We work with fuel and nonfuel suppliers to drive continuous improvement and efficiencies within the supply chain while improving environmental and safety performance. We ask suppliers about their sustainability strategy and activities through our procurement process, and we advise them of opportunities to help them reduce or mitigate their impacts on natural resources.
AEP’s Supplier Development group performs operational assessments of our key or critical suppliers. Since 2008, they have assessed more than 200 manufacturing facilities, evaluating five key operational areas: Quality, operational efficiency, responsiveness, health and safety and environmental/sustainability practices. These assessments proved especially beneficial for one of our suppliers who used the operational assessment to improve its business and become a successful bidder to AEP. The company was open to learning how to address the issues that had been identified and a year later made substantial improvements that resulted in winning a larger portion of AEP’s business.
AEP also works directly with its fuel suppliers and surveys its coal suppliers on their environmental, safety and health performance. We have conducted three surveys of our coal suppliers, a commitment we made to stakeholders to better understand the lifecycle of coal, its impacts on the environment, how our suppliers are addressing those impacts and to share leading practices.
“It should always be our value and norm to procure quality that includes attributes that reflect resource stewardship, environmental sensitivity and fair labor practices. This is a growing cultural requirement that AEP can continue to exercise leadership in our industry and globally.” - AEP Stakeholder
The AEP Sustainability Survey of Coal Suppliers is the only known survey of the coal industry that reflects an assessment of about one-half of the coal mined in the United States and nearly every coal basin in the country. The final report on the results of the third survey was issued in December 2012, based on 2010 data. Key findings include a high level of safety and health performance in 2010 along with an increase in the number of coal suppliers issuing annual sustainability reports.
This survey gives us important insights into the environmental, safety and health performance of the coal industry - validating that we share common values and strive to achieve excellence in managing our impacts to the environment and keeping employees safe. We have learned much about our suppliers, and they have learned about their own industry through this process. For example, a majority of respondents have programs that include training, job safety analysis programs, risk assessments and wellness programs.
We surveyed the coal suppliers who participated in the survey to ask them how they use the data and whether it provides value to them. The overwhelming response was that the survey provides great value, especially regarding environmental performance because it’s the only such benchmark of the industry. Some suppliers also said they use the data in their own sustainability reports and to help drive continuous improvement within their companies. Our 2013 survey will collect data for 2011 and 2012.
As we diversify our resource mix, we will consider how to engage with other fuel suppliers, particularly within the natural gas industry.