Report Introduction

Sustainability Strategy

Con Edison is dedicated to making a transformational impact on the environment, our region, and the lives of our employees and the people we serve. The company’s sustainability strategy goes hand in hand with our guiding principles of:  

• Safety
• Operational excellence
• Enhancing the customer experience

Our long-term success embraces people, planet, and sustainable business practices. We invest in people by creating a more diverse, equitable, and inclusive workforce and by putting resources into underserved communities. We protect the planet with our ambitious Clean Energy Commitment. And we aim to maintain a strong financial base while pursuing growth as we transition to a clean energy future. Our strategy is reflective of our deep commitment to sound environmental, social and governance (ESG) practices. This strategy is focused on the following key areas:

• Our bold Clean Energy Commitment, which reflects our strategy to lead New York and the nation in the transition to a clean energy future for our customers. We will do that by investing in, building, and operating reliable, resilient, and innovative energy infrastructure, advancing electrification of heating and transportation, and aggressively transitioning away from fossil fuels to a net-zero economy by 2050.
• Protecting our critical infrastructure against the impacts of climate change
• Expanding our national renewable electric production business – currently the 2nd largest owner of solar electricity production in North America
• Developing transmission opportunities to bring clean energy to customers in New York and across the Northeast and Mid-Atlantic
• Committing to diversity, equity and inclusion for our workforce and through supplier diversity, and
• Maintaining sound governance practices

Our Corporate Strategy Stems from Our Guiding Principles

Our corporate strategy grows from our three guiding principles and seeks to address the growing concern globally of the impacts of climate change and the desire of customers and the public to have increasing say over how their energy is produced and used.

The pursuit of our guiding principles should enable us to continue to provide steady, predictable earnings, maintain balance sheet stability, and pay attractive dividends for our shareholders – in 2022, we raised our annualized dividend for the 48th consecutive year.

Guiding Principle: Safety

Safety is the cornerstone of all that we do at Con Edison. We continue to strive for a zero-harm work environment for our employees and the public we serve.

While 2021 was another year of unprecedented challenges, as a team, our focus on safety remained relentless and was evident in our strong safety performance, resulting in 2021 being the second lowest in terms of number of injuries and illnesses in company history.

We have been aggressive in upgrading our systems against severe weather, having invested $1 billion over four years following Superstorm Sandy. We coordinated with Westchester County in New York to invest an additional $100 million to fortify our electric system following a pair of successive severe storms in 2018.

We continue to replace and repair leak-prone gas mains, reducing risk and cutting methane emissions. Con Edison was the first utility in the country to install natural-gas detectors that monitor the air where our gas service pipes enter buildings and send alarms to our control center personnel.

To make our electric systems safer, we’re using smart meter data to develop algorithms to avoid electrical shocks. Our 3D model of the 91-mile steam system better estimates potential problems caused by heavy rain and flash flooding, which improves safety and operations.

Surveillance of our electric and gas systems is also a priority as we conduct surveys of our entire electric and gas systems monthly.

Guiding Principle: Operational Excellence

Operational excellence is at our center. It is the rigor and procedures we use to design, construct, operate, and protect our energy systems. Con Edison’s electric system has historically been one of the most reliable electric systems in the country. However, we know our customers’ reliance on electricity is growing and their expectations are increasing. We are deploying sensors, using robotics to monitor our systems, applying analytics, and using other technologies to achieve the operating excellence that our customers demand.

To maintain our world-class reliability, we plan to invest around $4 billion every year on our electric-, gas-, and steam-delivery systems. We use a risk-based approach to maximize the impact of our investments. We seek to continuously improve during blue-sky days and emergencies. As part of our work to enhance our storm-outage response, we’ve purchased 90 bucket trucks that are ready to be used by flow-in utility workers who in the past have had to drive long distances to help our region recover.

Minimizing risk is key to operational excellence. This work begins with cyber and physical security. We invest in cybersecurity to protect customers’ personal information and our assets. We regularly train employees on potential cyber and insider threats, collaborating with government and industry partners. In 2021, we completed major physical security upgrades at many company facilities.

