PG&E Corporate Responsibility and Sustainability Report 2018

Northern California Wildfires

Materiality

PG&E completed its second materiality assessment on corporate sustainability in 2017—a strategic project to refresh our 2014 assessment and help us identify topics that are material to the long-term sustainability of our business. Conducted in coordination with PG&E’s strategic planning process, the materiality assessment integrated input from our stakeholders and members of our executive team, identified opportunities and risks, and sharpened our corporate sustainability strategy and reporting.

PG&E’s Materiality Matrix

PG&E’s materiality assessment identified 18 issues, grouped into four categories: safety and security, climate change strategy, customer engagement and retention, and integrity and credibility. Every issue is material to PG&E’s long-term sustainability, regardless of its placement on the matrix.

Materiality Matrix

What We Learned

Our materiality assessment provided important, actionable insights into our stakeholders’ priorities and our own business risks and opportunities. In the months since its development, the assessment and supporting analysis have been used in numerous ways, including as inputs to PG&E’s strategic planning process. They have also informed our corporate sustainability reporting and focus, and will continue to inform our goals and strategies in the coming years.

Key insights of the materiality assessment included:

  • It reinforced our focus on the basics of our business. The assessment showed that public and workforce safety, energy reliability, affordability and equity, and customer satisfaction are top priorities both for PG&E and our external stakeholders—and continue to be foundational issues.
  • We operate in a shifting landscape. The gas and electric industry is experiencing a transformation in how energy is generated and provided. Distributed energy resources, such as private rooftop solar, the increase in electric vehicles on the road, and aggressive emissions-reduction targets set by the state of California are impacting the traditional energy provider business model in significant ways.
  • Issues are highly interdependent. Each material issue is deeply interrelated with other issues—signifying the importance of systems thinking and the need for collaboration.
  • PG&E’s culture matters. PG&E’s general disposition—both internally and externally—about embracing change will have a large influence on how successfully it navigates the future landscape.
  • Finding the right balance is key to success. Many of the material issues PG&E faces can contradict one another. Balancing these competing forces will be crucial going forward.

Definitions

Safety and Security

Public and workforce safety
Managing the impacts of energy generation, transmission and distribution on long-term public safety; safe operations and accident prevention, including ensuring the safety of PG&E employees and contractors; creating a speak-up-for-safety culture within PG&E.
Energy reliability
Managing and investing in reliable gas and electric infrastructure to provide a consistent energy supply, while balancing stakeholder interests; ensuring that infrastructure and systems are resilient in the face of earthquakes, wildfires and other natural disasters; ensuring strong asset management practices and record-keeping.
Climate resilience
Adapting to a changing climate and changing weather patterns in ways that mitigate the potential consequences to PG&E’s assets, infrastructure, operations, employees and customers. Includes the risk of more frequent and severe wildfires, drought, storms, and heat waves, as well as longer-term changes, such as sea level rise.
System information access, management and protection
Addressing the growing interest by third parties in information on PG&E’s system and the grid; managing expectations associated with sharing information; reducing cyber and physical security risks through effectively protecting data, systems, infrastructure and facilities.
Workforce attraction, development and culture
Attracting, retaining, developing and engaging employees; effective dialogue with employees and transparency around business goals and operations and labor relations; diversity and inclusion in all roles, especially management-level gender diversity; hiring from the communities that PG&E serves and striving for a workforce that reflects those communities; maintaining a workforce with the required size and skill profile amid generational and technological shifts.

Climate Change Strategy

Decarbonization policy and clean energy transition
The degree to which PG&E is impacted by and able to inform California’s climate and energy policies, which are transforming the state’s gas and electric sector and energy supply, including aggressive state goals for climate change mitigation and renewable energy; the required investments, infrastructure and integration of renewable energy into the grid.
Broad electrification
California’s broad support for rapid electrification of economy-wide energy systems and the associated impacts and opportunities for PG&E’s business model and customer affordability objectives.
Future of natural gas
The role of natural gas in California’s energy future and PG&E’s ability to minimize risk and maximize opportunity from the transition, including leveraging alternative fuel sources such as renewable natural gas/low-carbon gas.
Grid integration and innovation
How PG&E will integrate technologies that enable energy transformation, including private solar, energy storage and electric vehicles, as well as tools for customer engagement and energy management; the growth of distributed energy resources among customers and suppliers, and the associated impacts on PG&E.
PG&E greenhouse gas emissions reduction
The contributions to climate change mitigation by reducing greenhouse gas emissions from PG&E’s own operations, including its facilities, vehicle fleet, gas system and supply chain.

Customer Engagement and Retention

Energy affordability and equity
The ability of customers to afford energy service; the degree to which PG&E can control affordability of customer bills through adopting operational efficiency measures and informing evolving rate structures and design; the pursuit of a clean energy future that is accessible and affordable to all customers.
Customer satisfaction
Customer satisfaction with the responsiveness and quality of PG&E’s service and engagement with them on energy management (including energy efficiency and other options), bills, safety and PG&E’s strategic plans for the future; the degree to which PG&E effectively communicates its value proposition to—and retains—customers, given increasing customer choices for procuring energy.
Business model and regulatory reform
How the gas and electric company business model needs to evolve to reflect the value of grid services, given the rapid growth of distributed energy resources, electrification of transportation and other shifts; how the pricing paradigm evolves to meet changes in how customers generate and use energy; how reform of the regulatory structure must accompany and inform business model evolution.
Data access, management and protection
The growing interest by customers and third-parties in access to customer data and PG&E’s ability to manage expectations while ensuring data privacy requirements and broader customer security.

Integrity and Credibility

Community and economic vitality
Contributing to local communities as a business partner (e.g., job creation through supplier diversity) and community partner (e.g., understanding and meeting community needs); effectively considering environmental and social justice concerns in business policies, decisions and operations.
Policymaker engagement
Effectively engaging policymakers and regulators on climate, energy and related policies, including working in coalitions with transparency; ensuring alignment of public policy advocacy with PG&E values.
Coalition-building
Effectively partnering and building broad-based coalitions to work toward mutually beneficial policy and regulatory outcomes for complex business challenges.
Reputation
Earning trust among stakeholders and communicating proactively to be viewed as an authentic enterprise that cares about its customers and communities; behaving ethically and complying with all applicable laws and regulations.