Reducing cost is a key objective of large corporates. Put simply, green investment can make commercial sense when used to improve energy efficiency and waste management. Companies have found that adopting energy-efficiency targets have helped to save a lot of money.
Over recent years we have also seen an increasing amount of disclosure requirements in relation to greenhouse gas emissions globally, putting big business in the spotlight and drawing attention to the reputational risks of not being particularly ‘green’.
Efficient use of resources
Cutting costs is only part of the story. In an ever-growing world of scarce and finite resources, developing products and undertaking operations that use fewer of these resources will become increasingly valuable.
Equally, large corporates are getting better at using energy and resources more efficiently, taking advantage of real estate square footage and locally abundant natural resources. Many businesses in sunny climates, for example, opt for roof top solar panels on large manufacturing plants, or ground-mounted panels on adjacent land.
Going green and becoming environmentally-friendly has become more than just a trend. It is increasingly engrained into the DNA and culture of large business, important to employee and customer commitment.
Customers not only expect businesses to follow the green agenda, but also share knowledge of and discuss environmental issues via the internet and the media, and put immediate and widespread pressure on organisations to be environmentally-friendly using various social media platforms.
Companies therefore have the opportunity to build rapport with their customer base through green initiatives and investments. For many corporates this means setting internal renewable energy or greenhouse gas mitigation targets, which in turn is driving the uptake of PPA s as they are more efficient to reach internally mandated targets.
It is an obvious point, but one worth making. Beyond the purely economic reasons to go green, corporates can help to cut emissions and other gases to reduce global climate change and protect natural habitats. It is something that can make shareholders happy and create opportunities for employees of and suppliers to the organisation.
The Paris Agreement is a political landmark. Its mechanisms are prescribed at a high level (with much detail yet to be worked out) and with limited enforceability. Nevertheless, the agreement has symbolic significance. Notably, 196 nations have agreed to its language, and in doing so have acknowledged that controlling climate change requires a global mitigation plan.
It includes mechanisms and legal obligations which are specifically designed to support low emission and emission neutral investments (particularly through the finance provisions for developing countries and the non-developed countries (NDCs) review mechanism.
Significantly, it draws a pathway for the mitigation of global emissions – a pathway that will shape the demand and the relative support for various energy operations, including big corporates ever conscious of their carbon footprint, and therefore the uptake of Corporate PPAs.