Recent years have brought, and the subsequent years will bring a lot of significant changes in the external environment of TAURON Capital Group. The most important of them, from the point of view of the Group’s business operations, are the climate and environment related regulatory changes. The global warming, increase of the pollution and a serious smog problem in Poland that have been observed for years, are forcing specific actions to minimize the negative impact of business operations on the environment.
According to TAURON Group, the most important issues that will affect the energy sector until 2025 include:
- European and national regulations: further reduction of CO2 emissions resulting in increased prices of emission allowances, increased obligation with respect to the share of electricity from renewable energy sources and increased energy efficiency;
- implementation of Poland’s Energy Policy until 2040,
- limitation of financing possibilities for investments in coal assets by the financial sector,
- integration of the European energy market and the reduction of the importance of the local markets in favor of the regional markets related thereto, rising capabilities for physical cross-border flows,
- ability to separate self-balancing areas, e.g. energy clusters, and the ability to provide additional services for them (balancing, aggregation, DSM, capacity reservation, etc.),
- development of technology related to energy storage,
- fast growth of the prosumers and the need to provide services at an appropriate quality level – timely implementation of the PV installation grid connection.
With the responsible development of the world in mind, the 2030 Sustainable Development Goals were adopted by all UN member states (193 countries in total, including Poland) in September 2015, setting the framework for an action strategy based on the concept of sustainable development. The agenda presents 17 sustainable development goals, and 169 detailed tasks related thereto, to be achieved by 2030.
The following UN goals provide the framework for the formulation of policies for the sustainable development (growth) of economies worldwide:
1. No Poverty
2. Zero Hunger
3. Good Health and Well-being
4. Quality Education
5. Gender Equality
6. Clean Water and Sanitation
7. Clean and Affordable Energy
8. Economic Growth and Decent Work
9. Innovation, Industry, Infrastructure
10. Reducing Inequality
11. Sustainable Cities and Communities
12. Responsible Consumption and Production
13. Climate Action
14. Life Below Water
15. Life on Land
16. Peace, Justice and Strong Institution
17. Partnership for the Goals
European energy companies place a great weight on the implementation of the UN Sustainable Development Goals, as they emphasize it in their reports and stock market publications. The figure below presents the Goals on which selected European energy companies focus most in their activities.
They are primarily:
Goal 7 – Providing everyone with access to sources of stable, sustainable and modern energy at an affordable price.
Goal 9 – Build resilient (stable) infrastructure, promote sustainable industrialization and foster innovations.
Goal 11 – Make cities and residential settlements safe, resilient (stable), sustainable and supporting social inclusion.
Goal 13 – Take urgent actions to combat climate change and its consequences.
Implementation of the UN Sustainable Development Goals by selected European energy companies
Source: Proprietary compilation based on the annual reports and presentations of the European energy groups.
TAURON Group also wants to contribute and contributes to the implementation of the UN Sustainable Development Goals in its operations, through the activities indicated below.
2030 UN Sustainable Development Goals at TAURON Capital Group
TAURON Group is also supporting other UN goals in its operations, through activities for the benefit of the local community, among others, in the fight against low emissions, educational and information campaigns, engagements in natural environment protection projects, by planting trees in forest areas or caring for the life of animals. The Group also attends national and European discussions as well as projects with respect to climate related energy transition. TAURON Group also cares about the highest standards in relations with customers and stakeholders, based on a two-way dialogue, and in its actions meets the needs of disadvantaged customers and sensitive consumer groups. The Group is guided by the principle of equal treatment of employees, respect for human rights and anti-discrimination.
MAIN EXTERNAL FACTORS THAT IMPACT THE SELECTION AND IMPLEMENTATION OF TAURON CAPITAL GROUP’S STRATEGIC DIRECTIONS
Political and regulatory
- European Green Deal – EU climate neutrality by 2050 project.
- Further tightening of environmental standards (related to emissions of pollutants, use of water, waste management, etc.).
