Introduction
Climate change is one of the biggest challenges facing society in general – and ENGIE in particular. To rise to this challenge, the Group has implemented a greenhouse gas (GHG) reduction programme, a climate vigilance plan, a natural resources savings programme and, lastly, a business model adjustment programme to build its resilience to climate change while taking into account the imperatives of a just transition.
Unanimously adopted by our shareholders in May 2020, the Group’s purpose statement offers a clear framework for our strategic decisions in this field.
Building on its purpose statement, the Group has also set itself ambitious non-financial targets for 2030 in order to meet its Corporate Social and Environmental Responsibility (CSR) commitments within this timeframe. These targets are part of a continuous improvement approach designed to meet a growing demand from its stakeholders. They not only require the company to meet its legal and regulatory obligations in various fields of CSR, but also primarily to adopt best practices to optimise its ability to anticipate and control the impact of its activities on its sphere of influence, and vice versa. The Group’s CSR commitments and policies aim to satisfy the demands of all stakeholders.
ENGIE is also committed to carrying out its activities in full respect of internationally recognised human rights wherever the Group operates, including in its dealings with the public authorities. The Group’s commitments reflect the risk of human rights violations potentially caused by the Group’s activities – either directly or as a result of its business relationships.
Despite these efforts, the Group’s activities and projects may give rise to questions from its stakeholders.
ENGIE has decided to take the initiative by responding publicly to these questions. The examples cited below are not comprehensive but demonstrate the importance given to CSR-related issues, implemented action plans and the Group’s transparency on these topics.
Climate
Group strategy
Besides its plan to exit coal by 2025 for Continental Europe and 2027 for the rest of the world, which is currently being carried out, the Group was one of the first energy companies, in February 2020, to have its 2020-2030 development plan certified compliant with the Paris Agreement by the global SBT (Sciences Based Targets) initiative, in line with 2°C warming.
Since then, ENGIE has raised the bar by committing, in May 2021, to the "Net Zero Carbon" objective by 2045, for all its direct and indirect emissions, which is extremely ambitious. This objective will be achieved by following a “well below 2°C” trajectory with intermediate targets.
Questions raised by some stakeholders
In March 2020, the NGO “Notre Affaire à tous” published a climate vigilance benchmark of 25 French multinationals and called out ENGIE’s climate strategy. Although ENGIE ranks 6th out of 25, the Group performed below average (47.5/100), and earned a similar rating in a second report published in March 2021 despite the SBT commitments made by the Group.
ENGIE has reaffirmed its commitment to fighting climate change and, over a number of years, has begun to globally reduce its greenhouse gas emissions – within the last five years, the Group has reduced its total emissions by some 40% and 50% for electricity production. ENGIE has also included climate risk in its vigilance plan, with an explicit reference to the IPCC’s Special Report on Global Warming of 1.5 °C. The plan sets out the Group’s emission reduction targets for 2030 on scopes 1, 2 and 31, SBTi certified since 2020. ENGIE would also remind stakeholders, in accordance with its strategic road map of 18 May 2021, of its commitment to net zero emissions by 2045 on all three scopes, its ambition to follow a “well below 2°C” trajectory, currently in the process of certification by SBTi, including a plan to exit from coal-fired electricity generation by 2027, and its far-reaching renewables and infrastructure road map with ambitious targets for renewable gas development.
Biodiversity
Group strategy
Biodiversity (fauna and flora) constitutes a natural heritage essential to human well-being and health. ENGIE also depends on biodiversity for its use of biomass resources and for water and climate regulation.
Biodiversity is at risk from climate change, pollution, habitat alteration, the invasion of alien species and the overexploitation of resources. The fragmentation and disruption of habitats caused by the footprint of our facilities and soil sealing are the principal ways ENGIE’s activities impact on biodiversity.
Aware of its responsibilities and the challenges it faces, ENGIE has developed, in consultation with leading experts, the International Union for Conservation of Nature (IUCN) and FNE (France Nature Environnement), a biodiversity policy which includes the follow-up of a site-by-site status report on the impact of activities at monitored industrial facilities and the development of action plans produced in consultation with stakeholders for priority sites. In February 2020, the Group set itself a more ambitious target: the implementation of an environmental management objective by 2030 – in other words, a biodiversity plan for all the Group’s industrial sites.
