This blog is the final installment in a four-part series on mitigating power purchase agreement (PPA) risk. Each blog in the series focuses on a different risk: market risk, regulatory risk, execution and operational risk, and reputational risk (this blog).
Author: Erin Decker is an industry-leading sustainability expert with extensive experience with renewable energy
In a crowded world of sustainability claims, select industry leaders including Google, IKEA, Proctor & Gamble, and Salesforce have earned exceptional public visibility by making high impact commitments to renewable energy. But not all actions to meet these commitments are created equally. When your corporate reputation is at stake, understanding the nuances of environmental claims with clean energy can make the difference between celebration and reputational damage.
How are leading companies enhancing their reputation with renewables?
Nationally, we see a growing trend of organizations making substantive public commitments. In 2015 alone, 154 companies joined the White House’s American Business Act on Climate Pledge and, to date, 53 multinational corporations have committed to 100% renewable energy targets as part of the RE100.
Forward-thinking companies follow these public commitments by pursuing quality renewable energy projects and sharing their success in a compelling and transparent way.
In contrast, organizations that fail to act on sustainability risk are earning a reputation as laggards. Or, worse, as bad players. A 2014 Nielsen survey discovered that 54% of U.S. market influencers have decided not to do business with a particular company after discovering negative information about how that company conducts itself.
Consider what happened in 2015 when Volkswagen was discovered to have intentionally misled buyers by claiming their vehicles were low emission when they were not. The company faces billions of dollars in fines and will struggle to regain the trust of even its most loyal customer base.
Stakeholders and the media know how to sniff out false claims. Your customers and your employees take notice when you make tangible, verifiable progress toward sustainability.
How do organizations find the best clean energy options that meet the tests for transparency, legitimacy, and bottom line benefits?
Not all renewable energy purchasing options are created equal. For a growing number of companies, the answer lies in power purchase agreements (PPAs). PPAs are 12 to 20 year contracts to purchase large amounts of clean power. These contracts provide the buyer an opportunity to lock in energy prices. Done right, they pass the test of adding new renewables to the grid that contribute to global emissions reductions, which is a powerful sustainability story.
Simply signing a contract with a renewable energy developer does not mean businesses can report environmental benefits from their purchase. Valid renewable energy certificates (RECs) must be obtained – and then retired – in order to verify that new clean energy came onto the grid and reduced overall carbon emissions from electricity. For example, the Vermont Attorney General’s Office recently warned that customers with on-site solar leases can’t claim that they are using renewable energy because the RECs are being sold to other entities. It’s critically important for your organization to tap expertise in carbon accounting, environmental claims, and sustainability communications to ensure that your team communicates an accurate and trustworthy message about renewable energy purchases to your stakeholders.
Your organization’s reputation is one of your most valuable assets. Smart renewable energy investments create authentic sustainability stories that build brand reputation. In an ever evolving and competitive marketplace, organizations that act and are transparent about those actions will gain the advantage.
For a deeper dive into risk identification and mitigation in a successful PPA procurement process, download our white paper Proactively Managing Risks to Accomplish Your Long-Term Renewable Energy Goals today.
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