By the end of this decade, Czechia’s energy group CEZ wants to be between the 20 per cent of the best-rated energy companies in Europe in terms of sustainability ratings.
CEENERGYNEWS spoke with Katerina Bohuslavová who leads the new ESG department about how she plans to reach this goal and the importance of the “S” which stands for “social” and the “G” for governance” in the Group’s long-term decarbonisation strategy.
“CEZ Group was established in 1992 and sustainability has been part of the Group’s strategy from the very beginning,” begins Mrs Bohuslavová. “As a leader in the Czech Republic, we had a stand-alone sustainability strategy. This year, we accelerated our sustainability strategy by incorporating it as an integral part of our business strategy. So for CEZ Group, it is not a new topic: unfortunately, sustainability ratings and ESG ratings do not give us justice.”
For Mrs Bohuslavová, the company doesn’t communicate well enough to get the ratings that it deserves. However, she underlines that due to the increasing pressure from banks, insurance companies and investors, there is a need to address the ratings.
The company’s strategy, Vision 2030 – Clean Energy for Tomorrow, announced earlier this year, not only significantly accelerates the decarbonisation strategy of the company but also sets ambitious goals in other areas, specifically environmental protection, social relations and transparent corporate governance, also known as ESG.
“The non-financial reporting department was transformed and replaced with the ESG Office, which is directly accountable to the CEO, Daniel Benes,” underlines Mrs Bohuslavová. “This has been a strong signal to both inside and outside the company that we take ESG issues seriously.”
Concretely, in the sphere of environmental protection, the Group will focus on faster reduction of carbon emissions as well as emissions of other pollutants and on the development of new renewable sources. By the end of the decade, for example, it will reduce its energy intensity by more than 55 per cent and build new renewable sources of energy with a total output of up to 6,000 megawatts (MW). In the sphere of social relations, CEZ will focus on retraining for those employees affected by the phasing out of coal and on ensuring an adequate number of new professional staff members. It is also preparing massive customer process digitisation. In terms of corporate governance, the group has subscribed to ambitious goals having to do with diversity and equal opportunities, with a 30 per cent representation of women in management being the company’s target.
To achieve all this, Katerina Bohuslavová explains that her department has two major tasks: non-financial reporting and project management.
“Regarding reporting, we need to communicate clearly what we do, and we must address any gaps in our sustainability reports,” she says. “We have identified three types of gaps. First, there are things we do but do not report. For example, we do not employ children in our mines, which might seem obvious to us, but in the world, there are companies employing children. With that in mind, we need to underline that we respect human rights. Indeed, what is clear on a regional level might not be clear on a global level. The second gap is related to the information that we do report, but it gets missed, maybe because not phrased well. Therefore, we need to build more user-friendly reports. These two types of gaps should be easy to fill. The third type, however, are things we have not considered and we need to address them.”
And this is where project management comes in: the task is not only identifying problems but also finding opportunities and developing initiatives through cooperation within the Group.
“We have centralised coordination but decentralised implementation,” Mrs Bohuslavová continues.
“For instance, we need to do better in terms of employee training, especially in smaller companies, who get less training than the mother company. So that everybody gets support from the company. Another example is to increase the number of women in management, which is a governance issue.”
“It is not realistic to find the perfect number we should reach, but we need to take steps to make the energy sector attractive for young girls,” she points out. “And I hope we are succeeding. Our summer internship programs for university students at the nuclear power plants attracted about 30 per cent of female students this year. It is a slower process than introducing quotas for women, but it is more effective and more permanent.”
Speaking of challenges, Mrs Bohuslavová doesn’t see them in the decarbonisation process as such, but in decarbonising while minimising its negative social impact on different stakeholders.
“We are committed to just transition: we have promised to take care of 100 per cent of our employees affected by the coal exit,” she underlines. “We will provide retraining, reskilling, or fair compensation. And we cannot jeopardise stable supply to our customers.”
“So while we are really serious about decarbonisation, we want to be very responsible at the same time. For us, the E and the S and the G are not separate but intertwined.”
For example, she mentions a contract with trade unions that is valid until 2027, something very unusual because typically, it is valid for only one or two years.
“If we plan to fully decarbonise our operations by 2038 at the latest, or more likely even sooner, we also need to send a message that we will protect the people,” she says.
Thus, the goal of the leader of the newly-established ESG Office is to consolidate the department in the first year and build a team that is strong and can survive under pressure.
“Also, I hope the ESG Office becomes the centre of excellence where these topics are dealt with, where ideas and projects are collected,” she concludes. “This is not just a job for one department, but we need to teach people within the company to come to us with suggestions and together make better decisions and facilitate innovation.”