ENGIE is committed to biodiversity within the framework of act4nature France and act4nature international: two voluntary biodiversity initiatives launched by the Association Française des Entreprises pour l’Environnement (EpE) and multiple other partners in 2018. They encourage companies to take action on their direct and indirect impacts, dependencies and their potential to make a positive contribution to nature. This alliance between businesses, public authorities, scientists and environmental organisations aims to build a global and collective momentum to protect, promote and restore biodiversity, including by involving CEOs from every sector in their initiative. The hope is that their interest legitimises biodiversity in the eyes of all their employees and partners, as actors in their value chain, and as a result incentivises local “bottom-up” actions.
Unlike climate change, biodiversity is essentially a local issue requiring systematic vigilance in the field for each site in operation and each project under development. It also calls for specific skills from outside the company and a strong ability to engage in dialogue with civil society. This occasionally gives rise to local problems which the Group endeavours to resolve using its extensive expertise in the field.
Learn more about the Group’s environmental policy.
Questions raised by our stakeholders
Discussion on the construction of a transmission line in Brazil (Gralha Azul project)
On 16 October 2020, a Brazilian court suspended the environmental licenses and construction work on a section of an electric power transmission line over a stretch of one thousand kilometres in the State of Paraná for failing to respect the vegetation of an Atlantic forest in a protected area and ordered their review.
On 9 December 2020, the Brazilian Supreme Court of Appeal revoked the injunction of the federal court, allowing the works to resume. In June 2022, the Superior Court of Justice ruled that the suspension of the environmental licences and construction works had no legal basis. The line was brought into commercial operation in August 2021, 18 months before the date set out in the concession agreement.
Drone technology was used on the Gralha Azul transmission line to lay cables for over 1000 kilometres of electric power lines, which reduced its environmental impact, optimised costs and increased the safety of workers. This initiative prevented the clearance of service areas at least four metres wide through large swathes of vegetation for cable-dragging by heavy plant. The use of drones to lay electric cables also reduced the impact on fauna by limiting vegetation clearance between towers, protecting the indigenous forest. The large-scale use of this technology is a pioneering initiative in Brazil.
Other measures were taken to minimise the environmental impact of the project, such as an in-depth study to determine the route of the transmission line: some 70% of this route runs through areas already disturbed by human activity, in other words, pastureland and farmland; access to the towers was designed to coincide with the internal accessways of properties impacted by the route; wherever possible, higher towers were used, further reducing the need to clear vegetation.
ENGIE also implemented social initiatives, giving priority to the hiring of local manpower, transparent relationships and an ongoing dialogue with impacted communities. In addition, when it launched its operations in September 2019, the company proactively invested some 1.8 million BRL (284,220 Euros) in social and environmental initiatives, mainly in the fields of health, education, culture and the environment in Paraná. A particular emphasis was placed on initiatives to help local authorities combat the Covid-19 pandemic, support communities in Quilombola, provide 2,700 free examinations for the early detection of different types of cancer, and invest in environmental education projects.
Air pollution
Group strategy
In addition to GHG (greenhouse gas) emissions that contribute to a global phenomenon, some gases cause air pollution that can have a potentially serious impact locally on human health and ecosystems.
As a consequence, for a number of years the Group has implemented environmental reporting audited annually by a statutory auditor, the Commissaires aux comptes, in order to monitor local regulations governing these pollutants and to produce centralised reporting on the three main causes of air pollution generated by the burning of fossil fuels (gas, coal, fuel oil and alternative fuels), biogas or biomass:
- nitrogen oxides (NOx = NO + NO2) expressed as NO2 equivalents
- sulphur dioxide (SO2)
- airborne particles or particulate matter (PM)
These three pollutants are a major public health issue, particularly in towns and cities, which may occasionally inhibit nearby production facilities.
Questions raised by our stakeholders
Rehabilitation of the Hazelwood power station and mine in Australia
In February 2014, embers from a bushfire in the Latrobe Valley of Victoria, Australia, started a series of spot fires in a nearby open cut mine next to the Hazelwood Power Station. These fires, which were not caused by ENGIE, proved very difficult to put out in extreme conditions and continued to burn for 45 days.
Built in 1964, the Hazelwood Power Station had reached the end of its operational life-time and could not be upgraded according to appropriate standards. This situation, combined with ENGIE’s strategy of exiting coal-fired power generation, led to the decision to close the power station from March 2017.
Since then, ENGIE has implemented a large-scale project to demolish the plant, rehabilitate the former mine and return the Hazelwood site to a safe, stable and sustainable condition, including a proposal to fill the mine void with water to manage two of the biggest safety risks: batter movements and fires.
