Companies across a diverse array of industries have come under pressure to adopt greener practices. Highly visible brands, being no exception to this trend, receive the brunt of demands for transparency and sustainability improvements from investors, NGOs, and consumers. The Consumer Staples sector, in particular, has come under recent scrutiny for its high electricity use and lagging execution on commitments to reduce greenhouse gas (GHG) emissions. The most recent Sustainability Roadmap update from CERES indicates that although a whopping 79% of Food and Beverage companies have GHG reduction goals, only 25% utilize renewable energy sources as part of a strategy to meet those goals.
This statistic reveals an opportunity gap where Consumer Staples companies can harness the power of renewables. There are several unique motivators for Consumer Staples companies that make renewable energy sources especially attractive. Among other reasons, these companies are driven by the ability of renewables to help them meet public expectations for sustainability, stabilize energy supply at global manufacturing sites, and engage their supply chains on sustainability efforts to multiply impact.
1. Meeting Public Expectations
For Consumer Staples companies—like Johnson & Johnson, Unilever, and General Mills—consumer perception is king. Brand recognition and reliance on customer trust govern the success (or failure) of Consumer Staples companies. Despite a fossil-friendly Administration, the overwhelming majority of Americans are asking for more renewable sources of energy. As a result, corporations have the environmental and social incentives to explore clean technology solutions.
By using clean energy, consumer-centric companies stand to gain brand loyalty, as well as the perception of being innovative and responsible. In a very competitive industry, renewable energy use can differentiate companies as sustainable leaders among corporate peers. And with the RE100 reporting that companies in the Consumer Staples sector have the largest disparity between electricity use and 100% renewable energy goals, the opportunity to stake claim as a leader in this industry is certainly still up for grabs.
2. Stabilizing Energy Supply
The majority of large Consumer Staples corporations have multinational operations and manufacturing facilities that span many distinct world regions and electricity markets. Supporting renewable energy projects, especially in less developed markets, gives corporations the power to help stabilize energy supply at manufacturing sites to increase productivity and reliability, as well as play a role in electrifying rural communities.
For example, India is a common manufacturing hub for many Consumer Staples corporations. The availability of an uninterrupted power supply is crucial to a company’s ability to maintain efficient operations. India’s power sector is notorious for unreliable and insufficient energy supply. The looming power crisis there presents a serious problem for companies that depend on manufacturing operations there. Companies that participate in renewable energy development activities, via Power Purchase Agreement (PPA) for instance, are significantly supporting their own operations by ensuring a consistent power supply. A company’s clean tech contribution to India’s electric grid also reaches far beyond the benefits to the corporate bottom-line by bringing life-changing electricity to the more than 300 million people living without it.
3. Engaging Supply Chains
Supply chain engagement on sustainability is a new frontier of opportunity for corporations operating globally. Consumer Staples companies not only have deep supply chains but also are vulnerable to climate change impacts. Food & Beverage and Apparel supply chains are good examples; when drought and extreme weather events affect crop outputs that fuel their operations, these companies feel the pain. By encouraging supply chain partners to also participate in renewable development, companies can again reap benefits that extend beyond insulating revenue from climate change.
Engaging global supply chain creates positive social impact on communities where suppliers are located. By tapping supply chain partners, Consumer Staple companies can take an even greater role in market development in emerging renewable energy markets worldwide. The local effects of improving renewable energy resources in these markets are immeasurable. To use India as an example again, new renewable energy projects help address human rights concerns by increasing access to electricity, jobs, and education for local communities.
Renewable energy is a key component in designing a corporate sustainability strategy which encompasses environmental and social components. For global, brand-conscious companies in the Consumer Staples sector, this three-pronged strategy designed to address all facets of sustainability will realize a myriad of economic and reputational benefits. For more information on how your company can become a clean tech leader, reach out to our team today.
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