Huaneng Power International: Relatively Unfavorable Progress on the ESG Front

4.38
13 ratings

Huaneng Power International is a China-based company involved in the development, construction, operation, and management of power plants, along with the generation and sale of electric power. The company operates its business globally. An analysis of the company's environmental, social, and governance policies are as follows:


Environment


From an environmental perspective, the company scores unfavorably, outperforming on the Resource Use Score front, but underperforming on the Environmental Innovation Score front.


For instance, it has implemented a resource reduction policy, which compares to the presence of a clear policy in the prior year. The company has implemented a water efficiency policy, with an energy efficiency policy implemented as well. This compares to the presence of a similar policy in the prior year.


Environmental policy areas the company is currently lacking include Environmental Supply Chain Policy, Water Efficiency Targets, the setup of an Environment Management Team, Environment Management Training, and Environmental Materials Sourcing. Areas the company has addressed include Resource Reduction Targets, Energy Efficiency Targets, and Toxic Chemicals Reduction.


The company has also not implemented renewable energy use, which compares to the lack of a clear policy in the prior year. The company has also notably not implemented green buildings as well, which compares to the lack of a defined policy in this regard in the prior year.


In terms of its carbon footprint, the company's Estimated CO2 Equivalents Emission Total stands at 348,224,200 in the latest fiscal year, which compares to 335,977,200 in the prior year and 251,318,700 in the year before based on Reported CO2 Estimates.


Social


From a social standpoint, the company scores reasonably, outperforming on the Workforce Score front, but underperforming on the Human Rights Score front.


For instance, it has implemented a health and safety policy, which compares to the presence of a clear policy in the prior year. The company has also implemented an Employee Health & Safety Policy, with a Supply Chain Health & Safety Policy not implemented. This compares to the lack of a similar policy in the prior year.


The company has produced a notable rise in Net Employment Creation relative to the prior year. The Number of Employees from CSR reporting totals 57,970, relative to 53,962 in the prior year and 42,210 in the year before.


As of the latest fiscal year, there have not been Management Departures, while the prior year saw departures. Meanwhile, the company experienced no strikes this year, which compares to no strikes in the prior year.


Governance


From a governance standpoint, the company scores relatively unfavorably, outperforming on the CSR Strategy Score front, but underperforming on the Shareholders Score front.


The company does not have a Corporate Governance Board Committee, but has a Nomination Board Committee, has an Audit Board Committee, and has a Compensation Board Committee. The company does have a Board Structure Policy and does have a Policy for Board Independence in place. The Board has held nine meetings in the last fiscal year, which compares to 11 in the prior year. The Board size currently stands at 12 members based on the latest annual/ESG report.


The Board has an average tenure of 5.0 years, which compares to 3.9 in the prior year. The Board lacks both cultural and gender diversity.


The company has implemented a Policy for Executive Compensation Performance but has not tied its Executive Compensation Policy to ESG Performance. The company has not implemented a Policy for Executive Retention and has not implemented a Succession Plan, along with an External Consultant policy.


The company has not implemented CEO-Chairman Separation and does not have its CEO as a Board member. Its chairman is not an ex-CEO. Board member term duration stands at three years. In total, senior executives' compensation has risen in the latest fiscal year, along with Board member compensation. Notably, the CEO compensation is not linked to total shareholder return. Meanwhile, executive compensation is not linked to long-term objectives. Sustainability compensation incentives have not been implemented. Thus far, there have not been any executive compensation controversies.


Sources:


https://www.csrhub.com/CSR_and_sustainability_information/Huaneng-Power-International-Inc


https://www.hpi.com.cn/sites/english/ESG2020/publish.aspx

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