American Eelectic Power

AEP has set a target to reduce its absolute scope 1 emissions by 80% by 2030 compared to 2005, which is almost aligned with the company’s 1.5°C pathway. However, the company’s target to achieve net-zero scope 1 and 2 emissions by 2045 is not ambitious enough to align with a 1.5°C pathway. The company should be aiming to reach net zero by 2035, which is consistent with the International Energy Agency’s (IEA)’s recommendation for electricity generation companies in advanced economies. The company has not set any targets to reduce its scope 3 emissions from purchased power, which account for a significant proportion of the company’s total emissions.

Between 2017 and 2022, AEP reduced the emissions intensity from its own electricity generation but not at a sufficient rate to align with its 1.5°C pathway. This was primarily due to a reduction in coal generation and an increase in renewables. To align with a 1.5°C pathway, the company should more than double its current rate of emissions reduction between 2022 and 2027; however, the company is not projected to make significant reductions in its emissions intensity over the next five years. Based on current and planned assets, the company is projected to significantly exceed its 1.5°C carbon budget over the period 2022-2037. The company should accelerate its coal phase-out, reduce its gas capacity and rapidly expand its renewable energy generation to remain within its budget.

AEP has established a process to review its trade association memberships to ensure the positions of these associations are consistent with the Paris Agreement goals. However, the company has not outlined a clear process for withdrawing from associations that are not aligned. The company is a member of three associations that have held climate-negative positions and opposed climate policies. These include the National Association of Manufacturers, which staunchly opposed the Inflation Reduction Act, and the US Chamber of Commerce, which opposed the US Securities and Exchange Commission’s (SEC’s) proposed climate disclosure rules.

AEP is aiming to achieve net-zero emissions by 2045 and has set an interim target to reduce its scope 1 emissions by 80% by 2030 compared to 2005. The company has not set any targets to reduce the upstream emissions associated with its purchased power.

AEP is reducing its coal capacity with plans to stop burning around 4.8 GW of coal for electricity generation between 2023 and 2028. The company plans to add 15 GW of renewable capacity by 2032 to grow its carbon-free capacity to 61% of its total energy. AEP is also investing in modernising and strengthening the grid and plans to use offsets to neutralise emissions in the long term.

AEP is investing USD 9 billion between 2023 and 2027 to expand its regulated renewables generation. The company states that it is monitoring various technologies to facilitate its long-term low-carbon transition, including carbon capture and storage (CCS) and small modular nuclear reactors (SMRs).

AEP has retired or sold around 13.5 GW of coal capacity over the last ten years. The company has successfully reduced the emissions intensity of its electricity generation from 2017 to 2022, but not at a sufficient rate to align with its 1.5°C pathway. To align, the company will have to more than double its emissions reduction rate over the next five years.

AEP has taken steps to transition away from carbon-intensive activities. Although its 2030 target is almost aligned with its 1.5°C pathway, its 2045 net-zero target is not. To align, the company should be aiming to reach net zero by 2035 in line with the IEA’s recommendation for electricity generation companies in advanced economies. AEP has not committed to phasing out coal and anticipates that coal will still account for 19% of its energy capacity in 2032.

The company commits to engaging in social dialogue with workers and unions. It also discloses the categories of stakeholders it engages with on a just transition, including employees, customers, investors and communities. While the company discloses the steps it takes to engage with identified stakeholders, no evidence that it demonstrates social dialogue and meaningful engagement with stakeholders on all aspects of a just transition. The company reports time-bound target to support communities on the plant transition. However, no evidence was found of the company undertaking low-carbon transition planning to mitigate the social impacts of the transition on workers and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

The company has a commitment to create and support access to green and decent jobs as part of the low-carbon transition. Moreover, the company also assesses and discloses the risks of employment dislocation caused by the low carbon transition and related impacts on workers and affected stakeholders. The company discloses the actions it takes to increase re-employment opportunities after closure of plants. However, no evidence was found of the company’s action to promote these jobs in a way that ensures gender balance and inclusion of vulnerable groups. The company has a commitment to re- and up-skill workers and stakeholders affected by the low-carbon transition and discloses the actions it takes in this regard. Furthermore, the company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. It does this through offering training and mentorship programs for female line workers. However, no relevant disclosure was found of a process for identifying skills gaps for workers and affected stakeholders in the context of the transition.

The company demonstrates how it contributes to addressing the impact of the low carbon transition on workers’ and affected stakeholders’ social protection in which it operates. However, no relevant disclosure was found to show if the company identifies impacts of the low-carbon transition on social protection for workers and affected stakeholders. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders. The company discloses its process for understanding the alignment of its lobbying activities with policies and regulation that support the just transition. However, no evidence found that the company identifies any misalignment, nor of the measures it takes to address misalignment. The company does lobby for just transition policies and regulations.

The company commits to respecting human rights. However, no evidence that the company commits to respecting the ILO fundamental rights at work, nor does it expects its business relationships to respect the same commitment. No evidence was found of the company’s process to identify, assess and mitigate salient human rights risks in its own operations and supply chain. Moreover, no evidence was found of the company disclosing the stakeholders whose human rights have been affected by its activities. The company does, however, have a grievance mechanism available to workers and external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment of its business relationships. However, no evidence was found of a time-bound target for paying all workers a living wage. No evidence was found that the company discloses the proportion of its direct workforce covered by collective bargaining agreements and the company’s required working hours. The company discloses some indicators of workforce diversity, including the age and gender of its workforce by employee category. However, no relevant disclosure was found of additional indicators of workforce diversity by employee category. The company commits to gender equality and women’s empowerment.

No evidence was found that the company commits to protecting personal data and that it has a privacy statement regarding the collection, sharing and access to personal data. While the company discloses its corporate income tax paid for each relevant jurisdiction, no relevant disclosure was found of the global tax strategy. The company does have a policy prohibiting bribery and corruption, and it includes corresponding clauses in its contracts with business relationships. While the company has a lobbying and political engagement policy, no evidence that it specifies that it does not make political contributions. The company discloses its expenditure on lobbying activities.