Naturgy Energy

Naturgy provides renewable energy from hydroelectric, onshore wind, and solar photovoltaic (PV) sources as well as electricity storage. Its renewable power capacity in 2020 was 4.6 gigawatts (GW). In 2022, 29% of the company’s energy production was from low-carbon sources. The company aims to grow its low-carbon energy capacity to 14 GW by 2025. To this end, it is working with the energy company Enagás on the development of a green hydrogen plant in La Robla. This will be the largest hydrogen plant in Spain. The company is also developing 150 megawatts (MW) of onshore wind power in Meirama. Further, the company generates electricity from nuclear power, accounting for 9% of its total energy, but it has no plans to expand this.

Naturgy invested USD 62 million on the R&D of green hydrogen; electricity storage; sustainable mobility; and biomethane using livestock waste, wastewater treatment plant sludge, industrial waste, municipal solid waste and agricultural waste. The company does not provide a breakdown of the amounts spent on each technology. Despite a significant portion of the company’s operations being in gas, the company does not invest in carbon removal technologies and carbon capture, use and storage (CCUS) technologies.

Naturgy’s scope 1, 2 and 3 emissions intensity trend in the previous benchmark assessment was aligned with its 1.5°C pathway. Although the company’s emissions intensity continues to decrease, this no longer aligns with a 1.5°C pathway. Between 2021 and 2022, the share of low-carbon energy in its energy mix fell from 35% to 29%. This was largely due to a reduction in the hydropower generated in its Spanish operations due to low rainfall caused by drought. While the company remains one of the top performers in the benchmark for this indicator, to align with its 1.5°C pathway once again, it needs to increase its energy output from low-carbon sources.

Although Naturgy has implemented board-level oversight of climate change, there is no evidence that its board has adequate climate expertise. The company’s transition plan is informed by climate scenario analysis. Naturgy also aims to be net zero by 2050 across its scope 1, 2 and 3 emissions. Further, Naturgy has committed to spending USD 9.2 billion on renewables between 2021 and 2025. It aims for a 56% share of installed renewable energy in its generation mix by 2025. It also plans to develop biomethane and green hydrogen as renewable gas sources. However, the company provides no details of its plans beyond 2025. Therefore, it is unclear how it plans to meet its long-term targets.

Naturgy has set a target to reach net-zero scope 1, 2 and 3 emissions by 2050. The company aims to reduce its scope 3 emissions by 20% by 2025 and its scope 1 and 2 emissions by 48% by 2025 compared to 2017. The company also aims to source 56% of its energy mix from renewable sources in 2025.

Naturgy has planned an investment of USD 9.2 billion in renewable energy between 2021 and 2025. The company is developing biomethane from waste and producing green hydrogen with surplus renewable energy. One of the targets of its recent strategic plan is to increase the share of renewable installed power in its generation mix to greater than 56% by 2025. However, the company’s transition plan does not extend beyond 2025.

Naturgy invested USD 62 million on the R&D of biomethane, green hydrogen, electricity storage and sustainable mobility, but details on the amount it spent in each area are not available. The company spent approximately 59% of its CapEx on low-carbon technologies in 2022.

Since 2021, there has been no coal-fired electricity generation in Naturgy’s energy mix. In 2021, the company increased renewable energy capacity in its electricity mix to 33%, with a 562 MW increase in capacity. Between 2021 and 2022, the company’s energy mix from low-carbon sources fell from 35% to 29%. This was due to a decrease in its hydropower production in Spain as a result of poor rainfall.

Naturgy has set a net zero by 2050 target which includes its scope 3 emissions. However, Naturgy’s transition plan does not extend beyond 2025. The company’s focus is on improving energy efficiency in its own operations while increasing the low-carbon products available to customers. However, the company has not committed to phasing out gas from its operations. Naturgy also still offers incentives to its employees for the growth of fossil fuels.

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 working with the Ministry for Labour and Social Economy as well as trade unions in relation to closing some of its thermal power plants in Spain. Furthermore, the company demonstrates ongoing social dialogue and meaningful engagement with affected groups, in its creation of a just transition plan which includes affected stakeholders as well as engaging with the Spanish government. However, no evidence was found that the company has a set of time-bound, measurable indicators to mitigate the social impacts of the low-carbon transition on workers, affected stakeholders and 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 has taken to create jobs while undertaking the direct closure of its plant in La Roba. 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 displaced by the low-carbon transition. The company’s process for identifying skills gaps for workers and affected stakeholders involves working with the Ministry of Ecological Transition and the Demographic Challenge in Spain to identify and upskill individuals. Furthermore, the company discloses the actions it takes to provide reskilling and upskilling opportunities through this project. For instance, it provides vocational training programs for employability in just transition zones. However, no evidence was found to show that the company discloses how it embeds equality of opportunity for women and vulnerable groups in these actions.

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, nor how it contributes to social protection. 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. However, no evidence was found of the company’s process to identify, assess and mitigate salient human rights risks in its own operations and in its supply chain. The company discloses the stakeholders whose human rights have been affected by its activities. It also 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. However, no evidence was found of the company having a time-bound target for paying all workers a living wage. No evidence was found to show that the company discloses the proportion of its direct workforce covered by collective bargaining agreements or its required working hours. The company discloses some indicators of workforce diversity, including gender and additional indicators. The company also commits to gender equality and women’s empowerment.

The company commits to protecting personal data. However, no evidence was found of the company having 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 it pays in each relevant jurisdiction. The company has a policy prohibiting bribery and corruption; however, it does not include corresponding clauses in its business relationship contracts. 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.