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E.ON UK Electricity and Gas Supplier Case Study Analysis

Case Study

E.ON is one of the largest electricity and gas generator providers in the UK. A company which is this big in size and customer base has to be face some serious challenges as well when it comes to complying with country’s energy and fuel emission crisis. If a firm knows that its actions, operating as well as non-operating, are adding to the emission problem, it is then highly recommended that something concrete is done quickly because that shows the firm is socially responsible and cares about the climate. This also results in good customer relations and generally favorable publicity. E.ON has shown good business sense when it adopted some serious almost desperate measures to control emissions for which its employees and their non operation actions were responsible.

Employees cannot be restricted where daily work related operations are concerned. However when it comes to daily non-operations activities, the firm wants to ensure that its employees are seen as environment-caring souls. Thus E.ON has come up with a series of actions that is meant to reduce emissions and these measures include giving up expensive cars, car pooling, use of company’s hybrid cars and even preferring public transport or bicycles.

E.ON UK Electricity and Gas Supplier Case Study Analysis

E.ON understands that UK is currently facing an emission crisis. In a desperate attempt to reduce CO2 emissions, UK is planning to close almost one third of its power plants in next 12 years. By 2020, UK wants major reduction in emission to achieve a 60 percent reduction by 2050.

Increasing concentrations of ‘greenhouse gases’ from human activities arc expected to cause a significant change in the earth’s climate. This may have important consequences for the environment of the UK. The main gases involved are carbon dioxide (CO2 ), methane (CH4 ), nitrous oxide (NO), chlorofluorocarbons (CFCs) and ozone (O3 ). These gases absorb outgoing infra-red radiation which has been reradiated from the earth’s surface. Observed global temperature increases over recent years are consistent with estimated increases caused by increased greenhouse gas concentrations. Although a molecule of CO2 is less potent than molecules of other greenhouse gases, the quantity of emissions is relatively so large that CO2 is the major contributor to global warming. Under its Climate Change Program, the UK is committed to reducing CO2 and CH4 emissions to 1990 levels by the year 2020. Total UK emissions of CO2 fell by 7 per cent, and of CH4 by 15 per cent, between 1990 and 1995, largely reflecting the decreasing use of coal in power stations and coal mining. Still international-level intervention will be required to reduce greenhouse gas emissions significantly.

The biggest problem is posed by corporations in the country and with some having no serious environmental policy; it becomes increasingly difficult for the greenhouse emission level to fall to acceptable level. However companies are rapidly seeking to appear more socially responsible and environment friendly and hence many have either come up with their own strategies for controlling emission or they are seeking collaborations with NGOs.

Is EON Really a Responsible Firm?

Considering the efforts that are being made by E.ON we can say that the firm appears to be socially responsible but its commitment to the cause is still limited. It is clear from the strategy that this corporation is only making efforts on personal employee level and only limits them to non-operations activities.

But as anyone would testify, a major part of the environmental problems is caused by industrial emissions that come from everyday business operations and not actually from non-operation activities.

It is good to have an environmental policy that is followed by all the employees so the company can “walk the talk”, as the saying goes. But it is even more important to have a policy with much wider and broader scope.

What Must be Done by E.ON?

For EON to evolve as a socially responsible firm with deep commitment to protection of environment, it would be best to not only apply its policy to non operations activities but also spread it to its daily business operations. This will have a much bigger impact on the environment and on firm’s reputation and credibility.

It must be borne in mind that effective organizational functioning is dependent on strong environmental forces — meaning in this context, social, political, and economic. Organizations should be urged to follow a strict environmental policy because that makes it far more effective. Apart from it being ethical, a good environmental policy simply shows good business sense.

But it is All Easier Said Than Done

EON has to come up with a plan that would work for the environment without compromising profits. Every business needs to find a balance between the two and without doing that, it is not possible to succeed in either area as Barry Commoner writes:

Perhaps the most profound question raised by environmental issues is to what extent the choice of production technologies should be determined by private economic considerations and to what extent by social concerns like environmental quality. These values are in sharp conflict. .

Recognition that significant environmental improvement depends on social rather than private governance of production decisions helps us understand why the considerable effort to improve the environment has had so little effect. (pp. 62, 64)

EON must understand that there lies a deep connection between performance and production and that a decision-making framework incorporating both is needed. One way to do this would be by designating a department or office within their organization as carriers of strong environmental message and social values. There must be a spokesman who would speak for the firm’s values and prepare a publicly released environmental impact assessment on all business proposals. This is in accordance with US government’s EIS law.

Code of Ethics

EON employees will minimize the use of emission producing vehicle.

Every employee who can produce evidence of helping in reduction of emission will be duly rewarded.

EON employees are requested to use public transport more often and company will reimburse them for this form of commute.