When it comes to a cleaner, more efficient future, our strategy involves reducing harmful emissions and expanding our portfolio of renewable energy production. Our targets include reducing sulfur hexafluoride emissions by five percent annually and reducing methane emissions by replacing four percent of our priority gas distribution mains annually in our natural gas local distribution system.

Guiding Principle: Enhancing the customer experience

Seeing from the perspective of our customers is what allows us to create the best customer experiences. We understand the pandemic and all its ramifications have caused incredible hardship for many of our customers. We are offering flexible payment agreements and pointing them to additional resources. Our customers have also made it clear that they want more access to renewables, energy efficiency, demand response, storage, and information to help them manage their energy usage and bills.

As part of our $1.4 billion, multi-year, smart meter investment, we are more than 92% complete with mass deployment activities, having installed 4.9 million smart meters. We are targeting to substantially complete the remaining installations by the end of 2022. Smart meters are the cornerstone of our efforts to meet the evolving needs of customers by providing greater insights into energy use with near real-time data—a truly transformational technology.

We are already seeing customer benefits and savings from our smart meter rollout. These benefits include improvements in customer restoration times following storm outages because we have integrated the smart meters with our outage management system. Net savings for customers from smart meters are expected to cumulate to $1 billion over the life of the assets.

The environmental benefits of smart meters are substantial as well: we expect to be able to reduce distribution voltage by as much as three percent, resulting in a one-and-a-half percent reduction in energy usage. Smart meters also make possible more interactive rate designs for our customers.

Clean Energy Future

In 2019, New York State enacted the Climate Leadership and Community Protection Act (CLCPA) that established a goal of 70 percent of the electricity procured by load-serving entities regulated by the New York State Public Service Commission to be produced by renewable energy systems by 2030 and requires the statewide electrical system to have zero emissions by 2040. The law also codified state targets for energy efficiency, electric vehicles, emissions reductions, offshore wind (9,000 megawatts (MW) by 2035), solar (6,000 MW by 2025) and energy storage (6,000 MW by 2030¹). We are in support of the state goals and have worked to codify our support through the Company’s Clean Energy Commitment.

¹  Note this was increased from 3,000 MW to a target of 6,000 MW by 2030 as per Governor Hochul’s New York State of the State Address.

Our Expanded Clean Energy Commitment

A major articulation of our sustainability strategy is our Clean Energy Commitment. In 2021, we updated our Clean Energy Commitment to make it bolder and meet the moment we are in. Our commitment to the clean energy future is supported by five pillars, detailed below. Each pillar is comprised of various company initiatives.

Our Clean Energy Commitment is available on our website at the following link: Our Clean Energy Commitment | Con Edison

Climate Change Resilience and Adaptation

Con Edison’s energy infrastructure is vulnerable to climate change, and the Company recognizes the global scientific consensus that these changes are accelerating. Accordingly, in December 2020, the Company released our Climate Change Implementation Plan, a follow-up to our 2019 Climate Change Vulnerability Study. The 36-month study, performed in conjunction with ICF International and Columbia University’s Lamont-Doherty Earth Observatory, evaluated our present-day infrastructure serving New York City and Westchester County under a range of potential climate futures.

The plan reflects not only the experience of experts across Con Edison, but also the feedback, input, and experience of more than 50 stakeholders, including New York State Department of Public Service staff, municipal representatives, and environmental advocacy organizations.

The company’s announced pathways prepare for high risk scenarios of potential climate change impacts, the implementation of which would allow us to go beyond the goals set out in the Paris Agreement. The plan addresses mitigation measures in response to identified company-specific climate-driven risks:

• Sea level rise
• Coastal storm surge
• Inland flooding from intense rainfall
• Hurricane-strength winds, and
• Extreme heat

The study estimates that we may need to invest between $1.8 billion and $5.2 billion by 2050 on targeted programs to protect our electric, gas and steam delivery systems and our customers from the impacts of climate change.

