Corporate Clean Energy Goals Leading The Way to a Low-Carbon Economy
Investors increasingly recognize the challenges presented by climate change even as they search for opportunities to mitigate the risks. As BlackRock’s Brian Deese said at the 2018 Investor Summit on Climate Risk in New York City in January, “if you’re not a climate aware investor, you’re not doing your job.”
New York’s Office of the State Comptroller recently advanced a promising way to contribute to climate solutions, while creating long-term value for shareholders. Last August, it won a strong 40 percent vote from Michael Kors shareholders on a resolution asking management to assess the feasibility of adopting “clean energy goals,” defined as increasing both energy efficiency and procuring renewable energy.
Since then, several other investors have filed half a dozen similar proposals with companies in sectors ranging from telecoms to defense to pharmaceuticals.
Why are these “clean energy” proposals gaining traction?
First, “clean energy” has deep appeal. Investors recognize the value of corporate action on clean energy and there is strong consumer support for it. According to a recent Gallup poll, 86 percent of the general public favors faster clean energy deployment.
Second, clean energy is increasingly cost-effective. In much of the United States, new renewables are less expensive than energy from fossil fuels while “big data” applications are quickly driving down the costs of saving energy.
Third, by focusing on clean energy adoption, the resolution elevates the role of corporate energy consumers in driving demand for low-carbon energy supplies. This complements investor pressure on energy producers to reduce carbon asset risk.
Fourth, the proposals help to establish clean energy goals as a best practice that both drives company performance and provides investors with essential insight.
Finally, by focusing on both efficiency and renewables, managers have the flexibility to optimize a strategy to the needs of their company.
Conversations with companies asked to adopt clean energy goals suggest key follow-up steps:
Establish baselines. Companies new to the space typically have to collect energy-use data to quantify emissions and future progress.
Assess the opportunity. Companies then conduct assessments to prioritize opportunities to save energy and procure renewables available in their local markets.
Adopt near-term goals. Companies can then set goals aligned with competitors or sign up for initiatives like the U.S. Department of Energy’s Better Buildings Challenge.
Set “Business Optimal” Goals. As companies gain experience, they can commit to invest in all efficiencies and renewables that are as profitable as investments in the core business.
Take the Lead. Companies poised for leadership can sign up for initiatives such as RE100 (and go 100 percent renewable), EP100 (for a 100 percent increase in energy productivity), or adopt clean energy goals aligned with science-based GHG reduction targets.
Companies that adopt goals use their market power to create demand for clean energy solutions while helping to bend the cost curve for all. They are accelerating change essential to the low-carbon economy of the future.
Daniel A. Seligman
Senior Manager, Energy Efficiency, Ceres
Winston E. F. Vaughan
Senior Manager, Renewable Energy, Ceres