Better Energy Ambitions petals, finance and ethics

We are working to give back to society, share the value we create and help to grow the economy we all depend on. We provide an essential service to society and it’s important that we do this in a responsible way. We want to be a better kind of energy company – one that thinks long-term and does business fairly and openly. That is why our ambition is to achieve a strong financial and ethical performance. We have made this central to how we do business.

This ambition also has a focus on transparency and honesty across our financial activities and performance. We are bearing down on costs across our operations, investing our profits wisely and managing our taxes responsibly, to ensure our customers get value for money. We are also contributing to the UK as a whole by paying our taxes, creating jobs and investing in the low carbon energy supply and infrastructure that will serve the country for years to come.

All our people work to our guiding principles for ethical behaviour and our business values. We regularly communicate these in lots of different ways. We also give our people the tools to work in an honest and ethical way and the confidence and processes to report any instances where we suspect we have not. 

Strong financial performance

Being in a strong financial position is vital to our sustainability.

Our vision for EDF Energy for 2030 will see us invest significantly to deliver reliable low-carbon energy for the future of the UK. To fund those investments we need to have money to invest from our operations today. This is what we mean by living within our means.  

We are working to give back to society, share the value we create and help to grow the economy we all depend on. We provide an essential service to society and it’s important that we do this in a responsible way. We want to be a better kind of energy company – one that thinks long-term and does business fairly and openly. That is why our ambition is to achieve a strong financial and ethical performance. We have made this central to how we do business.

Our programmes

Because we measure our success on our ability to build a long-term sustainable and responsible business, our financial goals tend to remain the same year on year. In this case our target is:

To live within our means and have efficient, profitable operations:

• By 2020 we will deliver our targets for earnings before interest and tax and free cash flow

How are we doing

EARNINGS AND PROFIT

Earnings before interest, tax, depreciation and amortisation (EBITDA) were reduced in 2017, mainly due to the significant impact of lower realised nuclear prices. Our underlying operating profit (*EBIT) also saw an overall loss of £3m, reflecting slightly lower electricity output and lower wholesale prices.

*EBIT numbers do not include non-recurring items and impairment


INVESTMENTS

Every year, a large proportion of our revenue is invested back into our existing electricity generation operations, customers business and new nuclear development. In 2017, £630m was invested back into our existing operations and £1.49 billion was invested into new nuclear. This continued investment helps ensure the UK has a safe, secure and affordable supply of electricity at all times.

EDF Energy also acquired Imtech in 2017 to accelerate the development of energy services for business customers in the UK. Imtech is a leading provider of engineering and technical services with more than 2,000 employees in the UK and Ireland. 

Growing the UK economy

Providing safe, reliable and affordable low-carbon energy.

 

At EDF Energy, we rely on our local communities for our success and licence to operate, we give back to society by sharing the value that we create and helping to grow the economy we all depend on.

As Britain’s biggest generator of, and investor in, low-carbon electricity we are helping to build Britain’s industrial strength. This has a long-lasting impact on jobs and skills. By providing safe, reliable and affordable low-carbon energy, we play a key role in building a more successful, confident, outward-looking Britain.

Our programmes at Hinkley Point C

 

During 2017, we have continued to develop an innovative sustainable supply chain for the construction of Hinkley Point C. Our strategy for has been to utilise local supplier capability, local sources of labour and materials /components as far as possible. This requirement has been reflected in contract tender documentation, instructions given to bidders and was encapsulated in the local consultation documentation and the approved Development Consent Order application. The extent and effectiveness of this engagement is being monitored by local authority stakeholders and by national government (BEIS). During 2017, we have:

  • Sought to continually raise awareness within the region of the opportunities arising for the construction of HPC through working collaboratively with the Somerset Chamber of Commerce and other key business stakeholders.

 

  •  Set up and maintained a listing of HPC contracts on the www.edfenergy.com website in order to inform Tier 2 suppliers of the scale and scope of the Tier 1 contracts.

 

  • Introduced and developed relationships with key Tier 1 contractors in order to uncover possible opportunities for local businesses.

 

  • Supported and developed collaborative mechanisms that offer early sight of contract opportunities for local & regional companies and have leveraged support to help suppliers become “Hinkley Ready”, creating a stronger economy in the South West and a legacy beyond HPC.

 

  • Through the medium of two supplier steering groups, secured senior leadership commitment from NNB & Tier 1 industrial partners to engage with local supply chain capability.

 

  • Facilitated the formation and development of several local consortia and alliances to compete for, win and deliver Site Operations work packages. This has already created hundreds of local jobs and has seen local spend approach £400 million.

 

During the lifetime of the project, numerous opportunities will arise for local businesses to engage and become part of the HPC supply chain. EDF Energy will continue to support the development of a sustainable new build supplier base within the UK and thus leave a legacy beyond HPC.

 

How we measure progress

This is a new goal for us, and we want to understand how we can best contribute to the UK at a local, regional and national level.

