5 Top US Utilities Lag in Climate Change Readiness

05.15.2017 50/50 Climate Project

Five of the largest US utilities are unprepared for the economic risks of climate change, according to a new report by the 50/50 Climate Project and The Sustainable Investments Institute (Si2).

Duke Energy, Southern, FirstEnergy, DTE Energy and American Electric Power are not pursuing business strategies consistent with the scientific realities of climate change and the accompanying financial, strategic, operational and competitive risks.

“Investors expect corporate boards at utilities with elevated climate risk to transparently tackle climate change in their governance, director education and nomination processes. They also want more better quality public disclosure and more robust stakeholder engagement.”

– Edward Kamonjoh, 50/50 Climate Project Executive Director

The utilities also have not meaningfully accounted for key business implications or opportunities. Instead, these firms have focused on narrow legislative and regulatory climate affairs, while simultaneously working to thwart forward-looking policy and regulatory solutions via political involvement.

The report identifies five key elements that characterize viable transition plans, irrespective of regional and regulatory differences:

1. Acknowledge climate change and its exigencies

2. Commit to International Energy Agency targets for emissions intensity

3. Work transparently to reform obstructive regulation

4. Collaborate with stakeholders

5. Align incentives with transition goals

This comprehensive, 62-page study builds on work Si2 published in 2016 with the IRRC Institute, examining the climate change orientation of the 25 largest investor- owned utilities, allowing investors to make informed judgments. Download the full study here.