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ESG
Governance

We operate our business with transparency, accountability and integrity. Strong governance enables us to deliver on our commitments and to create sustainable value for our stakeholders.

Material Issues

On an ongoing basis, we analyze material economic, environmental, and social issues that impact our ability to create value for our stakeholders. We use stakeholder input to help identify our most critical material issues and guide our strategies.

We engage in a variety of informal and formal communications with our key stakeholders and other important groups, including owners, lenders, and other members of the financial community, regulators, suppliers, nongovernmental and nonprofit organizations, and professionals in industry, government, labor, and education. More detail on the process we use to determine material issues is available on the Entergy sustainability webpage.

Material economic issues are identified by monitoring developments in energy demand; energy supply, including generation technologies and fuels; industry and general business regulation; and economic conditions. Local, state, regional, national, and global economic conditions all impact our business, and we monitor them accordingly.

Our material economic issues for 2019 were:

Issue Why It Matters
Financial performance Generating strong, competitive financial returns for our owners affords us access to capital needed to invest in our business; to provide safe, affordable, reliable, and increasingly clean power for our customers; to compensate our employees; and to invest in our communities.
Customer satisfaction Meeting customers’ expectations for affordability, reliability, enhanced products and services, and other needs such as outage communications and storm restoration is a key component of our mission. Customer satisfaction can also affect approved rates of return and other regulations.
Energy reliability Meeting customers’ expectations for service to be available on demand requires ability to invest in our system, up-to-date technologies, and robust supply solutions.
Energy affordability Maintaining affordable retail power prices supports economic development and attracts new businesses to our service areas. Low rates are particularly important in the states served by Entergy utilities, where average customer usage is high and many customers live in poverty.
Energy efficiency Offering energy-efficiency programs helps customers manage their bills and supports environmental goals. Energy efficiency can also free up capital for other productive investment that enhance our customer experience. Our ability to respond to the reduced customer usage from energy efficiency, to secure fair cost-recovery mechanisms, affects our financial performance.
Economic development Promoting economic development generates energy demand growth and helps strengthen our communities; maintain rate stability; fund investments to modernize our operations, increase efficiency, enhance reliability, and serve new demand; and earn authorized returns.
Fuel diversity Balancing fuel diversity and other resource attributes supports price stability, energy affordability, and reliability. Nuclear energy plays an important role in fuel diversity.
Security Maintaining continuous and reliable business operations depends on our ability to maintain the safety and security of all Entergy assets and operations.
Cybersecurity Entergy’s complex, interconnected network of generation, transmission, distribution, and control and communication technologies is a crucial part of the national critical infrastructure. Protecting this infrastructure — by remaining vigilant against cyberattacks and safeguarding the privacy and confidentiality of sensitive stakeholder data — is a top priority for Entergy.
Regulatory policies Complying with existing regulations and advocating for the development of constructive new regulations impact numerous operational and investment decisions, continued operation of nuclear plants, and our financial results.
Commodity price risk Delivering on financial performance objectives is impacted by our ability to accurately identify and quantify underlying commodity price risk in our business and mitigate it through effective hedging programs and strategies.

We identify material environmental issues by monitoring developments in environmental legislation, regulation, case law, agency guidance, industry trends, best management practices, and other actions. In addition, peer groups for air, water, waste, and biodiversity facilitate the identification and sharing of information on material issues.

Our material environmental issues for 2019 were:

