Power Forward: Trends in Fortune 500 Companies' use of Renewable Energy, Energy Efficiency

April 25, 2017

How the largest U.S. companies are capturing business value while addressing climate change

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The largest U.S. companies are increasing their clean energy and energy efficiency efforts while improving their bottom lines — and playing an important role in the decarbonization of the U.S. electric power sector. That’s the key finding of the latest Power Forward 3.0 report, which evaluates clean energy data provided publicly by Fortune 500 companies and is published by Calvert Research and Management (Calvert), CDP, Ceres and World Wildlife Fund (WWF).

Power Forward seeks to inform companies, investors, the electric power sector, and state and federal policymakers on key trends and preferences among large corporations taking action to reduce emissions and use renewable energy. It also is intended to encourage companies in and out of the Fortune 500 to better understand the need for and benefits of renewable energy and emissions-reduction commitments.

Strides in Target Setting

Nearly half of 2016 Fortune 500 companies have set targets to reduce greenhouse gases (GHG), improve energy efficiency, and/or increase renewable energy sourcing – up 5 percentage points from the last report in 2014. These and other findings are based on 2016 company reports to CDP as well as other public sources.

The strongest efforts are among Fortune 100 companies, with 63 percent adopting or retaining such goals. Notable strides have also been made with regard to the smallest 100 companies in the Fortune 500, with 44 percent setting goals in one or more categories, up 19 percentage points from 2013. Overall, the highest percentage of companies with targets was evidenced in the consumer staples sector, while the energy sector (mostly oil & gas companies) had the lowest percentage.

Businesses are reaping bigger and bigger cost savings rewards from energy-efficiency projects implemented to meet targets, with 190 companies collectively reporting $3.7 billion in annual savings. That amounts to a collective emissions reduction comparable to taking 45 coal-fired power plants offline.

Key Trends

The most significant new trend among the Fortune 500 is the increasing ambition of goal-setting leaders, as companies move to establish science-based targets and set 100 percent renewable energy goals. A science-based target utilizes the best available climate science to define a company’s appropriate share of the emission reductions required to limit global temperature increases to below 2 degrees Celsius.

As of January 2017, 210 companies from around the world have set or committed to set such targets through the Science Based Targets initiative.1 Among those are 10 Fortune 500 companies, including Procter & Gamble, General Mills and Kellogg Company. Additionally, 72 Fortune 500 companies (14 percent of the list) have reported to CDP2 and/or the Science Based Targets initiative that they intend to set such a target within two years.

Nearly two dozen Fortune 500 companies, including industry giants Wal-Mart, Bank of America, Google and Facebook, have committed to taking an all-renewable approach, powering all corporate operations with 100 percent renewable energy, compared to only a handful a few years ago.

Growth in overall target-setting over the past several years has been steady, with a net total of 25 Fortune 500 companies adding targets since the last Power Forward 2.02 report was issued in 2014. Forty-eight percent of Fortune 500 companies (240 companies) now have climate and/or energy targets, up 5 percentage points from the previous report. On average, companies reported an 81 percent success rate in achieving or exceeding their targets on time.

Bottom-Line Benefits

Pursuing and achieving clean energy goals has yielded financial benefits to these companies. Nearly 80,000 emissions-reducing projects were behind the $3.7 billion in savings captured by 190 companies in 2016 alone. Praxair, Microsoft and IBM are among the companies saving tens of millions of dollars every year through energy-efficiency efforts. Companies also decreased their annual emissions by 155.7 million metric tons of CO2 equivalent, which is equal to taking 45 coal-fired power plants offline for a year.

1 Science Based Targets Initiative: http://sciencebasedtargets.org/.
2 Power Forward 2.0: How American Companies Are Setting Clean Energy Targets and Capturing Greater Business Value: https://www.worldwildlife.org/publications/power-forward-2-0-how-american-companies-are-setting-clean-energy-targets-and-capturing-greater-business-value EMBARGOED.