Employees must bring to the notice of the management any serious emission producing activities that they have witnessed on EON property.

Strategic Plan for Reducing Emission

EON should have a separate department looking into environment related issues.

It must be made responsible for overseeing any activities that can be potentially hazardous to the environment.

EON must start working with NGOs like World Wide Fund for Nature to explore the issues raised by emission and disposal of hazardous substances.

EON can sponsor researches and studies on different economic, social and environmental issues to develop guidelines for best environmental practice.

The collaboration between corporations and NGOs is extensive, and there is an important trend in collaboration between some NGOs and some corporations. It is a trend which is clearly seen by both the specialized agencies of the UN and by developing countries as a practical solution to the potential conflict between the desire for environmental improvement and the lack of resources required to achieve that objective. It also demonstrates that with a balanced approach to interests and needs, collaboration which serves shared goals can and does occur.

Nuclear Plant Concerns

The firm’s plan to have a nuclear power plan to reduce emission needs some careful consideration. We understand that since its use after the war, nuclear power has generated roughly 100 GW(E)yrs of electricity in the UK, several hundred GW(E)yrs in the western world and around 1,000 GW(E)yrs worldwide. However as useful as they may be, they do pose a serious health and environmental hazard. For one we must not forget that nuclear power plans have to be developed according to UK safety rules which are carefully summarized by Gittus (1987):

UK safety rules first and foremost aim at the building of reactors that have intrinsic characteristics that provide inherent protection. Secondly, these natural defences are supplemented by engineered features to prevent, limit, terminate and mitigate any faults. Thirdly, the systems design must be tolerant to operator action—if the operator makes a mistake, the reactor shuts down. Fourthly, UK operators are highly educated and well trained, not just for routine operations, but for unusual and accident situations and, fifthly, the entire system is overseen by an independent Nuclear Inspectorate that can at any time, without hindrance or challenge, close down any licensed reactor… The reasons for the accident at Chernobyl are now clear. It occurred as a result of three main design drawbacks of the reactor:  1. it had a positive void coefficient (the reactivity increased if the gas volume in the reactor increased) and, below 20% power, a positive power coefficient, which made it intrinsically unstable at low power;

  1. the shutdown system was in the event too slow in its operation;
  2. there were no physical controls to prevent the staff from operating the reactor in its unstable regime or with safeguard systems seriously disabled or degraded.

(Gittus, 1987)

Having said all this, please do understand that nuclear power plants have presented a hazard to the health and safety of the public since their birth because they are prone to major accidents in which harmful substances called radioactivity could be released to the atmosphere as dust and expose a large population to lethal or injurious radiation. The source of this accident hazard is the nuclear reactor, which is the heart of the plant. It generates the nuclear energy for making electricity, and in the process, it also generates the radioactivity as a by-product. This radioactivity builds up in the reactor and is even used as fuel in the case of plutonium, which is perhaps the most potent of all radioactive substances. In order to assess the hazards of nuclear power plants, therefore, we must investigate the accident potential of the various nuclear reactors in use or planned for use.

The maximum conceivable consequences of the worst accident are as follows: (1) a lethal cloud of radiation with a range of seventy-five miles and a width of one mile; (2) evacuation or severe living restrictions for a land area the size of Illinois, Indiana, and Ohio combined (120,000 square miles), lasting a year or possibly longer; and (3) severe long-term restrictions on agriculture due to strontium 90 fallout over a land area of the size of about one half of the land east of the Mississippi River (500,000 square miles), lasting one to several years, with dairying prohibited “for a very long time” over a 150,000 square mile area. There are other consequences not here estimated for water-cooled reactors, such as genetic damage.

Incidentally, the maximum distance downwind from a reactor is about 1,500 miles to 2,000 miles. Hence, a nuclear reactor accident can affect distant communities as well as those nearby. (WASH)

We must all remember the major accidents in the past that resulted in serious environmental damage as well as severe damage to life and health of men. Chernobyl is one such example and hundreds of babies have since suffered the effects of radioactive substances in the atmosphere.

If EON wants to be considered a socially responsible and environmental friendly firm, it needs to be more careful of what it does. Any action taken for the apparent purpose of environmental protection needs to be checked in the light of past events. For history offers solid guidance and should not therefore be ignored. I am not in favor of nuclear power plant and feel that firm can come up with other more useful ways of protecting the environment and reducing CO2 emission.

  • Commoner Barry. 1987. “The Environment”. New Yorker, June 15, pp. 48-71.
  • Gittus J.H. et al., The Chernobyl Accident and its Consequences, NOR 4200 (HMSO, 1987).
  • WASH-1400, Reactor Safety Study, USAEC ( Aug. 1974; draft). H. W. Lewis et al., “Report to the American Physical Society by the Study Group on Light-Water Reactor Safety”, Reviews of Modern Physics 47

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