- The World Benchmarking Alliance (WBA) and CDP assessed 68 of the world’s largest and most influential electric utilities companies, including Enel, ENGIE, E.ON, Ørsted, SSE and Vattenfall, finding that companies’ total share of wind and solar generation almost doubled to 7% of the energy mix between 2017 and 2022.
- Although the sector is crucial to enabling other high emitting sectors to decarbonise, it is still falling short of the speed and scale needed to limit global warming:
- Too many companies still rely heavily on fossil fuels: only 43% of companies with coal generation currently have plans to phase it out.
- With COP28 fast approaching, WBA and CDP call for companies that generate and sell electricity to ramp up low-carbon energy investment and lead the way in the renewable revolution.
Amsterdam, 15 November 2023 – The World Benchmarking Alliance’s (WBA) latest Electric Utilities Benchmark, developed with CDP assessing companies across Africa, Asia, Europe, the Middle East, North and Latin America, shows that while the sector is making progress in the low-carbon energy transition, greater speed and scale is urgently needed to meet global climate goals.
As policymakers and leaders around the world prepare for pivotal climate discussions at COP28, the sector shows pathway to net-zero by creating more renewable energy, enabling other sectors to decarbonise, diverting demand away from fossil fuels.
The share of wind and solar generation across the 68 companies assessed almost doubled to 7% between 2017 and 2022. If companies were to continue on this trajectory, they would produce seven times more solar by 2030 – surpassing the International Energy Agency's Net Zero Emissions growth requirements.
There are small indications of change. Of the 60 assessed companies that generated coal-fired power over the last five years, 65% burned less coal in 2022 than they did in 2017, and two companies, Iberdrola and SSE, have already phased out coal entirely. However only 26 companies have plans to phase out coal – which significantly hampers international efforts to limit global warming to 1.5 degrees.
Amir Sokolowski, Global Director, Climate, CDP, said:
"Our assessment of key companies from this highly influential sector gives us both a need to act and a reason to be hopeful. COP28 will present the first global stocktake and will be a key moment to drive ambition to address the dwindling carbon budget. The progress from this sector, despite being limited, serves as a reminder that there is an alternative to fossil fuels that will enable companies to achieve a net-zero transition.
“The technology and capital exist but it must be scaled across the sector to increase the generation of renewable energy and underpin credible transition plans. We can’t be complacent, this assessment highlights that companies must still set more ambitious targets, reduce reliance on fossil fuels and increase generation of renewable energy."
Companies are not focusing on the energy storage and demand management required to ensure that renewables grow at the necessary pace and scale. Less than half of the assessed businesses currently have or are investing in storage capacity, and just 31% are currently building new or additional storage capacity, and/or shared plans to grow their storage capacity.
The best performing companies across the benchmark were Ørsted (headquartered in Denmark), Energias de Portugal (headquartered in Portugal), and Enel (headquartered in Italy). All of the top 10 performing companies are based in Europe, though the research identified a significant gap between the top three companies and the rest.
Vicky Sins, Decarbonisation and Energy Transformation Lead, said:
“We cannot keep 1.5 alive without the electric utilities sector moving more quickly away from polluting fossil fuels to renewable energy. These companies have a huge opportunity to lead the way. But despite promising progress, too few companies are investing in technologies and building the grid flexibility needed to ramp up renewables and retire fossil fuels.”
“COP28 is our opportunity to hold the electric utilities sector accountable for a faster energy transition. Companies around the world who make and distribute electricity must seize the unprecedented opportunity to make our systems better and cleaner, and to ensure their operations are fit for the future.”
The International Energy Agency recently highlighted that the world is on an "unstoppable" shift towards renewable energy.[1] Companies who fail to plan for this will be left behind and their failure to adapt will impact their future operations and results. Companies must understand the skills gaps and employment dislocation that may emerge from the low carbon transition.
The top performing company on just transition indicators, SSE, scored only 12.5 out of 20, and the average score across the sector is just 3 out of 20. Companies must do more to respect the rights and roles of their workers as their operations change. Engaging with workers, to understand what a just transition means for them, and committing to creating green jobs while reskilling and upskilling workers, are critical steps for businesses across the sector. Beyond respect for workers, a just transition rests on a foundation of respect for human rights, which is further expanded upon in the newly launched Renewable Energy Benchmark by BHRRC.
Electric utilities is the sole sector, among those assessed in WBA's Climate and Energy Benchmarks, developed with CDP - including oil and gas companies - to have met all "Just Transition" indicators to date. This highlights its potential for leadership in the energy sector. Good practice is already happening, including companies setting time-bound, measurable targets limiting the social impacts, and working to close the social protection gaps that emerge as their businesses decarbonise.
ENDS
Notes to editors
For more information, please contact Maddy Bravery [email protected]
About the Electric Utilities Benchmark
Link to the benchmark: https://www.worldbenchmarkingalliance.org/publication/electric-utilities/
To see the full methodology, visit: https://www.worldbenchmarkingalliance.org/publication/electric-utilities/methodology/
11 capital goods companies, including manufacturers of renewable generation technologies and conglomerates, have been included to provide a snapshot of the sectoral value chain. In 2022, the companies evaluated contributed 58% and 33% of the global added wind and solar capacity, respectively. Although the output capacity for wind increased by 146% in 2022 compared to 2018 in the company sample, associated manufacturing emissions have remained in alignment with a 1.5-degree pathway. This highlights that past gains in manufacturing efficiency were sufficient to deliver adequate emissions reductions. The same cannot be said for solar companies, despite improvements in manufacturing emission intensity averaging 10% per year between 2018 and 2022. Only three manufacturers of renewable generation technologies - First Solar, Vestas, and Siemens Gamesa - disclose data on upstream scope 3 emissions, even though these emissions typically account for 90% of the total scope 1, 2, and 3 emissions from such companies. Improving this would go a long way to establish a full picture of emissions in the sectoral value chain.
About the World Benchmarking Alliance
● Founded in 2018, the World Benchmarking Alliance is a non-profit organisation holding 2,000 of the world’s most influential companies accountable for their part in achieving the Sustainable Development Goals.
● It does this by publishing free and publicly available benchmarks on their performance and showing what good corporate practice looks like.
● The benchmarks provide companies with a clear roadmap of what commitments and changes they must make in order to put our planet, society and economy on a more sustainable and resilient path.
● They also equip everyone – from governments and financial institutions to civil society organisations and individuals – with the insights that they need to collectively incentivise leading companies to keep going and pressure the laggards to catch up.
● Visit www.worldbenchmarkingalliance.org and follow @SDGBenchmarks
About CDP
- CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions.
- Founded in 2000 and working with more than 740 financial institutions with over $130 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests.
- Nearly 20,000 organizations around the world disclosed data through CDP in 2022, including more than 18,700 companies worth half of global market capitalization, and over 1,100 cities, states and regions.
- Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy.
- CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net or follow us @CDP to find out more.