Science-Based Targets Inspire a Smarter Investment Strategy in Retail

August 26, 2016 By Ty Colman

Ty Colman

Near the end of 2015, shareholders of a large U.S. retailer proposed a proxy resolution requesting the company commit to purchasing more renewable energy. This retailer approached POINT380 for guidance. What proceeded is a case for using performance data and a science-based approach to advance corporate sustainability.

In the first phase of the project, we benchmarked this retailer’s corporate GHG emissions performance against its competition, as well as all retail companies that publicly reported their data, and emissions targets recommended by the scientific consensus of the Intergovernmental Panel on Climate Change. We have developed tools that allow us to compare a company’s GHG performance to the “2-degree pathway” — the annual global human-caused GHG emissions guidelines that, if achieved, are likely to limit average global temperature increase to 2 degrees Celsius. This analysis showed that the retailer was not only out-performing many of its competitors, but its emissions reduction program was already exceeding the targets of the 2-degree pathway.

We then analyzed the size and performance of the retailer’s past and expected future portfolio of investments to reduce energy consumption. This involved calculating the GHG reduction performance of the company’s investments, and analyzing their financial returns. We then compared these figures to average performance for their industry.

Using these results, we helped the retailer to develop coordinated program goals, investment plans, and a communications strategy that aligned shareholder and management objectives. In partnership with the retailer’s sustainability, communications, and energy teams, we set a new science-based GHG emissions goal for the organization and created internal and external messaging about program performance.

We then ran multiple investment scenarios to outline the best path to achieving the retailer’s new GHG target. These scenarios incorporated expanded investment in LED lighting retrofits and a smarter approach to renewable energy procurement. The plan showed an attractive overall financial return and carbon savings. This path proved more promising than a strategy focused strictly on renewable energy procurement because it allowed for investment in a smarter portfolio of projects, and avoided the negative financial returns of renewable energy credits.

This retailer ended up with a program that achieved the ambitious sustainability objectives of its shareholders while applying a business-savvy approach. This retailer achieved a better sustainability program through forward-looking data and analytics provided by POINT380, LLC.

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