The state of green business? Hopeful, puzzling… and pushing forward

I always look forward to the latest State of Green Business report from GreenBiz. It invigorates me and reminds me that there are a lot of talented people making sure that both business and the planet can thrive– a notion that I’m holding tight as the political atmosphere gets increasingly crazy.

I found two of the trends in the report of particular interest because they signal that smart business leaders are staying the course on climate.

Trend: Corporate Clean Energy Grows Up

The trend toward corporations transitioning to renewable energy has been gaining momentum for years. Today, twenty-two of the Fortune 100 have committed to procuring 100% of their energy from renewables, and 71 have a public target for sustainability or renewable energy.

“Business is a very important advocate for clean energy, because it speaks the language of hard economics,” points out Jim Walker, co-founder of The Climate Group. “It’s sending a strong signal to policymakers and the general public that this is the inevitable direction we’re going to move towards – a 100% clean energy economy.”

When innovative companies like Apple, Amazon, Unilever, and Google show leadership on renewable energy, their suppliers, customers, competitors, and the market respond. Microsoft, for example, is helping lead the way by purchasing 237 megawatts of capacity from projects in Wyoming and Kansas. And, Walmart, a long-time EDF partner, has also made a commitment to source 100% of its electricity from renewable energy. Currently at 25%, they’ve made significant progress on implementation.

With corporate leadership like this in place, it’s clear that business will continue to have an impact on the renewable energy revolution. The recent report from my EDF Climate Corps colleagues is proof of that: the solar power sector is growing quickly, and is a major source of jobs that are a.) impossible to outsource and, b.) available in all 50 states.

Trend – Companies Put Their Money Where Their Suppliers Are

According to the Business and Sustainable Development Commission, embedding sustainable business practices in the global food and agriculture industry could deliver $2.3 trillion annually.

“All stakeholders can share in the benefits: smallholder farmers improve their livelihoods; suppliers gain increased security of supply with improved quality; and we reduce volatility and uncertainty with a more secure and sustainable supply chain,” wrote Unilever CEO Paul Polman.

Elizabeth Sturcken, Managing Director, EDF+Business

When a corporation commits to reduce emissions in their supply chain, the results can be powerful.  We’re seeing this firsthand with our work with Walmart. EDF spent 10 years with Walmart to help drive sustainability across its global supply chain. The result? By the end of 2015, through leadership, innovation and a diverse range of projects, Walmart had exceeded its goal to reduce supply chain emissions eliminated 36 MMT of greenhouse gas from its supply chain. Now, they’ve committed to removing 1 Gigaton of emissions by 2030 – the equivalent of the total annual emissions of Germany.

Smithfield Foods is another company that EDF collaborated with in setting a goal to reduce absolute greenhouse gas emissions by 25% by 2025 across its upstream U.S. supply chain. EDF will continue to help Smithfield improve fertilizer efficiency and soil health, which will reduce nitrous oxide emissions from grain farms.

But to keep moving forward on these sustainability trends and others requires business to use its voice and influence to not backpedal on policies that are a win-win for our environment and our economy. We are at a crucial period where companies need to make the long-term economic case for policy, including the Clean Power Plan, Toxic Substances Control Act (TSCA) and ensuring the U.S remains part of the Paris Agreement.

Businesses will not go backwards on environmental protection. It’s bad for business and the environment. In fact, over 600 businesses have signed the Low Carbon USA letter calling on U.S. elected leaders to stay the course on environmental protection and climate leadership.  Now is the time for unlikely voices to step up and continue to press the case for action; the recent call for a carbon tax is probably most noteworthy because it was brought forth by Republican party faithfuls.

If there was one sentence in the State of Green Business report that captured the feeling of the moment it was this: “It’s hard to imagine a time more hopeful and horrifying for sustainable business.” At EDF, we’re not only hopeful but we’re committed: the economy and the planet can—and must–thrive together. Any conversation that suggests otherwise is a non-starter.

 

Is mainstream corporate America jumping on the clean energy bandwagon?

It’s no secret that renewable energy is becoming cheaper, and while we’ve seen companies like Google and Microsoft investing in utility-scale renewables, what about mainstream corporate America? Are large corporations jumping on the clean energy bandwagon or are they dragging their feet? As a data analyst at EDF Climate Corps, I turned to the numbers for answers. Fortunately, I didn’t have to look far. An analysis from our recently release report: Scaling Success: Recent Trends in Organizational Energy Management, says it all.

For almost a decade, EDF Climate Corps has been partnering with business to save money and reduce greenhouse gas emissions by improving energy efficiency through our graduate fellowship program.