Issue Why It Matters
Climate change risk Identifying and mitigating climate change financial and physical risks influence operational and investment decisions and help improve the resiliency of customers and communities. These risks include increased operational costs due to carbon regulation; increased weather-driven volatility of business results; and potential physical impacts to our facilities, our customers, and our communities.
Conventional air emissions Meeting or exceeding compliance with evolving federal and state regulation of air pollutants informs our business decisions regarding generation dispatch and design and the location, retirement, purchase, operation, and construction of electric generating units. The benefits of replacing our legacy units with clean technology include improved system reliability, increased environmental efficiency, and reduced costs for our customers by using less fuel and improving fleet efficiency.
Greenhouse gas emissions Reducing greenhouse gas emission intensity helps us reduce the risk of climate change impacts to our assets and our communities. This activity also defines our leadership role in industry-wide decarbonization efforts. Net reduction in carbon emissions can result from additional beneficial electrification of industry sectors served by our system.
Water issues Risks to water supply issues are mitigated by using water-saving technologies, monitoring available supplies, and minimizing our water withdrawal in water-stressed areas. We also recycle water in some of our cooling systems and operate one air-cooled combined-cycle gas unit. Water quality is protected through robust permitting and compliance programs.
Waste management A robust waste management and minimization process plays a key role in reducing risks to human health and the environment. Waste-related risks are mitigated by program elements that support source reduction, recycling, and repurposing. This includes recovering the value of obsolete parts and equipment through investment recovery sales and recycling ash for beneficial use. All of these efforts result in diversion of waste from landfills and the reduction of liability for hazardous substance management and disposal.
Habitat and biodiversity Having a goal to fully comply with all environmental regulations, including those that govern wildlife conservation, reduces environmental risks, including threats and impacts to biodiversity. Our investment review process identifies potential biodiversity risks as well as plans to avoid, minimize, or mitigate any risks identified for construction, commissioning, and / or operation. We view this as our responsibility as strong environmental stewards.

Material social issues are identified by monitoring trends and developments such as those among our employees, owners, regulators, communities, and markets, as well as from our own activities in operations, financial, legal, compliance, and supply chain.

Our material social issues for 2019 were:

Issue Why It Matters
Safety and health Ensuring strong operational and workforce safety practices are fundamental to our business.
Human resource management Relying on an aligned, engaged, and capable employee culture is fundamental to meeting our objectives. Diverse cultural backgrounds and perspectives of employees and supply chain partners provide us with a strategic advantage.
Local communities Sustaining business growth depends on healthy and vibrant communities. Our support of local communities through employment, tax base, financial investment, and community outreach is reciprocated by community support for ongoing company operations. Community engagement in areas such as emergency planning is especially important where we have nuclear generating facilities.

Material economic, environmental, and social issues are integrated into Entergy’s enterprise risk management processes. Our ERM processes identify, monitor, and mitigate risks that have the potential to impact Entergy’s ability to meet our objectives. More information on our ERM processes is available in the Risk Management section of this report.

Opportunities and Risks

Sustainability of our business depends on our ability to:

  • Deliver value as measured by strong net promoter scores, consistently positive customer interactions, high levels of service, reliability, superior and affordable products and services, highly skilled and engaged employees, strong corporate brand recognition, and industry-leading financial performance.
  • Maintain the safety and security of all Entergy assets, employees, and operations.
  • Maintain a reputation of excellence among our stakeholders.

To preserve these abilities, Entergy proactively manages risk using a hierarchy that ties directly to Entergy’s mission of creating sustainable value for our key stakeholders — customers, employees, communities, and owners. For each group, we consider expectations and key deliverables that are integral in meeting our sustainability mission. We then identify short- and long-term actions to help us better anticipate and mitigate risks. We map these risks and actions to our stakeholders as illustrated in the following risk-management matrix.

For Our Customers

Opportunities and Risks Entergy’s Management Approach
Energy delivery
  • Utilize reliable and efficient generation, transmission, and distribution resources
  • Maximize value of existing assets through operational excellence
  • Explore emerging technologies
  • Invest in transmission and distribution
  • Invest in storm hardening
  • Maintain business continuity planning
  • Ensure effective emergency preparedness and response policies and procedures are in place
Interaction experience
  • Consistently deliver positive customer experiences
  • Improve customer interactions by introducing an upgraded online platform and an interactive telephone voice response system
Value-added benefits
  • Leverage technologies to better understand customer behavior
  • Leverage technologies and utilize data analytics to further enhance our customers’ experience
  • Explore new technologies to provide enhanced products and services
  • Increase reliance on renewable energy
  • Maintain productive regulatory relationships
Total cost of use
  • Continue delivering affordable, efficient, and clean energy solutions while offering affordable retail rates
  • Invest to modernize our generation fleet by building new, modern, more efficient plants and retiring older, less efficient facilities
  • Leverage continuous improvement efforts to enable incremental investments that will benefit our customer experience without materially affecting customer bills
Privacy and security of information
  • Refer to the Cybersecurity Management section in this report

