Making Good on the Promise of Carbon Commitments
Today’s business leaders stand on the brink of a renewable energy revolution. Companies that take real action on their carbon commitments not only help to save the planet, but also strengthen their brand and gain a competitive edge in the marketplace.
Half of the Fortune 500 have already made either net zero or carbon reduction commitments.1 Low-cost capital market funding helped quadruple investments in renewable power to $281 billion in 2020,2 and new incentives are sure to accelerate the pace in 2021. The cost of clean-energy technologies has plunged over the past decade, dropping 70% for solar and 90% for wind, and renewable energy prices have fallen below that of coal and gas.3 Bolstered by this new economic reality, the drumbeat of change is getting louder. The world’s largest brands are making bold promises to build a climate-friendly future, and consumers are keeping a close watch on companies’ Environmental, Social, and Governance (ESG) positions.
As public and private pressure mounts, all eyes are on business leaders to make carbon commitments, and then make good on them. But turning aspiration into action will require more than money. It will require new technologies, new partnerships, and new ways of thinking. Companies that are taking real action on their carbon commitments are helping to save our planet while also strengthening their competitive edge.
An Urgent Call to Action
If you haven’t yet made a carbon commitment—or if you haven’t made progress on the promise you did make—there’s no time to waste. If anything, it’s likely that you’ll need to increase your commitment to keep up with the inexorable push toward greenhouse gas reduction. The pressure isn’t just coming from environmentalists. In May 2021, the International Energy Agency acknowledged that the world must reach net zero carbon emissions by 2050 or face irreversible damage to the Earth. The Agency’s report gives unflinching examples of how frantic the pace of change must be: to put solar energy output on track, for example, we would need to build the equivalent of the world’s largest solar farm every day for the next decade.4
The world’s largest brands are making bold promises to build a climate-friendly future, and consumers are keeping a close watch on companies’ ESG positions.
At the same time, pressure from investors is pushing public companies to disclose their carbon impact and report on actions they’re taking to reduce the damage. It seems the world is watching—and responding. With new carbon commitments flooding the headlines, Deutsche Bank (Global 291) research revealed that companies with positive press coverage regarding climate change saw their share price outperform the MSCI World index by 26 percent, while negative press on the topic was linked to underperformance.5 Consumer sentiment is following a similar trend. A new IBM (Fortune 38) study found that nearly 80 percent of consumers are looking for brands that are environmentally responsible; 60 percent are willing to change their buying habits to reduce environmental impact, and those who consider sustainability “very important” are willing to pay a 35 percent premium to buy from environmentally responsible brands.6 Even if you chose to ignore your investors and end users—a perilous decision—the U.S. government has set a goal of 100 percent carbon pollution-free electricity by 2035, 23 states have already established emissions-reduction goals, and 12 have instituted carbon-pricing policies.
The upshot? Sustainability is
firmly embedded in the decision-making of investors, consumers, and regulators,
leaving no room for hesitation among brands that hope to compete in this
carbon-conscious era. Time is running out for companies
to make their carbon commitments real. Fortunately, tech advances and new
partnerships can help you meet the moment.
Making it Real: New Partnerships Bring New Opportunities
As companies pursue their carbon reduction goals, promising new technologies are emerging. Long-duration energy storage, next-generation nuclear power, “green hydrogen” from renewable sources, and digital twins of the electric grid are all being explored in earnest by energy companies and their tech partners.7 Mitsubishi Power (a unit of Mitsubishi Heavy Industries – Global 339) has designed the world’s first integrated green hydrogen solution to store carbon-free energy and help companies compensate for fluctuations from wind and solar sources, smoothing out large-scale supply/demand imbalances and bringing a cleaner future within reach.8 It’s just one example of how the energy and utility industry is stepping up to connect corporations and communities with innovative solutions for reducing their carbon footprint.
Companies with positive press coverage regarding climate change saw their share price outperform the MSCI World index by 26 percent.
But what can companies do today while innovations are being developed and scaled? Whether your carbon commitment represents a moonshot or a modest goal, you need to be able to track your progress against it. It’s critical to have a reliable way of measuring the greenhouse gases you’re currently producing so that you know how far you have to go and can map a way to get there.
DTE Energy (Fortune 246) is providing a unique partnership that makes it easy for companies to act on their carbon commitments without changing their infrastructure or making capital investments. The MIGreenPower program offers residential, commercial, and industrial customers the opportunity to attribute up to 100% of their energy use to DTE’s wind and solar projects. A Renewable Energy Certificate (REC) is issued for each megawatt-hour (MWh) and acts as a tracking mechanism for renewable energy as it flows into the power grid, creating a record of each company’s carbon-cutting impact.
The program is flourishing: in just three years, more than 350 businesses have signed on to MIGreenPower and have supported nearly 1,800 gigawatt-hours (GWh) of clean energy.
“It has been extremely gratifying to see how this program is growing and how it is being used by some of our largest corporate and industrial customers to help them meet their sustainability targets,” said Brian Calka, Director, Renewable Solutions for DTE Energy, who oversees this program. “We know many of our customers want more access to renewable energy, and we are committed to meeting this demand. As Michigan’s largest producer of renewable energy, we can help our customers reduce their impact on the environment quickly and cost-effectively and in a way that doesn’t require them to add or maintain additional infrastructure.”
To deliver additional value, DTE provides a turnkey solution that offers carbon analysis and reporting; full account management for tracking and retiring RECs; simplified invoicing; and even marketing support for press releases and campaigns. MIGreenPower can even help reduce Scope 3 carbon emissions by engaging subscribers’ employees to enroll their residential DTE electric accounts into the program, bringing the effort full-circle.
Make it Real and Make it Count
There’s no question that the low-carbon economy has arrived. In the face of expanding energy choices, new financial realities, and growing social and policy pressures, the time is ripe for companies to make good on their carbon commitments, and for energy firms to rise and meet the moment. Wherever you are on the journey, the following building blocks can accelerate your success.
- Be transparent about your carbon-free progress. Tracking and reporting on meaningful carbon goals is quickly becoming table stakes, and your investors and customers are watching. Make sure you have the tools and processes in place to share how you’re performing against your ESG goals.
- Turn to the pros to power your promises. Smart partnerships can let you focus on running your core business while helping to save the planet. Find energy companies in your area that deliver innovation beyond the stats, like DTE’s turnkey solution for tracking, paying for, and marketing the success of your carbon reduction initiatives. (The NREL keeps a list of locally-based US power and utility green energy programs here)
- Embrace the customer experience to amplify your brand. Regardless of industry, all companies have the unique opportunity to make a carbon-free future feel personal today. Working with a digital innovation firm like Vectorform allows you to take advantage of technology-enabled solutions that can help you drive transformation and business impact – all while your employees and customers alike share and celebrate moments of significance with your brand and how your company is helping to save the planet.
- https://www.iea.org/reports/net-zero-by-2050 5 https://bit.ly/3osMDJo
Interested in learning more? Let’s start a conversation.