Why AEP Integrated its CSR and Annual Report

Sandy Nessing
May 17, 2010
Last month, American Electric Power published its first integrated report that combines the traditional Annual Report to Shareholders with the annual Corporate Sustainability Report. It was a bold decision and one that few others have made, but I think we're on to something big. For the last four years, many of our stakeholders have been pressing the company to go this route. The idea is that your financial success is intertwined with your environmental, social and governance (ESG) performance and reporting one without the other doesn't give you the full picture. Makes sense, right?

The fact is that investors, customers and other stakeholders have been increasingly asking us for more information on a broader range of issues. What we weren't doing well enough was framing the whole picture by tying the financial aspects of our performance together with our policy positions, environmental compliance, safety performance, workforce development and technology investments. At the same time, investors are taking a closer look at ESG factors that can add value or mitigate risk across an entire institutional investment portfolio. A 2008 study conducted by SustainAbility and KPMG confirmed what stakeholders want - integrated reporting, seamless access to information through all mediums and sustainability elements embedded in business goals that are linked to business strategy.

To find out if that was really what investors were asking for, I went to our Investor Relations team. They told me that beyond the numbers, which they get through SEC filings, investors were hungry for some of the non-financial data that we were reporting in our Corporate Sustainability Report. In particular, they wanted to know about how we are managing risks associated with climate change and changing environmental regulations and our positions on public policy. They were asking for information that is voluntarily reported through the Corporate Sustainability Report but not necessarily found in the 10K. Consequently, our IR team took the Sustainability Report to their investor conferences - not the Annual Report. That was the revelation I'd been waiting for so I built a business case for it and this time it was an easy sell to management.

Last week, during the Ceres conference in Boston, our approach was validated. NGOs, investors and other companies are taking a closer look. I think many were waiting for someone else to take the plunge first. And while the feedback so far has been positive, we know there is room for improvement and we expect our reporting will improve year over year. My plan this summer and fall is to tag along with our IR team to hear, first hand, what investors of all stripes are saying and asking for. That, and continue to keep my ear to the ground for any other new issues that are coming around the bend. It's going to be a busy year!


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About the Author

Sandy Nessing
Sandy Nessing is the Managing Director of Sustainability and ESH Strategy and Design for American Electric Power Co. Inc. She wrote and published AEP’s first Corporate Sustainability Report in 2007, and in 2010 published AEP’s first integrated Corporate Accountability Report, a combination of the annual sustainability report and Annual Report to Shareholders. Follow her on Twitter at @Watts4U.

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