Xcel Energy Chairman Ben Fowke: ‘A Lot Of Opportunities To Lead’

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Amid a litany of arguments that moving to 100 percent renewable power is impossible, Xcel Energy’s board decided to do it anyway—challenging other businesses to follow.


Editors’ Note: The board of Xcel Energy was honored with the “Greatest Impact on Corporate Boards” award by Corporate Board Member in its 3rd annual Board Leadership Awards, presented in partnership with Galt & Company. They are one of three honorees an independent committee of directors recognized for their work during a year of challenges and difficulties worldwide. The others include: Pamela Arway, Chair of DaVita, who was named “Independent Director of the Year” and the board of Johnson & Johnson, who received the “Courage in the Boardroom” award. In addition, Corporate Board Member will honor Clint Allen, founder and president of the American College of Corporate Directors, with a special lifetime achievement award.


In 2019, Xcel Energy became the first major U.S. electricity provider to establish a goal of 100 percent carbon-free electricity by 2050. It also committed to achieving an 80 percent reduction in emissions by 2030 and is already well on its way, having reduced emissions by 51 percent. “By 2030, almost two-thirds of our energy will come from renewable sources,” Executive Chairman Ben Fowke told CBM in a recent interview, adding that Xcel’s board backed the company on every step of its sustainability journey. “As you can imagine, we had significant conversations with our board around those goals, and they’ve been very supportive.” Excerpts of that conversation, edited for clarity and length, follow.

Pursuing a clean energy future, maintaining affordability and reliability for customers, and driving growth and profitability seem like conflicting goals. How does Xcel balance them?

It’s a really good question because our customers look for 24/7 affordable and reliable energy, and we can’t ever sacrifice that. So, we focus on three strategic priorities: First, the clean energy transition I already talked about; second, enhancing the customer experience and third priority, keeping our bills low.

The good news is that as policy was developing, technology was innovating and the price of wind and solar dropped dramatically. The steel and the costs of the wind farms we build is actually less than the variable cost of the fuel that we use to run our fossil power plants. That’s how the clean energy transition and keeping bills low can work together. It’s clear that we can reduce carbon and do it at an affordable price while keeping our product reliable. And that’s what led to our announcement that we want to be carbon-free on the electric side of our business by 2050.

As an investor-owned utility, we need our investors to be attracted to us. And if we own the renewable energy farm, we get a regulated return that displaces fuel, which is just a passthrough item for us. We don’t make money on things like natural gas and coal, the actual commodity. So if we can lower our customers’ fuel bill, save them money and have an investment vehicle that we can earn on and attract investors with, it really is a win-win. We’ve worked really hard to promote and to discuss with our key stakeholders how this can work.

Does Xcel incorporate ESG metrics in performance reviews and incentive plans?

Absolutely. Way back in 2004, when we established the company’s first carbon reduction goal, it became part of our long-term incentive plan. That was a long time ago, but we have increased targets ever since. We also are very sensitive to things like customer satisfaction, reliability and safety. We recently added another annual incentive target for improvement in diversity, equity and inclusion, recognizing that this is a journey we won’t solve overnight but that you manage what you measure. So that is on our system now.

Thirty percent of our long term incentive pay is tied to carbon reduction. Our annual incentive pay is fully aligned to ESG goals. In 2021, 40 percent of AIP is tied to employee and public safety, 20 percent to reliability, 20 percent to customer satisfaction, 10 percent to wind availability and 10 percent to DEI progress.

Finally, to more of the “G” side of your question, all of the promises we make to the investor community need to be met for us to be paid. So we don’t have one target in the incentive plan and a different target that we discuss with our shareholders.

There’s been a lot of discussion about how companies should disclose ESG practices. What’s your approach?

We’ve published an ESG report now for the last 16 years. It’s evolved with investors and shareholder interest and as reporting standards have increased. Our reporting follows the Global Reporting Initiative Standards and Sustainability Accounting Standards Board disclosures, which shows alignment of our goals with the UN sustainable development goals.

In addition to that, with our SEC filings, both the 10-K and the proxy, we do some pretty high-level ESG reporting on those documents as well. And then increasingly we’re getting requests from some of our investors and other stakeholders for various types of reports. For example, we supplied a report that responds to the recommendation of the Task Force on Climate-Related Financial Disclosures. We’ve provided reports on our carbon strategies for our electric and natural gas businesses. We did a detailed analysis comparing our carbon goals against the science of climate change in terms of what independent scientists are telling us we need to do to achieve the one and a half degree scenario modeling.

We do a report on the impact of our green bonds with the largest green bond issuers, and we take positions around human rights. The responsible transition from coal is also important to talk about because moving away from coal clearly is the right thing for our environment, but it’s pretty painful if it’s your town, your community that’s losing a coal plant and the associated jobs and tax basis with it.

