World’s Top Companies Embrace Clean Energy
Renewable energy is one of humanityâs best weapons to fight climate change. If the war-like rhetoric sounds strong, itâs because the consequences of climate change are as devastating as those of war. Fortunately, it seems that the worldâs biggest companies have decided to fight the good fight and started to migrate to clean energy to do their share for the environment and, consequently, their own balance sheets.
According to a new report compiled by Calvert Investments, Ceres and World Wildlife Fund (WWF), most of the worldâs largest companies are beating governments in the clean tech race by starting to adopt renewable energy to lower emissions and diversify their energy mix. The report, called âPower Forward: Why the Worldâs Largest Companies are Investing in Renewable Energy,â indicates that a majority of Fortune 100 companies have set a renewable energy commitment, a greenhouse gas (GHG) emissions reduction commitment, or both. The trend is even stronger internationally, as more than two-thirds of Fortuneâs Global 100 have set the same commitments.
âThe companies that are boldly setting either greenhouse gas or renewable energy goals and making progress on those commitments are demonstrating the business case and real leadership on climate change,â said Marty Spitzer, WWFâs Director of US Climate Policy. âAnd, in the process, these companies are changing the game â driving significant renewable energy investment globally and pressing for the right policy and market conditions that will allow companies to do even more.â
The report was based on two dozen interviews with Fortune and Global 100 executives as well as analysis of public disclosures. It reveals that energy practices are becoming standard procedures for some of the largest and most profitable companies in the world, including AT&T, DuPont, General Motors, HP, Sprint, and Walmart.
From the combined 173 companies in the Fortune 100 and Global 100, 96 of them have set GHG reduction goals (or 56 percent). Of those, 23 companies have set specific goals for renewable energy use (13 percent), with others using renewable energy to meet their GHG goals. Many companies are shifting from purchasing short-term, temporary Renewable Energy Credits (RECs) to longer-term investment strategies like Power Purchase Agreements (PPAs) and on-site projects, indicating a long-term commitment to renewable energy and reaping the benefits of reduced price volatility.
âThe worldâs largest companies are expanding their use of renewable energy because it makes good business sense â 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,â said Calvertâs Senior Vice President for Sustainability Research and Policy, Bennett Freeman.
Some companies still need to set their goals and amongst the biggest obstacles they have identified are cost (in some regions renewable energy is not yet at cost-parity with subsidized fossil-based energy), internal competition for capital, and inconsistent official policies that send mixed signals to companies and investors in renewable energy projects, particularly instability in renewable energy incentives and policies that prevent companies from signing green power purchase agreements.
For that reason, the report offers recommendations to policymakers in the U.S., who at the moment are discussing the extension of the Production Tax Credit for wind power and other credits and incentives that level the playing field. It also suggests establishing Renewable Portfolio Standards in states that do not have them, besides removing policy hurdles in states that prevent companies from contracting to buy the cheapest renewable power available and building on-site renewable power generation. Finally, the report highlights market-based solutions that put a price on the pollution from conventional energy generation.
Clear policies are crucial to foster a sound marketplace for renewables. It is good for the environment, it generates jobs and foments technological progress.
Image credit: WWF