Month: August 2019

(Part 3) Pathways to a Successful Renewable Energy Aggregation

pathways-aggregation

Incorporating Diversity into Renewable Energy Procurement

In our first two posts in our Pathways to a Successful Aggregation blog series, we’ve discussed various ways to convene a renewable energy aggregation buying group and how to build an effective aggregation team. In this third and final post of the series, we’ll explore the role that diversity can play in a renewable energy procurement once you have your team of buyers in place.

Companies engaging in long-term purchasing arrangements for renewable energy supply are committing themselves to a long-term relationship with a new supplier. These renewable energy purchases represent a significant financial commitment to that supplier — the project developer. With this in mind, contracting for renewable energy represents an ideal platform for buyers to assert a preference for suppliers who are aligned with their own environmental, social, and governance goals. Indeed in some cases, the team executing the energy purchase is also responsible for Scope 3 or sustainable purchasing goals; these procurements allow the sustainability team to “walk the walk”.

When soliciting offers for a renewable energy project, it’s both common and encouraging to see buyers infuse the RFP with specific criteria concerning the project’s environmental profile. It’s far less common, and certainly more revealing as a differentiator, to apply environmental and social criteria to the supplier. We tackled this in a recent aggregated procurement, which included several buyers with goals and programs around sustainable procurement and doing business with diverse suppliers.

Smaller Buyers, Larger Influence

In an aggregation, the individual purchasers are often seeking comparatively small renewable contracts. On their own, these companies may feel as if — or even be told by their advisors or prospective vendors that — their purchase is not large enough to warrant special treatment or unique considerations such as incorporating diversity disclosures into their RFPs. (As an aside, we’d advise these smaller buyers to find a different advisor or a different supplier…) In any case, joining an aggregation makes these smaller buyers far more interesting to their potential suppliers. This provides the perfect opportunity to communicate and emphasize the larger context of environmental performance and social change that many sustainability teams are aiming to achieve.

Diversity & ESG Criteria

In support of our forward-thinking clients, we’ve incorporated a variety of environmental, social, and governance criteria into recent project RFPs, in addition to criteria related to the project’s environmental and social performance. The information provided by bidders makes up part of our qualitative supplier scorecard, a companion to our quantitative project analysis. Our goal is not to be comprehensive, but rather to ask focused “indicator” questions which give us a solid sense of whether the supplier is working toward a broader vision of a sustainable future.

Examples of such questions include:

  • Diversity: Is the supplier certified as a small, minority-owned, women-owned, or disabled veteran-owned business? What proportion of the company’s staff are women, and what proportion are people of color? What proportion of its governing body are women or people of color? 
  • Sustainability programs: Does the vendor publish a sustainability report? Does the vendor calculate and publicly report its GHG emissions? (The positive response rate on this question is shockingly low!)
  • Local benefits: What are they doing to benefit the local community, beyond job creation? How do they show up as a sustainable and responsible neighbor? 

We’ve been encouraged by how many of our customers are not only on board with including such questions in the evaluation criteria for our project procurements, but who also actively engage in understanding and evaluating vendor responses.

In 3Degrees’ recent aggregated renewable energy procurements, these ESG criteria haven’t overruled price and other terms in our final project selection.  However, they have influenced our decisions on short-listing projects for deeper consideration, and we have chosen to give certain suppliers with strong performance in these areas an opportunity to re-bid their project terms so as to provide the most competitive offer possible.  Equally important, we hope we’ve sent a clear and consistent message to all bidders that our clients would prefer to do business with companies who are working toward a sustainable future across multiple dimensions.

In our view, there’s simply no excuse for companies who are doing business in renewable energy to be complacent in their own sustainable performance.

This is especially true for those who hope to become long-term partners with corporate sustainability leaders. We applaud those developers already on the journey, and hope they are joined by many others very soon.

MOM’s Organic Market: Leading the Way in Grocer Sustainability

MOMs-case-study

Mom's Organic MarketMOM’s Organic Market has a long history of environmental stewardship. In 1987, founder Scott Nash recognized the demand for organic food and its vast benefits for our environment and fighting climate change. He decided to start a company to deliver on that need in a way that demonstrates responsible and sustainable business practices. Today, MOM’s has stores in four states and Washington, D.C. and has created a culture centered on its purpose to protect and restore the environment.

Consistent with this culture, MOM’s has matched its total electricity with renewable energy since 2005. The company also practices strict energy and packaging efficiency at all locations, installed on-site solar in three locations, and has a 1.5-megawatt off-site solar farm in Kingsville, MD, which supports approximately 25% of its total power needs. But MOM’s was eager to make an even greater impact and enlisted the support of 3Degrees to further evolve its renewable energy strategy and help build plans to address the company’s long term climate goals.

Challenges

MOM’s Organic Market has a lean sustainability team with ambitious environmental goals. In addition to the on-site solar that had already been installed on several of the company’s facilities, MOM’s had matched the remainder of its Scope 2 emissions with high-quality, certified renewable energy credits. However, in order to gain access to a more competitive REC market and open up additional funds to reinvest in broader high impact sustainability initiatives, MOM’s turned to 3Degrees to help support its renewable energy sourcing.

Demonstrating an even deeper commitment to environmental sustainability, MOM’s launched its “CARbon OFFset” campaign to address the emissions generated by the retailer’s customers traveling to and from its stores. Armed with the store-level zip code data collected annually, MOM’s turned to 3Degrees to help process this data, determine CO2 equivalencies, and invest in high-quality carbon offset projects to cover the total output of their customers’ tailpipe emissions.

The 3Degrees team helped MOM’s craft a plan that would address both the company’s renewable energy and carbon reduction goals, while meeting its business and financial criteria.

How we helped

Renewable Energy

3Degrees developed a portfolio of Green-e certified wind facilities across the United States that would allow MOM’s to support renewable energy generation by purchasing enough zero-emitting wind RECs to cover the remainder of emissions from its electricity use.

Carbon Offset Projects

In order to offset its customers’ carbon footprint, MOM’s had to first measure the emissions created from their shopping trips. Every year, the company collects zip code information in store and calculates the average distance customers traveled, then multiplies that by the annual customer count across its 19 stores. 3Degrees uses this information to calculate the equivalent carbon emissions associated with this travel, then identifies high-quality, third-party verified carbon reduction projects to offset these emissions.

Today MOM’s Organic Market invests in a variety of different carbon reduction project types across the United States including landfill methane capture, anaerobic digester (manure methane capture), and emissions capture from U.S. coal mines. These projects all prevent potent greenhouse gases from entering the atmosphere and reduce MOM’s overall carbon footprint from its business operations.

Results

Since becoming a 3Degrees customer in 2015, MOM’s Organic Market has:

  • Purchased more than 47,600 wind RECs to match its direct electricity emissions
  • Prevented more than 225M pounds of CO2 from being released into the environment

MOM’s Organic Market continues to investigate new technologies and avenues to further reduce its impact on the environment. Its environmental commitment and associated sustainability initiatives have also translated into strong customer satisfaction ratings and customer loyalty.

Mom's case study impact

 

“Being an environmentally-focused company not only helps the world be a better place, it also helps our business’s bottom line by increasing employee morale and customer loyalty. With expanding options for solar and renewable energy, we hope other businesses follow suit.”

–Scott Nash, MOM’s Organic Market, CEO/Founder