Where energy fits in the sustainability puzzle

Now more than ever, organizations of all sizes are considering how to be more sustainable.

In January 2020, BlackRock, the world's largest money manager, announced that they would no longer invest in companies that present sustainability risk. This marked the first time a major investor publicly confronted climate change in relation to long-term business viability. With a valuation of $7 trillion, BlackRock's annual CEO letter has huge influence. Immediately following the announcement, more companies introduced new climate initiatives and Amazon CEO, Jeff Bezos pledged $10 billion toward efforts to protect the planet. Cited as a top three organizational priority in a recent report from Centrica Business Solutions, social and environmental responsibility have increasingly become a focal point of conversation and a business investment priority.

Companies are also striving to be more sustainable to keep up with shifting customer preferences. The U.S. sustainability market is projected to reach $150 billion in sales by 2021, according to Nielsen. Environmental concerns are top of mind for consumers looking to align their shopping with their values. A Futerra survey of over 1,000 American and British consumers found that 88 percent want brands to help them live sustainably.

However, sustainability as a broad, nebulous idea poses challenges to businesses who want to hone in, develop sustainable strategies and implement them.

Scope 1 – Direct emissions from operations

These emissions are produced directly from fuels burned during operations.

Scope 2 – Indirect emissions from purchased energy

These indirect emissions come from energy consumed and purchased such as, electricity and natural gas.

Scope 3 – Indirect emissions from the value chain

These indirect emissions come from supply chains – buying product where CO2 was made. Scope 3 can be very difficult to track and monitor.

Sustainability Managers may use a combination of scopes one through three to improve their company’s energy portfolio.

To cut Scope 1 emissions, large industrial companies often pursue operational efficiency projects that reduce their energy use and help decarbonize the grid. For Scope 2 emissions, organizations can use a combination of sourcing clean power and purchasing renewable energy credits and/or carbon offsets to counteract emissions. Scope 3 usually presents the greatest challenge. Large companies may be in the best position to track and measure these indirect emissions via steps like buying carbon offsets for business travel or incentivizing employee behaviors.

Transitioning to renewable energy supply

Along with efficiency projects, it’s important to consider energy supply to achieve sustainability goals. Energy consumers widely assume that sourcing renewable energy or installing new technology will be too cost prohibitive. However, the more the renewable energy industry has matured, the more costs have come down. The cost of generating utility-scale wind and solar electricity has fallen by 70 and 90 percent, respectively, in the last 10 years.

The dramatic drop in solar costs are attributed to rapidly decreasing technology costs, proactive consumers and organizations buying solar and more efficient installation methods. Some renewable energy technologies are now competitive with fossil fuels and a better option, depending on the market. Cases where sourcing renewable power does not come at a cost savings could still create alternative value by fulfilling stakeholder and customer expectations.

An ideal renewable energy supplier can structure custom deals that are lower cost and renewable. Innovative financing methods offered by suppliers can also help overcome barriers to investment. Organizations that source renewable power at a lower cost than traditional energy supply offer a win-win sustainability opportunity.

Moving sustainability goals forward

Buying renewable energy isn’t simply a matter of cost. Companies are also looking for credible suppliers with the expertise and services necessary to help them tackle sustainability projects. Direct Energy Renewable Services provides a unique advantage. We not only supply electricity, natural gas and renewable power, but also partner with our customers to help them meet their sustainability goals. We all have a role to play in creating a better climate future through environmental stewardship efforts. When it comes to energy, look for a trusted advisor who can help you implement a range of solutions to achieve your sustainability goals.