- Need to adapt generating units to the BAT conclusions.
- Winter package and limitation of support systems for conventional energy (EPS 550).
- EU taxonomy and its impact on the possibilities of financing investment projects in the energy sector.
- RES and energy efficiency directives, EU ETS emissions trading system.
- Operation of the capacity market, support for individual RES technologies.
- Funds for the energy transition and post-covid stimulation of the economy (Just Transition Mechanism, Modernization Fund, EU Recovery Fund and others).
- Poland’s Energy Policy Draft, National Plan for Energy and Climate.
- Risk of introducing regulations in the banking sector leading to an increase in capital allocation ratios for loans dedicated to financing coal assets.
- Work on government programs for the mining industry and conventional energy.
- Increase in average global temperature as a result of greenhouse gas emissions
- High level of dust air pollution in Poland (smog).
- High level of greenhouse gas emissions – Poland emits 18% more greenhouse gas per capita into the atmosphere and over 3 x more in relation to GDP than the EU average.
- Increasingly frequent occurrence of extreme weather conditions – droughts, hurricanes, severe heat waves, heavy rains and floods (causing not only the destruction of households, but also of the transportation and energy infrastructure).
- Further rising of sea levels; irreversible changes in river ecosystems and the Baltic Sea (eutrophication, loss of water biodiversity).
- Depletion of natural resources.
- Increased importance of the circular economy and minimizing of waste generation.
- Increase in the importance of limiting the effects of sewage, biogenic waste, municipal waste and fuels in seas and oceans.
Economic and market-related
- Rising electricity generation costs (high prices of CO2 emission allowances), decreasing economic profitability of coal units.
- Reduction or lack of financing for conventional energy, preferential financing for RES.
- Rising RES generation due to continuously increasing RES cost competitiveness and higher electricity prices.
- Increase in costs of materials, services and labor.
- Limited possibilities of thermal coal mining (deposits getting more and more difficult to access, lack of coal with appropriate parameters), increase of coal imports for power generation purposes.
- Thermal modernization activities, increase of energy efficiency.
- Generational and competence gap problem.
- Threat to stability of production and supply of electricity, risk of power shortage in the system.
- Increase in anti-carbon sentiment among the public.
- Increase in the society’s ecological awareness.
- Willingness to incur higher costs of electricity, if it comes from RES.
- Improvement of the image of companies using energy from RES.
- Increased customer awareness and customer requirements in terms of the quality of services provided and customer service, changing customer needs.
- Change in the customer’s approach to the way electricity is consumed.
- Negative perception of waste storage.
- Falling prices for renewable and distributed technologies.
- Fast development of prosumer energy, island, off-grid installations.
- Need to adapt the grid to the two-way electricity flow.
- Development of electromobility.
- Development of Energy storage facilities.
- Digitization of the Energy sector, development of smart metering.
- Technology development with respect to the circular economy.
- Emergence of energy self-sufficient buildings – Near Zero Emission Buildings.
TAURON Group participates in the works on the systemic solutions that would enable the transition of the hard coal and lignite mining sector, conducted at the government level and has high hopes for such works. The solutions developed should provide the possibility to transform and limit mining operations, while ensuring social acceptance for such process.
Works are underway at the government level on the system that would provide demand for the capacity of the conventional units, which, due to their inability to participate in the capacity market (high emissions level) and low production volume, should be retired for economic reasons. TAURON Group’s representatives are participating in these works.
The progressing climate change and its projected effects call for fundamental changes to the role and directions of the energy companies’ expansion.
In view of the most important trend, which is the transition to a low-emission economy, TAURON Group takes into account, in its activities and strategic plans, the fact that long-term success depends on sustainable development and corporate social responsibility.
A manifestation of that is the integration, already at the strategic level, of the financial and non-financial factors, including the environmental and climate related aspects, social impact and governance. It stems from the conviction that in order to exist and grow, a business should be run in a way that takes into account both economic aspects as well as the social or environmental interests, and a balance must be struck among them.
