Custom «Business & Sustainability» Essay Paper

Introduction

Corporate social responsibility (CSR) has now become a key feature of many large organization’s objectives and policies focusing on a wide scope of topics including the environment and energy. The extents to which low carbon procurement or energy management feature within the framework differs. It is no longer sufficient for businesses to operate and behave responsibly; now the CSR policies and accounting mechanisms should be applied. All energy organizations need to operate with a perspective of energy conservation and consumption, as well as offer considerably low costs. For these reasons, the Energy Act and energy institute are working together on providing a basic framework for energy relevant issues (Campbell, 2004).

Company Overview

E.ON is one of the largest British leading gas and power companies. The company produces electricity and retailing gas and power and is a division of the E.ON group. In a short period, the company has become one of the world largest gas and power investors.

Since five million people consume E.ON’s gas and electricity at work and home, it appears to be the leading energy company in the UK.

 RWE is the incorporated energy company supplying 10% of electricity and gas consumed in Wales and England. Recognizing their role in accomplishing the target of 20% renewable energy by 2020 and being leader in enforcing regulations, RWE defines its ambitious goal as reducing the carbon intensity to 50% in their generation activities by 2015. They initiated the first transformation of a coal-fired plant to produce electricity from 100% sustainable biomass (RWE Corporate Responsibility Report, 2011).

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E.ON Approach to Sustainability

In recent years, expectations of society towards the energy sector have increased. E.ON stakeholders expect the company to be responsible for running the sustainable business. At the same time, E.ON faces greater challenges such as finding sustainable solutions for the future energy supply system and environmental change. The company’s new strategy of purifying energy meets these complex demands. In line with this strategy, the company formulated a new sustainability program that revolves around future sustainability criteria such as occupational safety, environmental protection, and corporate governance into its key organizational activities. In dialogue with stakeholders, the company has established long-term goals for the year 2012. E.ON’s approach towards sustainability can be defined as finding a balance between reliability and sustainability of electricity. In its CSR report in 2011, the company states that affordable, reliable, and sustainable energy is the backbone of total change in the cultural and social aspects. Besides, at the same time, the company must consider the protection of the country as well as future generations’ interests. As a part of its approach, E.ON has outlined its Responsible Procurement Principles. These principles outline the necessary requirements that all suppliers have to adhere. E.ON specifically states that this policy mainly concerns suppliers of raw materials such as uranium, coal, and biomass (E.ON Annual Report, 2011).

RWE Approach to Sustainability

The RWE states ten areas upon which its strategy of CSR grounds and where it intends to take action. They are energy efficiency, climate protection, security of supply, demographic change, community engagement, pricing, innovations, supply chain, environmental protection, health and safety. Supply chain is one of its prime areas. RWE’s target is making sure that 95% of the group procurement satisfies internationally recognized environmental standards. All suppliers of RWE need to follow the Code of Conduct as introduced in 2005. This code also implies company’s lignite mining. The code relies on the charter of the UN’s Global Compact and the OECD principles for multinational corporations. In its Code of Conduct, the company states that it does not have business relationships with suppliers who violate the Global Compact Initiative of the UN in areas such as labor standards, human rights, anticorruption, and environment (RWE Corporate Responsibility Report, 2011).

Environmental Protection of E.ON

The E.ON’s CSR strategy states that the company is formulating climate and environment protection guideline, endorsed by the board in 2012, will be compulsory in all market units. It mentions that climate protection covers actions to increase energy efficiency, CO₂ free electricity generation, and reducing greenhouse gas emissions. This environmental protection will undertake issues including biodiversity and ocean protection as well as environmental management systems. E.ON complies with Health & Safety Environment Management System, which sets behavior principles and minimum standards for health, safety, and the environment. The company in its Biodiversity Statement outlines actions to protect biodiversity including initiating conservation measures and adopting site biodiversity action plans. 

Announced in 2011, the company’s climate protection strategy intends to minimize CO₂ emissions by at least 50% till 2020 compared to 1990 standards. The policy has five prominent areas:

1. Expansion of renewable capacities;

2. Increasing the thermal efficiency of conventional power plants;

3. Implementing CCS technology in coal-fired power plants;

4. Expanding investments in the R&D of climate-friendly technologies;

5. Playing a key role in specializing nuclear power.

The Group mentions climate-protection concern in all strategic and operational decisions and continuously assesses all substantial capital investments in the carbon field (E.ON Annual Report, 2011).

