Recent news stories have focused on the rise and rise of renewable energy. The International Energy Agency in its assessment of renewable energy states ‘we see renewables growing by about 1,000 gigawatts by 2022, which equals about half of the current global capacity in coal power’.
Renewable energy use and generation is one of the key trends we assess in our 2017 report into the Sustainability Reporting Performance of Europe’s largest companies.
Companies typically adopt complementary approaches to reach their 100% renewable energy target, combining procurement methods such as green tariff contracts with suppliers, unbundled renewable energy attribute certificates (RECs, REGOs, GOs), power purchase agreements (PPAs) and on-site generation projects.
Four FTSE 100 companies score best practice leader points for renewable energy. They purchase green electricity from verifiable sources, have onsite renewable energy generation and demonstrate the power generated as well as having a commitment to renewable energy.
The number of companies in the FTSE 100 generating power through onsite renewable technologies continues to increase year on year (52% 2017, 48% 2016, 41% 2015). However slight the increase compared to last year, this is a continual step in the right direction. This increase is down to more companies retrofitting technologies to sites that they already own, to reduce their carbon footprint and ensure a reasonable price for power into the future.
Buying renewable energy is one of the ways businesses can work towards reducing carbon and energy emissions. We believe that finding a route to achieve reductions facilitates innovation in low-carbon technology, driving cost-cutting efficiencies throughout the business.
But to increase the scale and ambition of carbon and energy reductions, companies need to get to grips with short, medium and long-term emissions reductions targets. Indeed, our research finds that 83% of CAC 40 companies set reduction targets compared to 70% in the FTSE 100 and 57% of companies in the IBEX 35.
To limit global average temperature increases to below 2°C in line with the Paris Agreement, the Science Based Targets initiative (SBTi) has called on the business community to set emissions reductions targets that are in line with climate science. Recently, the SBTi has seen more than 300 companies commit to the initiative, with well known brands such as Nike and Gap joining the movement.
11 companies across the 3 indices set science based targets (8 in the FTSE 100, 2 in the CAC 40 and 1 in the IBEX 35).
Setting science based targets makes sense when considering the challenge we collectively face in managing dangerous climate change. It will also bring other benefits. Setting a SBT can help drive emissions, energy and cost reduction internally and satisfy key external stakeholder and reporting requirements.
SBTs demonstrate strategic, long-term thinking and leadership, reinforcing positive reputations with investors and customers but also allowing companies to increase the scale and ambition of their energy and emissions reductions.
More information about how to approach setting a science based target and the benefits it will bring is here.