Energy Utilities

Risks and Opportunities

Utility companies still rely heavily on fossil fuels for energy generation. The extraction of oil, coal, lignite and natural gas has been linked to groundwater contamination, air pollution, deforestation and habitat degradation. Human rights-related risks have also been documented, including threats to local livelihoods and communities’ rights to good health, clean water and food. Dedicated industry initiatives can assist companies in setting up rigorous due diligence procedures to mitigate such risks.

At the same time, the unbridled growth of renewables is fundamentally reshaping energy systems around the globe. Utilities are at the forefront of decarbonisation efforts across the wider economy and provide vital impetus for harder-to-abate sectors such as buildings, heavy industry and transport.

Still, electricity and heat generation from renewables, power grid expansions, the deployment of battery storage and electrolysers, and e-mobility are becoming the fastest-growing segments of demand for critical minerals such as copper, aluminium, lithium, nickel, cobalt or manganese. Wind turbines and solar panels, for instance, typically contain more minerals and rare earth elements than their fossil fuel counterparts and their extraction is frequently plagued by human and labour rights risks. These include poor working conditions, insufficient occupational safety procedures, child labour and the financing of armed conflicts. Further risks comprise land use conflicts, flawed resettlement processes and pollution. The latter often stems from inadequate safety provisions, for example in relation to tailings dams. Sound due diligence measures are thus required to safeguard human and labour rights and rein in adverse impacts from hazardous waste, wastewater and air emissions along the value chain. This equally applies to upstream activities such as metal production, equipment and machinery manufacturing.

Lastly, the industry is also characterised by high occupational accident rates as utility companies and their suppliers tend to outsource hazardous and specialist work to contractors. Stringent rules and management systems are needed to uphold adequate health and safety standards.  

Close collaboration with suppliers that is geared towards strict social and environmental guidelines, circular product design and material efficiency can help utility companies alleviate many of the above-mentioned challenges and business risks.

How IntegrityNext
can help

IntegrityNext provides a platform for comprehensive ESG supply chain risk management that allows you to meet due diligence requirements and improve your sustainability performance:

1. Carry out a carbon footprint assessment and benefit from enhanced visibility into your suppliers’ emissions data, reduction efforts and targets.
2. Analyse the most relevant environmental, social and governance risks as part of a five-step risk management process.

It includes an abstract country and industry risk analysis to deliver initial insights into your supply chain’s risk exposure. Based on more detailed pre-built assessments, which draw on authoritative international standards and conventions, you can monitor your suppliers with respect to the main ESG risks:

We help you identify suppliers with the most severe impacts so that you can develop a coherent strategy and target your preventive and remedial measures accordingly. The results gleaned from the assessments are synthesised in a GRI-certified report that can be readily used for your disclosures.