Some of the world’s most famous brands, including Google and Microsoft, have joined the RE100 campaign to source all their electricity from renewables. Campaign leaders claim the corporate world is now leading governments in pushing the green agenda, but can it really be true? Asks David W. Smith.
Ours is an age of cynicism about corporate power. People suspect companies of ‘green washing’ their reputations, whilst behaving unethically. Growing anger at corporate tax avoidance has further undermined the bond of trust with the public. In such a context, when a group of the world’s richest corporates – including Coca Cola, Nike, BMW, Microsoft, Walmart, Nestlé and Google – join a campaign to source all their electricity from renewable energy, to many people it sounds too good to be true. The voice of cynicism whispers – what’s in it for them? Are these financial behemoths really doing what they say?
Too good to be true?
But the non-profit The Climate Group, which helped to create the RE100 global campaign along with the Carbon Disclosure Project, claims there has been a sea-change in corporate attitudes to renewables. “The market has been transformed. There used to be anxiety about whether they worked efficiently, but now they are tried and tested and often cost the same as fossil fuels,” says Emily Farnworth, RE100 campaign director. “Of course, companies are concerned about their bottom lines, but it’s become a smart business decision. There’s no longer a conflict between doing the right thing and making money. It’s a win-win.” The Climate Group’s RE100 Annual Report 2016 says prices are plummeting and by 2030, it will be cheaper to choose wind and solar than coal or gas in most countries. The Group expects solar prices to fall by 47 per cent and wind to drop by 32 per cent by 2040. And the corporates, which account for 40 per cent of global electricity use, will be instrumental in driving those prices down, she says. “The investor community is also aware of the need to shift financing from fossil fuels to cleaner energy. It gives us a better chance of putting into effect the ambitious goals of the Paris COP21 conference.”
The decision of 57 of the world’s most iconic business to go 100 per cent renewable could galvanise the entire business sector, she says. So large are these companies – other household names include Aviva, Goldman Sachs, Johnson & Johnson, Philips, Starbucks and Unilever – that they will create demand for 90.1TWh of renewable electricity. In layman’s terms, that amounts to 0.4 per cent of global electricity, enough to power both Hong Kong and Singapore. The switch would also save around 56Mt of CO2 a year – the same as Morocco’s emissions.“In trying to achieve the COP21 goal of net zero emissions before the end of the century, the electricity sector offers the quickest wins,” Farnworth says. “It contributes a third of global emissions and renewables are the low-hanging fruit before we tackle more difficult issues around aviation and fossil fuels.” Farnworth says this is just the beginning for the RE100 movement. A year ago
only 15 companies were signed up, but that number has more than trebled. They are primarily headquartered in Europe and North America, where it is easier to access renewable power, but there is more and more interest from companies in China and India. The Indian IT group Infosys, for example, has made its 100 per cent RE100 pledge and is accessing solar energy. “It’s much cheaper than off-the- grid options and they don’t need to rely on diesel back-up generators in a country where energy supplies are unreliable,” says Farnworth.
The Climate Group aims to expand the RE100 way beyond its first big-name signings. If a thousand of the world’s most influential companies became 100 per cent powered by renewable electricity, they could save around 1,080Mt of CO2 every year, which is 3.4 per cent of total global emissions – more than the whole of Africa. And if the entire private sector used green energy it would cut global CO2 by nearly 15 per cent.
Jaded by corporate claims to righteousness, cynics might scoff at these claims. William Young, a professor of Sustainability and Business at the University of Leeds, offers a balanced view. “It’s a strange world in which corporates are required to lead the way on renewable energy. They are stepping into a void left by governments who have cold feet for political reasons,” he says. “But seeing corporates steering the debate is becoming a more regular occurrence across different areas. Companies are starting to influence consumer behaviour on energy use and food waste, whereas traditionally, local or national governments took charge of these areas of civic society. We might ask why are they doing that? One reason is they are driven into adopting green energy strategies by their sustainability wings.”