For Our Employees

Opportunities and Risks Entergy’s Management Approach
Health and safety
  • Relentless focus on everyone being safe, all day, every day
  • Continuously improve our systems, processes, and communications to support employee and contractor safety
Workforce capabilities and organizational health
  • Foster a culture focused on diversity, inclusion, and belonging
  • Promote continuous learning and development
  • Make long-term, fundamental improvements in the way we work to ensure efficient, cost-effective, and sustainable practices
  • Sustain a work culture that is aligned, adaptable, engaged, and able to get the right things done
  • Align our approach for training, developing, and promoting employees to support current and future business needs
  • Develop human resource programs to recruit and retain a workforce that has the knowledge, skills, diversity, and abilities to achieve our strategic imperatives
  • Recruitment, development, and retention of top talent by ensuring individual’s professional growth goals and the company’s objectives are all achieved
  • Invest in education and workforce development, including working with community partners, to support regional workforce readiness
  • Empower employees to work more productively and implement innovative solutions that deliver exceptional customer experiences
  • Encourage employees to take ownership in the business
  • Be the employer of choice for talent acquisition and ongoing employee development

For Our Communities

Opportunities and Risks Entergy’s Management Approach
Environmental impact
  • Deliver industry-leading environmental stewardship while maintaining affordable rates
  • Implement a comprehensive environmental strategy that includes partnering with communities and customers to take action to meet our voluntary CO2 emissions commitments
  • Engage in the regulatory process on environmental issues
  • Ensure readiness for extreme weather events with industry-leading emergency response capabilities
  • Advocate for investment in coastal infrastructure and resiliency and actively engage in climate change discussions at federal, state, and local levels
Economic development
  • Aggressively pursue economic development and customer expansion, which will ultimately help mitigate bill effects by spreading fixed costs over a larger customer base
  • Support economic growth in our region, which will benefit our customers
Overall quality of life
  • Support local communities through employment, tax base, financial investments, and community outreach that result in a positive social and economic impact
  • Take part in community engagement
  • Maintain effective communications regarding emergency planning in areas where we have nuclear generating facilities

For Our Owners

Opportunities and Risks Entergy’s Management Approach
Financial
  • Realize steady, predictable growth in earnings and dividends while maintaining key cash and credit metrics
  • Refer to the Financial Performance Management section in this report

Other Influencers of Our Business

Opportunities and Risks Entergy’s Management Approach
Preserve constructive relationships with other influencers of our business
  • Foster constructive relationships with regulators that result in positive customer outcomes
  • Engage with regulators and stakeholders to understand their goals, to ensure understanding of our objectives, and to obtain input on key issues

Exiting Our Merchant Business

Opportunities and Risks Entergy’s Management Approach
Ensure orderly exit of EWC
  • Maintain safety as a top priority
  • Manage transition as we exit the merchant business
  • Support employees and communities through the transition from operating state to sale of the facility post shutdown

Risk Management

As Entergy’s business evolves toward a more customer-centric model, we are enhancing our enterprise risk hierarchy to enable aggregation, tracking, and reporting of risks at the enterprise level. We’ve developed a bottom-up risk identification and assessment model that supports the company’s focus on sustainability and analyzes and monitors a full range of economic, environmental, and social risks. As we implement customer solutions through technology and other enhancements and as we manage the orderly exit from our Entergy Wholesale Commodities business, the model will leverage the expertise of the people closest to our discrete risks. Our integrated risk-management framework is designed to ensure that these risks are consistently identified, thoroughly assessed, and effectively managed.

