S OCIAL DIMENSION

5.2.1. Focal firm stakeholders

Taking the organizational culture and work environment as a standing point, in the wind turbine industry, workers’ health and safety in maintenance and service jobs is the main concern. It is an issue that directly affects operational efficiency and effectiveness. Hence focusing on this area can reduce sick days and increase productivity as well as prevent work accidents that might increase medical bills or reduce the stress level of workers and consequentially impact the employees’ turnover rate. According to U.S. BUREAU OF LABOR STATISTICS, from 2019 to 2029 it is estimated to grow 61 percent in employment of wind turbine service technicians, who have one of high injury and illnesses rate of all occupation (U.S. BUREAU OF LABOR STATISTICS, 2021).

The number of accident numbers has shown an upward trend from an average of 120 cases yearly from 2006-2010 to 171 cases from 2011-2015 and 184 cases from 2016-2020 due to the increasing installation of onshore and offshore wind turbine (Caithness Windfarm Information Forum, n.d.). Besides the medical costs for the injuries, there are also usually high operation costs involved with accidents such as equipment damages and delay caused by extensive investigations. Vestas devotes to reduce injury rate and set long-term safety targets to reduce the rate of total recordable injuries to 1.5 per million working hours by 2025, and to 0.6 by 2030 to make Vestas a safer place to work (Vestas, 2020b). Figure 14 shows the injury rate at Vestas declines from 25% to 3.3% in 2020.

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Figure 14:Incidence of injuries. (Source: Vestas, 2020b)

Another factor that could have an impact on performance in wind turbine companies is effective corporate governance. Good corporate governance is seen as the support for a company’s sustainable development (Sheba & Bello, 2020). Improving corporate governance is an essential activity to affect the way the focal firm is managed and controlled to ensure its performance and value (Fülöp, 2013). Vestas, as previously mentioned, enhances the efficiency of the management system through its two-tiers management structure to make sure the firm is operated with the ethical business of conduct and comply with law and regulations.

5.2.2. Supply chain stakeholders

The actors in the supplier chain’s social performance could have a potential impact on the focal company. In some cases, the focal company has to discontinue the corporation with the supplier and search for a substitute supplier, which resulting in a direct impact on increasing the operating costs. In other cases, Suppliers’ unethical business conduct could damage the focal company both financially and brand image, which the focal company might have to take much effort and investment to restore.

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In connection to the social dimension of the wind turbine supply chain, it is often linked to the raw materials suppliers, who supply the minerals to the wind turbine companies. A wind turbine consists of approximately 84-89 percent of iron and steel. The suppliers for iron and steel often have adverse impacts such as corruption, human rights violations, destruction of ecosystems on the local community and the environment, especially in developing countries (ActionAid, 2018). These negative externalities from suppliers in the mining and extracting industry pose a challenge of social acceptance for the deployment of wind energy (Ellis &

Ferraro ,2016).

To deal with this challenge, Vestas can have a positive impact on these suppliers through their supplier management to reduce the impact of negative externalities. In this respect, Vestas establishes a supplier scorecard to track their strategic supplier’s sustainability performance on a monthly basis to drive sustainability development in the energy sector (Vestas, 2020b).

Its responsible supplier management tool is updated with human rights and labor self-assessment questions, which indicate how well its suppliers perform on the social front. This is to ensure a transparent supply chain and traceable information flow between Vestas and the suppliers. Vestas also conducts third-party due diligence screenings, assessment of supplier compliance, onsite visits, external audits to mitigate supplier risk (Vestas, 2020b). In this way, Vestas minimizes reputational risk by ensuring its suppliers comply with norms and regulations through suppliers reporting on the assessment.

5.2.3. Stakeholders beyond the supply chain

In terms of impact on social well-being, business operation of the wind energy industry influences the use of the land to a very limited extent, so there are few conflicts with farmers on the use of agriculture land (Energy.gov, n.d.). As wind power emits no toxic substances, it improves the level of public health and puts less pressure in the health care system in the long

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run. However, the sustainable value of these factors is not significant to be captured at a firm level.

The flexibility in scaling up and down investment in wind infrastructure can benefit the economy in rural areas, where there are often strong wind sources for power generation (Energy.gov, n.d.). This advantage widens the access to electricity for the population in the remote or less developed areas. Today, across the globe, there are still more than 1.3 billion people lacking access to affordable and reliable electricity (Steiner-Dicks, 2015). Lacking electricity can have consequences for access to clean water and irrigation, human health, education, and economic well-being for the society as a whole. Many of these remote communities in developing countries have to rely on expensive and polluting diesel generators to supply power. Wind power generation infrastructure enables off-grid power supply at a cost lower than existing diesel-powered electricity in remote areas, where it is often non-economical to supply electricity through extending the main power grid at a cost of tenths of thousands of dollars per mile of distance (LuvSide, 2020). It is noteworthy that abundant wind resources are available for more than 50 million people living in the area where electricity is still lacking (Steiner-Dicks, 2015). Wind energy can create new opportunities and improve prosperity by powering these remote areas. The developing countries increasingly see the potential in decentralized or off-grid electricity generation to deliver electricity to rural and remote locations.

In this respect, Vestas started “Wind for Prosperity “project in 2011 and were partnering with ABB to supply wind power to remote areas by utilizing ABB’s microgrid systems which is designed to manage renewable energy generation in isolated grids (Steiner-Dicks, 2015). It ensures utility-grade power quality and grid stability, as well as very high levels of wind power penetration. This project for instance has been carried out in Kenya 13 rural areas that can benefit 200,000 people who basically can have more stable electricity rather than using diesel

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power electricity (Steiner-Dicks, 2015). The off-grid wind power significantly improves the living standard in these small communities. There are still challenges in terms of raising funds for such development. But more and more investors, energy companies and governments start to see the benefits to scale up wind infrastructures, such as in South Africa (Steiner-Dicks, 2015).

To conclude, in improving social well-being in the wind energy industry, the industry’s business operation has much impact on ensuring access to affordable and clean energy for all.

In other words, the wind energy industry in the social dimension fulfills the stakeholders beyond the supplier chain’s interest in sustaining social well-being by providing global citizens access to electricity.