GOALS and TARGETS

To add value to society and the UK economy:

• To report EDF Energy’s direct and indirect economic value added to the UK 

 

How are we doing

Our operations throughout the UK provide wider economic and social benefit to the people and communities with which we work. We support thousands of jobs and millions of pounds is invested both directly and in-directly into regional economies throughout the Country. 

Our latest report that analyses our performance in this area shows that that EDF Energy;

  • Provides £3.9 billion of gross value added to the wider UK economy.
  • For every £100 in gross value added created directly by EDF Energy, a further £100 is spent in the wider economy through indirect and induced spending.
  • EDF Energy directly and indirectly supports 79,183 jobs across the UK economy.

 

Infographic showing Socio-Economic Benefit to the UK

Doing business ethically

Doing business in an ethical way is one of our most important values. 

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.

Through our Finance and Ethics ambition we are working to ensure sustainable, ethical practice across our supply chain, and we will not tolerate any fraud, corruption or abuse of human rights.

Our programmes

CODES OF CONDUCT

We want to create a culture of openness, integrity and accountability. This approach benefits not only us, but also our customers, employees and shareholders.

To help our people work in a positive way we created some guidelines:

  • act honestly and with integrity to safeguard our revenue, property and reputation
  • maintain the highest ethical standards and take action when others do not
  • observe legislation and regulations
  • behave in a way that protects the interests of our company, our colleagues and the environment
  • respect our policies and procedures
  • report any activities that don't follow our codes of conduct to our Compliance Officer or the Head of UK Internal Audit
     

Our Business Code of Conduct, which covers both employees and contractors, sets out how we protect human rights


COMPANY POSITIONS

At EDF Energy, we recognise that Modern Slavery is a growing global concern, and we are working to ensure that our own operations, and those of our supply chains, are appropriately evaluating the risks of Modern Slavery. 

We report our sustainability performance annually through our Better Energy Ambitions, and are signatories to the United Nations Global Compact (UNGC).

We want to build an inclusive, open and welcoming workplace where everyone can be themselves and do their best. In line with this, we are due to publish a more detailed breakdown of our workforce in "Diversity & Inclusion Week" at the end of May.

We have also reviewed the way we recruit and pay people, among other human resources processes and policies. In 2016 we were officially recognised as a Living Wage employer. We are now working with our suppliers to give the Living Wage to those who regularly work on behalf of the company.

This will help us achieve the UNGC advanced level in 2017.


TAX POLICY

We take a responsible and honest approach to tax, in line with our values:

  • acting with integrity
  • planning tax to make sure our work is legitimate and done in an efficient way
  • maintaining an open, honest and positive working relationship with HMRC

EDF Energy is a UK company and part of EDF Group. All our profits and losses are appropriately taxed or relieved in the UK, regardless of where individual entities were originally incorporated.

We always pay the right amount of tax at the right time according to both the letter and spirit of UK tax laws. We also sometimes discuss significant transactions with HMRC if there’s any uncertainty about how they should be taxed.


ETHICAL SUPPLY CHAIN

We are asking our key suppliers to complete the Chartered Institute of Procurement and Supply Sustainability Index and to assess the social, economic and environmental factors that affect their business. We also make sure our suppliers follow the Ten Principles of the UN Global Compact.

We encourage our Supply Chain Specialists to take our Sustainability Specialist Supply Chain training to make sure we do business ethically, responsibly and sustainably throughout our supplier services.

How we measure our progress

GOALS and TARGETS

To do business in an ethical way:

  • All employees compliant with the Company Ethics and Business Conduct Policy
  • Publish our policies / positions on fair tax, labour standards and annual performance against these standards
  • Ethical supply chain (95% United Nations Global Compact compliance / Top 200 suppliers meeting Chartered Institute of Procurement & Supply Index or equivalent by 2020)

We strive to improve our standards of ethical behaviour continuously, and our commitment to ethical business practice is outlined in our Ethics & Business Conduct Policy

How are we doing

PAYMENT PRACTICES

EDF Energy is committed to ethical business practice which includes paying our suppliers in accordance with contractually agreed terms. We monitor our payment performance as part of our normal business operations and take action to address the root cause of identified exceptions. In 2017, we made 87% of our payments on-time with our average payment period being 61 days. To support the working capital requirements of our supply chain, we also offer a free-to-join Supply Chain Financing facility enabling suppliers to draw down funds from approved invoices in exchange for a small financing fee.


CHARTERED INSTITUTE OF PROCUMENT AND SUPPLY (CIPS) SUSTAINABILITY INDEX

Ensuring that we support a sustainable and responsible supply chain is an important area of The Better Plan. To date, 141 suppliers representing 22% of our total expenditure have now published scores within the CIPS Sustainability Index. This index is an annual assessment of supplier performance across Social, Economic and Environmental dimensions. In addition to the CIPS index, a further 5 suppliers have subscribed to EcoVadis, a similar form of sustainability accreditation.

