ESG Materiality

Understanding ESG Materiality

ESG materiality assessments are a mechanism designed to help companies identify and understand the relative importance of specific environmental, social and governance topics.

Insights gained from these materiality assessments enable companies to appropriately prioritize ESG topics, manage relevant performance improvement and integrate ESG goals into their business strategy. Companies can also gain line of sight into emerging topics that may impact their business to help them manage related risks. Additionally, companies may use ESG materiality assessment results to evaluate how well they are communicating with stakeholders about ESG topics through their corporate responsibility reporting and disclosures.

How We Use our ESG Materiality Assessment

2022 ESG Materiality Review

Our ESG performance depends largely on our ability to effectively identify, manage and communicate the risks and opportunities of relevant ESG topics to our internal and external stakeholders. We designed our Corporate Responsibility website to be a central and accessible location for disclosures on ESG topics that influence our company.

The purpose and value of our materiality review include:

Strong management and oversight of ESG topics, together with transparency and accountability regarding areas for improvement, help drive us forward as a company.

Methodology

Our 2022 ESG materiality review was completed using Datamaran®, a cloud-based software platform that enables a comprehensive and data-driven process for monitoring the ESG landscape.

Datamaran® assessed the ESG topics that are most relevant to the electric utility industry as informed by SASB’s Sustainable Industry Classification System® (SICS)*. Using their patented machine learning technology, Datamaran® analyzed our Corporate Responsibility website to determine how effective we are in communicating our ESG topics. The same technology is used to track the frequency and emphasis of those same ESG topics within our stakeholders publicly available sources including – corporate annual reports, ESG reports, industry regulation and digital media. The stakeholder groups included electric utility peers, regulators, policy makers, investors, customers and suppliers. The output was a robust, AI data-driven ranking of the importance of ESG material topics as described by these external stakeholders in their disclosures.

Results

The results of the 2022 ESG material assessment affirmed that our company’s Mission, Core Values, company goals and Strategic Plan align with our relevant ESG material topics.

While it is important to understand and act on ESG topics material to our business, the ability to effectively communicate the importance of these topics to external stakeholders can be equally important.

Datamaran’s AI technology helped us determine that we are meeting stakeholder expectations though our external communications on our Corporate Responsibility website. The results demonstrated that a majority of our relevant ESG material topics are communicated effectively and are aligned with external stakeholders’ expectations for these disclosures.

While energy transition and energy access and affordability are among FirstEnergy’s top priorities and actively supported by a range of company initiatives, the assessment results indicated that our disclosures regarding these topics were not aligned with stakeholder expectations. Moving forward, we will use these findings to better communicate our progress by providing additional disclosures on these topics in the near future.

We also recognize that ESG topics are continually evolving and will continue to use data analysis to evaluate emerging topics and focus our efforts on those topics most important to FirstEnergy and our stakeholders.

We provide valuable feedback to our internal Risk team on the material ESG topics. Understanding the potential impact of ESG risks and building proactive mitigation plans are important steps toward our company’s continued success.

We remain committed to executing our corporate responsibility approach by identifying and driving company initiatives that support and improve our ESG performance. Going forward, we will continue to use results of our ESG materiality assessment to ensure that our ESG initiatives and activities remain relevant and responsive.

FOCUS
PRIORITIES
RELEVANT ESG MATERIAL TOPICS
Environmental
Protect the environment by minimizing our impact, improving the sustainability of our operations, executing our Climate Strategy and finding opportunities to enhance the ecosystems we interact with
  • Greenhouse Gas Emissions
  • Non-GHG Emissions
  • Water Management
  • Waste Management
  • Biodiversity and Conservation
  • Climate Change Risk Management
Social
Support the development of an inclusive, equitable, rewarding and safe work atmosphere, while empowering our diverse and innovative team to make our customers’ lives brighter and our communities stronger
  • Employee Relations
  • Public Health Risks
  • Safety Health and Wellness
  • Diversity, Equity, and Inclusion
  • Customer Experience
  • Employee Development & Talent Management
  • Energy Management
  • Energy Transition
  • Community Vitality
  • Sustainable Supply Chain
  • Energy Access & Affordability
  • Energy Reliability, Resiliency & Emergency Preparedness
  • Innovation
Governance
Maintain oversight of significant company issues and strengthen risk management; build a strong, centralized corporate compliance program and culture of ethics and integrity; continue stakeholder engagement efforts and provide consistent, transparent disclosures on ESG topics
  • Corporate Governance
  • Ethics and Compliance
  • Transparency
  • Legal and Regulatory Compliance
  • Cybersecurity & Information Technology

*SASB’s Sustainable Industry Classification System® (SICS®) uses an impact-focused methodology categorizing companies under a sustainability lens. SICS builds on and complements traditional classification systems by grouping companies into sectors and industries in accordance with a fundamental view of their business model, their resource intensity and sustainability impacts, and their sustainability innovation potential.

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