As the focus on environmental, social and governance metrics and accountability measures gains traction in the corporate world, some utilities in the midst of a massive energy transition are taking a closer look at the "s" part of that equation as they seek to meet their climate goals. The evolving view of corporate responsibility coincides with the industry's growing push to diversify boards and management teams.

Most corporate ESG reporting is still focused on meeting greenhouse gas reductions or other environmental performance metrics. With such requirements comes a new take on meeting social obligations — as in a utility's responsibility toward coal communities, Gwen Mizell, vice president of sustainability and electrification at Ameren Corp., told a panel at the Energy Bar Association's Mid-Year Energy Forum on Oct. 13.

"That's where the 's' creeps into the picture, because if you're really building those new [renewable] facilities and if you have stranded assets in the mix as well, then costs are going to go up," Mizell said. "So you have to think about what impact that will have on vulnerable communities. Our transition has us bringing on cleaner renewables in parallel with shutting things down, and we're trying to balance that out while lessening the impact on … vulnerable populations to the extent that we can."

For Ameren, that social balancing act will require some coal-fired power plants to continue to operate a bit longer than environmentalists would like, Mizell said.

Ameren won praise from the Natural Resources Defense Council and other clean energy advocacy groups when it released a new sustainability plan in September 2020. The historically coal-heavy utility pledged to invest $4.5 billion to install 3,100 MW of wind and solar generation by 2030, along with energy efficiency and demand response programs expected to shave nearly 2,000 MW from peak energy demand by 2040.

After closing its last coal plant in 2042, Ameren expects to reach net-zero emissions by 2050. Reliance on coal and natural gas until mid-century — longer than what climate scientists say the planet can endure — "ensures reliable and affordable energy for our customers today, tomorrow and for decades to come," the utility's integrated resource plan said.

A growing focus on diversity

At the same time, other legs of the ESG stool are taking on more prominence, adding pressure on companies racing to meet investor expectations.

In early August, the U.S. SEC approved new board diversity requirements that Nasdaq had requested to force thousands of companies to publicly disclose diversity statistics for their boards. The first company reports under the new rule are due in 2022.

"This is not something that is going away," said Serena Rwejuna, an associate with the Jones Day law firm who moderated the Energy Bar Association panel. "The SEC's leadership has said they're taking an all-leadership approach in responding to investor demand for climate change and other ESG information."

Investors today are more thoughtful about where they place their money and what to ask from the companies they support than just a few years ago, panelists agreed.

"They are really focused on community composition at the board level, where they are on policies and also who are making up the really critical committees that are part of that board," noted Marcy Block, a senior director for sustainable finance and ESG analytics at Fitch Ratings, which serves financial markets. "There is intentionality in a lot of their decisions and in how they're evaluating ESG factors in their portfolios."

For Ameren, this investor focus coincided with the coronavirus pandemic and social unrest of 2020. The utility raised $23 million to support customers who had trouble paying their electric bills and has pledged another $10 million over the next five years to help address racial equity issues in its Midwestern service territory.

"It became very clear to us that companies like ours have more of a responsibility to our communities than just delivering energy," Mizell said. "We understand that our board has to be significantly diverse to be able to represent all the perspectives that exist in our service area, and we're proud of the fact that our board is more than 60% either racially or gender diverse."