Utilities Industry: Promoting Local Societal Investment
Date: December 15, 2015
December 15, 2015–On November 19, 2015 CECP convened its 7th Utility Industry Roundtable in San Francisco, hosted by the PG&E Corporation. CECP presented 2014 Utilities Industry corporate giving trends, and participant companies shared corporate societal engagement practices and case studies.
The Utilities Industry not only seeks innovation in terms of finding more renewable sources of energy and revenue, but also in terms of giving back to society and engaging its employees in societal causes.
Utilities stand out with:
- High allocations of cash giving as a percentage of revenue (0.13% for utilities and 0.09% for all companies) and pre-tax profit (1.06 % for utilities and 0.65% for all companies).
- More giving to the Environment (10%) than all companies (3%).
- Large teams: Median team size was 14 compared to median across all companies of 8.
- Small grants but more grants managed per team member: Each utilities grant team member manages a median of 87 grants compared to median across all companies of 65 grants.
Societal investment is stable and strong for utilities companies
Total giving was up for 56% of companies, looking at a consistent set of 200 companies that provided giving information for 2012, 2013, and 2014. When taking a closer look at utilities companies, we observe that societal investment was also up: 67% of Utilities companies increased their total giving between 2012 and 2014.
Cash giving benchmarks high for utilities
In 2014, the Utilities Industry had higher median ratios of cash giving to revenue (0.13%) than all companies (0.09%) and higher cash giving ratios to pre-tax profit (1.06%) than all companies (0.65%). To put that revenue benchmark in context, a utilities company that had $20 billion in revenue would have a cash giving budget of $26 million. This higher ratio of cash giving to revenue and pre-tax profits than broader company trends can be explained by utilities’ lower-than-average share of non-cash giving, which in 2014 only represented 2% of total giving (17% for all companies). It is intuitive for a service-oriented industry like utilities to have a smaller share of non-cash giving, which typically comes in the form of product donations.
Source: CECP Company-reported dataset, 2014
2014 was a strong year for Utilities. According to The Wall Street Journal, Department of Energy data show that in 2014 there was a nationwide increase of 3.1% in the average price of a kilowatt-hour of electricity, mainly caused by increased capital spending (e.g., more plants that follow environmental rules, building new power lines), despite reduced costs in fuel. A significant proportion of that revenue was allocated to giving. When analyzing the ratio of giving to revenue in a matched-set of companies from 2012 to 2014, we found that utilities companies surpassed all companies, and even the top 100 companies in the Fortune 500.
Source: CECP matched-set data, 2012-2014
Education and Environment: Cornerstones of societal investment for utilities
In 2014, Education (K-12 and Higher Education) was the program that was allocated the most total giving (30%), followed by Health and Social Services (26%), across all Giving in Numbers respondents. When analyzing the Utilities Industry, Education was also the top focus area (26%), followed by Health & Social Services (22%). There is one cause where utilities are quite different from companies as a whole; utilities gave 10% to the Environment compared to an overall company average of 4%. This is tied to the intrinsic linkage between utilities’ effort to develop innovative and eco-friendly renewable sources of energy. Disaster Relief was the program area that received the lowest giving allocation in 2014 across all companies (2%) and in the Utilities Industry (1%). However, we know that Disaster Relief and preparedness are inherent investments of utilities’ line of business, so it may not be fully reflected in their allocation to Disaster Relief because of what is measured in “giving.”
Utility companies are known for making strong local connections. Examples of societal investments and impacts from the Utilities Industry are represented in the following case studies:
- PECO Energizing Education Program (PEEP) is an environmental education program with a focus on STEM and energy science. It encourages students from all backgrounds to develop their talents and continue their education beyond high school. After completing its seventh successful year, PEEP has benefited 24,000 middle school students from 87 local schools across the Greater Philadelphia region.
- Energizing Student Potential (ESP) is a collaborative education initiative designed to empower students to explore energy-related STEM subjects and careers, and help discover their own path. The Exelon Foundation, ComEd, Nicor Gas, Peoples Gas, North Shore Gas, and BP America, in partnership with the National Energy Education Development (NEED) Project, launched the ESP program for grades 5 – 8 in their respective customer regions in Illinois and Indiana.
- PG&E played a crucial role in alleviating the effects of California’s 2015 wildfires by providing almost half a million dollars in grants to 23 organizations, relief kits, exportable power trucks, and temporary showers to affected communities. PG&E employees donated 2,000 vacation hours, and more than 100 volunteered in the relief efforts.
Diversity and Inclusion
- Public Service Enterprise Group (PSEG) supports nonprofits such as the American Association of Blacks in Energy (AABE), which ensures input of minorities in the discussion of energy policies and Minority Interchange (MI), which promotes education, employment, and networking opportunities. PSEG also has alliances to support female, LGBT, and Hispanic employees. Other PSEG employee resource groups include PSEG Vets, which provides assistance with onboarding efforts for veterans in the workplace and the Enabling Abilities group, which builds awareness of the capabilities and contributions of employees and customers with disabilities within the workplace and communities.
Larger teams spread across more localities
In 2014, the median Full-Time Equivalent (FTE) contributions team size in the Utilities Industry was the second largest (14), only surpassed by the Communications Industry (22). However, even if the median FTE contributions team size is large for utilities companies, internally for them, teams can feel smaller because there might only be a few team members at their headquarters, with the rest spread across local offices. Each FTE staff in the Utilities Industry manages more grants (87) than across all companies (65); but the median grant is smaller for utilities ($12K) than for the rest of industries ($34K for all companies together). This can be explained as a desire to have more local impact in more places.
More traditional volunteer programs offered in the Utilities Industry
Paid-Release Time (60%) and Employee-Volunteer Awards (59%) are the two most commonly-offered domestic volunteer programs across all 2014 Giving in Numbersrespondents. When doing a deep-dive into the Utilities Industry we found that more traditional programs such as Dollars-for-Doers and Company-Wide Day of Service were the most commonly offered domestic volunteer programs (63% each), followed by Employee-Volunteer Awards and Board Leadership (58% each). Utilities employees have more opportunities to implement their skills as board leaders when compared to broader company trends.
What societal engagement activities are your Utilities companies doing in your region? Let CECP know at email@example.com! Or tweet about your programs to celebrate and share your work: @CECPTweets
CECP is a coalition of CEOs united in the belief that societal improvement is an essential measure of business performance. Founded in 1999, CECP has grown to a movement of more than 150 CEOs of the world’s largest companies across all industries. Revenues of engaged companies sum to $7 trillion annually. A nonprofit organization, CECP offers participating companies one-on-one consultation, networking events, exclusive data,media support, and case studies on corporate engagement.