Following a call to action to companies by The Climate Group’s CEO Helen Clarkson earlier this year, the Head of RE100, Sam Kimmins, blogs on the release of new guidance for businesses looking to implement a renewable electricity program throughout their supply chain.
Bold targets like 100% renewable energy are fast becoming the norm for many companies, with RE100 members at the leading edge through commitments to 100% renewable power.
This week, we announced our 116th RE100 member. Together, these 116 companies represent over 154 TWh/yr of renewable electricity demand annually, which is more than enough to supply Poland, Malaysia, or New York State.
To date, companies have mostly focused on addressing the carbon footprint of their own operations. But on reaching our 100-member milestone for RE100 in July this year, our CEO invited companies to “go one step further”.
RE100 members are starting to look beyond the RE100 commitment, to also encourage the uptake of renewable electricity within Tier 1 of their supply chains. This makes sense for leading companies, who recognize that it is their responsibility to minimize the climate impacts of the goods and services supporting their businesses.
Accelerating change
It also makes sense for accelerating change in our global electricity system. According to CDP, indirect emissions from supply chains are typically four times greater than an organization’s direct operational emissions. Extending renewable electricity purchasing into the supply chain therefore has the potential to create a multiplier effect in demand and investment.
The potential extends well beyond the simple arithmetic of additional demand. The supply chains of RE100 members stretch across the world, and represent TWh-scale electricity demand in countries such as Vietnam, Indonesia, Bangladesh and Laos, where direct demand from our members is low. Adoption of renewable electricity by supply chain companies in these regions can send a strong signal to markets and policymakers in countries where coal currently features strongly in national growth plans.
By partnering with suppliers, companies can open opportunities for collaboration, aggregation of demand, increased purchasing power and knowledge sharing between different companies, sectors and parts of the supply chain.
“By raising awareness of the positive aspects of supply chain action, it is possible to deliver tangible, meaningful results for the bottom line and the planet.”
Patricia Espinosa, Executive Secretary, UNFCCC
Challenges and opportunities
Whilst the opportunity is huge, this is a new discipline and the ‘rulebook’ is yet to be written. Supply chains are often complex and difficult to navigate – and the bigger the company, the more this tends to be the case. Encouraging and empowering the supply chain of a large company is not simply a case of dictating or flicking a switch.
We have gathered the experiences and guidance of three leaders in our network – Apple, BT Group and IKEA Group – in a new RE100 report. We aim to show you the challenges that each of these face in rolling out renewable electricity across their supply chains, and how they are overcoming these challenges and demonstrating what is possible.
“We are well on our way to hitting 100% renewable worldwide,” said Robert Williams, Head of Energy Supply, BT Group. “Going at this alone is not an option - the extensive knowledge and experience we’ve acquired is being used to help our partners and suppliers on their own carbon reduction journeys.”
These companies are engaging their supply chains in renewables because they know that it makes long-term business sense. The technology is available, unsubsidized costs are competitive in many parts of the world, and they are ready to invest at scale.
And they’re not the only ones moving on this. In September, Mars, Inc. announced it will invest US$1 billion to cut greenhouse gas (GHG) emissions from its supply chain including through renewable power. The majority of Mars’ emissions – approximately 65% – come from its supply chain, which includes about one million employees.
And earlier this year, Walmart launched ‘Project Gigaton’, which asks suppliers to reduce GHG emissions by one gigaton – the equivalent of taking more than 211 million passenger vehicles off US roads for a year. We are now seeing a growing number of Walmart suppliers switch to renewable power.
If all of the companies in our RE100 network adopt a similarly strong approach, and influence others to do the same, we can create massive change closer to the speed commensurate with the challenge of delivering on the Paris Agreement and keeping global warming to well below 2 degrees Celsius.
What next?
Knowledge sharing between companies, and between companies and their suppliers, will help many to overcome shared challenges, reduce duplication of effort, and accelerate the pace of change.
Following a successful workshop with RE100 members at RE-Source in Brussels in October, we will be actively assisting this process over the coming months with our partners in CDP Supply Chain and REBA.
In the meantime, whether you’re a Supply Chain Manager, Head of Energy Procurement, or CFO, there are things you can do to start engaging your suppliers. We invite businesses around the globe to read our RE100 report and digest the following top tips:
RE100 top tips
1. Build a comprehensive analysis of your supply chain electricity consumption and the renewable electricity potential for the major suppliers within it.
2. Set ambitious and fact-based public targets for your supply chain.
3. Ensure your organization is fully aligned behind ambitious targets, with support from key procurement decision makers.
4. Be prepared to invest sufficient resources in supporting suppliers to move to renewables.
5. Look for leaders in your supply chain to demonstrate what is possible.
6. Pick the right incentives for suppliers.
7. Build in the right kinds of support for your suppliers to be successful.
8. Be prepared to innovate, and collaborate with other companies with ambitious supply chain targets to overcome shared barriers
9. Learn from pioneer companies and look for collaboration opportunities.
10. Report on progress and on challenges related to supply chain targets.
In the words of Tim Cook, CEO, Apple, “We believe passionately in leaving the world better than we found it and hope that many other suppliers, partners and other companies join us in this important effort.”