ENGIE

Engie has an established and profitable business segment offering energy solutions to clients. Low-carbon energy efficiency services account for around 5% of the company’s revenue. Additionally, Engie has committed around USD 3.2 billion in capital expenditure (CapEx) for growing this segment between 2023 and 2025, equivalent to around 13% of total growth CAPEX. The focus of this segment is installing decentralised energy networks, including on-site solar and energy storage, and installing heating and cooling networks. The company plans to add installed assets with a total capacity of eight gigawatts (GW) to these decentralised networks by 2025 compared to 2020.

Engie aims to reduce the emissions intensity of its energy sales (produced and purchased) by 56% and the intensity of its direct energy production by 67% by 2030 compared to 2017. This target has been validated by the Science Based Targets initiative (SBTi) as being aligned with a well-below 2°C pathway. The company also commits to achieving net-zero emissions across its value chain by 2045. However, to align with its 1.5°C pathway, the company needs to increase the ambition of its targets. For example, to align the company should aim to reduce its energy production emissions intensity by approximately 80% by 2030.

Engie has created a detailed transition plan informed by scenario analysis which includes quantified and time-bound targets and clear financial commitments. The company identifies its key decarbonisation levers and outlines how they will contribute to emissions reductions between now and 2030. However, the company’s transition planning lacks detail for the period 2030-2045. Engie can improve its performance in this area by setting interim targets between 2030 and 2045 and providing more detail on its planned growth of biogas and green hydrogen and carbon capture and storage (CCS) in this period.

A key pillar of Engie’s transition plan is the development of “green gases” (primarily biomethane and green hydrogen) to allow the company to decarbonise its existing gas generation and its gas network and supply business. Although these technologies are yet to be tested at scale, Engie is investing significantly in their development. Engie has committed around USD 4.2 billion to expand its hydrogen provision and USD 2.7 billion to expand its biomethane capacity by 2030. It has set targets to produce 10 terawatt hours (TWh) of biomethane by 2030 and expects this to be its primary decarbonisation lever between 2030 and 2045.

Engie has committed to achieve net-zero emissions across its value chain by 2045. The company has interim targets to reduce the emissions intensity of its energy sales (produced and purchased) by 56% and of its direct energy production by 55% by 2030 compared to 2017. The company will phase out all coal-powered generation by 2025 in Europe and by 2027 worldwide.

The company plans to expand its renewable energy capacity from 38 GW in 2022 to 80 GW in 2030 and phase out all coal power capacity by 2027. The company’s longer-term plans depend on the development of hydrogen and biomethane alongside the use of CCS to decarbonise its current thermal power capacity and gas network business.

Engie is investing in the development of green hydrogen and biomethane. It is adding decentralised energy capacity and providing low-carbon energy solutions to its clients as a significant pillar of its business model. Engie is also developing storage capacity and smart grids to increase flexibility in the electricity system.

Over the last five years, Engie has decreased the emissions intensity of both its generated and purchased electricity at a rate sufficient to align with its 1.5°C pathway. It has achieved this by consistently increasing the proportion of renewables in its energy mix over this period. Between 2017 and 2022, the company reduced its coal-fired capacity by 64% and increased its renewables capacity by 58%.

Engie has made significant progress towards achieving its targets. However, the company acknowledges that its targets are not aligned with a 1.5°C pathway. The company is investing significantly in building its biomethane and green hydrogen capacity to allow for full decarbonisation of its existing gas business by 2045. As a result, the company does not have plans to retire its existing gas generation capacity and is projected to exceed its 1.5°C carbon budget for the period 2022-2037.

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 governments, workers, trade unions and municipalities. Furthermore, the company demonstrates ongoing social dialogue and meaningful engagement with affected stakeholders, through dialogue where employee representatives are influencing the group’s reorganization and programs to engage with local stakeholders in the context of coal asset closures. The company demonstrates engagement in social dialogue and with stakeholders in its just transition planning. Furthermore, the company has time-bound indicators to mitigate the social impacts of the transition on workers, for instance targets on upskilling its workforce from now until 2030. However, no evidence was found of timebound indicators to mitigate the social impacts of the transition on other affected stakeholders or business relationships.

The company has a commitment to create and support access to green and decent jobs as part of the low-carbon transition. Furthermore, it discloses the actions it takes to create jobs, for example by expanding its investments in renewable hydrogen and local economies. 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. Additionally, no relevant disclosure was found of the company’s assessment of employment dislocation risks. The company has a commitment to re- and up-skill workers and stakeholders affected by the low-carbon transition and discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. It does this through personal development programs to support women, and programs to support young people who have dropped out of schools. However, no relevant disclosure was found of a process for identifying skills gaps for workers and affected stakeholders in the context of the transition.

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. However, the company shows how it contributes to the social protection of workers which includes expanded paid leave for certain circumstances. The company discloses its process to understand the alignment of its lobbying activities with policies and regulations that support the just transition. Furthermore, it discloses the measures it takes to address misalignment of its lobbying activities.

The company commits to respecting human rights and the ILO fundamental rights at work, and it expects its business relationships to respect the ILO fundamental rights at work. Additionally, the company describes its process to identify its human rights risks in its own business and supply chain. However, no evidence was found of the company’s process to 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. The company discloses some workforce diversity fundamentals. However, the company can strengthen its disclosure on these subjects as well as on its working hours practices.

The company commits to protecting personal data. However, no evidence was found of a privacy statement regarding the collection, sharing and access to personal data. While the company discloses its global tax strategy, no relevant disclosure was found of the corporate income tax paid for each relevant jurisdiction. Furthermore, the company has a lobbying and political engagement policy, and it specifies that it does not make political contributions. Yet, no relevant disclosure was found of the company’s expenditure on lobbying activities. The company can strengthen its disclosure on these subjects and on its anti-bribery and corruption practices.