For the average person, climate change is most often thought about in terms of its impact on the planet. But industry leaders understand that climate change also poses legitimate, tangible risks to their company’s stability—from reputational concerns to volatile insurance premiums to business models challenged by the low-carbon economy. As discussed in Ecova’s recent webinar, Corporate Climate Action: The Business Benefits to Forging Ahead, addressing these risks successfully requires urgency and proactivity, rather than viewing them as future hypotheticals. We must pay critical attention to the risks associated with climate change or face what Mark Carney calls “the tragedy of the horizon”: a catastrophic financial crisis driven by global inaction.
Fortunately, many businesses have already taken the first step and adopted ambitious climate action goals. A common platform for these targets is provided by We Mean Business, a coalition of organizations working with globally influential businesses to transition to a low-carbon economy. We Mean Business asks participating companies to commit to at least one climate action initiative, such as adopting a science-based emissions reduction target, reporting climate change information in annual financial reports, investing in renewable power or improving energy productivity. Across these initiatives, science-based targets remain one of We Mean Business’s highest priorities due to their ability to reduce regulatory uncertainty, strengthen investor confidence and improve profitability.
These business’s commitments have elevated them within their industry, benefiting both their reputation and their bottom line. In the retail segment, Walmart set a new standard by committing to reduce absolute emissions by 18 percent from 2015 levels by 2025. Both Bank of America and Nike, Inc., meanwhile, have pledged to source 100 percent of their electricity from renewables by 2020 and 2025, respectively. In doing so, they have joined the 86 other industry leaders in We Mean Business’s global, collaborative RE100 effort—which asks participants to establish individual goals for transitioning to 100 percent renewable electricity.
The rising interest in distributed energy resources (DERs) like renewables, driven by increased energy costs and an erratic marketplace, speaks to the critical role an RE100 target can play in meeting energy and carbon reduction goals. While transitioning to renewables offers significant potential for addressing science-based carbon targets and RE100 goals, doing so successfully requires thoughtful planning and consideration of factors such as location, renewable fuel availability, risk sensitivity and incentives. Ecova’s eBook, Five Key Considerations for Integrating Renewables into Your Procurement Strategy, provides insight into laying out an organizational roadmap for DER success.
In the ever-changing energy industry, one thing remains certain: addressing the business risks associated with climate change will only become more important in the years ahead. By following the example of corporate industry leaders adopting science-based targets and increasing investment in renewables, organizations stand to turn this challenging landscape into an opportunity for greater financial security and investor confidence.