Last year, $260 billion was invested in clean energy globally, marking the one trillionth dollar put into the sector since 2004 and the first time that clean energy saw more investment than fossil fuels.
As a new report shows, much of that activity is being driven by large corporations that are setting internal sustainability goals that include targets to reduce greenhouse gas emissions or targets to procure renewable energy and energy efficiency.
According to a new analysis from Ceres, WWF, and Calvert Investments, 68 percent of companies in the Global 100 list have set targets to lower global warming pollution or purchase clean energy. In addition, 58 percent of companies in the Fortune 100 list have set similar targets.
In the past, when corporations announced renewable energy goals, they were mostly a public relations opportunity. Instead of investing in projects themselves, companies would buy tradeable renewable energy credits — an offsetting mechanism that many criticize for doing little to bring new renewables online. But that dynamic is changing. As this report points out, large corporations are now choosing to directly purchase renewable electricity from project developers, or are even building on-site projects themselves. As the report points out, this is an important and positive shift in corporate culture:
Many companies with a history of predominantly purchasing RECs have transitioned instead to favoring PPAs and on-site direct investment, driven by longer-term commitments to emissions reductions and renewable energy. These companies are looking to capture the long-term value of renewable energy, like electricity price certainty, instead of year-on-year purchases of RECs. In some cases companies are able to get closer to cost parity (the price at which renewable energy is cost competitive with fossil fuel) with long-term PPAs or on-site direct investment. Companies also increasingly recognize that RECs do little to incentivize new investments in renewable energy. By investing directly or signing PPAs, companies are directly adding renewable capacity to the grid.
Most of the corporate targets are set for 2015 to 2020. With very little certainty on a global deal to reduce greenhouse gases and with numerous countries shifting their support for renewable energy, there are many uncertainties beyond that time frame. But one thing is certain: the planet is warming at an accelerated pace and many of the world’s leading companies understand that they need both adapt to and mitigate the problem. According to a survey of 400 of the biggest global companies released by the Carbon Disclosure Project in September, 37 percent of corporations say they are already seeing the impact of climate change on their business — up from 10 percent in 2010.
Reactions to corporate sustainability goals are understandably mixed. Advocates working closely with companies hail these corporate targets as a big step forward; others concerned more broadly about rampant consumer culture worry that they are simply cosmetic changes that avoid the need for structural reforms.
For example, when Walmart announced its suite of targets designed to cut packaging, make operations more efficient, and procure more renewables, many advocates saw it as a major shift in corporate culture. Ultimately, however, Walmart’s business model is still built around fueling consumerism by selling massive amounts of cheap products in sprawled-out stores. That’s not sustainable.
Both of these views have merit. Ultimately, true corporate sustainability – a target that is still very hard to define – is a very complex, long-term process. The road to getting there is evolutionary. So if a corporation like Walmart doesn’t completely reinvent its business model overnight, that shouldn’t prevent us from building off the short-term successes.
This latest report reminds us many of the world’s largest companies and investors actually recognize we have a problem and are trying to do something about it. That’s more than we can say for our policymakers here in the US.
This article was originally published on Climate Progress. Reproduced with permission