Environmental performance of CO2 emissions

The company emitted 86 metric tons of CO₂ in 2011, compared to 121.3 million metric tons in 2010, mostly from its oil, coal, and natural gas processing while operating power plants, transporting, and non-conventional activities. CO₂ emissions multiplied by 8.7 million tons compared to 2009 due to increase in electricity and coal-fired production. The graph below shows the comparative study of E.ON and RWE’s CO₂ emissions.

Power plants

The company was liable for 0,43% of the 28.6 billion metric tons of CO₂ emissions released worldwide in 2011 through the burning of fossil fuels. E.ON is successful in reducing emissions by about 35% since 1996, from 720 grams CO₂/kWh to 520 grams CO₂/kWh in 2010.

Emissions have significantly dropped from 2000 due to efficiency of intensified measures, the closure or sale of inefficient plants, and the development of renewable capacity. 

The overall E.ON group’s figures include emissions of CO₂ from 944 grams CO₂/kWh (US Midwest, generates 95 percent of electricity from fossil fuels) to 11 grams CO₂/kWh (Nordic, produces only 3.5% of electricity fossil fuels.) The only unit, which has made considerable reductions to emissions since 1991, is E.ON UK. The reductions were made by the company before it became a division of the E.ON.

Distribution

The company invests £1.6 bn to renew and refurbish its distribution network and reduce electricity losses in 2012. The company intends to reduce the CO₂ emissions of its vehicle fleet by 25% in 2011. It is enhancing the fuel efficiency of its fleet. The company has directed a policy restricting CO₂ emissions from the cars, which should not exceed 166 g/km. E.ON also replaces less efficient vehicles with new ones and tests the speed limiters enhancing fuel efficiency by 1.6-2.6%. 

Non-operational activities

E.ON is taking various steps to reduce its carbon footprint across the entire organization by increasing building energy efficiency. It uses distributed production technology (small-scale alternatives to large power plants, such as micro wind turbines, heat pumps, and combined heat and power systems.) It reduces business travel and increases environmental awareness among employees. The group intends to reduce CO₂ emissions per employee by 10% annually. The company has made the significant progress. In 2008 and 2009, the company set a goal of decreasing CO₂ emissions per employee by 10% annually, which broke its previous record of 12% in 2007 and 17% in 2006 (Carbon Market Data publishes the EU ETS Company Rankings, 2011).

Nuclear waste

In 2010, E.ON Nordic and E.ON Energie generated 3,632 tons of low-level nuclear waste and 280 tons of high radioactive waste. Greenpeace statement shows that the company is the second largest contributor of Europe’s high-level nuclear waste producing 9% of this. Some of low-level radioactive waste is recycled into non-radioactive material. Another portion is shipped to the Simpevarp peninsula for disposal.

Other solid waste

In 2011, E.ON generated more than 4,550 kilotons of dangerous waste, 75% of which is recyclable. The company regularly recycles a substantial portion of the byproducts of fuel gas scrubbing and coal combustion; particularly gypsum and ash have become popular in the building materials industry.

Water

E.ON declares that water is usually available at all of its power stations. Reducing water consumption has a lower priority than other environmental protection issues, but the company ensures the use of water properly. Cooling power plants requires the largest water consumption. The company draws water either from a nearby river or water wells. Water is also utilized to generate steam; 92-95% is re- condensed and used again. Water is additionally used for desulphurization. E.ON’s consumption of water is the amount of water consumed for electricity generation without cooling power plants; in 2010 it was 105.8 million m3 (Sustainability in the power sector, 2010).

Environmental Protection Policy of RWE

RWE understands its responsibility towards the environmental protection and is dedicated to improvement of its ecological performance. The company plays a crucial role in fulfilling the guidelines of UN Global Compact including its environmental policies and principles.

In order to achieve these objectives, RWE policy requires:

1. Integration of ecological factors into business processes and decisions;

2. Observing relevant ecological norms;

3. Formulating corporate aims and targets for ecological improvement;

4. Regular revaluation of management level and its ecological achievement; and implementation of high standards of ecological reporting;

5. Improving and establishing systems for environmental management;

6. Imparting suitable training for employees on ecological issues.

RWE long-term objective in accomplishing a neutral ecological power supply by 2050 pose immense challenges. Producing electricity with reducing CO₂ emissions is a significant element of RWE’s strategy, which motto is “More sustainable, more robust, and more international.”

