Sustainability at PG&E

Our Approach

Our approach to corporate sustainability centers on understanding the most important (or “material”) issues; planning our approach, which includes leveraging benchmarking to identify best practices for continuous improvement; managing performance and executing our work; and measuring and communicating progress.

Planning Our Approach

Like any organization, we are working to improve and strengthen our multi-year strategic planning in order to drive continuous improvement. Last year, we instituted a rigorous new process designed to formulate clear multi-year goals and strategies, align resources and ensure integration, consistency and continuity in our financial and operational plans. The process focuses first on long-term strategy and identifying the critical objectives, and then matches our strategies with resource planning—developing and implementing tactical plans and budgets on a corporate-wide basis.

Understanding the needs and expectations of our customers, employees and many other stakeholders is essential to this process, and we continue to look to these groups for guidance on the priorities and practices that will enable PG&E to meet these expectations sustainably in the long run.

For example, in 2013, in coordination with PG&E’s integrated planning process, we sought the perspectives of internal and external stakeholders as we conducted a formal assessment of the most “material” issues for the long-term sustainability of PG&E. This effort will further strengthen PG&E’s corporate sustainability reporting and focus, and inform our overall corporate strategy. The assessment will benefit from our annual feedback process facilitated by Ceres, a leading nonprofit focused on sustainability issues. Through this effort, we gather feedback and engage directly in discussions with thought leaders from different stakeholder constituencies, such as business customers, investors, environmental and community groups, and suppliers.

We also continue to rigorously benchmark our results and identify gaps in our performance, so that we can close them. Doing so has increasingly become part of the way we do business, and it is a key to continuous improvement.

Managing Performance and Executing Our Work

The Public Policy Committee of PG&E Corporation’s Board of Directors has primary oversight of sustainability issues, such as environmental compliance and leadership, workforce development and climate change. This includes an annual review of PG&E’s sustainability practices and performance. Other committees of the PG&E Corporation Board and the full Board itself address other components of PG&E’s sustainability portfolio, such as public and employee safety, investments made to build a smarter grid and the pathways to increasing our deliveries of renewable electricity.

Within management, the Chief Sustainability Officer of Pacific Gas and Electric Company is responsible for developing and coordinating PG&E’s corporate sustainability initiatives and overseeing PG&E’s corporate sustainability reporting and measurement. This is done in coordination with other members of senior management who are responsible for functions such as supply chain management, environmental compliance and customer energy solutions.

Employee-led initiatives throughout the business are also helping to integrate sustainability priorities into our work. For example, the Grassroots Green Network is a group of employees from across different business units who actively support our waste reduction goal by engaging with co-workers to reduce office waste, and our 10 Employee Resource Groups provide an important link to diverse communities through volunteer service, mentoring and scholarship awards.

PG&E’s Short-Term Incentive Plan (STIP) reinforces PG&E’s sustainability commitment by rewarding eligible employees for their contributions toward achieving goals that benefit customers, shareholders, employees and the environment. Each year, we reexamine the STIP to help ensure we are employing the most effective and accurate means of measuring and reinforcing performance. In doing so, we aim to sharpen our STIP measures, better align our rewards program with the direction of our business and bring increased accountability to PG&E’s overall results.

In 2012, we changed the STIP measures to tie compensation more closely to safety than ever before. Safety performance measures—which were expanded to encompass not only workforce safety but also public safety—determined 40 percent of management’s annual at-risk performance-based pay, and continue to do so in 2013. Safety is the single largest driver for annual at-risk performance-based pay, with financial performance and customer service comprising the remaining 60 percent.

Short-Term Incentive Plan – Performance Measures
Measure 2012 Weight 2013 Weight
Safety1 40% 40%
Customer Satisfaction 30%2 35%3
Financial4 30% 25%
  • 1 Based on four subcomponents: nuclear operations safety, electric operations safety, gas operations safety, and employee safety.
  • 2 Based on three metrics: the overall satisfaction of customers, as measured through a quarterly survey; the longest duration in days at year-end of pending complete gas project job packages received by the Gas Asset Mapping organization; and the average duration of electricity outages.
  • 3 Based on five metrics: the overall satisfaction of customers, as measured through a quarterly survey; how quickly gas asset information is entered into the Utility’s gas mapping system after gas construction is completed; the average duration of electricity outages; reductions of gas and electric dig-ins; and execution of our gas pipeline safety work index.
  • 4 Based on PG&E Corporation’s earnings from operations.

For more details on the specific measures and targets for our 2012 and 2013 STIP, as well as our 2012 results, please see page 35 of the 2013 PG&E Corporation and Pacific Gas and Electric Company Joint Proxy Statement.

Measuring and Communicating Progress

Publishing this annual report allows us to share with our stakeholders the steps we are taking to meet our long-standing commitment to the environment, our employees and the many diverse customers and communities we serve.

In this report, we share our progress against a set of Key Sustainability Indicators for which we set annual targets. We also share data on our performance across a wide range of environmental, social and economic measures. By reporting on a wide range of metrics and issues, the report illuminates where we are doing well, as well as where we are redoubling efforts to elevate our performance.

Holding ourselves accountable and reporting on our performance with transparency is essential and has been a hallmark of our approach since we began producing a formal corporate environmental report in the 1990s.