ENGIE is currently preparing an environmental effects statement (EES) on the proposal to create a mine lake. The EES process has only just begun and technical studies and impact management plans will be made available to the public as part of stakeholders and community consultation; their comments will be passed to an independent Inquiry and Advisory Committee and the Victorian Department of Environment, Land, Water and Planning.
Another example of ENGIE’s commitment to energy transition in the Latrobe Valley is the construction of a 150 MW Hybrid Battery Energy Storage System (HBESS) on the site of the former Hazelwood plant, which is scheduled to begin operation in early 2023. The HBESS has the capacity to store the energy equivalent of an hour of energy generation from the rooftop solar systems of 30,000 Victorian homes, playing a critical role in increasing the state’s energy capacity and delivering further grid stability.
Human rights
Group strategy on human rights
The Group ensures the fundamental rights of its employees are respected, in accordance with the conventions of the International Labour Organisation: it rejects all forms of forced or compulsory labour, of child labour, of human trafficking, and of discrimination, and recognises freedom of association and the right to collective bargaining. The Group pays particular attention to guaranteeing the highest standards of health and safety in the workplace, working hours and holidays in accordance with international standards and equal remuneration.
ENGIE rejects any form of harassment or violence in the workplace and makes sure to provide its employees with a working environment that respects their individual freedoms and their privacy. ENGIE puts in place whistleblowing systems and guarantees the anonymity of the whistle-blower.
The Group ensures that its activities do not infringe the rights of local communities surrounding its sites, and that assignments related to the security of its employees and assets are conducted with respect for human rights.
To ensure compliance with all its human rights commitments and to meet French and international requirements, the Group relies on different cross-functional policies and policies specific to certain issues, particularly the human rights policy. The health and safety, CSR and purchasing policies complement the human rights policy, covering specific commitments that fall within their particular scope.
Questions raised by our stakeholders
Supplies of photovoltaic panels from Xinjiang, China
ENGIE, leader in the energy transition, develops, installs and operates carbon-free energy production solutions, which include photovoltaic panels. China, which within the last decade has become the world’s main supplier of photovoltaic panels, sources most of its raw material (polysilicon) from Xinjiang, a region in the far west of China. In recent years, multiple investigations have highlighted the repression and grave violations of the fundamental freedoms of the Uyghurs. As the fate of the Uyghurs moves to the centre of international debate and places a question mark over the import of products from the Xinjiang region of China, the solar energy industrial sector is working hard to make its supply chain more transparent.
ENGIE has pledged to monitor respect of its commitments on human rights. ENGIE endeavours to engage in a dialogue with its suppliers to promote and uphold its commitments and to improve the transparency of the supply chain.
ENGIE experts implement preventive actions to address ethical, reputational and financial risks: ENGIE continuously assesses, selects and inspects its subcontractors, including through increasingly advanced ethical risk analyses.
ENGIE is therefore committed to:
- Ensure respect for the rights of workers under international law and take an active role in ensuring our suppliers do not use forced labour, across the whole supply chain.
- Systematically implement advanced “due diligence” (inspections) with suppliers prior to signing all contracts, particularly if they are likely to have links with the Xinjiang region.
- Listen to civil society organisations to adapt as quickly as possible to the reality of the human rights situation and to continuously strengthen compliance with ethical standards.
- Require suppliers to provide information on who they work with and where, across the whole supply chain; talk directly and regularly with our suppliers about respect for human rights.
- Use independent experts to fully investigate respect for human rights by our suppliers.
- Require our suppliers to commit in writing not to use forced labour, particularly in the Xinjiang region. All our contracts also include clauses that allow us to terminate the contract if our suppliers – and their subcontractors – fail to comply with their obligations, particularly the ban on forced labour.
- Take the necessary measures – which can go as far as termination of the contract – if it turns out that there is a risk of being associated with forced labour or any violation of human rights.
Shale gas
The Group’s policy
On a general note, it is important to remember that ENGIE is not a gas producer. The Engie Group is a network operator and an energy supplier that transports and distributes gas for direct use by its clients or to be transformed into electricity in its thermal power plants. Engie therefore plays a key role in the security of energy supply in the areas where it operates.
