PG&E Corporate Responsibility and Sustainability Report 2018

PG&E Chapter 11 Update

Integrating Sustainability

PG&E defines sustainability as meeting the needs of today in a way that creates a better tomorrow—for our customers, communities, employees and the planet.

As an energy provider rooted in California, PG&E confronts choices and challenges with environmental, social and economic factors that impact the customers and communities we serve. Finding the right balance between these factors in the decisions PG&E makes is essential to achieving our goals of providing safe, reliable, affordable, and clean energy—today and into the future.

Corporate sustainability as business strategy has never been more important—taking an approach that considers PG&E’s operations through the lens of preparing for the future and providing ongoing, long-term value to our many stakeholders. In fact, doing so is what customers, investors, policymakers, regulators, environmental and social justice advocates and many others have come to expect from PG&E.

To help guide our decisions, we rely on our Mission, Vision and Culture framework, developed through extensive outreach and interactions with our employees, customers and other stakeholders. Importantly, it places a sustainable energy future at the center as our North Star.

Our Mission

To safely and reliably deliver affordable and clean energy to our customers and communities every single day, while building the energy network of tomorrow.

Our Vision

With a sustainable energy future as our North Star, we will meet the challenge of climate change while providing affordable energy for all customers.

Our Cuture

  • We put safety first.
  • We act with integrity and humility. We are transparent, accountable, and lead by example.
  • The needs of our customers are central to our decisions.
  • We embrace change, innovation and continuous improvement.
  • We value diversity and inclusion. We speak up, listen up, and follow up.
  • We succeed through collaboration and partnership. We are one team.

Governance

In early 2019, PG&E Corporation announced the appointment of Bill Johnson as CEO and President and the appointment of 10 additional directors to its Board of Directors. These governance and leadership changes reflect PG&E’s focus on strengthening our safety culture and operational effectiveness and successfully navigating the Chapter 11 process. Shortly thereafter, PG&E announced the appointment of an additional director, as well as the hiring of Christopher Hart, former chairman of the National Transportation Safety Board, to serve as a special independent safety advisor.

The refreshed Boards include highly accomplished individuals committed to further enhancing PG&E’s safety culture, understanding and properly responding to customer concerns and fairly treating wildfire victims, employees, retirees and other interested parties.

More recently, Pacific Gas and Electric Company appointed Andy Vesey as CEO and President. He reports to the Board of the Utility, while working closely with and taking direction from PG&E Corporation’s CEO and President.

At PG&E, sustainability is managed on three levels:

Boards of Directors

The Boards of PG&E Corporation and Pacific Gas and Electric Company have numerous permanent standing committees, which support each Board’s basic responsibilities. The standing committees are as follows:

  • Executive
  • Audit
  • Compensation
  • Compliance and Public Policy
  • Finance
  • Nominating and Governance
  • Safety and Nuclear Oversight

The Compliance and Public Policy Committee of PG&E Corporation’s Board of Directors has primary oversight of corporate sustainability issues, such as environmental compliance and leadership, climate change, community investments and workforce development. This includes an annual review of PG&E’s sustainability practices and performance. Other committees of the PG&E Corporation Board and the full PG&E Corporation and Pacific Gas and Electric Company Boards address other components of PG&E’s sustainability commitment, including public and employee safety, operational excellence and investments to increase our delivery of clean energy and enable a low-carbon future.

Business-Wide

PG&E Corporation’s Vice President of Federal Affairs and Chief Sustainability Officer is responsible for leading PG&E’s corporate sustainability initiatives, reporting and engagement.

To further embed sustainability into our operations, PG&E established an internal Sustainability Leadership Council, co-chaired by the Chief Sustainability Officer and Pacific Gas and Electric Company’s Chief Customer Officer. The Council brings together leaders from functions such as gas and electric operations, supply chain management, corporate real estate, transportation services, environmental compliance and customer energy solutions to define holistic, long-term targets and strategies to reduce the environmental impact of our operations. For example, the Council recommended, and PG&E adopted, a voluntary goal to avoid one million tons of cumulative greenhouse gas emissions from PG&E’s operations from 2018 through 2022, compared to a 2016 baseline.

Grassroots Involvement

Employee-led initiatives throughout PG&E help integrate corporate sustainability priorities into our work. For example, our volunteer Grassroots Green Network has engaged employees to reduce facility energy use, water use and waste, while our Employee Resource Groups (ERGs) provide an important link to diverse communities through volunteer service, mentoring and scholarship awards.

Materiality

In 2017, PG&E completed its second materiality assessment on corporate sustainability—a strategic project to 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. The assessment identified 18 issues, grouped into four categories: safety and security, climate change strategy, customer engagement and retention, and integrity and credibility.

Creating Incentives

PG&E’s Short-Term Incentive Plan (STIP), an at-risk part of employee compensation, reinforces PG&E’s sustainability commitment by rewarding eligible employees for achieving specific goals crucial to our success. In 2018, the senior management team and the PG&E Corporation Compensation Committee decided not to award compensation via STIP, due to the larger uncertainty facing our business. For more details on the specific measures, targets and results for our 2018 STIP, please see page 58 of the 2019 PG&E Corporation and Pacific Gas and Electric Company Joint Proxy Statement (PDF).

The Bankruptcy Court has approved PG&E’s 2019 STIP for performance management-eligible employees. The 2019 STIP is focused on the important company objectives of safety, financial health and customer impact.

Short-Term Incentive Plan – Performance Measures
Measure 2019 Weight
Safety Footnote 1 65%
Financial Footnote 2 25%
Customer Footnote 3 10%
  • 1. Based on four subcomponents: nuclear operations safety, electric operations safety, gas operations safety and employee safety.1
  • 2. Based on PG&E Corporation’s earnings from operations.2
  • 3. Based on escalated customer complaints.3

The 2019 STIP will be paid each quarter based on PG&E’s cumulative, year-to-date results against the STIP metrics. The STIP remains an at-risk plan, subject to enterprise performance and Compensation Committee certification of performance with respect to each quarterly payment. Our most senior officers are not eligible to participate in the STIP.