What constitutes leadership on corporate sourcing of renewables? As businesses around the world are asked to ‘step up’ their efforts to lower climate change emissions, Sam Kimmins, Head of RE100, The Climate Group, and Alberto Carrillo Pineda, Director, Science Based Targets & Renewable Energy, CDP, share their thoughts.
Since its beginning, RE100 has been about leadership. Our members put their heads above the parapet and pledged to go 100% renewable when few thought it possible, smashing preconceptions and sending a powerful demand signal to the market.
Four years later, The Climate Group and CDP have brought together 140 pioneer companies with the same ambitious commitment, all putting renewables at the hearts of their business strategies.
2018 is a pivotal year for accelerating climate action, and leading companies want to be as effective as possible in reducing emissions and in driving the clean energy transition for the benefit of their business.
Our members increasingly ask us how they can optimize their impact and use their influence most effectively as agents of change. In the past, these kinds of discussions have mainly focused on extra capacity being brought onto the grid. This is important, but not the whole story.
As our new briefing shows, leadership is truly multifaceted.
Ambitious targets and transparent progress
So, what does it take to be a corporate leader on renewables?
Firstly, it means setting clear and ambitious targets for sourcing 100% renewable electricity as soon as possible. A 100% goal leaves no room for doubt – reaching a 100% renewable electricity requires change across a business globally, from the boardroom right through to the shop floor.
Speed is just as important. To keep warming under 2 degrees Celsius, we need to decarbonize the grid by 2050, globally. Targeting 100% renewable electricity by this time is not a stretch target, it’s the minimum we need to succeed.
Nearly two-thirds of RE100 members aim to power their operations entirely with renewable electricity by 2025, and more than three-quarters by 2030. This includes companies from energy intensive sectors like the automotive industry, for which a fast transition to renewables will never be easy, but unparalleled opportunities exist to lead.
For Tata Motors, the opportunity is strikingly clear. With a target to source 100% renewable electricity by 2030, India’s largest automobile manufacturer has established itself as a pioneer in a challenging market, and through RE100, is sharing its learnings with other companies.
Transparency is another hallmark of leadership. By publicly declaring their targets and progress, and by sharing how they are buying renewables, businesses can substantiate their claims and showcase action to their investors and customers, who are increasingly interested in how companies are managing the risks and opportunities of the clean energy transition. By sharing their experience with their peers, companies can also help to accelerate the growth of renewable electricity markets, to the benefit of all.
It’s a requirement for RE100 for companies to disclose their energy data through CDP, and we encourage companies to go further, reporting not only the proportion of electricity being sourced from renewables, but also how they are sourcing it, and any other ways in which they are influencing change. Transparency provides the insight for greater action.
Driving sustainable economic growth
Leadership also means creating positive impact – driving economies of scale, new jobs and innovation.
Corporate sourcing of renewables provides a new source of finance, and according to Bloomberg NEF, RE100 members are investing over $94 billion. Bloomberg NEF also calculates that the current 140 signatories of RE100 will need to purchase an additional 197TWh of renewable energy in 2030 to reach their 100% targets – which could be met with a 100GW of build, larger than California’s electricity grid.
According to IRENA, 10.3 million people are now employed worldwide in the renewable energy sector. RE100 members are taking this number higher, especially, when pursuing the highest impact strategies for sourcing renewable electricity, such as power-purchase agreements, onsite generation, and investing in emerging technologies. Through these methods, leading businesses are actively growing renewables capacity on the grid and delivering a cleaner economy.
Leading companies are not only transitioning towards 100% renewables. They are also ensuring that this transition is done sustainably – directly benefiting local communities, conserving natural habitats and increasing wider access to renewables.
Organic Valley is a great example of this. Half of its 30MW solar project in Wisconsin in the US is used by the food company and the other half provides renewable electricity for local residents, at a lower cost. This model won’t work for all major businesses, but it will be possible for many; and could be a new frontier for corporate leadership.
Going beyond the expected
A key aspect of business leadership is the will of a company to go beyond its own operations to influence others to follow.
When RE100 reached its 100 members milestone one year ago, we called on companies to engage their suppliers on renewable energy. We also produced a guide on how it’s done.
Earlier this year, Apple announced that 23 of its supply chain manufacturers (including RE100 member DSM) are now committed to using 100% renewable electricity for all their Apple productions. This is a shining example of a company accelerating change by taking responsibility for the wider structures around it.
We want to be telling many more stories around this kind of leadership. How we get more companies to lead in this way is one of many subjects The Climate Group will be exploring at Climate Week NYC in September.
At the same time, as the size of the RE100 membership grows, our collective influence over policymakers is growing – enabling the progressive voice to be better heard above the fossil fuel lobbyists.
When BT, H&M, IKEA Group and many other RE100 members signed an open letter to the Council of the European Union calling for an ambitious post-2020 Clean Energy Package, they brought their purchasing power to bear around the need for supportive policy. This is exactly the kind of leadership we want to see from businesses to effect change on a much larger scale.
And the leaders are not just making waves in Europe. During a recent visit to Japan, we met with the Ministry of the Environment and the Ministry of Foreign Affairs, who, inspired by the rise of Japanese companies joining RE100, have committed to transitioning their own electricity use to 100% renewable energy. The hope is that, when its departments are taking this journey themselves, the Government will realize the need for impactful policy change allowing the renewable energy market in Japan to reach its full potential.
With many of our RE100 members going the extra mile, and by demonstrating climate action is good for business, we believe they will influence many more companies to go further and faster – and in more ways than one. There’s no one way for a company to demonstrate leadership on renewables; what’s vital is that they seize the opportunities.
Download the RE100 Leadership Paper here.