As I followed the numbers, a new clean energy trend stood out: over the last 5 years, clean and renewable energy projects have grown five-fold, with 1/3 of our partner organizations working on at least one clean energy project in 2015. Companies have been using their EDF Climellen_blog_box3-finalate Corps fellows to decipher the complex landscape of technologies, policies, procurement strategies, and financing options for renewable energy. As we tally the results for our 2016 fellowship program, we expect the focus on clean energy to continue to grow, and don’t plan on it stopping anytime soon.

Following the money

But why have we observed this recent uptake in clean energy projects? It seems to be “all about the Benjamins.” Our data shows that fellows are increasingly able to build a solid business case for clean energy projects. In just 2 years, the average payback for clean energy projects decreased dramatically from around 4 years to under 2 years and we’ve seen a surge in positive Net Present Value (NPV) clean energy projects. This tell us that clean energy projects are becoming increasingly cost competitive – a mirror image of industry trendsfig9_es_blog.

Which brings us back to our initial question – are large corporations jumping on the clean energy bandwagon? Yes, mainstream corporate America IS adopting clean and renewable energy- and they are doing it cost-effectively. The winds of change are blowing in the right direction (and hopefully through a wind turbine!) and our EDF Climate Corps fellows are proving that investment in renewables makes good business sense. However, there are still challenges to getting clean energy adoption at scale. Many renewable energy projects with large returns also require large upfront capital investments, and although the projects may have a positive NPV, some still fall outside the required payback period for corporations. We’ve seen that lack of funding and competing internal priorities are still major barriers to implementation.

How companies can continue to drive forward

And so, a new question emerges – what should companies be doing to drive clean energy projects internally? First, corporate leadership should set targets for renewable energy procurement and benchmark against their peers. Second, energy managers should pilot clean energy projects to demonstrate their viability. These pilots can serve as proof points for future projects and larger-scale investments. While navigating the complex clean energy alphabet soup (PV, PPAs, RECs, RPS, ITC, etc.) can be tough, especially given the nuances in state level policy and regulations, partnering with a third-party organization (such as a program like EDF Climate Corps, another NGO or a vendor) is a great way to accelerate your clean energy projects. You just may find that making the business case for clean and renewable energy isn’t as hard as you thought.

I invite you to learn more about what 8 years of EDF Climate Corps data tells us about trends in energy management and clean energy by reading our Scaling Success report.

 

 

 

 

 

Old Excuses on Policy Advocacy Don’t Work Anymore

I admire corporate sustainability leaders who, as hockey great Wayne Gretzky once said, know how to “skate to where the puck is going, not where it has been.”

I’m optimistic about our future when I see courageous leaders at companies like Unilever, Pepsi, Mars and others lead the way by looking beyond short-term profits for long-term success and publicly advocating for the smart regulatory and policy changes required to preserve the natural systems that people, communities and companies need to thrive.

Yet, there are too many companies that still rely on old excuses when asked to take a public stand on energy and environmental policy.

To be a bold leader in the 21st century requires a strong voice on the most pressing environmental issues of the day. It’s no longer good enough to put a green label on a product or declare in an annual report that your company is making the world a better place. It’s time to take the next leadership step.

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At Environmental Defense Fund (EDF), we like to call the next step of sustainability leadership the business policy nexus. It simply means that your company has aligned your sustainability goals and strategies with your external engagement on policy.

If your company isn’t operating in the business policy nexus, it’s time to retire the following excuses and go public in support of forward-facing environmental policies:

Excuse #1 "We're not political."

Companies can no longer be silent on issues like the environment. Customers expect the brands and companies they love to stand for something and to show leadership on issues that matter to them.

In previous decades, this excuse might have sounded more like, “we want Democrats and Republican to buy our products.” However, this recent working paper by researchers at Duke and Harvard suggests that C.E.O. activism can sway public opinion — and even increase interest in buying a company’s products.

Corporate neutrality on the issues that matter may be outdated. If you don’t believe me, maybe ask Paul Polman of Unilever or Indra Nooyi of Pepsi or Yvon Chouinard of Patagonia. Their corporate voices ring loud and clear when it comes time to stand up for the environment.

Excuse #2 "It's not part of our core business."

In a 2015 article the head of government relations for one of the world’s biggest companies told the Guardian: “There’s a reluctance if a regulation doesn’t get into your core competency to get into somebody else’s backyard. It’s an unspoken acknowledgment that you stick to your knitting.”

The earth is everyone’s backyard. And the state of our environment affects every business.

Just take a look at the companies who have backed the Clean Power Plan. “Clean energy” isn’t the core competency of global giants like Amazon, General Mills, Nestle, or Levis, but these companies and many others made their corporate voices heard for the good of business and society.

