Duke Energy has invited Business for Social Responsibility (BSR) to conduct an independent review of the company’s 2007|2008 Sustainability Report. This is the second year we have provided our analysis of Duke Energy’s accomplishments and areas for improvement in reporting sustainability performance following the merger of Cinergy and Duke Energy. It should be noted that our review neither verifies nor expresses an opinion on the accuracy, materiality, or completeness of information provided in this report.
The significant strengths and achievements we observed in this year’s report include:
- Linking sustainability and business strategy. This report moves beyond general discussions of sustainability risks and opportunities to show how these considerations have shaped core business decisions. For example, the report highlights how sustainability has informed investment in capital improvements, spurred the creation of a new business model, and is changing the future of Duke Energy’s generation portfolio.
- Response to stakeholder concerns about coal and nuclear generation. The CEO letter frankly acknowledges stakeholder concern about the public health and climate change impacts of the new Cliffside 6 coal-fired plant and outlines the steps the company is taking to minimize and offset its CO2 emissions. The letter also discuses safe disposal of nuclear waste and Duke Energy’s active explorations of alternatives such as fuel recycling.
- Transparency. We observed several instances of open and honest discussion of challenging issues and criticism in the report. Duke Energy successfully communicates the complexity and uncertainty involved in striving to reduce carbon emissions given current business, technical, and regulatory constraints (see p.8-9). The company also directly responds to critics who see a contradiction between its pursuit of increased generation using coal technology and its public commitment to reducing climate change (p.6).
In future reports, we encourage Duke Energy to strive for the following:
- Continued improvement in reporting performance. This year’s report describes the concrete actions taken to achieve each sustainability goal and reflects a key recommendation from our last review to demonstrate progress against the Sustainability Plan. Next year we look for Duke Energy to enhance its measurement of performance by: including more indicators of the impact of these activities, and placing performance in context by tracking these indicators over time and against the social and environmental outcomes the company seeks to achieve.
- Integrate other voices and perspectives. While the company has acknowledged stakeholder criticism, we encourage Duke to consider including commentaries from independent, external voices in future reports, especially on timely and contentious conversations such as the role of nuclear power, customer rates, and US climate change policy. By incorporating and responding to different perspectives, the company will deepen stakeholders’ knowledge and understanding of how Duke Energy approaches these issues.
- Share how Duke Energy is creating a ‘culture of sustainability’ to drive innovation. Creating a “culture” of sustainability in the company is identified in this report as a crucial part of achieving the sustainability goals and encouraging the innovation necessary to meet the 2030 carbon challenge. The establishment of a formal management structure for sustainability is a step in this direction. We look forward to hearing how Duke Energy is cultivating a culture of sustainability amongst all employees; finding ways to nurture innovation internally to meet the 2030 challenge; and creatively drawing on the expertise and imagination of external stakeholders in pursuit of these goals.
Manager, Energy & Extractives Practice
Business for Social Responsibility
March 19, 2008