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Asset Management: Experience with Sustainability Reporting

Canadian utility Hydro-Quebec uses sustainability reporting to disclose its economic, environmental, and social performance. Availability of this information allows the utility, its customers, and the public to objectively measure its performance.

Sustainability reporting provides a method for communicating a broader picture of a company's performance, beyond financial performance. A company calculating its overall economic, environmental, and social performance can use this data to benchmark its performance against competitors, track company trends, and make operations more transparent for customers and the public.

Several systems are available for measuring sustainability. One of the most widely recognized and used is the Global Reporting Initiative (GRI). The GRI – an initiative of the U.S.-based non-governmental organization Coalition for Environmentally Responsible Economies and the United Nations Environment Program – was launched in 1997. The goal of the GRI is to develop a globally-accepted standard for sustainability reporting. Businesses, non-profit groups, accounting bodies, trade unions, and investor organizations throughout the world use the initiative.

In 2000, the GRI released its first Sustainability Reporting Guidelines, which provide a basis that businesses can build upon to create a customized report. In 2007, the GRI published G3, the most current (third) edition of these guidelines. G3 integrates the notion of materiality and technical protocols. (Materiality means the information reported should cover topics and indicators that reflect the organization's significant economic, environmental, and social effects or that would substantively influence the assessments and decisions of stakeholders.) Each protocol addresses a specific indicator and provides detailed definitions, procedures, formulas, and references. Examples of indicators include: direct economic value generated and distributed; strategies, current actions, and future plans for managing effects on biodiversity; and percentage and total number of business units analyzed for risks related to corruption.

Why sustainability reporting?

Financial reports are compiled for the benefit of a company's shareholders. Sustainability reports, on the other hand, include information of interest to non-governmental organizations, employees, customers, advocacy groups, trade unions, community members, and others. By compiling information representing quantitative and qualitative performance indicators into one report, a company can satisfy the information needs of these groups. By providing such "proof of performance," companies can strengthen their reputation and competitiveness in the marketplace.

For Hydro-Quebec, sustainability reporting is a good way to show how its hydro projects fulfill three conditions: profitable under market conditions, environmentally acceptable, and well-received by local communities. Sustainability reporting, which the company began practicing in 1995, offers an opportunity to present the results of the utility's major projects in regard to these three conditions.

The decision to make Hydro-Quebec's environmental practices public arose from a desire to be more understood by and visible to customers and the public. The goals were to communicate that Hydro-Quebec strives to ensure its hydro projects and all other activities are well-managed and well-known.

What is reported?

Each year, Hydro-Quebec provides information on 42 profile disclosures and 79 performance indicators. The profile disclosures are qualitative information that sets the overall context for understanding organizational performance, such as its strategy, profile, and governance.

The performance indicators fall into three categories: economic, environmental, and social. Economic data included in the report and posted on the company website1 includes electricity sales, net income, direct jobs supported by procurement of goods and services, and total acquisitions of goods and services. Environmental data reported includes atmospheric emissions of greenhouse gases from electricity generation, spills reported to authorities, and environmental non-compliance notices. Social data reported includes the size of the permanent workforce, frequency of work-related accidents, percent of payroll invested in training, and overall customer satisfaction index.

Hydro-Quebec compares data over a four-year period to show trends, such as an increase in electricity generated and purchased or more money provided for donations and sponsorships.

Gathering and analyzing the data, writing and editing the company's annual Sustainability Report, and updating the website is completed by staff in Hydro-Quebec's corporate affairs and general secretary group. About 150 people within the company provide information for the report. In addition, the company makes this information available on its sustainability website, which includes a GRI section.

Lessons learned

With more than 15 years of practicing sustainability reporting, Hydro-Quebec has learned several valuable lessons. Among these is the fact that a gradual approach is better than trying to report on every metric in the first year. Instead, it helps to choose the most important or relevant indicators. Concentrating efforts on these indicators enables a company to provide accurate information.

Also, external quality control adds value to the process. Hydro-Quebec hires an outside company to carry out an independent verification of the validity of some of the quantitative information published in its annual Sustainability Report.

Continuing to evolve

The practice of sustainability reporting will continue to evolve for years to come. Hydro-Quebec anticipates that its data collection process will continue to improve each year.

Over the coming years, Hydro-Quebec faces the challenge of convincing consultants and business partners outside the company to report their activities, allowing the utility to provide a more well-rounded sustainability report. Another challenge will be to respond more precisely to the expectations of the company's stakeholders, including improving our sustainable development communication tools. For example, in 2006 the provincial government adopted a sustainability law. This legislation required Hydro-Quebec to publish a Sustainability Action Plan before March 31, 2009. The company now must commit to objectives for the next four years, report publicly on whether it achieved those objectives, and provide reasons if the objectives were not met.

The ultimate goal is to be more understood and more visible to customers and the public.

Note

  1. www.hydroquebec.com/sustainable-development/gri/index.html. 

Examples of Hydro-Quebec's Quantitative Performance Indicators 

Environmental

Social


Developing Guidelines for Electric Utilities 


Guy Lefebvre and Dominic Marchand are environmental performance advisors and Gilles Favreau is manager, general secretariat and access to information with Hydro-Quebec. 

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