The “G” in ESG

The G in ESG stands for “Governance”, but that can relate to different things. Today’s ESG frameworks and reporting standards have largely established the relevant contents and scope. Typically, the G section includes topics centering around ensuring responsible business conduct. But what does it mean for Axpo? Let’s hear it from Sandra Middel, Axpo’s Chief Ethics and Compliance Officer.

Sandra, from Axpo’s perspective, what comes to mind when you think of “Governance” in the ESG context?

Good corporate governance is about establishing clear responsibilities, robust control mechanisms and a culture of ethics, compliance and integrity. In areas like international energy trading, regulated markets and operating critical infrastructure, integrity isn’t optional, it’s Axpo’s license to operate. At Axpo, good corporate governance allows us to credibly pursue our environmental and social goals, make long-term investments and build trust in a secure and sustainable energy supply. This is achieved through a framework of principles, values and ethical behavior. But just as important are effective compliance and risk management systems as well as an open speak-up culture.

Speak-up culture is often mentioned as a cornerstone of good governance. What makes it so critical?

A strong speak-up culture is vital for integrity and risk management. When employees feel safe to raise concerns, potential misconduct or weaknesses can be identified and addressed early, preventing escalation. Beyond compliance, this drives better decision-making, innovation and continuous improvement. It is important that we encourage employees to challenge practices, share ideas and propose solutions. 

And how do we achieve it?

Management is key in that regard: Clear support from leaders to reinforce ethical behavior, creating an environment where risk awareness and innovation thrive together. Essentially, it’s all about trust. Trust is the cornerstone of a good speak-up culture, and it all starts with leadership. The way leaders act and make decisions sends a strong message to employees about what they can expect when raising concerns, especially in challenging situations.  By consistently demonstrating integrity, fairness and openness, leaders build the trust and credibility needed to create a safe and supportive environment. This ensures employees feel valued and empowered to contribute, fostering a culture that protects and drives the organisation forward."

We see that regulatory complexity is growing. How does Axpo approach this challenge?

Indeed, the regulatory landscape is evolving at an unprecedented pace, particularly in areas like sanctions, anti-bribery laws, financial and energy market regulations and ESG requirements. Staying ahead requires a proactive approach: we stay informed, aim to ensure awareness and embed compliance into daily operations across all countries, business models and subsidiaries. Every employee plays a vital role in keeping us on the right track. With the “Yes – Check”, developed as part of our new Code of Ethics, we’ve created a simple tool to help everyone reflect on whether their actions align with Axpo’s values or whether they should seek support and guidance.

Today, ESG commitments are under increased scrutiny, especially regarding greenwashing. How does Axpo ensure credibility?

Stakeholders are increasingly demanding tangible evidence that ESG commitments are genuine, measurable and embedded into decision-making. Misalignment between strategy, communication and behavior can quickly lead to greenwashing accusations. This carries the risk of reputational damage and even legal consequences. Therefore, our commitments, decisions and projects are guided by transparency, credibility and build on scientific standards as well as measurable outcomes.

Digitalization and AI are big ticket topics these days. They bring opportunities but also ethical challenges. How does Axpo approach these?

Digitalization and AI are transforming the energy industry, offering efficiency and innovation. However, they also raise ethical questions around data protection, cybersecurity, algorithmic bias and transparency. At Axpo, we promote responsible use of technology by embedding ethical considerations into our digital strategy. This includes robust data protection policies and an approval process for high-risk AI applications within a cross functional framework. The AI governance board facilitates transparent communication with stakeholders about how technology is being implemented and used. The goal is to enable innovation while maintaining trust, ensuring that technology works for the benefit of all stakeholders and in compliance with applicable regulations.

So, how does Axpo essentially manage good corporate governance?

Governance isn’t just about systems and policies, it’s deeply rooted in culture and leadership behavior. Regulators and stakeholders increasingly focus on how leaders act, how they set the tone and whether they create an environment where ethical behavior is the norm. At Axpo, we emphasize accountability at all levels. Leaders are expected to model ethical behavior, encourage open dialogue and challenge practices that fall into “grey zones.”

You’re alluding to certain business situations that can lead to ethical dilemmas. How does Axpo support employees in making the right decisions?

Indeed, fast-moving, high-pressure environments like energy trading and large-scale transformations can create conflicting incentives and time pressures. This can make ethical decision-making challenging. To support employees, Axpo aligns performance targets with our values. In addition, we will roll out our Code of Ethics with leader-led sessions around ethical dilemma. We also encourage collaboration and open communication, ensuring that employees feel supported when facing tough decisions. Ultimately, our goal is to create a culture where doing the right thing is always the priority, even under pressure.

Where are Axpo’s key values and principles defined?

Axpo will shortly publish a completely revised and publicly available Code of Ethics, which defines the values and principles that guide our organisation. This Code applies to all employees and reinforces Axpo’s commitment to integrity and ethical behavior. It provides guidance on important topics such as anti-corruption, conflicts of interest, insider trading, data protection, human rights, ethical leadership and responsible environmental practices. To ensure understanding and effective implementation, group-wide training initiatives and leader-led sessions will accompany the rollout.

So, to round up: What is the G in ESG at Axpo from your view?

Governance at Axpo can be summarized as ensuring we do the right thing, and that we do it the right way. It’s about embedding integrity into everyday decisions while navigating regulatory complexity, technological change and rising expectations for transparency and accountability.

For more insights into Axpo’s approach to Governance and Ethics & Compliance, see Axpo’s latest Sustainability Report.