Business goals, sustainable development and transition of TAURON Group towards Poland’s leading low-emission energy group are implemented in accordance with TAURON Group’s Strategy for the years 2016-2025 and the Update of the Strategic Directions – the so-called Green Turn of TAURON.
The implementation of business goals is supported by building and continuously improving the management culture, friendly work environment based on the principles of diversity and compliance, as well as maintaining lasting relations with local communities and developing initiatives with respect to social and business partnership. This approach maximizes benefits for both economic as well as social growth.
The activities carried out as part of TAURON Group’s sustainable development are based on the 3P model – relating to both economic gain (profit), people associated with the company (people) and care for the ecological aspect of the operations (planet). They are in line with the sustainable development goals for 2015-2030 adopted by the United Nations and comply with the CSR standards defined by the International Standardization Organization in the ISO 26000 standard “Guidance on social responsibility”.
TAURON Group’s priority is customer orientation and ensuring the security of energy supply, as well as developing a product and service offering that will fully reflect customer expectations. As part of its business activities the Group cares about maintaining good relations with customers by striving for the highest customer service standards, comprehensiveness and quality of the offering. This translates into improved efficiency, increased customer loyalty and satisfaction, or a decrease in the number of complaints.
TAURON Group has been undertaking a number of initiatives aimed at minimizing the negative impact of its operations on the natural environment for years. The Green Turn of TAURON, i.e. investments in RES and the transition of the Group’s energy mix are among the Group’s most important strategic activities in this respect. In the environment protection area TAURON Group sets itself goals that include efficient management, recovery and re-use of the resources, implementing environment management systems (ISO, EMAS), investing in modern technologies, continuous modernization of production assets, optimization of production processes, increasing resource utilization efficiency, educating the society and defining requirements for the suppliers.
TAURON Group’s employees constitute a key group of stakeholders. The aspects related to building long-term relationships based on diversity, ensuring safety in the workplace, creating development opportunities and an appropriate level of ethical culture and values are important in this regard. TAURON Group also attaches importance to establishing long-term relationships with the company’s immediate environment, through activities for the benefit of local communities, cooperation with academic centers and promoting the sustainable development subject among stakeholders and encouraging them to be responsible, as well as conducting a transparent policy of communication with the stakeholders.
In order to systematize the activities conducted, as well as to precisely define the objectives and periodically monitor the degree of their implementation, the Management Board of TAURON Polska Energia adopted the following Policies for use at TAURON Capital Group:
- TAURON Group’s Customer Oriented (PRO-customer) Social Policy (PROClient Social Policy),
- TAURON Group’s Diversity Policy,
- TAURON Group’s Environmental Policy,
- TAURON Group’s Climate Policy,
- TAURON Group’s Human Rights Respect Policy,
- TAURON Group’s Human Resources Policy,
- TAURON Group’s Subsidiaries Employee Recruitment, Selection and Adaptation Policy,
- TAURON Group’s Anticorruption Policy,
- TAURON Group’s Work Health and Safety (WHS) Policy,
- Strategic Research Agenda,
- TAURON Group’s Corporate Purchasing Policy,
- TAURON Group’s Subsidiaries Contractors (Counterparties) Code of Conduct Policy,
- Personal Data Protection Policy for TAURON Group entities,
- TAURON Group’s Policy of Compliance with the Principles of Ethics and Counteracting Mobbing and Discrimination.
The above-mentioned documents ensure compliance of TAURON Capital Group’s operations with the requirements specified in art. 49 b, clause 2 and 3 of the Accounting Act. They also represent an important part of conducting a transparent communication policy with the numerous stakeholders of TAURON Capital Group, who may familiarize themselves with the annually published reports on their implementation.
Each of the above documents contains an exhaustive description of actions taken by TAURON Capital Group’s subsidiaries to achieve the intended goals in the given area. The following sub-sections present the main principles, methods and tools implemented by TAURON Capital Group under the individual policies and the results of their application in 2020.