As markets evolve and expectations grow, the leadership bar is rising for global companies on their use of clean energy. This year we’ll be celebrating the RE100 members taking their pioneering renewable electricity commitments to the next level. As we launch the first ever RE100 Leadership Awards, our Head of RE100 Sam Kimmins asks, what might this new leadership look like?
When RE100 was launched in 2014, few thought it possible for companies to reach 100% renewable electricity across their global operations. Nevertheless, our founding members took the plunge, and six years on, setting, and achieving this goal is becoming the de-facto expectation for any major company wishing to be considered a sustainability leader.
Let’s be clear on one thing – all RE100 companies are leaders. By publicly committing to achieve 100% renewable electricity, our members have transformed the conversation about the business case for renewable electricity. They are not only greening their own operations; they’re sending a strong market signal that renewables are the future.
RE100 companies are investing at scale, driving the build-out of 34.6 gigawatts (GW) of wind and solar capacity in the three years to 2020, according to BloombergNEF – that’s enough to power around 25 million European homes. Together, they are creating demand for renewables that exceeds the annual electricity consumption of Indonesia; shifting the balance of power from the twilight industries peddling fossil fuels, to a brave new world of renewable energy producers.
And this is not just a fair-weather commitment. Despite the current challenges created by Covid-19, our members are showing us that they are still determined to stick by their 100% goal. It makes sense for their business as they plan for the years and decades ahead.
Yet, the leadership bar is rising.
The Climate Group and CDP last discussed this in detail in our 2018 RE100 leadership paper, which still stands the test of time. With more and more companies taking the RE100 pledge every month (we have 236 members at the time of writing), and as renewables increasingly beat fossil fuels on price as well as environmental credentials (despite the temporary crash in oil and gas markets), the definition of leadership is shifting.
For us, leadership is about maximizing the impact of commitments and actions. This can be viewed in two ways – how the company is progressing toward its own 100% goal, and how they are changing the broader system beyond their own operations.
Leadership in reaching the 100% goal
How and when companies achieve their RE100 goals is important. Each announcement of a new power purchase agreement (PPA) deal or onsite installation is a step forward in the clean energy transition, as is each announcement by an RE100 company that they have reached their 100% goal or milestone, or brought forward their target date.
Our last RE100 annual report showed that 2028 is the average target year for members to reach 100% renewable electricity, with three in four targeting 2030 at the latest. One in three members have already switched more than 75% of their electricity use – with many experiencing cost savings as a result.
Of course, companies do need to consider the context in which they are operating when setting target dates or determining which methods to use to purchase their electricity. For operations in mature markets, such as the US and Europe, a 2022 RE100 goal for 100% renewables would be considered highly ambitious (more than 30 RE100 companies have already achieved 100%).
For operations in Korea or Japan, however, where renewables are currently expensive and difficult to procure, 2040 would be considered ambitious and 2035 truly pioneering. So, target years and procurement methods can be useful measures of leadership, but these have their limitations and are by no means the only benchmarks.
Leadership in system transformation
The mission of RE100 is to accelerate progress toward zero carbon electricity grids, in order to achieve this goal by 2040. We want it to be normal for companies to be using 100% renewable electricity, and for renewables to be the default choice offered by utilities, with prices based on a level playing field with fossil fuels. Achieving this requires companies to think beyond their own operations.
Many RE100 companies are already doing this. 44% of members are influencing suppliers to use renewable electricity. One in two plan to engage with stakeholders this year, including encouraging regulators and policymakers to remove procurement barriers and transform more challenging markets.
Last year, 20 RE100 companies called for ambitious 2030 renewable electricity targets in Japan. By setting themselves 100% targets despite the impossibility of achieving such a goal at the time, Japanese business are sending a strong demand signal to their government. They want to access to reliable renewables at a fair market price in Japan, as they do in Europe and the US.
Governments are paying attention.
The growth in RE100 membership was recently cited in Japan’s COVID-19 stimulus package as the rationale for including US$1 billion in support for onsite PPAs. In Korea, RE100 was namechecked in the ruling party’s manifesto, while President Tsai of the Taiwanese authorities referenced RE100 as “a vital consideration in industrial policy”. These are just a few examples of how the aggregated demand of over 200 of the world’s most influential companies can shift the wider energy system.
Others still are driving forward new ways of buying, storing and using renewable electricity that will define markets of the future. Leadership is multifaceted, and RE100 companies are becoming more sophisticated in their approaches, moving beyond what may have started for some as a race to 100%, to form a collaborative movement for change.
RE100 Leadership Awards 2020
This year, during Climate Week NYC, we will celebrate RE100 companies whose ambitions and achievements go above and beyond RE100 criteria and offer scalability across the wider private sector – from opting for sourcing methods that generate local benefits, to influencing suppliers and policymakers, sharing best practice, and taking additional steps across energy and transport.
The RE100 Leadership Awards 2020 will be the first of its kind. By showcasing what’s possible, we aim to inspire forward-thinking companies around the world to follow their lead and accelerate our clean energy future. I want to see as many members entering as possible.
And the conversation doesn’t end here. With dozens of companies aiming to reach their 100% goals over the coming year, at the RE100 Members Forum during Climate Week NYC we’ll be asking, "what’s next"?
We hope that many RE100 members will join us.