We work with our employees and impacted townships when we make that decision. We haven’t laid off anybody. We are willing to retrain and relocate them. We also take advantage of natural attrition and, so far, it’s worked well. In those communities we quite often try to put replacement generation at the same site, whether that’s natural gas backup or solar farms, and it’s worked out very well.

More generally, companies have been through quite a rollercoaster over the past 18 months, with Covid-19, racial unrest, political divisiveness impacting companies. What were the biggest challenges for Xcel with respect to ESG’s ‘S’ and ‘G’?

The past 18 months really showed us how resilient we can be as people and how important electricity and gas that heat homes are for the customers we serve. I’m proud of how our employees adapted to what we needed in the Covid environment. Our crews continued to keep the lights on and plants running. They did that through natural disasters like storms and wildfires, as well as when they had to overcome Covid protocols, working to keep themselves and our community safe.

Then, of course, we also had the murder of George Floyd right in our backyard, which made a big impact on me personally. We [spoke out] about the need to address and promote diversity, inclusion and racial justice at Xcel Energy. I’ve already mentioned that we added a corporate scorecard for diversity and inclusion.

We’ve always been very active in our communities, through both dollar contributions and volunteer time contributions, but we stepped up this year by taking a $20 million gain we had from a sale of a company asset and donating the entire amount to long-term corporate giving, including support for racial equity and social justice. When children were schooling remotely, something that can be especially difficult for disadvantaged kids, we teamed up with other Minneapolis- area companies to provide $1 million to fund mobile-distance learning support given to the several hundred Black and minority students whose schooling was disrupted by the pandemic.

We also developed an Xcel Energy relief and recovery proposal designed to jumpstart the economy post pandemic. It’s a $1.4 billion spend that mostly involves building new solar farms but also provides $4 million for new workforce training for people in underserved communities so they can pursue energy-related careers. We dedicated $3 million to low-income rooftop solar programs and another $6 million for energy efficiency workforce partnerships. That $1.4 billion will create 3,000 jobs.

I also had the privilege during this timeframe to be chairman of the Edison Electric Institute industry trade group, and I challenged my colleagues to catalog all the best practices around diversity and adopt more of them. Everybody rallied to that challenge.

Shareholder interest in engagement seems to have intensified in recent years. How actively does Xcel’s board engage with investors? What concerns have shareholders raised?

I’ve seen an increase in interest in ESG. During the last couple years, we’ve had our lead director along with myself and our investor relations team talk about our ESG goals with investors. That’s something we do at least once a year now. That’s something I think has emerged in the last few years.

If you take your eye off of ESG these days, I think you’re going to have some activism in the boardroom pretty shortly. The importance of staying on top of your values, on top of your ESG goals, on top of hotlines and compliances— there’s no holiday for that. That’s extremely important.

Tell me about the biggest challenge faced by the board during your tenure as a director there. How did the board handle it? What did you learn from the experience?

We’re a regulated utility operating in eight states, from Minnesota all the way down to Texas. Those are different political environments, and then, of course, we had federal regulation. So, public policy really impacts us. We spent a lot of time with the board discussing the ramifications of public policy and the need to engage with various stakeholders, to listen, but also to try to have those stakeholders understand what we are trying to do, which typically, hopefully, aligns with what they want. Getting public policy right has probably been one of the biggest topics in my tenure as a director and a CEO that we routinely discuss—and one of the biggest things that we have to get right within the company.

How has the regulatory environment shifted under the new administration?

It’s very interesting. I was just on a call about some of the things that are happening with the administration. There’s a lot of discussion about energy policy, tax policy, most of it geared towards driving this clean energy transition. If that public policy can get enacted in ways that are supportive of what we’re trying to do, it would be very beneficial.

Obviously, the last administration was less focused on that, but our industry kept moving ahead for the reasons that I mentioned. Stakeholders wanted us to move ahead, and technology allowed us to move ahead. I’ve been able to sit down with people who are really not into renewable energy and show them on a spreadsheet, “this is going to save you money,” and they become believers after that. So, we’ve made good progress under multiple administrations with different agendas, but it’s clear that this administration wants to see the clean energy transition go forward, and that’s helpful for us.

Looking ahead, what do you see as the biggest challenge for Xcel’s board?

Well, as you get closer and closer to your [carbon reduction] goals, it does get harder. I’m really excited to see what technologies are going to emerge post 2030 that will get us to that last 20 percent reduction.

I’m super excited about electrifying things like transportation. An announcement just came out today from the U.S. carmakers that half of the cars they plan on selling by 2030 will be electric.

That is a big deal for our industry and for Xcel Energy. So we’ve got a lot of opportunities to lead the clean energy transition, and the challenge will be making sure that we don’t lose sight of affordability and reliability. That probably means that we have to continue to make sure that public policy gives us that framework so that we can do all the things I’ve mentioned, but I think we’ve got an exciting future ahead.

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