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Business Benefits Drive Companies’ Shift to Clean Energy

December 10, 2012 By Linda Hardesty

A new report from Calvert Investments, Ceres and World Wildlife Fund (WWF) shows that most of the world’s largest companies aren’t waiting on governments to embrace renewable energy and lower emissions.

The world’s behemoth companies are expanding their use of renewable energy because it makes good business sense. They see the value in diversifying their energy supply, mitigating fuel cost risk, cutting their energy-related emissions, and, in some cases, providing a physical asset with real value for the enterprise, according to the report, “Power Forward: Why the World’s Largest Companies are Investing in Renewable Energy.”

The report shows that a majority of Fortune 100 companies have set a renewable energy commitment, a greenhouse gas (GHG) emissions reduction commitment or both. The trend is even stronger internationally, as more than two-thirds of Fortune’s Global 100 have set the same commitments.

Through 24 interviews with Fortune and Global 100 executives and analysis of public disclosures, the report finds that clean energy practices are becoming standard procedures for some of the largest companies in the world, including AT&T, DuPont, General Motors, HP, Sprint, and Walmart.

Among other key findings, the report shows that:

  • 96 companies from the combined 173 companies in the Fortune 100 and Global 100 have set GHG reduction goals (56 percent).
  • Of those, 23 companies have set specific goals for renewable energy use (13 percent), with others using renewable energy to meet their GHG goals.
  • Many companies are shifting from purchasing short-term, temporary Renewable Energy Credits (RECs) to longer-term investment strategies like Power Purchase Agreements (PPAs) and on-site projects, indicating a long-term commitment to renewable energy and reaping the benefits of reduced price volatility.

Companies identified the following key barriers: the fact that in some regions renewable energy is not yet at cost-parity with subsidized fossil-based energy; internal competition for capital; and inconsistent policies that send mixed signals to companies and investors in renewable energy projects, particularly instability in renewable energy incentives and policies that prevent companies from signing green power purchase agreements.

The report offers several recommendations for U.S. policymakers, including promoting tax credits or other incentives that level the cost playing field for renewable energy, particularly, extending the Production Tax Credit for wind energy this year; establishing Renewable Portfolio Standards in states that do not have them; removing policy hurdles in states that prevent companies from contracting to buy the cheapest renewable power available and building on-site renewable power generation; and market-based solutions that put a price on the pollution from conventional energy generation.

The report was prepared by David Gardiner & Associates with the guidance of WWF, Ceres, and Calvert staff.


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