The danger of governments taking a back seat, however, is that it allows the corporates to be selective in highlighting areas of the business that paint them in a good light. “The move to adopt renewables has to be a good thing, but we must recognise they are partly doing it for reputational reasons so an element of cynicism is justified,” says Professor Young.
“Walmart’s entire business model is based around not paying people a living wage in the US. They can use these positive moves about renewables to deflect attention from their core business”. Regulators are less likely to control sugar consumption if they are doing all the good stuff.” Another important point to make, he says, is that a commitment to green energy is not that big a deal for some companies on the RE100 list. In the case of Nike, for example, most of their operations are outsourced. “They don’t produce anything.
They only provide finance and supply chain management so if it means sourcing green energy for their office blocks, the commitment is not that great. We have to ask what it means for their supply chains” Hannah Jones, Nike’s chief sustainability officer says the company sources renewable energy through on-site generation at some of its largest facilities, including the European Logistics Campus in Belgium and the China Logistics Center in Taican. But she recognises that many operations are subcontracted.
“We proactively support and encourage our contracted factories’ use of clean-energy solutions, and we have invested in efforts to identify future local clean energy supply opportunitiesforourcontractfactories,”she says.
Professor Williams says that in the past corporates have made great claims about going green, but their proclamations have not always lived up to close scrutiny. In particular, some of the promises emanating from the oil and gas sector proved spurious. But The Climate Group’s Emily Farnworth says the RE100 commitments are genuine and are being closely monitored. “Many companies have set interim targets to keep themselves on track and are achieving their targets. The latest available data from 2014 showed on average they were halfway there, though some have already reached 100 per cent.
“The current group of 53 should reach an average of 80 per cent by 2020. The IT sector is leading the way on 64 per cent.”
The retail sector has the highest average electricity use. Companies like Walmart have huge operations and others own their own manufacturing facilities, including IKEA. Many retail companies obtain power purchase agreements (PPAs) from energy providers to secure renewable power in local areas. Most companies also have some form of on-site renewable resource, usually solar. In IKEA’s case, they make direct investments in their own wind projects to generate as much power as they use. PPAs are common in other business sectors, too. BT In the UK, which represents 85 per cent of BT’s total power use, has a contract with npower to supply 100 per cent of its electricity from renewable sources. BT has also entered into a number of PPAs directly with energy generators, supporting the creation of wind farms and a large solar array in Suffolk. The company plans to expand this to energy providers outside the UK for its worldwide operations. Meanwhile, Nestlé has a PPA deal with Mexican wind turbine company CISA-GAMESA, to provide 85 per cent of the electricity consumed at its Mexican factories from wind power. Nestlé estimates it will reduce air emissions, including GHGs, by more than 124,000 tonnes of CO2 annually – comparable to taking 39,000 small cars off the road.
Some governments have been slower than the corporates to catch on to the renewables revolution. Excited by short-term profits, they cling to nuclear and fossil fuel options. This is particularly true of the British government, which last year ended subsidies for onshore wind power and slashed backing for solar farms. “As soon as there were pressures on prices their green commitments went out the window, which is shameful,” says Steve Thomas, professor of Energy Policy at the University of Greenwich Business School. Despite government apathy, there is rapid progress on renewables. Just a few months ago, Steve Holliday, CEO of National Grid, said the idea of large coal-fired or nuclear power stations was “outdated”. He told World Energy Focus: “The amount of solar being added to the system is incredible – 1500 MW in the first three months of this year. That’s the capacity of two power stations. I made a comment to the energy minister four years ago that there was little probability we would have 20,000 MW of solar in the UK. Now three of our scenarios will have more than 20,000 MW of solar by 2035.” Emily Farnworth says the corporates are sending a big message to both governments and utilities that this is the direction of travel. “There will still be dinosaurs, especially in the oil and gas sector, that dig their heels in, but the majority see this is where business is heading.”
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