Integrated Reporting, Stakeholder Engagement, and Balanced Investing at American Electric Power


  • Katherine W. Parrot,

    1. KATHERINE PARROT is a doctoral candidate at the MIT Sloan School of Management.
    Search for more papers by this author
  • Brian X. Tierney

    1. BRIAN TIERNEY is Executive Vice President and Chief Financial Officer at American Electric Power.
    Search for more papers by this author
    • Acknowledgements: We acknowledge AEP's staff for their help in providing raw material and editorial help for this paper: Joe Buonaiuto, Bruce Braine, Lonni Dieck, Dale Heydlauff, Mark McCullough, Rich Munczinski, Sandra Nessing, Melissa Tominack, Dennis Welch, and Chuck Zebula.


The policies and practices of American Electric Power (AEP) encompass a number of paradoxes in the domain of sustainability. AEP is a large electric power provider with a predominantly coal-fired power generation portfolio, which puts the company squarely in the center of national debates about global climate change and national air quality. At the same time, AEP is also a leader on several social and environmental fronts: integrated reporting, stakeholder engagement, technology innovation, and policy solutions for climate change.

In this article, the authors describe AEP's rationale for providing leadership in these areas and then explore how the company tries to balance stakeholder interests and financial, environmental, and social concerns in its capital investment decisions. Using these examples, the authors expand on and discuss the limitations of Michael Jensen's theory of “enlightened value maximization.”