The Electric Utilities Benchmark 2023 presents a ranking of 68 keystone electric utilities companies based on an Assessing low-Carbon Transition (ACT) assessment and a social assessment comprising Core Social and Just Transition Indicators. Additionally, 11 capital goods companies are also assessed but not included in the ranking.
The ACT assessments measure the companies’ degree of alignment to the low-carbon transition, in line with the 1.5°C Paris Agreement temperature goal. The social assessments measure whether the companies are transitioning in a just and equitable way.
Details of how WBA integrates the two assessments to calculate the total score can be found in the WBA Electric Utilities 2023 methodology report.
This framework proposes indicators used to develop sector-specific methodologies. The modules can have past, present or future orientation, and cover a company’s targets, material investment, intangible investment, management, policy engagement and business model shift. The ACT electric utilities methodology has been translated by the WBA to create this benchmark.
The performance of the 50 companies varied quite widely across the modules and indicators. It was observed that some companies with a strong performance overall are performing well against certain indicators, and yet are performing poorly against others.
Many of the companies were able to demonstrate that they had reduced emissions intensity from 2013 – 2018. However, the overall performance of the keystone electric utilities in this benchmark is compromised by generally poor performance in modules relating to targets setting and intangible (low-carbon R&D) investment that would reflect readiness for the low-carbon transition, as well as the indicator on locked-in carbon emissions. Each module ranking page contains more in-depth insight into companies’ performance.
The narrative score provides a holistic analysis of a company and rates the maturity of the companies’ low-carbon transition against four key criteria: business model and strategy; consistency and credibility; reputation; and risk (using RepRisk).
17 companies received an E (the lowest rating), 18 received a D, 6 received a C, 8 received a B and only the leading company in the benchmark, Ørsted, managed to achieve an A rating. This paints a clear picture that the majority of keystone electric utilities are not prepared for the rapid transition required to achieve the Paris Agreement goals.
Some notable findings were drawn:
Clear discrepancies exist between some companies’ climate rhetoric and the reality; for example, Korea Electric Power Company and NTPC’s plans to expand renewables were undermined by plans to significantly expand coal capacity as well;
Persistent environmental regulation violations and pollution of local ecosystems was a problem for some companies such as China Huaneng Group, Taiwan Power Company and NTPC. Korea Electric, Kansai Electric Power Company and Saudi Electric have all been involved in corruption and bribery cases, which may undermine the effectiveness of their climate governance. Coal has been a target for activists, both for its impact on local air quality and for its high carbon emissions. As a result, until they close their coal assets Uniper and RWE are likely to have a poor reputation on climate issues, which can undermine their climate credibility with their stakeholders, particularly consumers.
Companies with smaller generation capacity, E.ON and Ørsted, do have main business models that are likely to remain profitable in the low-carbon economy. However, 35 of the 50 keystone companies assessed derived over half of their electricity generation from fossil fuels in 2018.
The trend assessment saw 33 companies receiving a “-”, 12 receiving an “=” and only 5 receiving a “+”. Our first key finding provides more in-depth insight into these results.