At the same time, we consider the impact of our business on global risks such as those associated with climate change and environmental regulation. This helps ensure we operate according to universally accepted standards for responsible business practices. We report on economic, environmental, and social assessments and actions through investor-led indices such as the Dow Jones Sustainability Index. More detailed information on our sustainability initiatives can be found throughout this report and on our EEI / ESG template, performance data table, and GRI index at entergy.com/sustainability.

Our risk management team routinely submits reports to the audit committee of the board of directors, which has primary responsibility for risk management at Entergy. Reports focus on key topics such as environmental compliance, corporate compliance, significant legal matters, insurance programs, market and credit risks, and cybersecurity risks.

Cybersecurity Management

As we expand and automate our utility infrastructure, our comprehensive and coordinated “three lines of defense” risk management model has evolved to ensure that effective protections and controls are in place and being monitored to secure our part of America’s electric grid. We manage physical and cybersecurity threats as an enterprise risk with a comprehensive strategy that includes close coordination and information sharing with our federal, state, and local partners and our internal risk and control resources. Cyber and physical security risks are regularly reviewed by corporate senior executives and the audit committee of our board of directors. We consider ourselves stewards of the customer, employee, and vendor information that we collect, maintain, and use. We have a corporate obligation to ensure data privacy through a comprehensive data governance program and effective data security controls.

To prevent cyber incidents, we have implemented modern access management controls including a layered multi-factor authentication approach to network and system access and a defense-in-depth security ecosystem that includes advanced threat detection from independent third parties and federal partners, security logging and monitoring, and independent third-party penetration and vulnerability assessments. All employees are required to complete computer-based cybersecurity training modules throughout the year to enhance security and threat awareness, to promote best practices, and to meet regulatory requirements where applicable. Additionally, employees are subject to disciplinary measures for security policy violations and repeat responses to Entergy’s simulated phishing campaigns. Should an event occur nonetheless, we have a corporate incident response plan that is tested and exercised annually and continuously improved based on lessons learned.

Security is an evolving landscape and Entergy maintains a comprehensive security strategy to keep pace with the changing risk landscape and to make investments to improve enterprise security capabilities. A risk-based methodology is in place to ensure security initiatives address the most significant risks and provide the most value in terms of risk reduction.

We engage with local, state, and federal law enforcement agencies on initiatives to share threat information and participate in a wide range of industry collaborations and classified briefings on cybersecurity. These partnerships include:

  • Utilities United Against Scams, a consortium of electric, gas, and water utilities dedicated to combating utility scams by providing a forum to share data and best practices and working together to implement initiatives to inform and protect customers;
  • Electricity Information Sharing and Analysis Center, a provider of security services to North American electric utilities;
  • Department of Energy Cybersecurity Risk Information Sharing Program;
  • Federal Bureau of Investigation Domestic Security Alliance Council, a strategic partnership between the FBI and U.S. private industry that enhances communication and promotes the timely and effective exchange of security and intelligence information; and
  • Electricity Subsector Coordinating Council, a provider of the primary security communications channel for the electricity subsector as well as a resource to assist with incident preparedness.

Financial Performance Management

Our overarching goal for owners is to deliver top-quartile total shareholder returns. This enables us to attract the capital we need to serve customers and grow our business. We also strive to maintain investment-grade ratings at our utilities and Entergy Corporation. A strong financial and credit position gives us the financial flexibility necessary to respond to unexpected events and changing market conditions. Successful execution on our strategy is driving strong shareholder returns. We outperformed the Philadelphia Utility Index by 17.5 percent in 2019 and by 36.9 percent over the three-year period encompassing 2017 through 2019.

Our overarching financial objective is to produce steady, predictable growth in earnings and dividends. Generating strong financial results supports our sustainability goals by enabling us to provide safe and reliable power to customers over the long term; to attract, retain, and compensate employees; to invest in our communities; and to satisfy our owners.

For our three-year utility capital plan for 2020 through 2022, approximately 90 percent of planned investments are expected to be recovered through timely regulatory mechanisms, and approximately 90 percent is ready for execution from a regulatory approval standpoint. Our project management organization has a strong track record of completing major projects on schedule and on budget, or better.