Throughout 2018, we will continue to engage our key suppliers on sustainability by promoting subscription of the CIPS Sustainability Index and actively manage improvement plans for any suppliers falling short of the database average. We will also identify and explore alternative and additional accreditations our key suppliers hold now or could hold in future through our programme of Supplier Compliance Reviews.


UNITED NATIONS GLOBAL COMPACT

The Better Plan ambitions are aligned closely to both the United Nations Sustainable Development Goals and the ambitions of the United Nations Global Compact. It aims to support business in aligning their strategies and operations with the ten Principles on human rights, labour, environment and anti-corruption and in taking strategic actions to advance broader societal goals with an emphasis on collaboration and innovation. During 2017, 98.3% of our suppliers have declared compliance with the Ten Principles of the UN Global Compact.


DIVERSITY & INCLUSION

We have continued our efforts to encourage and promote diversity within our supply chain during 2017. Under the strategic direction of our supply chain-specific Diversity and Inclusion Action Group, we have now established a baseline understanding of the diversity of ownership of our supplier organisations from which to build targeted, pro-active interventions; leveraging the strong links we've built with industry partners to promote EDF Energy as a customer of choice for diverse suppliers.


MODERN SLAVERY

Doing business in an ethical way is one of our most important values. Through The Better Plan, we are working to ensure the responsible operation of our supply chain including emulation of our commitment to zero tolerance of fraud, corruption or abuse of human rights. We recognise that Modern Slavery is a growing global concern and we are working to ensure that our own operations and those of our supply chain are appropriately evaluating the risk that it poses.

In June 2017, we published our Modern Slavery Statement. It outlines the processes we have in place to review and mitigate the possible risks of modern slavery in our operations and those of our suppliers. During 2018, we will further develop our approach and work with partners to consider additional steps to protect our workforce and supply chain.


LIVING WAGE

EDF Energy is committed to fair employment practices. We continue to be an accredited Living Wage Employer, confirming we pay our own employees the Real Living Wage and ensure that the Real Living Wage is paid to the employees of our suppliers who work regularly[1] on our sites.

The principle of paying a real living wage is adopted into the Hinkley Point C Social Covenant Agreement reached with the Trade Unions and is aligned with our overall project values. In addition to paying a living wage, we also remain sensitive to the dynamics of the local labour market and are careful to avoid adversely impacting the labour market for local employers.

 

[1] Regularly is defined as suppliers working 2 hours per week at an EDF Energy controlled location for more than 8 or more consecutive weeks in a year


SUPPLY CHAIN COLLABORATION

During 2017 it became clear that an improved method of digital collaboration across teams was required to enhance the effectiveness of our teamwork throughout our supply chain. The concept for Supply Chain Collaboration is built upon the concept of access to a ‘Community Cloud’ team directory of international Workspace Members.

Our selected method has been to use the A-Site Doddle platform. We will create multiple secure online areas to share information with others, inviting users to join our workspaces and we can join theirs. During 2018 we will begin scoping functionality requirements of the system and expect to be fully using the system later in 2018.


DEVELOPMENT OF THE HINKLEY POINT C SUPPLY CHAIN

During 2017, we have continued to develop an innovative sustainable supply chain for the construction of Hinkley Point C. Our strategy for has been to utilise local supplier capability, local sources of labour and materials /components as far as possible. This requirement has been reflected in contract tender documentation, instructions given to bidders and was encapsulated in the local consultation documentation and the approved Development Consent Order application. The extent and effectiveness of this engagement is being monitored by local authority stakeholders and by national government. During 2017, we have:

  • Sought to continually raise awareness within the region of the opportunities arising for the construction of HPC through working collaboratively with the Somerset Chamber of Commerce and other key business stakeholders.
  • Set up and continue to develop an up to date register of businesses wanting to engage with the project, mapping suppliers against a listing of project needs.
  • Set up and maintained a listing of HPC contracts on the www.edfenergy.com website in order to inform Tier 2 suppliers of the scale and scope of the Tier 1 contracts.
  • Introduced and developed relationships with key Tier 1 contractors in order to uncover possible opportunities for local businesses.
  • Supported and developed collaborative mechanisms that offer early sight of contract opportunities for local & regional companies and have leveraged support to help suppliers become “Hinkley Ready”, creating a stronger economy in the South West and a legacy beyond HPC.
  • Through the medium of two supplier steering groups, secured senior leadership commitment from NNB & Tier 1 industrial partners to engage with local supply chain capability.
  • Facilitated the formation and development of several local consortia and alliances to compete for, win and deliver Site Operations work packages. This has already created hundreds of local jobs and has seen local spend approach £400 million.

During the lifetime of the project, numerous opportunities will arise for local businesses to engage and become part of the HPC supply chain. EDF Energy will continue to support the development of a sustainable new build supplier base within the UK and thus leave a legacy beyond HPC.

Our Better Energy Ambitions

Our six Better Energy Ambitions set out our short, medium and long-term goals and targets for improving our social, economic and environmental performance.

By meeting these ambitions, we will have created Better Lives, Better Experience and Better Energy - The Better Plan - in a responsible and sustainable way.