Sustainability at Pinnacle West:  An integrated business model
Sustainable business practices are a critical component of our business plan. Sustainability is not a program at Pinnacle West, it is the way we do business; a business model for accomplishing our goals.  For many years, our company has had a formal corporate philosophy of "doing the right thing" which basically means focusing on ethical business decisions that are good for the company while also being good for our customers, our communities, our employees and the environment.  We continue to build on that philosophy in our sustainability efforts. Sustainable business practices are becoming part of every employees' mindset and way of doing business, because they are the right thing to do and make good business sense.  As such, we strive to incorporate sustainability concepts into our daily operations and to drive "ownership" of sustainability to each and every employee, just as we have with other corporate core values.

We have established a strong sustainability governance system which includes:

1. Board of Director and executive engagement and oversight, including establishing a Chief Sustainability Officer position. 
2. Public disclosure of sustainability goals and performance through this annual Corporate Responsibility Report.
3. Establishment, communication and ongoing monitoring of sustainability goals and metrics.
4. Ongoing dialogue and interaction with our employees about our sustainability efforts. 
5. Establishment of a formal sustainability organizational structure for effective evaluation, communication and management of our sustainability efforts.

The chart below illustrates our sustainability governance structure. 

The Eco-Efficiency and Technology Innovation Department's charge is to help integrate sustainability initiatives throughout the enterprise and to better address the evolving expectations and opportunities of stakeholder groups and the general public. This department helps us to improve the strategic direction and planning of our initiatives, while allowing the company to better plan and respond to emerging issues, risks and opportunities. The department is headed by a Senior Manager, who reports directly to the Chief Sustainability Officer. The department does not have line authority over other Pinnacle West departments, rather it serves a planning, support and coordination role in our sustainability efforts.

The Sustainability Working Group (SWG), a cross-departmental team of key managers and leaders, works in tandem with the Eco-Efficiency and Technology Innovation Department to improve coordination among the company's various departments; establish our sustainability baseline and evaluate new issues and opportunities in sustainable business practices; and help ingrain those business practices and philosophies among our front-line employees. This team also helps develop and track sustainability performance, including appropriate metrics. The SWG forms Initiatives Teams from employees across the company as needed to work on specific sustainability issues.

A policy group of company officers and senior managers provides executive level oversight to our sustainability effort. The policy group and Chief Sustainability Officer interfaces with our Board of Directors on sustainability issues.

Arizona Businesses Advancing Sustainability
In order to help advance sustainable business practices across our community, Pinnacle West partnered  with Intel Corporation in 2007 to found a new business association, called Arizona Businesses Advancing Sustainability or AzBAS.  AzBAS is dedicated to improving economic, environmental and social business practices in Arizona, with a goal to discuss sustainable business practices and work collaboratively to improve business aspects in the state.  Among the issues the association expects to discuss is how to work with government policy makers to improve the state's sustainability. The group also will look to build better relationships with the communities the companies serve while addressing environmental concerns.

Re-Establishing our Sustainability Baseline and Setting Future Goals
In 2007, our SWG, in conjunction with an outside consultant, conducted a comprehensive benchmarking study of corporate sustainability goals and metrics, with particular focus on the electric utility industry.  Following that benchmarking study, the SWG completed a detailed review of all sustainability metrics at Pinnacle West.  Based on those two studies,  Pinnacle West re-established our sustainability foundation, ensuring that the goals, metrics and key issues being used were appropriate to our company.  As part of that baseline setting, the SWG identified several new goals and metrics for key issues related to water use, customer energy conservation and employee engagement, which have been reviewed with the Policy Committee for incorporation in 2008.