World's Biggest Companies Deepen Commitment to Clean Energy

The world’s largest companies aren’t waiting for governments to act aggressively on climate change, according to a report by Calvert Investments, Ceres and the World Wildlife Fund (WWF).

"Power Forward: Why the World’s Largest Companies are Investing in Renewable Energy," shows that a majority of Fortune 100 companies have set renewable energy targets, greenhouse gas (GHG) emissions reduction targets or both. The trend is even stronger internationally, as more than two-thirds of Fortune’s Global 100 have commitments.

Through interviews with executives and analysis of public disclosures, the report concludes that clean energy practices are becoming standard practice for most of the largest, most profitable companies in the world, including AT&T, DuPont, General Motors, HP, Sprint, and Walmart.

56% of companies now have climate action plans that include concrete GHG emissions reductions targets, renewable energy investments, or both. 13% have specific goals for increasing renewable energy use.

Importantly, companies are putting less emphasis on offsetting emissions by buying renewable energy credits (RECs). Rather, they are focusing more on meaningful direct investments in clean energy through long-term power purchase agreements and on-site renewable energy installations.

A similar report from the Carbon Disclosure Project found that 78% of the biggest companies have integrated climate change initiatives into their business strategy, cumulatively reducing emissions 13.8% in 2012. Now they are working on suppliers. Other examples of corporate leaders on climate change are here, led by IBM, and automakers are making progress.

Timberland is on track to get 30% of its energy from renewables by 2015 and General Motors is shooting for 125 MW globally by 2020.

That’s similar to what US states have done in creating Renewable Portfolio Standards (RPS), requiring utilities to source a certain percentage of energy from renewables by a target date.

It makes sense that having a concrete target is a major driver for adding renewable energy capacity, and these huge corporations can play a major role in the shift to clean energy by doing this.

Walmart currently leads in on-site generation investments in the US, followed by BMW Manufacturing and Coca-Cola Investments, according to recent EPA data.

Certain sectors, notably materials, high-tech and telecommunications companies, are particularly aggressive, says the report.

"The world’s largest companies are expanding their use of renewable energy because it makes good business sense – they see the value in diversifying their energy supply, mitigating fuel cost risk, cutting their energy-related emissions, and, in some cases, providing a physical asset with real value for the enterprise," says Calvert’s Senior Vice President for Sustainability Research and Policy, Bennett Freeman. "We strongly encourage all companies to set renewable energy targets and disclose these commitments, which we believe will help companies-and those who invest in them-address clear risks and seize concrete opportunities."

Large companies need ways to limit their exposure to volatile fossil fuel prices, which affect the price of electricity. They understand that coal is increasingly risky and the current glut of cheap natural gas simply can’t last, explains Mindy Lubber, Executive Director of Ceres.

"We strongly encourage all companies to set renewable energy targets and disclose these commitments, which we believe will help companies-and those who invest in them-address clear risks and seize concrete opportunities," says Freeman.

Because the looming expiration of the US wind production tax credit (PTC) would put the brakes on those investments, 19 companies including Starbucks, Ben & Jerry’s, Johnson & Johnson and Levi Strauss recently asked Congress to extend it.

Companies say they could be more aggressive in transitioning to renewable energy if those sources cost the same as with subsidized fossil fuels. Other barriers are competition within companies for capital funding projects; and inconsistent policies that send mixed signals to companies and investors in renewable energy projects, particularly instability in renewable energy incentives that prevent companies from signing green power purchase agreements.

"Investing in renewable energy has become an integral part of what it means to be a sustainable company in the 21st century, which has significant implications for electric utility companies as more large electricity consumers shift to renewable energy," write the report’s authors.

The report makes a number of policy recommendations to facilitate this shift:

  • Extend policies that promote renewable energy, including the PTC as well as feed-in tariffs for solar
  • Eliminate state-level policies that limit development of on-site renewable energy projects
  • Create new state policies that authorize the use of third-party PPAs (Currently, PPAs are restricted in Florida, Georgia, Iowa, Kentucky and North Carolina.)
  • Enact Renewable Portfolio Standards in every state (either at the state level or through a federal standard)
  • Policies that help global companies make clean energy investments in emerging economies, particularly where their supply chains are located
  • A level playing field for energy incentives that makes clean energy more cost-competitive with fossil fuels.

Last year, Ceres called on companies to commit to reducing emissions 25% and get at least 30% of energy from renewables by 2020, in its Roadmap for Sustainability. That would put them on track to meet the targets scientists say are necessary to keep temperature rise below 2 degrees C.

Here’s the report:

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