As a result, the Group must diversify sources of supply in order to guarantee a resilience of gas supply. Tensions in energy markets as early as December 2021 made our strategy to diversify sources of supply all the more relevant. This diversification strategy is based on a portfolio of long-term contracts and a liquefied natural gas (LNG) component and, to this extent, the US represents an alternative to our traditional producers. In this regard, like all the main players in Europe and France in particular, we buy US gas from local players. It should be noted that, from a chemical point of view, the gas arriving in liquified form is the same whether it is supplied from shale sources or a conventional gas field.
ENGIE also now needs to compensate for the interruption in supplies of Russian gas, which historically represented some 40% of European supplies (half as much in France, which for historical and geographical reasons has a more diversified energy mix). We therefore have a duty to ensure safety of supply for our clients and our activities. The purchase of LNG from all alternative sources is one of the options open to us, alongside negotiating additional volumes with our other suppliers under the terms of our long-term contracts with Norway, the Netherlands and Algeria.
As regards US shale gas and the need to take into account its environmental impact, we are currently reviewing information, public and confidential, relating to our counterparts with whom we may enter into a contractual relationship. These considerations remain a key element in deciding whether to conclude a specific transaction.
We choose US producers able to offer the best guarantees in terms of traceability of emissions and environmental monitoring of their activity. Forming long-term contractual relationships with suppliers allows us to strengthen these relationships based on long-term monitoring and the implementation of CSR initiatives.
Lastly, all gas purchase contracts signed by ENGIE are compatible with the Group’s carbon pathway.
A closer look at the Cheniere contract
ENGIE signed a contract for the supply of LNG with US company Cheniere Energy, Inc. ("Cheniere") which began in September 2021. Given current security of supply challenges, ENGIE decided to extend the term of the contract. ENGIE increased the volume and extended the contract by agreeing to purchase approximately 0.9 million tonnes per annum of LNG for a term of approximately 20 years.
Cheniere has made a clear commitment to transparency, the traceability of the carbon content of its gas supply chain and continuous improvement of its management of methane and carbon dioxide emissions. Cheniere’s annual CSR report includes more than 70 environmental performance indicators based on the best international standards, including the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-Related Financial Disclosures (TCFD).
Cheniere brings transparency to its gas supplies by providing ENGIE with data on the greenhouse gas ("GHG") emissions of each LNG shipment produced in the company’s liquefaction facilities in Sabine Pass and Corpus Christi.
A closer look at the NextDecade contract
ENGIE and US company NextDecade Corporation ("NextDecade”) signed a 15-year agreement for the sale and purchase of 1.75 million tonnes per annum of LNG from its Rio Grande LNG export project in Brownsville, Texas (USA).
The agreement, with the first train expected to start commercial operations as early as 2026, was signed after lengthy discussions with NextDecade focusing on its social and environmental performance.
NextDecade plans to use carbon capture and storage (CCS) technology to reduce greenhouse gas emissions by about 90% at its liquefied natural gas (LNG) export project. NextDecade also plans to use a net-zero energy at its Rio Grande project to minimise its Scope 2 emissions.
In addition, NextDecade intends to use natural gas from RSG ("Responsibly Sourced Gas") in the Permian Basin and Eagle Ford Shale. RSG is a natural gas that has been certified by a third party that ensures it is sourced through environmentally responsible procurement practices, based on standards such as air emissions, water stewardship, land use and community impacts, and was produced with lower methane emissions.
Lastly, NextDecade has announced plans for a pilot project for monitoring, reporting and certification of the GHG intensity of the LNG to be sold from its Rio Grande LNG export facility.
With regard to our commitments, these contracts do not call into question the Group's ability to achieve its Net Zero objective by 2045, nor its greenhouse gas emission objectives for 2030. These contracts expire before 2045. In the meantime, they offer the Group the flexibility to reroute these volumes.
Based on available data, our best view to date is that the average level of emissions from LNG transported to France from the USA is comparable (about 10% difference in emissions from extraction to combustion) to the average level of emissions from gas transported from Russia by land.
These contracts are part of a broader strategy of renewing the natural gas supply portfolio, which is compatible with a decreasing demand for natural gas in Europe by 2045 (the extent of the decrease remaining subject to uncertainty given the context). This strategy also includes the mobilization of additional volumes from the North Sea, which are efficient in terms of greenhouse gas emissions.
1 The GHG Protocol classes direct and indirect emissions into three scopes:
Scope 1: direct GHG emissions occurring from sources that are owned or controlled by the company
Scope 2: indirect GHG emissions occurring from the electricity, heat or steam consumed by the company
Scope 3: others indirect emissions