Energy companies have been in the spotlight since the Conservative governments of the 1980s and early 1990s controversially privatised public utilities. Unwieldy and inefficient state-owned utilities with a remit to provide public services were transformed into private companies with the additional responsibility of providing shareholders with competitive returns.
Yet these newly privatised companies were not given carte blanche to pursue profits: regulation played a key role in shaping the competitive landscape. Today in Britain, the Office for Gas and Electricity Markets (Ofgem) regulates the sector with a brief to protect the consumer from unfair competition.
EDF Energy, one of the largest electricity and gas suppliers in Britain, believes it too has a major role to play in protecting consumers. To the casual observer, this may seem somewhat incongruous with making profits. But this is exactly where EDF Energy takes aim, believing that as a company serving the community it has a duty to be involved in initiatives such as those focused on fuel poverty. The company-funded EDF Energy Trust, designed to help vulnerable customers pay their bills and advise on money management, exemplifies this approach.
Formed by the merger of the London Electricity, SEEBOARD and SWEB group of companies, EDF Energy supplies about 5m people in the UK with electricity and gas, as well as operating the country’s largest public and private electricity network.
France’s state-owned electricity company Électricité de France (EDF) owns EDF Energy, although plans have been tabled to float 30% of the share capital before the end of 2005 to raise €10bn (£7bn). EDF Energy currently has 11,300 employees across the UK and in 2004 turnover was over £4bn .
EDF Energy tackles corporate responsibility through what it calls “business ambitions”. According to chief executive Vincent de Rivaz: “People talk about financial performance, customer service and corporate responsibility as if they are separate. They are the same. They are all a part of our core responsibilities”.
REPORTING STRUCTURE
What appears to be a complex reporting structure reveals the fundamental nature of corporate responsibility practice at EDF Energy: integration throughout the business structure.
On an operational basis, Jennifer Gramolt, corporate responsibility strategy manager, and her colleague Alison Braybrooks, community investment strategy manager, report to director of communications Gareth Wynn. Wynn sits on the company’s UK executive committee.
In addition, Gramolt supports Helen Shaw, director of human resources – the ‘board champion’ of corporate responsibility. Shaw has responsibility for driving performance as chair of the CR Steering Committee, comprising of all EDF Energy’s executive committee members.
On the second tier, Shaw chairs the CR Strategy Group, comprising representatives of all EDF Energy branches and corporate functions at the director level. This group plays a pivotal role, overseeing and monitoring the implementation and development of corporate responsibility.
“Effectively the CR Strategy Group members have responsibility for delivering CR within the business as a whole. They also have topic responsibilities, both down and across the business lines,” Gramolt explains.
Corporate responsibility sits naturally, but not exclusively, in the human resources function, since human resources by its very nature has a “cross-company” view of the business.
“We don’t see it [corporate responsibility] as sitting in communications or human resources or any other performance-lead divisions; it has an integral role in all of them,” Gramolt says.
That’s not to say that the company’s responsibility policies skirt human resources. Looking after EDF Energy’s workforce is a key priority, the company says in its responsibility report. In 2003, the company carried out an employee satisfaction survey, with 57% agreeing to the question: “Overall I am satisfied with my job”. The company also launched a final salary pension scheme in 2003 and has introduced performance coaching across the business.
Community investment
Community investment has its own budget within the corporate responsibility function; a large portion of which is controlled by the communications department and allocated throughout the country. Meanwhile, different parts of the business retain control over their own community budgets, which they have freedom to allocate to projects on an individual basis.
“We don’t really have control over the individual pots of money on the ground. But what we do is meet with the people every month and talk about strategy and where we want to go,” Braybrooks explains.
Internally, EDF Energy implements its community investment programmes through a network of coordinators, some of whom have responsibility for delivering community investments and others who are “volunteer champions”.
Externally, EDF Energy works with its community partners, such as Mencap, the company’s adopted charity for 2005, and the charity Learning Through Landscapes (http://www.ltl.org.uk/fitforfun).
EDF Energy measures performance of its community investment programmes through the London Benchmarking Group (http://www.lbg-online.net), managed by The Corporate Citizenship Company, the publisher of Briefing.
The CR team conducts a selection process every November to choose its charity of the year. First, a staff survey is conducted to ask which area (such as health and disability, homelessness, children and the environment) employees would like to support in the coming year. The company then draws up a list of charities in the chosen area and all are invited to submit a four-page written proposal. The charities are then whittled down to a shortlist of four – this year the charities being, Mencap, Cancer Research UK, British Heart Foundation and MS Society. These charities all presented to EDF Energy’s charity committee made up of representatives across its business.
Volunteering
Volunteering lies at the heart of EDF Energy’s community investment programme. Through the group’s Helping Hands initiative the company offers every employee two days paid leave to get involved in the community.
By the end of 2004, over a quarter of all employees – including the executive committee – took up to two days of company time to volunteer in their local communities: equivalent to EDF Energy employing 10 of its staff to work full time in the community for one year.
Throughout 2005, EDF Energy employees are volunteering for the company’s new charity partner, Mencap, as well as raising £200,000 for the learning disability charity.
Since 1996, EDF Energy has worked in partnership with Learning through Landscapes to establish the School Grounds Awards, helping schools across the country to improve their grounds. EDF Energy has invested over £1m in funding for schools since the scheme began, and over 250 employees have volunteered in schools to develop their grounds.
