executive-letter

Updated: April 2021

2020 presented a host of challenges that changed the world in profound ways. But with every challenge comes opportunity—opportunity to learn, to change and to improve. And that’s precisely what the APS team did. The challenges of 2020 were a timely reminder that corporate stewardship and social responsibility are not about buzzwords or having a catchy slogan. It’s about company values and doing the right thing in difficult circumstances. 

Our web-based Corporate Responsibility Report details our company’s activities in response to the challenges of 2020 and highlights important substantive actions we took in the environmental, social and governance (ESG) spaces. 

Our Continued Commitment to a Clean Energy Future

In 2020, we set our course to provide customers with 100% clean, carbon-free electricity by 2050, and we made steady progress in our first year. We secured more than 400 megawatts of clean energy resources, including 200 megawatts of wind and 75 megawatts of demand response capability. We also issued a request for proposal to acquire more energy storage we can pair with solar generation to add between 1,000 and 1,500 megawatts of new resources to our system, including more renewable energy.

Our clean energy leadership was recognized by global environmental non-profit CDP, which named us to its prestigious ‘A Lists’ for a second consecutive year for tackling climate change and acting to protect water security, and by Morgan Stanley Capital International (MSCI), which maintained our “A” rating on resilience to ESG risks. In addition, the Smart Electric Power Alliance (SEPA) saluted the APS leadership team for our clean energy commitment.

In September, we issued our first green bond, raising almost $400 million to support projects such as renewables and energy storage, energy efficiency programs, climate change mitigation and clean transportation.

We proudly sponsor the Electric Power Research Institute’s (EPRI) Low-Carbon Resources Initiative, which is addressing the need to accelerate development and demonstration of low- and zero-carbon energy technologies. We’ve also teamed with Advanced Energy Economy (AEE) on a project called Arizona Clean Energy Future, which will develop solutions for our clean energy goals and support electrification of the transportation sector.

The transition to a clean energy future is a marathon, not a sprint, and we believe we are on track to meet our goals thanks to the hard work of our employees and collaborative engagement with our stakeholders. Stakeholder outreach will continue to be crucial as the new administration sets climate goals in Washington, DC and energy policy attracts additional attention at the state level.

Focused on Customers, Employees and Other Stakeholders

The safety and well-being of our customers and employees remained a top priority in 2020. We quickly recognized that the pandemic presented serious challenges for our customers and took action to assist them. We suspended customer disconnections for non-payment in mid-March through the end of the year, funded $12.4 million in customer support programs providing direct bill relief and expanded access to our limited-income bill discount programs. 

We focused on limiting the spread of COVID-19 and protecting our employees who perform essential roles keeping the power on for customers. Employees who do not have a critical need to be at our facilities are working remotely, and those whose jobs can only be performed on site are taking measures to maintain social distance and practice rigorous personal and workspace hygiene.

Last year, we introduced the APS Promise – our commitment to our customers, communities and each other as employees. The Promise builds on our cultural strengths and promotes a learning culture and behaviors that will enable our future success. It is foundational to our new 10-Year Strategic Plan, which aligns our talented and diverse workforce around five long-term strategic issues that will guide our efforts and drive our focus on meeting ESG objectives. 

Part of our clean energy commitment includes exiting coal generation by the end of 2031. Recognizing our important role in supporting these communities as they transition to clean energy, we worked collaboratively with leaders of the Navajo Nation and stakeholders to propose a comprehensive coal communities transition plan. Subject to the approval of the Arizona Corporation Commission, the proposed framework provides substantial financial and economic development support to the Navajo Nation, where the Four Corners Power Plant is located; to the communities surrounding the Cholla Power Plant; and to the Hopi Tribe, which is impacted by the closure of the Navajo Generating Station.

Impactful engagement with stakeholders is a key focus area for the company that extends into the public policy space. In 2020, we outlined our public policy values, including transparency, respect and consistency, and our responsibility to advocate for sound, forward-looking public policy that creates shared value for our customers, our community and a vibrant Arizona economy.

Strengthening Our ESG Governance Structure

In 2020, we made important organizational changes at multiple leadership levels to strengthen our ESG governance structure and drive change within the organization. 

Our Board of Directors amended the charter of the Corporate Governance Committee, now the Corporate Governance and Public Responsibility Committee, to add the responsibility to review ESG trends, ensure oversight of ESG issues and make recommendations to the Board, as appropriate. We also established an ESG Executive Council, composed of senior executives, to develop and maintain a common, cross-functional ESG vision and shared value across all business units.

We also formed a new Sustainability department at APS dedicated to integrating environmental, social and governance best practices into the everyday work of APS. Its fundamental purpose is to drive our performance and enhance our reputation as a responsible corporate citizen. Finally, we created a Culture and Inclusion team at APS to develop, strengthen and implement diversity, equity and inclusion strategies. Both teams play critical roles in supporting and evolving our efforts to design for tomorrow, empower each other, and succeed together. 

Looking Ahead – Priority Sustainability Issues

Having established a structure for ESG governance and performance within our enterprise, we turned our attention to the future, working with EPRI to conduct a Priority Sustainability Issues assessment. We engaged numerous internal and external stakeholders to help us identify and prioritize the sustainability issues that warrant our attention and influence. This work will enable us to put industry leading ESG practices in place to create shared value with internal and external stakeholders. 

While 2020 demonstrated that we cannot predict every challenge we will face, it also proved that strong leadership, a resilient workforce and a clarity of purpose – to do what is right for the people and prosperity of our state – can help us navigate whatever critical challenges lie ahead.

 

Jeff Guldner

Jeff Guldner
Chairman, President & Chief Executive Officer
Pinnacle West Capital Corporation

Ann Becker

Ann Becker
Vice President, Sustainability
Arizona Public Service Company

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