Excuse #3 “Our government affairs team deals with policy.”

Some corporate leaders have been passing the buck to other departments, other industries and other leaders for too long.

You have a responsibility to inspire everyone in your organization to maximize the triple bottom line: profit, people and planet.

Leaders find it easy to measure profit; measuring social and environmental impact is a little harder. Without good data, no one in a company feels comfortable taking the lead on policy.

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This is where an NGO like EDF can help make a difference. EDF has built a framework for corporate sustainability success that encompasses science, strategy, and systems to create measurable environmental and business benefits. Your organization can use this framework to become a sustainability leader and confidently stand up for smart climate policy that addresses your future business risks.

The old excuses don’t work anymore. So stand up for change and advocate for policies that will help us overcome the most serious environmental challenges we face. The issues are too important; the consequences for little or no action are too serious.

Follow Tom Murray on Twitter: @tpmurray

Further reading:

4 Ways to Invest in the Low-Carbon Economy

by Peter Sopher, Policy Analyst, Clean Energy

career-544952_640-300x211Citigroup Inc. recently pledged $100 billion for lending, investing, and facilitating deals related to sustainability, renewable energy,  and climate change mitigation. This is yet another sign that global capital markets are enormously interested in delivering capital into clean, renewable sources of energy. But you don’t have to be Citigroup to invest in the clean energy future.

The industry’s rapid growth presents an interesting diversity of  long-term opportunities for individuals like you and me who might be looking to make investments in a low-carbon economy.

Fueled by an increased demand for solar and wind energy, clean energy investment last year beat expectations, rising 16 percent to $310 billion worldwide, according to Bloomberg New Energy Finance (BNEF). Fortunately, this robust growth is representative of a general upward trend in clean energy investment over the past decade.

Although the vast majority of this money is coming from governments, corporations, and private equity and venture capital firms, people of all income levels can consider whether it is right for them to add clean energy to their investment portfolios. And, you don’t need millions in the bank to make these types of investments – any investor can consider whether to put their money to use  through the four financial instruments described below. Read more

Clean Energy is Just Smart Business for Leaders like Apple, Google

by Peter Sopher, Policy Analyst, Clean Energy

Apple and Google have changed our lives forever, both because of their technological innovations and sheer size as global corporations. Now, they’re aiming to reshape the energy landscape.

apple-google againThis month, Apple announced plans to spend nearly $2 billion on European data centers set to run entirely on renewable energy and invested $848 million to secure power from 130MW of First Solar’s California Flats Solar Project under a 25-year power purchase agreement. Google also agreed to replace 370 wind turbines installed in the 1980s with 24 new, more efficient and bird-friendly turbines at the Altamont Pass in the San Francisco Bay Area. Moreover, there has been recent speculation Apple may be working on an electric vehicle to challenge Tesla’s dominance in that market.

These developments are impressive on their own, but they are also part of a new trend among major corporations – whose primary focus is not energy generation – proactively pursuing clean energy projects.  So, why are they doing this?

For corporations whose businesses do not rely on fossil fuels, aligning themselves with clean power is proving a prudent move both financially and for public relations. Read more

Is Water the New Bottom Line for Companies?

On December 11th, the U.S. Chamber of Commerce Foundation (USCCF) Corporate Citizenship Center will host The Energy-Water-Food Nexus: Risks and Opportunities for the Private Sector, the second in a series of roundtables based on a report released earlier this year. The USCCF’s report and surrounding events are highlighting success stories, and more importantly, opportunities for the business community to address the energy–water nexus: the idea that energy and water use are Source-flickr-neilsingapore-300x228fundamentally intertwined. In order to accurately address water risks across operations and supply chains, businesses must take a more holistic look at their water and power usage.

The business world is quickly beginning to understand the intersection of these two sectors and the significant impact that they have on business operations.

Business and the energy-water nexus

In the commercial, industrial, and institutional sectors, energy efficiency and other measures could save as much as 15-30 percent of water use without reducing operations. This is particularly important as businesses consider how they manage water risks in areas where they operate. The 2014 Carbon Disclosure Project Water Disclosure Global Report, conducted on behalf of 573 investors with assets of $60 trillion, reported that 68 percent of responding companies say water is a substantial risk to their businesses, but only 42 percent have publicly demonstrated a commitment to water efficiency. Interestingly, 43 percent of reporting businesses said that water stress and/or scarcity was a top risk driver versus 16 percent that said drought was a top risk driver. This indicates that companies are more focused on longer-term risk management, as opposed to reacting primarily to drought conditions and concerns about short-term profits. Read more