To reflect support for London 2012 Olympics (EDF is a premier partner) and the growing concern over the health of young people in the UK, the awards were named Fit for Fun this year. Any project that seeks to improve the health and fitness of young people through the development of school grounds is eligible to apply for an award.
Alleviating fuel poverty
In February, independent consumer watchdog Energywatch criticised EDF and others, for raising gas and electricity prices for the third time in 10 months. “This is the first increase of 2005. It won’t be the last. Energy consumers will be feeling under siege,” the watchdog’s chief executive Allan Asher said. Since March 1, 2004, the watchdog estimated gas prices had risen 16.2% and electricity prices 15.9%.
To help vulnerable consumers, EDF Energy announced it would offer a price freeze until March 2006 for some of its poorest customers. The so-called “social tariff” currently applies to 62,000 EDF Energy customers living in fuel poverty – officially defined as households who spend more than 10% of income on energy needs.
Beyond 2006, EDF Energy hopes to offer the first ever “fuel poverty tariff”, where the company will set differential tariffs to its customers. But at the moment, Ofgem’s regulations don’t allow these types of scheme.
A keystone of EDF Energy’s community-contribution programmes is the independently governed EDF Energy Trust. Launched in 2003 with an initial donation from EDF Energy of £2m, it aims to help people take control of their finances by reducing their debt burden and ultimately helping them meet future bills.
EDF Energy Trust “is not twiddling at the edges, which I think can happen so often with a community investment or corporate responsibility programme,” Braybrooks says.
But should companies see themselves as key players in the alleviation of poverty and debt? EDF Energy certainly thinks there is a key role to play, explains Braybrooks. For one, it makes good business sense to ensure the provision of proper debt counselling throughout its customer base.
“Ultimately debt is an issue the company has to deal with and if there is a better infrastructure in place of debt advisers across the UK and particularly where we do business, that benefits the company enormously because they are providing specialist debt advice to not just our customers, but all the utilities,” Braybrooks says.
Second, preventative money management advice means customers will eventually enjoy a positive experience of the company and are more likely to remain loyal. The company is also advising the government on fuel poverty and providing expertise.
“Our view is we don’t have a responsibility in dealing with poverty in the UK, but we do have a role to play in dealing with fuel poverty,” Gramolt says.
The company can also offer superior data on fuel, poverty, and models to interpret this data. “The government’s data on fuel poverty are a statistical creation; they don’t know precisely where the [poorer customers] are. Electricity companies know postcode by postcode or even ward by ward which households have the indicators of being in fuel poverty,” Gramolt adds.
EDF Energy has yet to establish a rigorous method of measuring the economic benefit of its fuel poverty programmes. “This year we’re really looking at how to measure [the benefit] and embedding it in the business,” Braybrooks adds.
Shaping public policy
EDF Energy believes that the very nature of the energy business means it has a clear remit to work with the government on public policy issues. “We see ourselves as working in partnership with government on issues we have expertise or knowledge or impact that they aren’t perhaps able to leverage alone – I think that’s very much the approach that we take,” Gramolt says.
“Because of what we do as a company we touch on so many public policy issues around for instance environmental issues, around customer protection and affordability. The energy industry has traditionally always worked very closely with government,” Gramolt says.
Climate change is clearly emerging as a hot topic. The company participates in the emissions trading scheme, but Gramolt believes the government also has a definite role to play in terms of helping stimulate customer awareness and demand around issues such as renewable energy.
Going private
EDF Energy’s corporate responsibility team do not expect a radical departure from their well-established practices once its parent company floats on the open market. In fact, they expect EDF Group to look to the UK operation as an example of best practice.
“As we move towards the IPO, EDF is looking to us as an example of how in a less regulated, privatised market, you retain your values and your social and environmental programmes, that there is a business case,” says Gramolt.
But with nearly a third of the company in private hands, Gramolt admits some improvement would probably have to be made. “We might have to just work a little harder in communicating the benefits in terms of how there is a strong route from community investment into the business. We might (also) have to work a little harder in developing the tools to convey the benefits to the City.”
With community investment so embedded in the business, Braybrooks stresses the cost-effectiveness of EDF Energy’s programmes. “We have a much bigger spread across the board, simply because 5,000 people are involved in volunteering. It is cost effective… because it is embedded in learning and development.”
Conclusion
By their very nature, companies providing gas and electricity to the public are directly linked to the community they do business in. As Braybrooks notes, “the community is the customer.”
With community investment programmes targeted at protecting vulnerable consumers, EDF Energy clearly understands this mutually dependent relationship. Furthermore, the company has made substantial progress developing practices that solve some of the quandaries faced by privately owned public utility providers. With the problem of poverty very much on the radar of both domestic and international policy-makers, those at the lower end of the income scale will be hoping that EDF Energy’s ‘caring’ policies will continue, even as the parent company fully embraces the demands of the free market economy.
Corporate Citizenship Briefing, issue no: 81 – April, 2005
Alison Braybrooks has been EDF Energy’s Corporate Investment Strategy Manager since February 2004. Before that, she spent 10 years in the voluntary sector, heading up corporate development teams at Shelter and NCH. Previously she worked in management consultancy, developing customer service strategies for blue-chip UK organisations. Contact: alison.braybrooks@edfenergy.com
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