Why the world's largest companies are investing in renewable energy

Among the world's largest companies, a commitment to clean energy is now the norm rather than the exception, according to a recent report. 56 percent of the companies in the Fortune 100 and Global 100 now have a renewable energy goal, a greenhouse gas reduction goal, or both. Nearly two dozen companies go even further--setting public and voluntary renewable energy commitments for themselves.

These are the key findings of the report "Power Forward: Why The World's Largest Companies Are Investing In Renewable Energy", published last month by the World Wildlife Fund, US-based mutual fund company Calvert Investments, and Ceres, a coalition of large investors and environmental groups that promotes sustainability in the business community.

The trend, which stands in stark contrast to the gridlock that often mars inter-governmental climate negotiations, is driven by a growing realisation that there is a strong business case underpinning clean energy investment. Through two dozen interviews with top executives and an analysis of public disclosures, the report describes how large corporations are increasingly turning to renewable energy.

The aim behind all this is to reduce long-term operating costs, diversify energy supply and hedge against volatility in traditional fuel markets. Renewable energy is also a way for companies to achieve greenhouse gas emissions reduction goals, an important mark of leadership in the corporate sustainability sphere.

"The companies that are boldly setting either greenhouse gas or renewable energy goals and making progress on those commitments are demonstrating the business case and real leadership on climate change," said Marty Spitzer, WWF's Director of US Climate Policy. "And, in the process, these companies are changing the game--driving significant renewable energy investment globally and pressing for the right policy and market conditions that will allow companies to do even more."

For many of these Fortune and Global 100 firms, investment in renewable energy is not limited to regional or national levels; it is planned on a global scale, involving comprehensive purchasing strategies in every significant market, especially those core to their supply chains. Many are also shifting from the purchase of short-term, temporary Renewable Energy Credits to longer-term investment strategies like Power Purchase Agreements and on-site projects. This demonstrates a long-term commitment to renewable energy.

"It speaks volumes that almost all of these companies set their renewable energy and greenhouse gas goals after the economic downturn, precisely because they understand the economic benefits of efficiency and renewable energy," said Mindy Lubber, President of Ceres.

Companies, however, continue to face a variety of barriers in adopting or accelerating the use of renewable energy. In some regions, renewable energy is not yet at cost-parity with subsidised fossil-based energy. Company executives must also contend with inconsistent policies that send mixed signals to companies and investors in renewable energy projects, in particular the instability in renewable energy incentives and policies that prevent companies from signing green power purchase agreements.

Despite these barriers, the report findings show that clean energy investment is now becoming an integral part of what it means to be a sustainable company in the 21st century.