Con Edison is already using its climate change projections for decision-making in areas such as power supply forecasting. Starting in 2020, we began integrating climate considerations into our planning, engineering, operations, and emergency response practices to adapt to climate change. In addition, the company formed a new executive-level committee focused on climate risk and resilience.

While the Climate Change Implementation Plan provides a strong foundation for action, Con Edison will evolve its adaptation efforts over time based on new climate science and its customers’ needs. It will review its climate projections annually and update them at least every five years. The company will provide regular public reporting on its progress through its annual Sustainability Report and other disclosures.

Con Edison Clean Energy Businesses

The Clean Energy Businesses (CEB) are forecasted to grow over time, as clean energy targets and advancements in renewable technologies present opportunities for CEB investment. On December 31, 2021 CEB had 3,004 MW (AC) of utility-scale renewable energy production projects in service (2,996 MW) or in construction (8 MW) and 69 MW (AC) of behind-the-meter renewable energy production projects in service (65 MW) or in construction (4 MW). Our assets are comprised of 90% solar and 10% wind. We have projects operating in 20 states in the U.S. and are the second-largest owner and operator of solar electricity generation in North America.

CEB has a dedicated battery storage team and is actively integrating storage into new renewable development as well as into operating assets where economical. Battery storage is also offered for projects CEB is developing on behalf of renewable energy and energy efficiency customers.

Con Edison is considering strategic alternatives with respect to the Clean Energy Businesses.

Additional Opportunities in Renewable Energy Production and Electric Transmission

Con Edison Company of New York in January 2022 filed a proposal for new electric and gas rates. The proposal included plans to expedite the development 1,000 MW of solar electric production over 10 years and to assume ownership of those projects for the benefit of low- and moderate-income customers. CECONY currently has a pilot community solar project underway that provides both clean energy and associated skilled employment opportunities in economically disadvantaged areas.

Con Edison is also pursuing opportunities to develop and own electric transmission to connect new renewable energy projects to customers. New York State, our principle state regulatory jurisdiction, has a goal of 70% renewable electricity by 2030.

In April 2021, CECONY received approval from the New York State Public Service Commission to build three electric transmission projects at an estimated cost of $780 million to provide relief from loss of electric generating peaking plants that will not meet NOx emission rules and to enable delivery of renewable generation – both from offshore and from upstate. One project is expected to be in service by 2023 and the other two projects by 2025.

CECONY and O&R joined other state utilities in a joint filing to develop additional electric transmission projects to enable that New York’s electric grid support the State’s climate mandates of the CLCPA and the Accelerated Renewable Energy Growth and Community Benefit Act.  CECONY’s proposals include two clean energy hubs to facilitated access to renewable energy, especially offshore wind, for its customers.

Con Edison Transmission

Con Edison Transmission (CET) is the company’s FERC (Federal Energy Regulatory Commission) regulated subsidiary that invests in new electric transmission to support the increased use of clean energy resources, including offshore wind.

CET has a 45.7% in the NY Transco that is developing a new $600 million, plus interconnection costs, electric transmission line that will enhance the grid’s reliability and bring renewable energy to customers. That line is scheduled to be in service in December 2023 and, along with another segment under construction, will increase capacity by 1,850 MW.

CET will continue to pursue opportunities to build stronger transmission backbones and create the pathways to deliver clean offshore wind energy as well as other clean energy resources. Con Edison Transmission plans to invest more than $1 billion over the next 5 to 10 years to develop, with strategic partners, electric transmission to bring clean, renewable energy from where it is produced to where it is needed to serve customers, advocating a “transmission first” approach (building out the transmission capacity before focusing on building renewable assets) where appropriate and furthering the Biden Administration’s goal of 100% clean electricity by 2035.

Diversity, Equity & Inclusion

At Con Edison, we have a long-standing commitment to diversity, equity and inclusion. Our vision is to be a company whose values and behaviors foster a culture of inclusion and respect for all. We know that a diverse and inclusive company is a stronger, more successful company.

