbonising these assets with various technologies (biomethane, carbon capture and, depending on technological developments, renewable hydrogen). To fully industrialise these technologies, despite promising developments in the regulatory framework (particularly in the EU), we consider that the credible horizon is 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 the medium term, a significant development of renewable energy production

ENGIE is targeting 80 GW of renewable capacity in 2030 and 50 GW in 2025 (compared to 34.4 GW at the end of 2021). This will enable the Group to reach 58% of renewable capacities in its energy production in 2030 with targets of 4 GW per year of solar and wind capacities commissioned over 2022-2025 and 6 GW per year over 2026-2030. This development should mobilise €13-14 billion of investment over the period 2023-2025, representing 55% to 65% of the group's growth investments.

 

  • The long-term development of renewable gas 

ENGIE intends to gradually decarbonise gas through biomethane, green hydrogen and CO2 capture techniques. These technologies will have to receive the necessary public support to become competitive. The development of renewable gases will make it possible to accompany the development of renewable electrical capacities, which are essentially intermittent, and to optimise investments with a view to a carbon neutral energy system. Biomethane is part of a circular economy logic: it allows the deployment of decentralised solutions and the creation of local jobs. It can be injected into all existing infrastructures. ENGIE has set a target of 10TWh of biomethane production in Europe by 2030. Renewable hydrogen produced by electrolysis from renewable energies will be key to decarbonising high temperature industrial processes and transport. ENGIE will allocate €4 billion of investments to the development of renewable hydrogen over the period 2023-2030 and is targeting a hydrogen production capacity of 4GW by 2030. The sector should move from local production to a European market benefiting from the conversion of existing gas infrastructures. Scaling up will require the establishment of partnerships, the development of the sector, including the need for market mechanisms and the mobilisation of public authorities.

 

  • The decarbonisation of customers and suppliers

ENGIE is committed to supporting its top 250 preferred suppliers (excluding energy purchases on the markets) so that they are all certified or aligned with the Science Based Target by 2030. This would cover 20% of the Group's purchases in terms of expenditure. By the end of 2022, 23% of the top 250 preferred suppliers were already certified or aligned.
At the same time, the Group is involved in international working groups such as the WBCSD (World Business Council for Sustainable Development) and the Net Zero Initiative, which has enabled it to build a new indicator to measure the decarbonisation of companies and public players with peers and NGOs. On the basis of this indicator, ENGIE has set itself the objective of contributing to decarbonising its customers by 45Mt CO2 eq. by 2030.

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:

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

ENGIE has also entered into a partnership with a renowned meteorological institute (Institut Pierre Simon Laplace, member of the IPCC experts), which has enabled us to obtain refined data and maps on the evolution of these 4 types of climate impacts in 2030 and 2050. A tool was developed to classify the exposure of assets and activities to these climate events. Work on the adaptation plan is underway (implementation of systematic impact reporting, verification of asset exposure levels, study of adaptation actions to be considered to limit exposure). In this context, ENGIE is working with local authorities. In 2021, the impact of climate change on the evolution of solar, wind and hydro power production has been mapped. In 2022, the Group has concluded this analysis with the impact study for thermal activities, the biomass supply chain, and for heat and cooling demand. In 2023, all this data will be deployed at the most local level of the Group to increase the resilience of all our sites.

 

Other environmental risks

Given the specific nature of the environmental field and the diversity of the underlying risks, an analysis of the environmental risks of ENGIE's industrial activities is carried out each year as part of a global approach within the Group. This approach, led by the CSR Department, makes it possible to identify and update the risks for all activities and to define the list of the most exposed industrial sites in terms of water, biodiversity, air quality (NOx, SOx and particles), soil pollution and waste management. The map below presents the synthetic results of the risk analysis based on 2022 data.

CSR map

Societal risks

Societal risks are mapped at the level of industrial activities, in particular through a dialogue process with stakeholders deployed in all Group entities.

The ENGIE Group has made dialogue with stakeholders a cornerstone of its project management and business operations in order to create sustainable and shared value. Thus, ENGIE maintains a continuous and proactive dialogue with all stakeholders around its industrial activities. On the basis of existing approaches, the Group supports its operating entities in deepening and structuring their practices. This ranges from the implementation of dialogue strategies to their operational deployment in 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

From an environmental point of view, the major risk for the Group is climate risk, followed by biodiversity, water and pollution risks. These global and local environmental risks are studied annually at the central level and at the sites in order to identify the risks for each site. 
The environmental policy fully integrates this risk analysis. Controlling its CO2 emissions is a major challenge for the Group, which has led it to set up a specific action plan. This plan is supplemented by international objectives and commitments that are the subject of detailed reporting. The environmental policy also aims to respect the sequence Avoid, Reduce and, if necessary, Compensate for the environmental impacts of the Group's activities, with monitoring being carried out through the action plans.
The ENGIE Group's environmental policy specifies:

  • the Group's environmental challenges.
  • the means implemented by the Group to meet its challenges and improve its performance.
  • the governance that contributes to its implementation.

It is completed by 5 thematic policies (climate, biodiversity, water, forestry and circular economy) which detail the commitments and objectives made specifically in these areas.

 

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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 2 observations, even before recent regulatory changes, by placing societal issues at the very heart of its business model. ENGIE, through its corporate purpose, enshrined in its articles of association its commitment to having a positive impact on people. 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, to avoid and reduce the potential impacts 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 focusing 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 “license 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. The implementation of the action plans is subject to a progressive deployment target.

 

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 interested
  • take remedial steps, without waiting for any legal decisions.

In 2022, 53% of activities, projects, industrial sites and sites being dismantled were covered by an environmental action plan established in collaboration with the stakeholders. The objective is to reach 100% by 2030.  
In 2022, 46% 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. 

 

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.

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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.