In this series, we explain the basics of transitioning to renewable energy, from the emerging opportunities, options and impacts, to the process of implementing onsite or offsite solutions.
Corporations that choose to power their operations with renewable energy are on the bleeding edge of the industry. They’re choosing to endure some difficulty for the opportunity to switch to renewable energy -- they’re choosing the harder path. But why?
It turns out that switching to renewable energy has seven primary benefits for stakeholders inside the company. These benefits include:
The price of fossil fuels changes every day. This price fluctuation leaves traditional corporations vulnerable to rising prices. If civil unrest strikes in an oil-rich country tomorrow, most companies’ bottom lines will take a hit at the end of the quarter.
But renewable energy sources provide a safe and predictable alternative to the fluctuations of fossil fuels. Most renewable energy projects are developed under a contract that locks in a predictable or fixed cost over 10 to 25 years. This predictability reduces risk, and can create a competitive advantage when other companies are still vulnerable to fluctuating prices.
For companies with manufacturing operations in developing countries, grid reliance can be costly. Blackouts can shut down assembly lines for days at a time, and then take several more days to get back up to full production. This can cost companies hundreds of thousands of dollars in lost production.
However, manufacturing facilities powered by onsite or offsite renewable energy can remain unaffected by grid failures. As long as the sun keeps shining and the wind keeps blowing, factories can remain in full production. We’ll talk more about onsite and offsite production in a later post.
Energy efficiency measures require an analysis of the full scope of operations within a building. By examining the entire structure’s environment, and exploring opportunities though a systems-thinking approach, businesses often find beneficial solutions outside the realm of energy consumption. By seeking to implement energy efficiency solutions, operations overall can improve.
According to a Nielson study, 66% of consumers are willing to pay more for a brand they view as sustainable. Millennials now make up the fastest-growing segment of consumers, accounting for over $1 trillion in U.S. consumer spending, and 81% of Millennials say they expect corporations to commit to good corporate citizenship. By implementing renewable energy programs, and marketing those measures to the public, it’s possible for a company to boost its brand and increase sales.
Recent research in the UK shows that 42% of the workforce wants to work for a company that has a positive impact on the world. The same research found that 44% of employees felt that doing meaningful work was more important than a higher salary, and 36% would work harder for a company that was doing good for society. And those numbers are even higher among Millennials -- 10-20% higher on each measure.
This research is backed up by Fortune Magazine’s annual ranking of “Great Places to Work,” which shows Millennials are much more likely to stay at a company with a larger social purpose. Investing in renewable energy is a concrete way to demonstrate to current employees and job seekers alike the commitment a company has to its values.
Many corporate executives are conscious of the legacy they’ll leave behind after their term is over. With the public’s attention shifting towards the negative impact that large corporations historically have on the environment, many executives are hoping they’ll be remembered for shifting that narrative.
Sustainability is an ideal path for legacy-building because it’s inherently long-term. Efficiency upgrades, solar panels, and wind farms positively impact a company’s bottom line and public perception for years to come, and executives that approved the measures will inevitably be remembered in a positive light.
Shareholders are increasingly aware of the risks posed by reliance on fossil fuels. Companies who have been delisted from the Dow Jones Sustainability Index have seen a drop in share prices. Some institutions that are too reliant on coal have been deemed uninsurable. As the predictability of renewables increases, and the risk of fossil fuels is recognized, companies invested in sustainable energy will no doubt see rewards in their share prices.