“We will make strong and trusted financial and ethical performance central to how we do business, providing an essential service in a responsible way.”
- Rob Guyler, Chief Financial Officer
Find out what we're doing to meet our other Better Energy Ambitions:
“Every action I take on a daily basis is to ensure we achieve value from our suppliers. Getting the best value from suppliers either saves the company money, achieves higher quality products and services, or both.
I ensure we are only buying from suppliers that support our sustainability ambitions. I have pushed through a change to our stationery catalogue that ensures we only have the most environmentally friendly products available, reduced the number of stationery deliveries – reducing our CO2 emissions greatly – and completed smaller changes, such as using paper instead of card for work order cards.”
- Sam Willcox, Supply Chain Specialist
“We’ve gained a facility that is both functional and has an amazing feel. The car park doubles as an energy centre, able to provide 50 percent of our energy needs. The variety of my role is the most enjoyable aspect. I can be deciding how to display archaeological finds in the morning and managing how we integrate 3D technology into training in the afternoon.”
- Frazier Greenshields - Head of Cannington Court
"We proactively source companies who meet our ethical and responsible standards across the supply chain. Our Zingy merchandise goes through a stringent process to ensure the suppliers involved conform to our standards. We ensure decisions made during every part of the process support our ambition to be an ethical and responsible business. It’s about doing the right thing by everyone in the supply chain."
- Lucy Dagg, Marketing Operations Communications Executive
This is why we have an ambition to achieve strong financial and ethical performance. We have deliberately made this central to how we do business. It means we can be a better kind of energy company – one that thinks long-term and does business fairly, openly and ethically.
We’ve strengthened our ambition by adding a clear commitment to strong ethical performance – how we manage our business and our supply chain. This ambition also has a focus on transparency and honesty across our financial activities. It’s all about a responsible long-term approach to our whole business.
Strong financial performance
Our key targets
- We will challenge costs across our operations and achieve a long term return on capital which is at least in line with our cost of capital
- We will invest our profits to benefit our customers, our people and our business, while striving to have a positive free cash flow
- We will continue to demonstrate a responsible and honest approach to our tax management
Our performance in 2015
- Our underlying operating profit, or earnings before interest and tax (EBIT) in 2015 was £664m. This was 15% lower than in 2014, as a result of the ongoing cost of our investment programme.
- Additionally there was a one-off charge of £796 million related to gas and coal generation and storage equipment falling in value – a reflection of the year’s challenging market conditions.
- We were awarded the UK’s largest annual electricity supply contract by the Crown Commercial Service following a competitive tender process. The renewal of the multi-billion pound four-year agreement will see EDF Energy continue to supply electricity to thousands of public buildings and sites across central and local Government, including schools, the NHS, the Highways Agency and major cultural assets such as the National Gallery.
We invest £600 million a year in our nuclear plants and this investment is paying off. In 2015, they generated 60.6TWh, the highest level for 10 years and 50% higher than in 2008, the year EDF Energy acquired the stations.
The year ahead
In the face of challenging market conditions, our belief that the Government will maintain and strengthen its Carbon Price Floor and Capacity Market policies gave us the confidence to extend the operational life of four of our nuclear power stations. The Carbon Price Floor encourages generation from low-carbon sources like nuclear, while the Capacity Market ensures the UK has the power it needs.
How we conduct our business, and the impact and influence we have through our wider supply chain, is just as important as our financial performance. We publish our performance against the 10 principles of the United Nations Global Compact (UNGC) to help us focus and improve our performance.
- We will maintain a United National Global Compact (UNGC ) compliant supply chain and show continuous improvement aligned to the principles of the Department for the Environment and Rural Affairs (Defra) Sustainable Procurement Framework.
Our performance in 2015
- We spent £2.2 billion with more than 4,000 suppliers, broadly consistent with 2014. We calculate this supported over 89,000 indirect jobs within our supply chain.
- We continued to promote and assure UNGC compliance among our suppliers but fell slightly short of our 100% target.
We continued our journey of continuous improvement against the Chartered Institute of Procurement and Supply (CIPS) Sustainable Procurement Review by:
- adopting the CIPS Sustainability Index (SI) for supplier assessment
- inviting our Top 200 suppliers (84% of corporate spend) to undertake a CIPS SI assessment (42 have completed and published scores so far)
- establishing a Health, Safety and Environmental (HSE) and Wellbeing forum where we can collaborate with our strategic supply chain partners across six work streams
- supporting our company-wide accreditation against the National Equality Standard
- collaborating with our supply partner EY to hold a joint women’s network event
- continuing the rollout of sustainability training to our supply chain practitioners.
We decided not to seek silver accreditation in the CIPS Sustainable Procurement Review, allowing us to focus on establishing the foundations required for sustained success in the future
Early in 2016, with the support of our Trade Unions, we gained the Voluntary Living Wage accreditation. This means we will continue paying our employees a Living Wage and will work with our supply chain partners to make sure everybody who works within our supply chain is also paid a Living Wage.
We published our first Communication on Progress of our compliance against the ten principles of the UNGC. We have committed to achieve advanced level compliance by 2017.
The year ahead
We will continue to engage our top suppliers on sustainability. Our target is for 100% of our prioritised suppliers to have completed the CIPS SI assessment by the end of 2016, with improvement plans agreed for any suppliers falling short of the average.
We will revise our UNGC compliance target to 95% of suppliers, to allow for process timescales and churn within our vendor master database.
Upon request, we will provide our suppliers with an interim statement of our compliance with the Modern Slavery Act 2015, ahead of publishing a full statement on our website in 2017.
Compliance with tax policy
Our performance in 2015
EDF Group will continue to demonstrate a responsible and honest approach to its tax management. It has adopted a tax policy which is aligned with its stated ambitions and values. Specifically the Group’s tax policy includes:
- acting with integrity
- only undertaking tax planning to ensure legitimate business activities are implemented efficiently, and not to undertake artificial schemes or arrangements
- maintaining an open, honest and positive working relationship with HMRC
- where differences of view arise with regard to the interpretation and application of tax law, committing to addressing the matter in real-time and resolving the matter with HMRC in a constructive manner.
EDF Energy is a UK company and all EDF Group profits and losses are appropriately taxed or relieved in the UK, regardless of where individual entities were originally incorporated. In addition, the Group seeks to pay the right amount of tax at the right time according to both the letter and spirit of UK tax laws. The Group chooses to discuss significant transactions with HMRC in advance of their completion, where it feels the tax treatment is uncertain.
Based on our 2015 profits, we expect to pay around £120 million in corporation tax.
We reinvested all of our operating profit and more back into the business, spending more than £1.3 billion on our nuclear, coal and renewable plants and on our new nuclear project, Hinkley Point C.
The year ahead
We will review our processes and resources to find further efficiencies and eliminate tax risk.