PG&E®

Letter from the Chairman and CEO

Peter A. Darbee
Peter A. Darbee
To Our Stakeholders:

PG&E has undergone a remarkable evolution in the past five years as we’ve pursued our vision to become the nation’s leading utility. But one of the most profound changes over this time has been the richer understanding of—and deeper commitment to—sustainability that has come into focus as we have refined our views of what it means to be a leader.

Built around four equally strong commitments to customers and communities, employees, shareholders and the environment, PG&E’s leadership vision brings together what we believe are the essential prerequisites for maintaining the long-term health and growth of our company.

What is clearer than ever before, though, is that we cannot achieve success if we choose to pursue these goals independently. Rather, success requires that we consistently work to achieve our goals through integrated initiatives that place a high priority on moving us forward simultaneously on multiple fronts and managing our total impact as an enterprise.

This balance and integration is the core of our sustainability commitment—and it is indispensable to realizing the aspirations reflected in our company vision.

It is also what our stakeholders expect from a leading company in an industry whose actions carry such far-reaching implications for the economy, the environment and the millions of people who rely on utilities to conduct their business responsibly.

In fact, sustainability considerations are now among the most influential factors defining the playing field within our industry. Many of the most important opportunities to grow our company lie in solving key sustainability challenges—a reality that is making sustainability a competitive imperative.

Accordingly, within PG&E today we are increasingly adapting our strategies, our operations and our culture to drive positive results across what many sustainability experts have come to call the Triple Bottom Line, commonly given expression as “People. Planet. Profit.”

The spirit behind this Triple Bottom Line philosophy has long been alive and at work within PG&E. Elements of it are embedded deeply with our core values. And clear examples of it in action can be found daily in the company—be it in efforts we are helping to lead on climate change, the assistance we are providing to customers in the tough economy or the programs we run to help train a diverse pipeline of future workers from our communities.

But if we have the advantage that much of this territory is not entirely new, we also have the challenge that comes with learning to approach familiar ground in fresh ways.

To build on this foundation and take it to a new level, in 2009 we took important steps aimed at raising the visibility of our sustainability commitment and better integrating it throughout the business.

These steps have included several notable “firsts” for PG&E.

Significantly, we appointed PG&E’s first ever Chief Sustainability Officer, a position that reports directly to the Chairman and CEO. This new role is responsible for developing and coordinating the company’s sustainability strategy and initiatives and overseeing PG&E’s sustainability reporting and measurement programs.

We also, for the first time, established concrete targets attached to the four cornerstones of our vision, and we set a timetable for achieving these goals by the end of 2014.

Our goals now specify that we will hold ourselves accountable for performing in the top quartile for employee engagement and total shareholder return, and the top decile for customer satisfaction and environmental leadership. We believe these objectives provide us a clear line of sight not only to our progress toward our vision, but also to our success in creating value across the Triple Bottom Line.

Additionally, for the first time, we have taken the step of directly tying elements of management employee compensation to PG&E’s performance on environmental leadership, alongside of other links to our performance for customers, employees and shareholders.

On a smaller, yet still significant, note, we recently made the decision to expand the scope of this annual corporate responsibility report to also reflect our new focus on sustainability—as the report’s new title highlights.

These changes represent some of our latest steps in what has been an ongoing journey—and we are already seeing important new benefits.

For example, within the detailed business planning now under way to support our 2014 goals, sustainability considerations are serving as a powerful new driver for collaboration and alignment across the business.

As part of this process, our sustainability commitment is helping us to agree on priorities, identify important challenges and opportunities, and allocate resources to our initiatives. It is helping us make better informed, strategic decisions. And it is serving to ensure the costs and benefits of our choices are clear and transparent across the various parts of our operations.

Another example of the kind of efforts arising from our sustainability commitment is a recently announced project in conjunction with UC Berkeley to complete an analysis of the carbon footprint of the products and services PG&E buys.

The project will use a technique called life cycle assessment to better understand supply-chain greenhouse gas emissions and to identify promising opportunities for emissions reductions. In turn, this information will help PG&E and our suppliers cooperate to develop targeted climate action plans to reduce emissions throughout the supply chain.

Our team is excited about these initiatives and those that we expect will follow in the future, just as we are proud of the many accomplishments outlined in this year’s online report.

As you will see, last year we continued to make progress toward key goals. Areas in which we posted solid results included safety, supplier diversity, reliability, energy and water usage reductions, and employee volunteerism and giving, to name a handful. We invite you to read more about these and other achievements throughout these pages.

Once again, we owe credit to many stakeholders who have helped us achieve these results, either through their direct engagement, or through the constructive feedback we rely on them to provide us.

This kind of open engagement is a key part of our overall sustainability commitment, and we look forward to continuing to work with a broad and diverse range of partners. This is especially true as we work to address areas in which we know we must continue to do better, such as environmental compliance.

Also important, again this year in preparing this document we were fortunate to receive invaluable input from members of an independent stakeholder team brought together by our partners at Ceres. Their observations and advice have strengthened this report, and we greatly appreciate their contributions.

In keeping with that spirit, we invite you—and indeed encourage you—to share your thoughts on our report and our performance going forward. We take this feedback seriously and always welcome it.

Meanwhile, PG&E will continue to strive toward its vision of industry leadership and its sustainability goals in the year ahead. As we do, you have our commitment that we will be working to extend our performance in areas where results are already strong, while diligently addressing those aspects of our performance in which we see the greatest opportunities for improvement.

Thank you for your ongoing interest in PG&E and for your support.

Sincerely,

Peter A. Darbee
Chairman of the Board, CEO and President
PG&E Corporation