We seek to maintain and strengthen our leadership as one of the largest generation and transmission companies in the United States. We strive to maintain our leadership as the largest electric distribution business throughout the regions we serve, and to be a leader in technical innovation of power systems, environmental technology, transmission systems and customer service.
American Electric Power will be an energy leader through programs and technologies that protect people, manage our impacts on the environment, promote energy efficiency, provide for customer control over electricity usage and provide for greater access to renewable forms of energy and advanced clean energy technologies. We will work with our regulators and other stakeholders to achieve this through an approach that maximizes the positive economic, social and environmental impacts of
our operations.
Our material issues are those that (1) have a significant impact on the company's finances or operations; (2) have or may have significant impact on the environment or society now or in the future; or (3) can substantially influence the assessments, decisions and actions of our stakeholders.
We believe that our material
issues are:
- Leadership, Management & Strategy: Sustainability requires
a strong and committed leadership team willing to be aggressive and take prudent risks to maintain AEP's role as an industry leader, meet the needs of our customers, deliver value to our shareholders and achieve our vision for sustainability. We will continue to integrate social and environmental considerations into our business.
- Environmental Performance: Although environmental laws and regulations are complex and change frequently, we must comply at all times. Our challenge is to continuously achieve compliance, reduce our impact on the environment, improve the health of our communities and to go beyond compliance where we can.
- Work Force Issues: Protecting the safety and health of our employees and contractors and reducing the number and severity of work-related injuries is a core value. We seek a skilled, diverse and highly motivated work force to build, operate and
maintain existing and future generation, transmission and distribution technologies.
- Public Policy: We must actively engage legislators, policymakers and other stakeholders to ensure that
public policy, laws and regulations now and in the future enable us to continue to serve our customers, reward our shareholders and pursue our vision for sustainability. We will work with regulators and legislators on alternative rate-making solutions.
- Climate Change: AEP has a major role to play in addressing climate change, including bringing advanced coal and other technologies to commercial scale, supporting energy efficiency programs and securing access to large-scale renewables through transmission development. Our company and the prosperity of many within our service territory require us to work effectively and cooperatively with government regulators, our stakeholders and the states and communities in which we operate on climate change issues. We must be a leader internationally to help achieve a global solution.
- Energy Security, Reliability & Growth: Our electric generation and delivery systems must be modern, reliable and able to handle a diverse fuel supply and keep pace with customer demand. Collaboration with others is essential not only to create and maintain these systems, but to ensure adequate and timely cost recovery.
- Stakeholder Engagement: All of the material issues we face and our well-being as a company increasingly depend on working closely with our stakeholders. Sustainability requires us to disclose our intentions, report on our performance and engage in active and forthright dialogue with our various stakeholders.
We conducted five stakeholder meetings in the process of preparing this report. The engagement was more issue-focused and represented a wider range of stakeholder views than in the past. Our discussions with employees, customers, labor, academia, regulators, policymakers, environmental groups, community leaders and investors were candid and helped us to identify strategies and specific actions. We are working to stay connected and talk more frequently with our stakeholders.
During the past year, we worked with SustainAbility, a leading sustainability firm, to facilitate three stakeholder meetings at the community level on climate and the environment, energy security and reliability, and work force issues. For the third year in a row, Ceres, a national network of investors, environmental organizations and other public interest groups, facilitated a dialogue for us with stakeholders on a national level. This year's report includes an unedited open letter to AEP from this stakeholder team. We appreciate the candid discussions we had with
all of our stakeholders and look forward to continuing the dialogue. Our discussions are reflected throughout
the report.
Our primary stakeholders are:
- Shareholders and prospective investors
- Customers – large and small
- AEP employees and retirees
- Labor unions
- Local communities
- Federal and state legislators and regulators and other elected leaders
- Prospective employees
- Suppliers and others doing business with the company
- Non-governmental organizations
- Professionals from industry, government, labor and academia
The following issues were
identified by our stakeholders
as being important to them:
- Safety and health — for
employees and contractors; for communities
- A workplace that stimulates
employees' achieving their
full potential
- Leadership in the public
policy arena
- Climate change
- Environmental performance
upstream and downstream
- Cost of electricity; reliable,
adequate supply
- Leadership on energy
efficiency/demand response
- Coal issues — mountaintop
mining, coal ash, viability as a
fuel source
- Renewable energy and
transmission
- Collaboration, partnerships
between AEP and its stakeholders
- Impacts of the economy on our
commitments
This report is based on performance and information for calendar year 2008, but provides three- to five-year data trends when that information is available. Detailed financial information is available in AEP's 2008 Annual Report
to Shareholders and other financial
filings.
AEP's Board of Directors reviews this report, provides guidance, votes
to approve its content and passes a resolution each year to publicly voice
its intent to hold management accountable. The resolution is published each year on the inside front cover. AEP's sustainability initiatives are overseen by the Board's Committee on Directors and Corporate Governance. AEP was recognized by Corporate Secretary magazine last year for having one of the most innovative corporate social responsibility disclosure policies. AEP's executive-level Steering Committee for Sustainable Development provides guidance on sustainable development and participates in developing our reports.
SustainAbility benchmarked last year's report to identify strengths and areas for improvement. Our report scored well for its candor and forthright tone as well as its discussion of process, outcomes and value of the stakeholder engagement process. SustainAbility called it "a strong second report with significant evolution of coverage of critical sustainability issues." The study noted areas for improvement, such as providing a better business case for action on climate change; providing a fuller picture of what is driving sustainability across the business; and improving the presentation of performance data. These issues continue to be areas of interest to stakeholders, and we have worked to provide greater focus and clarity around them.
Starting in 2009, we will provide a semiannual update of our key commitments online.
It will be the basis for a stakeholder briefing to be chaired by our executive leadership.
AEP was one of two U.S. companies that participated in a pilot program for the new Global Reporting Initiative (GRI) Electric Utility Sector Supplement. The supplement was developed to be applicable on a global basis, regardless of size, type of generation, ownership, or other variations within the sector. The indicators were not final at press time; consequently, the indicators we reported on were evolving. An index of the GRI and Sector Supplement indicators at the end of this report.
AEP's report follows GRI's G3 Reporting Principles. The GRI Electric Utility Sector Supplement will provide greater insight into our specific industry and the issues we face. We adhere to the GRI principles of materiality, stakeholder inclusiveness, sustainability context, completeness, comparability, accuracy, timeliness, clarity, reliability and boundary setting. Our report is checked by GRI.
AEP tracks all commitments made herein through our Enterprise Risk and Insurance Department. Each business unit collects and verifies data for which it is responsible, some of which is verified
for regulatory compliance as well. We are working on a more complete information management system and in 2010 our Audit Services Department will begin to audit our data collection process.
For additional information about this
report, the GRI information posted
on the company's Web site or the company's sustainability initiatives, please contact Sandy Nessing at
smnessing@aep.com or TaKeysha Cheney at tscheney@AEP.com.
