Last month, 3Degrees hosted an interactive luncheon for top sustainability leaders at Fortune 500 companies. The session, which included presentations from Lance Pierce, president of CDP North America and Kim Fiske, 3Degrees vice president of strategy and corporate development, revolved around challenges and successes of setting and achieving renewable energy (RE) and greenhouse gas (GHG) reduction targets. Executives from over a dozen top tier companies gathered to learn about a range of environmental targets and the merits of each.
Discussion focused on a few key areas:
Why should companies set a renewable energy or greenhouse goal?
As in so many other parts of business, here the old adage holds true: what gets measured gets managed. This is why setting public renewable energy and GHG goals is imperative for organizations looking to drive innovation and maximize cost efficiency. CDP data indicates that companies with public goals make more progress at a faster rate than those that do not. Other reasons for goal setting includes improved competitive positioning and compliance.
Barriers to setting and achieving goals.
Organizations across various sectors said they were facing similar challenges to setting and achieving public goals. Top challenges included:
- Uncertainty on where to begin and how to build a business case
- Lack of data and reporting
- Lack of support from appropriate stakeholders
Other challenges included budgetary issues, fear of failure, and lack of internal alignment. For organizations that have set goals, some cited a lack of an action plan as another significant challenge.
Fortunately there is no need to reinvent the wheel. There are a number of resources and examples to draw upon from groups like CDP and from consulting organizations like 3Degrees. Learn from the experience of others and adjust their approach to your organization’s needs, appetite for change and corporate culture. Best practices include involving a broad group of stakeholders, starting small, and considering all relevant options for reducing your footprint, not just those with the most “buzz”.
Goal setting options
There are many types of goals that companies can set around reducing their carbon footprint. These include intensity goals, goals around energy efficiency, and goals around absolute reductions. These may (but don’t have to be) associated with public pledges of commitment. At our event, participants were most interested in discussing the relative merits of two particular pledges/goals: RE100 and Science Based Targets (SBTs).
RE100 asks companies that participate to commit to 100% renewable energy. RE100 can be appealing to companies because of the relatively low barrier to participation and relative simplicity in aligning stakeholders. The continuing decline of renewable energy costs also make it an attractive emission reduction option and has led to a recent spike in adoption.
According to the 2017 CDP report, the number of companies with renewable energy targets has increased 23% in the last year.
Another goal setting option that appears to be part of a growing movement among industry leaders is science-based targets (SBTs). The Science Based Targets Initiative has established a common framework that companies can rally behind. It also sends a strong message to the market about the need for meaningful action on climate and can also help uncover the most cost-effective mechanism for individual organizations.
Signing on to SBTs is a significant commitment and can be overwhelming for many organizations. It oftentimes requires a fundamental change to the business which may be too high a hurdle for some. In addition, partly because of its popularity, there is currently a backlog of companies awaiting data and target validation, leading to a longer adoption process.
One size does not fit all
Every industry and every company has unique challenges and opportunities when it comes to reducing their carbon footprint. The trick is to find which set of tools work best for your organization today and in the future.
With a portfolio of options to choose from including onsite solar, renewable energy certificates (RECs) green tariffs and power purchase agreements (PPAs), we recommend companies consider all available tools.
The graph below illustrates what tools are being used across industries to address scope 2 emissions targets.
*EACs (energy attribute certificates) include RECs, GOs, and IRECs.
Bottom line: By taking a portfolio approach to establish environmental targets, organizations are able to diversify risk, manage costs, and have a greater overall impact. This all starts by determining the most meaningful goals for your company.