Xcel Energy is a major U.S. electricity and natural gas company whose headquarters are located in Minnesota, with operations in eight Western and Midwestern states. Xcel Energy provides a portfolio of energy-related products and services to 3.4 million electricity customers and 1.9 million natural gas customers through its regulated operating companies.
Challenge: Transparency for stakeholders and customers
As part of a carbon-intensive industry, environmental leadership is a primary focus for Xcel Energy and forms the cornerstone for its strategic initiatives. It monitors its compliance program, considers policy initiatives, and has an environmental management system. The company sets environmental performance goals that go beyond standard regulatory compliance to address areas of potential risk for the company, including carbon reduction. Executive compensation is tied to the company’s carbon reduction goals. The company believes that providing transparency related to carbon risks is critical to its stakeholders, including regulators, investors, customers, and environmentalists.
Solution: Reporting to CDP articulates action on carbon reduction
The company also believes that updating stakeholders about initiatives and actions taken to reduce environmental impact is equally as important as transparency. Since 2003, Xcel Energy has reduced carbon emissions by a cumulative 55 million tons. By yearend 2010, it had reduced carbon emissions by almost 10 percent from 2005 levels. With its recent plans to retire and replace coal plants in Colorado and repower two older coal units in Minnesota, the company is now on track to meet a 20 percent reduction by 2020.
To help achieve these goals, Xcel Energy has reported to CDP for the last five years. In 2008 the company was named in the CDP Leadership Index for carbon-intensive industries in the S&P 500. It aims to maintain this position on the CDP Leadership Index and the more recently formed Performance Leadership Index. Alongside reporting, Xcel Energy implemented a new database to record and store emissions data, enabling the company to more easily and accurately report emissions information for a number of uses. The company reports information publicly in a few areas and considers the CDP disclosure survey an important process in its annual reporting.
Frank Prager, Vice President of Environmental Policy and Services concludes, “The independent CDP process is not only useful in helping to prepare the necessary data for use in greenhouse gas inventories, but also enables Xcel Energy to better understand and interpret greenhouse gas emissions and climate risk data. CDP reporting provides a useful track record that shows where we have been, where we are going and how we compare against other utilities and large companies.”
Benefit: “CDP helps inform our stakeholders”
A carbon disclosure score of 89 and carbon performance score of ‘A’ is testimony to Xcel Energy’s commitment and achievements. Prager is convinced the reporting process helps the company communicate its emissions reduction initiatives to key stakeholders.
Reporting has enabled the organisation to communicate to stakeholders more efficiently and holistically. Being part of a large international reporting collaboration has led to ease of comparison with other companies and helps to benchmark Xcel Energy. According to Prager, “Internally, staff realise the value of CDP reporting and further appreciate the company’s commitment to carbon reduction. Externally many environmental organisations seek information about the company’s GHG emissions data from CDP’s public reports, which are known to be a thorough and credible source of information.”