Commitment to an ambitious and urgent climate action
The fight against climate change has been the main driver behind a strategy of profitable growth, which has led us to invest 120 billion euros in these two decades, with the aim of achieving a decarbonised energy model.
Iberdrola group's goals of emission reduction.
With an emission-free production of 79 % at the close of the First Quarter 2021, the Iberdrola group is committed to becoming carbon neutral in Europe by 2030, where its emissions for the period have now reached historic minimums (28 g CO2/kWh) and are a tenth of the emissions released by its European and American competitors, it has also committed to reducing its global CO2 emissions intensity to 50g/kWh — which would be 70g/kWh by the end of 2025 — until it becomes carbon neutral globally by 2050.
The company has also set a target to reduce absolute Scope 1, 2 and 3 greenhouse gas (GHG) emissions, which has been approved by the Science Based Target initiative. Find out more about our emissions in our greenhouse gas emissions inventory.
CLIMATE ACTION, A PRIORITY AXIS OF OUR STRATEGY
Iberdrola has amended its By-Laws to entrust its Board of Directors with responsibility for climate action, thereby strengthening its climate governance. The group's highest management body will be responsible for approving and updating a climate action plan that allows meeting the company's environmental objectives, as well as reporting annually on climate management.
The Board will set interim emission reduction targets, ensuring that these cover all direct and indirect emissions and are validated by science with respect to their alignment with the Paris Agreement. It will also establish an investment strategy that is consistent with these objectives and define the methods that will help achieve them.
This measure, which was approved by the shareholders at the last General Shareholders' Meeting, is another step forward in Iberdrola's Climate Action Policy, which includes priority lines of action that contribute to the electrification of the economy. To achieve this, the group will support regulatory initiatives to promote, for example, electric mobility and heat pumps, the "polluter pays" principle, the elimination of subsidies to high-emission technologies or sectors, the analysis of the risks arising from climate change and, in general, the development of a real and global energy transition.
The content of the Climate Action Policy, which has also been endorsed by shareholders at the Meeting, is aligned with the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD), a benchmark platform on climate reporting, which sets out guidelines for integrating climate change into internal strategic planning and decision-making processes, as well as in the analysis, management and reporting of long-term risks.
WE ARE MOVING TOWARDS CARBON NEUTRALITY
As a strategic pillar for its achievement, we are working according to the group's investment plan, which is supported by innovation initiatives aimed at decarbonising the energy mix, increasing its resilience and consolidating the company's leadership in renewable energy, smart grids, efficient storage and clean technologies.
Iberdrola group, against climate change.
- 73.7 million tonnes of CO2 avoided(1)
- 79 % of the owned installed capacity is emission-free
- 73 % of the owned installed capacity is from renewable energies
- 120 billion euros invested in energy transition since 2001
- Over 35,000 MW owned capacity in renewables
- 150 billion euros between 2020 and 2030 (tripling our renewable capacity and doubling our network assets)
- 17 coal- and oil-fired power stations closed
- Over 13.2 billion euros in green bonds between 2014 and 2020
- 3 billion euros invested in East Anglia ONE to improve the penetration of renewables
(1) During the last three years
Data at the close of the First Quarter 2021.
WE MANAGE THE RISKS AND OPPORTUNITIES OF CLIMATE CHANGE
Iberdrola one of the first companies to publicly commit itself to implementing the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) in its public reports for 2020. In 2017 the company created a multidisciplinary internal working group which coordinates all the work carried out on this matter, reporting in a specific section of its 2019 Statement of Non-financial Information [PDF] (and other annual public documents) on the progress made and its alignment with each of the four thematic areas into which the eleven TCFD recommendations are structured.
In addition, the Iberdrola group has participated, together with other electricity companies, in a report promoted by the World Business Council for Sustainable Development (WBCSD) on the disclosure of financial information on climate change aligned with the TCFD in the electricity sector.
Iberdrola has adapted its Governance and Sustainability System to the three main issues the international investment community uses to measure the impact and sustainability of its investments: environmental, social and governance (ESG). Previously, in 2018, the company Board of Directors undertook a major reform of its internal regulatory system to reinforce the group's commitment to the UN's Sustainable Development Goals, especially numbers 7 — affordable and clean energy — and 13 — climate action —. The Board also reviews the Group's Policy against climate change, and the long-term incentive plan proposed by the Board of Directors at the 2020 General Shareholders' Meeting, includes, among other things, targets linked to the fight against climate change.
Among other functions, the Board's Sustainable Development Committee is responsible for reviewing aspects related to climate change and is regularly informed in this regard.
Climate change is a key element in defining the company's strategy. Iberdrola is addressing it not only as a risk factor, but also as an opportunity for growth through mitigation and adaptation actions during the transition to a low carbon economy.
Iberdrola has analysed its strategy regarding different future climate scenarios, demonstrating that the group's business model is generally adequate to face the challenges arising from the energy transition, as well as the physical impact of climate change.
To face the first of these, transition, the group is perfectly positioned to take advantage of the opportunities arising from the energy transition thanks to its leadership in renewable energy, smart grids, storage systems and also digitisation, all key in the transition to a climate-resilient, low-carbon economy.
In the case of the second, the physical impacts of the main climate threats and the increase in the frequency and severity of extreme weather events, and based on the studies carried out, as they are chronic and progressive impacts, they will occur over the coming decades over relatively long periods, so they will be managed in accordance with the degree of adaptation and resilience of the different facilities. Furthermore, Iberdrola has policies, plans, technology and predictive systems to minimise the impact of events. One outstanding example is MeteoFlow, an integrated system to predict weather variables which, as part of its continuous improvement, has incorporated the forecasting of extreme weather phenomena among its functions, allowing emergency plans to be set up and better management of maintenance equipment in any type of renewable facility.
However, given the constant evolution of science and the uncertainty associated with climate projection studies and their impacts, the analysis must be furthered and deepened in order to quantify the possible impacts and establish the adaptation measures, if necessary.
The group's risk control and management system considers and monitors the risks derived from climate change, which can be grouped into:
- Physical: possible material impacts on installations.
- Transitional: associated with the process of global decarbonisation (regulatory changes, market prices, technological, reputational, etc.).
- Others: such as risks to the supply chain and social phenomena.
The identification, analysis and management of risks is approached with a multi-departmental approach, in which both corporate and business functions collaborate. The risks derived from climate change were identified and assessed with the support of experts in the field to estimate the risks derived from the main threats identified, among which extreme weather phenomena stand out, as well as the possible variability of the renewable resource.
Based on the best knowledge available, Iberdrola's solid ability to adapt can be affirmed, due, among other factors, to the great diversification of its assets, its proven capacity and experience over the years, and its consideration of climate change as a manageable risk, which implies that new investments can be made on more resilient assets.
Metrics and targets
Iberdrola includes relevant indicators relating to climate and its strategy to combat climate change in its Statement of Non-Financial Information [PDF] and in the Integrated Report. These include indicators on its greenhouse gas emissions inventory, emissions intensity, reduction objectives, energy use, energy intensity, the energy mix, installed renewable capacity, water use, the origin of its water, R&D&i and investment in developing low emissions products, services and/or technology.