One of the most apparent signs of corporate leadership in energy and sustainability is the acceleration of publicly announced goals. Many companies are making quantifiable and measurable commitments to their customers, shareholders and the community at large, while simultaneously reducing their cost of operations and impact on the environment. Third-party reporting and benchmarking programs are growing, and the number of companies from around the world setting science-based carbon reduction targets has surpassed 500, while 63% of Fortune 100 companies have set some type of clean energy goal.
The trend toward public targets and transparency is validated by a recent survey conducted by GreenBiz and Schneider Electric. More than 300 energy and sustainability industry professionals shed light on what motivates their companies to action and the barriers that stand in the way of progress. The responses revealed that external goals and commitments help companies move quickly, and realize financial, reputational and other advantages.
State of public energy and sustainability commitments
More than half of the companies participating in the research have made public commitments to reduce resource consumption and improve sustainability. Another 9% of respondents are considering a public commitment in the near future. This represents a clear majority of firms and highlights the urgency to set public-facing targets. Of those companies making a commitment, about half have also set measurable goals with a third party such as the Science-Based Targets Initiative (SBTi), thus implementing rigorous and externally audited standards.
The imperative to set public goals has also become a competitive differentiator, with companies going so far as to call out others in their industry in public forums to spur greater sustainability action. The urgency of addressing climate change, paired with significant economic upside and pressure from investors and consumers, is further driving these commitments.
Impact of public commitments on performance
Companies that have made public commitments cite a wide variety of reasons. For example, 42% of responding companies with public commitments view customer and investor expectations as a driver of their programs, compared to only 5% for firms without public commitments. Corporations are also motivated to set public goals because of environmental concerns. 44% of firms with public commitments cite this reason, while only 21% of firms with no public commitments do.
Companies with public commitments are more successful at securing funds and building business cases for their projects.
Companies that make public commitments also are more likely to adopt emerging technologies. For example, only a minority of companies surveyed have implemented advanced and emerging technology like batteries for energy storage and load curtailment, but about 50% of those making public commitments have done so.
This may be because these firms have better data on their environmental performance — requisite for fulfilling public commitments — which builds more credible estimates of the financial and non-financial benefits of such advanced technology. Or firms that set public commitments may be more forward-looking, leading them to investigate advanced technologies like batteries and fuel cells. Regardless of the reason, the data is clear: Companies that want to accelerate their action on energy and sustainability find greater success when they set a public goal.
Taking action: learn from leaders
A number of organizations have realized positive benefits from their public commitments. For example, in 2018, Fifth Third Bancorp became the first Fortune 500 company and first bank to sign a power purchase agreement (PPA) to achieve 100% renewable energy through a single project. As part of its public announcement, Fifth Third also joined RE100, a corporate leadership initiative from The Climate Group and CDP. Fifth Third’s leadership on renewable energy has served as an example to other corporations. The firm has realized reputational benefits from this action, in addition to the direct environmental benefits.
“The payoff from setting a public goal was huge: We were the first Fortune 500 to contract for 100% solar power and we expect the project to come online in 2019!" ~ Scott Hassell, Director, Environmental Sustainability, Fifth Third Bank
Hear more from Fifth Third Bank
Scott Hassell discusses Fifth Third's experience in signing a renewable energy PPA and offers advice for companies interested in following the same path in this video.
Corporations are leading the energy and sustainability charge. Download the full 2019 Corporate Energy & Sustainability Progress Report to explore what other factors motivate (and act as barriers to) corporate climate action.