Our corporate Diversity, Equity & Inclusion (DEI) strategy is built on four key elements – ongoing learning and competency building; inclusive and visible leadership support; reviewing our systems, policies, and procedures to eliminate potential barriers to inclusion; celebrating and acknowledging the diversity of our workforce.

In addition, we implemented our 14-point Action Plan, built on a two-pronged approach: 1) data-driven change to ensure that our employees at all levels reflect the diversity of our communities; and 2) culture transformation to promote behaviors and mindsets that support a diverse, equitable and inclusive workplace. Our Action Plan is supported by our DEI Task Force.

Our commitment to diversity also extends to our Supply Chain. Our effort in this area helps us to increase competition within our vendor base, create millions of dollars of opportunities for minority-owned and women-owned businesses and contribute to the economic vitality of the communities we serve.

Our people will always be our greatest strength—and the incredible range of culture, experience, and perspective makes the company stronger.

Maintaining Sound Governance Practices: Setting Priorities and Strategy

While the company prepares for the impact of climate change, our broader efforts are focused on helping mitigate climate change. We have a governance structure and strategy in place to harness the skills and intellect of our employees consistent with sound, sustainable principles.

As disclosed in our Proxy Statement, the Company is firmly committed to sustainability, which is broadly overseen by the Board. The Board reviews and discusses various sustainability topics throughout the year and routinely reviews environmental issues (including climate change) and their impact on the Company’s operations, strategies, and risk profile.

In addition, the Board has delegated to the appropriate committees, responsibility for the specific sustainability categories relating to the oversight with which such committees are charged. The Safety, Environment, Operations and Sustainability Committee oversees sustainability matters relating to safety and the environment and reviews the Company’s Annual Sustainability Report prior to its publication. In discharging its responsibilities, the Safety, Environment, Operations and Sustainability Committee, at each of its meetings, reviews certain key performance indicators relating to climate risk. The Corporate Governance and Nominating Committee is charged with sustainability matters relating to governance, including overseeing the Company’s approach to political and lobbying activities and receiving periodic reports about the Company’s political contributions, lobbying and trade association activities. The Management, Development, and Compensation Committee’s responsibilities include oversight of sustainability topics relating to human capital management. The Management, Development, and Compensation Committee annually reviews performance results as well as proposed performance indicators for the following year.

Committees not specifically tasked with oversight of sustainability also periodically review sustainability related matters. As part of its review of strategy and financial plans, the Finance Committee considers the financial sustainability of the Company.

To help guide and oversee our sustainability strategy, we have developed a governance structure that extends from our Board of Directors to the employee level. Our structure includes:

• Safety, Environment, Operations, and Sustainability Committee of the Board
• Corporate Governance and Nominating Committee of the Board
• Management, Development and Compensation Committee of the Board
• Vice President-level Environmental, Social, and Governance Committee

In 2016, we engaged BSR, a leading sustainability consulting firm, to assist us in developing our sustainability materiality assessment and determine our key sustainability priorities, and in 2019 we worked with New York University in refreshing that assessment and resulting priorities.

We have integrated our sustainability priorities, including our Climate Change Implementation Plan, with our long-range planning. Our 20-year plan for our electric and gas businesses is designed to help us navigate today’s challenges while preparing for changes in the energy landscape.

Our long-range plans identify $68 billion in strategic investments to advance our clean energy, climate resilience, core service, and customer engagement priorities over the next 10 years. These plans include three representative pathways toward our net-zero carbon goals for our electric, gas and steam operations:

• Full electrification that relies on existing technology solutions,
• Targeted electrification that balances existing technologies with innovations in low-to-zero carbon gaseous fuel technologies, and
• Hybrid consumption that benefits from existing electric, gas and steam infrastructure to deliver low-carbon energy.

The plans are available on our website at the following links: Long Range Plans | Con Edison