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Energy utilities’ sustainability priorities may vary based on multiple factors, including geographic footprint, asset ownership, business structure and operational activities. In the North American electric power industry, approaches to sustainability continue to evolve in response to emerging risks, changing climate conditions, shifting stakeholder sentiments, market dynamics and regulatory drivers.
For energy utilities looking to establish or update a sustainability program, EPRI’s report, Sustainability Priorities for the North American Energy Utility Industry: 2023-2024, can offer insights on industry trends, stakeholder interests and peer activity. The report is also a resource for energy utilities looking to develop further or expand their organization's sustainability programs or governance structures. The 2023-2024 version is the fourth iteration of sustainability priorities in a series of reports first published in 2013 and last published in 2021.
Competing stakeholder demands and the expansive characterizations of sustainability can make it challenging for utilities to prioritize and appropriately allocate resources to their programs. Understanding sustainability priorities at the industry level can help shape and direct a company-specific sustainability program, much like a materiality assessment can drive core business strategy.
The current report assessed how sustainability priorities have changed over the past three years and refined the list to ensure the most relevant, usable and manageable priorities were identified. The report also highlighted sustainability as an opportunity for energy utilities to build resilience and long-term strength. Researchers described 17 sustainability priorities in the 2024 report through a three-stage methodology that incorporated interviews, surveys, workshops and literature reviews.
Defining sustainability priorities as environmental, social and economic priorities that have the potential to impact long-term value creation for energy utilities and their stakeholders, the study investigated:
● The energy utility industry and external energy stakeholders’ views on sustainability priorities;
● The importance of each priority on electric power sector sustainability; and,
● The performance of energy utilities on each priority, seeking to identify gaps that can indicate opportunities
A broad set of respondents participated in the study, including utility and non-utility stakeholders. Generally, the two respondent groups were aligned and ranked similarly regarding sustainability priorities. Overall, the results from both groups were in agreement on the top three priorities: climate resilience and adaptation, energy reliability and resilience and decarbonization. Respondents also believed the importance of these three priorities, plus energy access and affordability, will significantly increase over the next three years. Although respondents did not rate equity and environmental justice as top priorities in 2024, most agreed its significance will notably increase.
There were some differences in the current report as compared to past years. The 2024 refresh updated the previous priority of climate change to climate resilience and adaptation. Adaptation encompasses the ability to react to the risks posed by climate change. At the same time, resilience was added to capture the implied operational challenges of grid hardening, decarbonization and business resilience.
Other priorities also evolved from the previous 2021 report. The financial health priority now focuses on the relationship between sustainability and economic performance. The 2021 priority of greenhouse gas emissions evolved into decarbonization, which combines clean energy strategies with greenhouse gas reductions. Equity and environmental justice, a new addition to the list, emerged from the workshop and discussions on its growing significance. Respondents believe it is separate and distinct from diversity, equity, and inclusion, as it is more external-facing and focuses on the environments that intersect with business activities. The impact companies have on the communities they serve.
The research continues to validate a significant shift in the industry’s approach to sustainability over the past few years. Today, stakeholders view sustainability as an opportunity for utilities to enhance long-term value creation. Cross-industry collaboration and partnerships can provide additional value when energy utilities organize their sustainability initiatives. As the understanding of sustainability continually evolves, it is also helpful for utilities to acknowledge the gaps between their perceptions and their stakeholders’ views to inform strategic decision-making and resource allocation better.
Energy utilities can adopt the industry-level sustainability priorities from this study or use the list as the foundation for their assessments. Recognizing that sustainability priorities have the most impact when translated into concrete actions with targets and timelines, EPRI’s next steps will involve metric analyses to monitor and measure progress. EPRI intends to develop resources and tools to support organizations in applying sustainability priorities and informing strategic decision-making.
Competing stakeholder demands and the expansive characterizations of sustainability can make it challenging for utilities to prioritize and appropriately allocate resources to their programs. Understanding sustainability priorities at the industry level can help shape and direct a company-specific sustainability program, much like a materiality assessment can drive core business strategy.
The current report assessed how sustainability priorities have changed over the past three years and refined the list to ensure the most relevant, usable and manageable priorities were identified. The report also highlighted sustainability as an opportunity for energy utilities to build resilience and long-term strength. Researchers described 17 sustainability priorities in the 2024 report through a three-stage methodology that incorporated interviews, surveys, workshops and literature reviews.
Defining sustainability priorities as environmental, social and economic priorities that have the potential to impact long-term value creation for energy utilities and their stakeholders, the study investigated:
● The energy utility industry and external energy stakeholders’ views on sustainability priorities;
● The importance of each priority on electric power sector sustainability; and,
● The performance of energy utilities on each priority, seeking to identify gaps that can indicate opportunities
A broad set of respondents participated in the study, including utility and non-utility stakeholders. Generally, the two respondent groups were aligned and ranked similarly regarding sustainability priorities. Overall, the results from both groups were in agreement on the top three priorities: climate resilience and adaptation, energy reliability and resilience and decarbonization. Respondents also believed the importance of these three priorities, plus energy access and affordability, will significantly increase over the next three years. Although respondents did not rate equity and environmental justice as top priorities in 2024, most agreed its significance will notably increase.
There were some differences in the current report as compared to past years. The 2024 refresh updated the previous priority of climate change to climate resilience and adaptation. Adaptation encompasses the ability to react to the risks posed by climate change. At the same time, resilience was added to capture the implied operational challenges of grid hardening, decarbonization and business resilience.
Other priorities also evolved from the previous 2021 report. The financial health priority now focuses on the relationship between sustainability and economic performance. The 2021 priority of greenhouse gas emissions evolved into decarbonization, which combines clean energy strategies with greenhouse gas reductions. Equity and environmental justice, a new addition to the list, emerged from the workshop and discussions on its growing significance. Respondents believe it is separate and distinct from diversity, equity, and inclusion, as it is more external-facing and focuses on the environments that intersect with business activities. The impact companies have on the communities they serve.
The research continues to validate a significant shift in the industry’s approach to sustainability over the past few years. Today, stakeholders view sustainability as an opportunity for utilities to enhance long-term value creation. Cross-industry collaboration and partnerships can provide additional value when energy utilities organize their sustainability initiatives. As the understanding of sustainability continually evolves, it is also helpful for utilities to acknowledge the gaps between their perceptions and their stakeholders’ views to inform strategic decision-making and resource allocation better.
Energy utilities can adopt the industry-level sustainability priorities from this study or use the list as the foundation for their assessments. Recognizing that sustainability priorities have the most impact when translated into concrete actions with targets and timelines, EPRI’s next steps will involve metric analyses to monitor and measure progress. EPRI intends to develop resources and tools to support organizations in applying sustainability priorities and informing strategic decision-making.
