ESG Incidents
ESG principles, policies, and practices play an essential role and increase their importance in the company strategies to address the needs and interests of their stakeholders.
However, these initiatives may not always avoid an ESG incident.The ESG incidents relate to one or more ESG indicators and are considered as controversies. Sometimes, these controversies could result in the payment of fines.
ESG
Active controversies
Tax controversy regarding sale of hydro portfolio
Investigation process about CMEC and DPH
São Manoel dam in Brazil
Abuse of market position
Interruptions in electricity and natural gas supply
Vegetation management
Tax controversy regarding sale of hydro portfolio
Last December 2020, EDP sold a portfolio of Hydro Power Plants in Portugal to a French consortium led by ENGIE. There is an ongoing investigation process about the tax implications of the transaction.
EDP confirms that searches were conducted to its headquarters in respect to the sale of a portfolio of hydro power plants to the French consortium led by ENGIE, for alleged tax fraud.
As always, EDP is collaborating with the authorities. EDP understands, considering reputable experts’ opinion, that the operation met all legal and tax requirements.
Investigation process about CMEC and DPH
On 2 June 2017, EDP was made aware of the investigation being carried out by the DCIAP since 2012 regarding the amounts due to EDP for the early termination of the CAEs and the right of use over the DPH.
For further information, please see the latest update regarding this matter as well as EDP’s market notifications and public positionings.
São Manoel dam in Brazil
The São Manoel Hydroelectric Power Plant is being constructed a few hundred meters from the border of the Kayabi Indigenous Territory, inhabited by three ethnic groups (Kayabi, Apiaká and Munduruku).
All the impacts are of an indirect nature and all the mitigating measures established in the Indigenous Environmental Project are compensatory in nature with no correlation to any possible impacts caused by the dam.
Additionally, the São Manoel HPP held a wide-ranging discussion on the construction of the enterprise with the indigenous peoples of the area covered by the plant.
Abuse of market position
This case is related to the bidding strategy on ancillary services market of EDP Produção’s power plants.
In this context, the AdC imposes a fine of 48 million euros to EDP Produção, which is not a final decision as it is subject to appeal.
The proceeding is pending before the Portuguese Court of Competition, Regulation & Supervision.
According to the AdC-Autoridade da Concorrência (competition authority), between 2009 and 2013, EDP Produção allegedly limited the supply of secondary reserves by power plants under the CMEC regime.
In this regard, on 30/10/2019, EDP Produção submitted an appeal against AdC decision.
Interruptions in electricity and natural gas supply
On 28 January 2021, ERSE notified EDP Comercial on its decision regarding 104 administrative offences, of which 92 were considered severe. All of them were related to interruptions in electricity and natural gas supply to consumers.
On June 4, 2021, ERSE notified EDP Comercial of the final terms of the settlement.
EDP Comercial is permanently assessing its processes and has a continuous improvement programme in place, mitigating the possibility that cases such as those in question will happen again.
On May 17, 2021, EDP Comercial decided to present a settlement proposal with some insights, such as confirming the willingness to pay the fine and compensating the customers to minimize their losses. €8,000 of a total €12,700 have already been paid.
On June 18, 2021, EDP Comercial paid the fine of €425,000 and decided not to appeal the ERSE's decision. So the process has been closed. At the moment, EDP Comercial is paying the remaining compensations to the customers.
Vegetation management
E-REDES and some of its employees are accused in 2 legal cases, regarding to 2 wildfires that occurred in 2017 (Pedrogão) and in 2018 (Monchique).
We firmly believe that EDP was not negligent in any of the cases.
We have evidence that the vegetation management works were done in accordance with legal rules and internally approved procedures, following the regular intervals, and with the planned interventions to comply with the Municipal Plan.
Market notifications and public positionings
For further information regarding this investigation, please see public information namely EDP's statements at CMVM (Portuguese Securities Market Commission), media, European Commission decisions.
