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 to organizations looking to drive innovation and maximize cost efficiencies.
CDP data indicates that companies with outlined public renewable energy or GHG goals make more progress at a faster rate than those that do not.
Meanwhile, goal setting has also been shown to improve a company’s competitive positioning and compliance.
What are the barriers to setting and achieveing goals?
Organizations across various sectors are facing similar challenges to setting and achieving public goals. Top challenges included:
- uncertainty on where to begin and how to build the business case;
- lack of data and reporting; and
- lack of support from appropriate stakeholders.
Other challenges include budgetary issues, fear of failure, and lack of internal alignment.
Once an organization has set a goal, they also face challenges with implementation, with many citing the lack of clear plan for action as a significant challenge.
Fortunately there is no need to reinvent the wheel. There are a number of resources and examples available to draw upon from groups like CDP and from consulting organizations like 3Degrees.
By learning from the experience of other, companies can adjust their approach and learn to tailor it ot the needs, appetite for change and corporate culture within an inidvidual organization. Best practices include involving a broad group of internal and external stakeholders, starting small, and considering all relevant options for reducing your footprint, not just those with the most “buzz”.
What options are there for setting ambitious goals?
There are many types of goals that companies can set around reducing their carbon footprint. These include emission reduction goals, energy efficiency goals, and goals for increasing the uptake of clean energy and low carbon solutions.These may (but don’t have to be) associated with public pledges of commitment.
From working with companies, we see that two goals particularly have peaked companies’ interest: 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 make it an attractive emissions reduction option, which has led to a recent spike in adoption.
According to the 2017 CDP report, the number of companies with renewable energy targets has increased by 23% in the last year alone.
Another goal setting option that appears to be part of a growing movement among industry leaders is science-based targets (SBTs). Science-based targets offer companies a clearly defined pathway to aligning their emissions reduction to the level of decarbonization required to keep global temperature rise below 2 degrees Celsius – the level agreed by 195 governments under the Paris Agreement.
Setting a science-based target sends a strong message to the market about the need for meaningful action on climate and can help uncover the most cost-effective mechanism for individual organizations.
The Science Based Targets initiative (SBTi) has established a common framework that companies can rally behind..Some 340 companies are already committed to align their strategies with the ambition of the Paris Agreement through the SBTi, and almost 900 more companies have declared their ambition to set science-based targets within the next two years in their 2017 disclosure to CDP.
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.
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 organization.
A version of this article was original published on 3degreesinc.com.