And we strive to do even more for our customers. We have no shortage of investment opportunity, so we continuously work to improve how the business functions. This enables us to fund incremental investments that further enhance our customers’ experience, therefore providing incremental services to customers at a similar bill level.

We have an objective to have a steady, predictable trajectory in dividend growth over time. In 2019, we raised our dividend for the fifth consecutive year.

Our finance organization, led by our chief financial officer and governed by the finance committee of the board of directors, oversees our financial performance using prudent policies, strategies, procedures, and investment processes. We proactively manage our business to ensure compliance with all laws and regulations.

Ethics and Compliance

Our ethics and compliance culture is based on our core value, “Above all, act with integrity.” This is more than a culture of compliance, it is a culture of integrity in which our employees are trusted to engage in ethical behavior, even when there are no clearly defined rules.

Our ethics and compliance program includes the Code of Entegrity with overarching guidelines for business ethics and compliance. We also have codes of business conduct for nonemployees and suppliers, as well as policies with specific guidance on complying with applicable laws, regulations, and company policies. We identify risks of noncompliance and then mitigate those risks through preventive and detective measures and corrective actions. Employees regularly receive training and communications to help them understand Entergy’s ethical expectations.

Our practice is to address compliance issues as they arise. The Entergy Ethics Line is available for all employees. It is managed by a third party and enables anonymous reporting of ethics violations or concerns. The corporate compliance committee, made up of top management from each of Entergy’s business functions, oversees the ethics and compliance program. The vice president of ethics and compliance provides regular reports on the program to the audit committee of the board of directors.

Supply Chain Management

Entergy purchases approximately $4.5 billion annually in materials and services. In 2019, we expanded our Supplier Governance Board to focus on additional operating units in the company, including nuclear and utility operations. The expansion ensures we make quality decisions when purchasing materials and contracting for services. In this way, supply chain creates value for our stakeholders.

All suppliers are expected to conduct business in a manner consistent with our supplier code of conduct. Entergy expects our suppliers to provide goods and services in a safe and environmentally conscientious manner. We actively seek suppliers who operate in a fair, honest, and socially responsible manner and share our commitment to protect the environment. We have incentive and non-incentive scorecards that target multiple performance indicators for the company and our key suppliers, including sustainability-related measures. Although specific scorecard measures differ based on services and products provided, standard metrics used to align contractor performance with company objectives include safety, budget, schedule, reliability, and human performance.

2019 was a year of action for Entergy’s supply chain organization as an influential member of the Electric Utility Industry Sustainable Supply Chain Alliance. EUISSCA is known as the leader in establishing and promoting sustainability best practices in the electric utility supply chain in North America. Comprising 20 North American electric utilities, the alliance represents a combined spend of $170 billion. Entergy’s chief supply officer joined the alliance’s executive committee in 2019 and was elected vice chairman for 2020. Entergy supply chain members have served on several key subcommittees addressing issues such as the social aspects of sustainability, measuring key suppliers’ sustainability performance, investment recovery, and embedding sustainability questions in utility sourcing processes. More than 75 supplier affiliate members work together with participating utilities toward a common mission to improve environmental performance and advance sustainable business practices.

Key Entergy supply chain initiatives in 2019:

  • Through our ongoing Print Smart Partnership with Xerox, we reduced our printed paper consumption in 2019 by 6.3 million printed pages. Resulting positive environmental impacts included important reductions of 727 million BTUs; 1.9 million gallons of waste water; 258 tons of wood; and more than 500,000 pounds of greenhouse gas emissions.
  • We strengthened our partnership with Xerox through the Print Releaf program. We offset in 2019 approximately 87 million sheets of printed paper the company used in 2018 by replanting the equivalent — almost 10,400 trees — in support of global reforestation projects in Brazil, Dominican Republic, India, Ireland, Madagascar, Mexico, and the U.S. Plantings were accomplished through a grant from Entergy’s Environmental Initiatives Fund. This and other company reforestation initiatives support Entergy’s work to influence UNSDG 15, which aims to sustainably manage forests and halt the loss of biodiversity around the world.
  • Entergy partnered with a sustainable flooring supplier to purchase 30,000 square yards of carbon-neutral flooring for facility upgrades that resulted in a carbon reduction of 274 metric tons.
  • Strong demand for fly ash led to a strategic marketing solution that will improve landfill maintenance at Entergy’s coal sites. The partnership will increase revenues from fly ash sales from $13 million to $38 million over the five-year agreement while supporting stringent environmental compliance. Increased sales of fly ash benefit the environment and our communities by delivering less waste to landfills.

