SSE

SSE leads among the other companies assessed in the benchmark in regard to its supplier engagement practices. The company’s Sustainable Procurement Code outlines requirements that it has in place for its suppliers for emissions reporting, validation of carbon data and implementation of a net-zero strategy and associated target. SSE has set its own target for 50% of its suppliers to set science-based targets by 2024. The company also provides information and training programmes and incentivises innovation among suppliers. SSE can still improve its performance in this area by explicitly including greenhouse gas (GHG) emissions reduction criteria in its supplier selection and specifying how it responds to supplier non-compliance with its requirements.

The company’s low-carbon capital expenditure (CapEx) in 2022 accounts for 81% of its total CapEx. Over the next five years, SSE is planning a capital expenditure of USD 22.5 billion, and 90% of this will be spent on low-carbon technologies: 40% on renewables and 50% on transmission and distribution. Although these investments fall just short of the sectoral expectation of 95% low-carbon CapEx, it is one of the highest proportions of low-carbon CapEx among the other companies assessed in the benchmark and demonstrates SSE’s commitment to the low-carbon transition.

SSE is developing business models that illustrate how the company intends to make its transition a reality. The company is working on expanding its renewables capacity from 4 gigawatts (GW) to 16 GW by 2032. It is developing pumped hydropower storage capacity to support a renewables-led power system. Additionally, it is rolling out smart meters to enable the delivery of flexible products, such as time-of-use tariffs, though the scale of this action is unclear. Additionally, SSE closed its last coal power plant in 2020 and plans to develop a minimum of three gas power plants with carbon capture and storage (CCS), though this will not encompass all of its existing gas networks.

SSE has set a long-term target to reduce its scope 1 and 2 emissions by 100% by 2040 and interim targets to reduce its absolute scope 1 and 2 emissions by 72.5% and its scope 1 GHG emissions intensity by 80.2% per kilowatt-hour (kWh) by 2030, both compared to their 2018 baseline. The company also has a target to reach net zero across all emission scopes by 2050, which covers emissions from its joint ventures. SSE’s 2030 targets are validated as aligned with 1.5°C by the Science Based Targets Initiative (SBTi). The company can improve by bringing forward its zero emissions target for all its electricity to 2035, which would be consistent with the International Energy Agency’s (IEA) recommendation for companies in advanced economies.

SSE’s emissions intensity decreased between 2017 and 2022, due to an increased share of low-carbon generation and phasing out of coal. However, the company’s emissions intensity did not decrease at the rate required by its 1.5°C pathway. Though the company’s emissions intensity is projected to continue to decrease, it must reduce by over half to align with a 1.5°C pathway in 2027. SSE’s reliance on gas means it is not projected to meet this goal. The company acknowledges the need to reduce emissions from gas. It plans to reduce the operating hours of its combined cycle gas turbine power plants in favour of renewable energy generation. Still, it has not committed to a gas phase-out, instead planning to use carbon capture and storage (CCS) and hydrogen blending to curb emissions, though it still lacks time-bound commitments for these.

SSE, in partnership with University of Strathclyde, National Manufacturing Institute Scotland and Renewable Parts Ltd, has launched the Coalition for Wind Industry Circularity to increase the circularity of in-service parts on onshore wind farms, establish an end-of-life strategy for onshore wind farm parts, and deliver a UK Wind Circular Economy Sector Deal. However, at a company level, the intervention is not supported with details such as planning, performance tracking and measures of success. Establishing these would show how the company plans to reduce embodied emissions from its own onshore wind assets, which made up 15% of the company’s electricity generation in 2022.

SSE has set a long-term target to reduce its scope 1 and 2 emissions by 100% by 2040. It also has interim targets to reduce its absolute scope 1 and 2 GHG emissions by 72.5% by 2030 and its scope 1 GHG emissions intensity by 80.2% per kWh by 2030, compared to 2018. Additionally, the company has set a target to reach net zero across its scope 1, 2 and 3 emissions by 2050, which includes its joint ventures and gas utility business.

SSE plans to spend USD 22.5 billion between 2022 and 2026, 90% of which will be spent on low-carbon technologies. The company plans to increase its renewables capacity from 4 GW in 2022 to 9 GW in 2027 and to 16 GW by 2032. This includes the company’s planned development of a 1.3 GW pumped hydropower storage project. To reduce its emissions from fossil fuels, the company plans to abate emissions from its gas plants through the use of CCS and hydrogen blending, with the potential to convert them to hydrogen plants.

In 2022, SSE invested USD 43 million in research and development (R&D) in total, of which USD 28 million (65%) was allocated to low-carbon technologies. The company has invested in energy storage, including electric vehicles (EVs), battery storage and vehicle-to-grid technology. It also launched the Coalition for Wind Industry Circularity to increase the circularity of onshore wind farms. Further, it continues research to increase the carbon capture rates of its CCUS projects.

SSE closed its last remaining coal plant in 2020. The company’s emissions intensity reflects this, showing a decrease between 2017 and 2022. However, the company continues to rely on gas. Gas makes up almost two-thirds of the company’s generation mix, and in 2022, SSE completed the joint acquisition of Triton Power Limited, gaining a 50% share in several new gas power plants. As a result, the company’s emissions intensity trend did not decrease at a rate aligned with its 1.5°C pathway.

SSE is developing a range of low-carbon business models, including significant growth in renewables and storage capacity. It has also committed significant funding to low-carbon technologies, including both renewable energy and transmission and distribution improvements over the next five years. While the company has plans to reduce emissions from its gas assets, the commitments it has made are not at the scale or speed needed to reduce the company’s emissions at the rate required by its 1.5°C pathway.

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 government, business, communities, and workers. However, no evidence was found to demonstrate the company’s ongoing social dialogue and meaningful engagement with affected stakeholders. 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 and affected stakeholders. For instance, the company plans to invest up to £25bn in low carbon infrastructure by 2031 and to create at least 1,000 new jobs by 2026. However, no evidence that the company has time-bound indicators to mitigate the social impacts of the transition on its 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 200 highly skilled green jobs for its domestic solar installations. The company also discloses the measures it takes to ensure that these jobs embed equality of opportunity for women and vulnerable groups. However, 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 actions it takes in this regard. For instance, it offers re-training programmes for people who want to transition to low carbon roles. Furthermore, the company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. However, no relevant disclosure was found of a process for identifying skills gaps for workers and affected stakeholders in the context of the transition.

While the company contributes to the social protection of affected stakeholders, no evidence that it has the same contribution to its employees. 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. No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

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. Furthermore, the company discloses a human rights due diligence process that includes the identification and assessment of salient human rights risks. The company takes action to mitigate these risks in its own operations and supply chain, and it engages with affected stakeholders. Additionally, the company has 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. No evidence was found of a time-bound target for paying all workers a living wage. Moreover, 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 race/ethnicity and gender of its workforce by employee category. However, no relevant disclosure was found of additional indicators of workforce diversity. The company commits to gender equality and women’s empowerment.

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. The company also discloses its global tax strategy and the corporate income tax paid for each relevant jurisdiction. While the company has a policy prohibiting bribery and corruption, no evidence was found that it includes corresponding clauses in its contracts with business relationships. While the company has a lobbying and political engagement policy, no evidence was found that it specifies that it does not make political contributions. No relevant disclosure was found of the company’s expenditure on lobbying activities.