By 2020, RWE plans to increase the proportion of renewable energy to at least 25%. Relatively low-carbon production of electricity from gas will be the enormous share of production projected at around 45%. By 2014, RWE power-station renewal program for conventional power stations is going to be completed. The company will bring coal-fired and advanced gas power stations with a total capacity amounting to 12,500 megawatts (MW.) The company intends to invest substantially in the expansion of renewable energy. In the period from 2011 to 2015, RWE intends to invest around € 4 billion in renewable energy. By 2015, RWE objective includes reducing the CO₂ emissions from all of its power stations by more than 25% per megawatt hour (MW.) In 2006, when European emissions trading started, RWE emitted 0,80 metric tons per MW. Its target is 0,63 metric tons per MW. In fact, there are plans to reduce the emission factor to 0,46 metric tons per MW by 2015. However, the rejection of nuclear energy in Germany demanded an adjustment to RWE’s goal. Last year, RWE decommissioned 2,5 GW capacity of carbon-free electricity production with the Biblis A and B units. By the end of 2016, another 1,4 GW will leave the grid with Gundremmingen B. At the same time, RWE will increase the deployment of coal-fired power stations. CO₂ emissions rose accordingly: in 2011 the power stations emitted 0,79 metric tons of CO₂ per MW compared to 0,73 metric tons per MW in 2010. A report from Carbon Market Data reveals that RWE is one of the biggest CO₂ emitters in 2011; the company emitted 141 metric tons of CO₂ compared to 86 metric tons by E.ON (RWE Corporate Responsibility Report, 2011).

The graph below gives the number of CO₂ emissions compared to the free allowance received annually under the EU emissions scheme.

The footprint of greenhouse gas emissions within the company is governed by fossil-fired power stations, which contribute 98% of company’s total CO₂ emissions amounting to 163,9 million metric tons. Therefore, it represents the biggest lever of reducing emissions. The modernising of power stations led to producing electricity at much higher efficiency levels.

Modernized power stations use less fuel to produce the same amount of electricity. For example, increasing the efficiency of coal-fired power stations by one and half percentage reduces CO₂ by around 3,5 million metric tons annually. These observations are made from power stations’ current portfolio and the amount of electricity produced in 2011.

The process of dumping nuclear operating waste (medium grade and low grade nuclear waste) and highly radioactive waste goes under the strict supervision of the authorities. RWE transports low and intermediate waste to the licensed interim storage site.

High-grade nuclear waste remains in cooling ponds before storing safely in Castor storage containers in conformance with nuclear regulations act.

Water use

All thermal power stations of RWE require cooling water in their operation. Usually rivers provide a key source of water; in the UK the sea and lakes are also one of the prime sources of water. However, lignite-fired power stations use groundwater for cooling and keeping opencast mines dry.

Most of the cooling water after usage goes back to the ecosystems. The company decreases water intake through multiple usage of recycled water. Thus, this process improves the chemical composition of the water before cooling, hence enabling its further unlimited use. Only 7,5% of the 4,346 million m³ of water meets the ecosystem’s requirement.

Waste

The slag and ash obtained from coal-fired and biomass power stations contribute a significant share of the company’s hazardous waste. The slag and ash are reusable. Nearly 75% of 1,3 million metric tons of slag and ash generated at coal power stations can be used in producing the building materials and in construction activities. Other waste amounting to 2,02 million metric tons generated during operations, drains through external disposal systems. More than 95% of the waste is recycled (Carbon Market Data publishes the EU ETS Company Rankings, 2011).

Conclusion

The above analysis indicates that there are many conflicts and motivations in protecting the environmental balance in the United Kingdom. RWE and E.ON attempt to reconcile their role as a global citizen with its profit-motivated duty to their shareholders. Whilst the UK government continuously encourages CSR in spite of the financial difficulties, current reduction of emissions is not adequate to define a state of ecological equilibrium within the economy. Undoubtedly, the response emanating from both power producing giants is overwhelming in support of environmental responsibility. Their environmental policy depends on other external factors. They are unwilling to sustain the rising costs of implementing a new technology, and seem to wait until the government compels them to renew their strategy.