Supply chain manages the enterprise investment recovery program that aims to obtain the best return for assets that Entergy no longer needs. Instead of disposing retired assets in landfills, which is costly, this program facilitates recycling and repurposing retired assets and components, selling surplus assets, and assessing market conditions and trends to assure that Entergy receives the maximum value in investment recovery sales, which will ultimately benefit our customers. In 2019, our sales totaled $18.8 million. Our cumulative sales over the last five years is $65 million. In addition, Entergy recycled 14.5 million pounds of metals in our distribution operations business unit, including legacy meters from our grid-modernization project. This effort diverts waste from landfills while securing value for Entergy and our customers. For more on grid modernization, see the Grid Modernization section of this report.

Looking ahead to 2020 and beyond, Entergy is focusing on a sustainability strategy to reduce warehoused inventory as a continuous improvement measure that will ultimately result in fewer assets to sell or recycle. With this in mind, our target for investment recovery sales in 2020 is $8 million.

Entergy’s supplier diversity and development initiative is designed to identify and develop a robust population of safe, competent, and competitive suppliers capable of meeting our procurement needs. Diverse suppliers provide a variety of products and services and support investments across our different business functions. Entergy makes a concerted effort to ensure that diverse suppliers are included in all applicable sourcing opportunities. Each sourcing event is required to contain at least one qualified diverse supplier, if available. In 2019, Entergy spent more than $667 million with approximately 630 diverse firms and, for the fourth time, was recognized as a top corporation for women-owned businesses by the Women’s Business Enterprise National Council. Entergy was recognized as the corporation of the year by the Southern Region Minority Supplier Development Council. Additionally, Entergy received the Advocate of the Year Award from The Women’s Business Enterprise National Council. For the year 2020, Entergy has set a diverse spend target of 14 percent of managed spend, which will result in an increase of approximately $50 million in diverse spend compared to 2019. To support Entergy’s economic impact to our local communities, we are also developing a more robust strategy to provide more opportunities for local suppliers.

In January 2020, Entergy implemented the vendor management and risk oversight procedure and program. The objective of the VMOS program is to take a risk-based approach to mitigate key risks in the supply chain and drive vendor performance to meet or exceed expectations through an organized and structured relationship model between the vendor and Entergy. In 2020, our goal is to initiate the VMOS process with 63 of our top vendors.

Advocacy and Political Accountability

We are involved in a number of legislative and regulatory initiatives across a broad spectrum of policy areas that can dramatically affect our operations. We take positions on key economic, environmental, regulatory, and social policy issues affecting our business, such as potential environmental regulations and poverty. We also participate in legislative and regulatory processes through trade organizations.

We encourage employee participation in the political process through the Entergy Corporation Political Action Committee. ENPAC contributions directly support state and federal political candidates, and our procedures ensure corporate political contributions comply with all applicable laws and are reported in a timely manner.

Approximately half of our employees are members of EnPower, Entergy’s grassroots advocacy group. EnPower educates members on issues of importance to the company and encourages members to get personally involved, including reaching out to public officials.

Entergy’s Stakeholder Engagement Management Program allows us to purposefully plan and execute our interactions with stakeholders on key initiatives. The program ensures that all stakeholders are informed of our business pursuits and that their concerns and positions are heard.

More information on Entergy’s advocacy and political accountability can be found in our annual Advocacy and Political Contributions Report on Entergy’s Investor Relations webpage.