No fake news: accurately promoting your renewable energy purchase
This article is sponsored by 3Degrees.
The push for companies to incorporate renewable energy commitments into their sustainability goals has continued to grow over the past few years. Companies are getting pressure from stakeholders at all levels — employees, environmental advocates, investors, customers — to double down on their environmental commitments and in particular, increase their use of renewable energy. Here are just a few examples:
- The RE100 initiative calls on companies to make commitments to 100 percent renewable electricity.
- The EPA’s Green Power Partnership continues to rank companies based on their renewable energy procurement.
- Since 2010, Greenpeace has developed an annual clean energy index, ranking tech companies on their energy performance, grading them on a range of factors including their environmental commitments, renewable energy procurement and energy transparency.
As a result of these initiatives and others, over 60 percent of Fortune 100 companies have set clean energy targets as well as nearly half of the Fortune 500, according to World Wildlife Fund.
With this growing commitment, it is not surprising that a growing number of companies want to report on and even promote these investments in renewable energy. Stakeholders have asked them to use more renewable energy in their operations and companies want to let those stakeholders know that they heard them and took action.Over 60% of Fortune 100 companies have set clean energy targets as well as nearly half of the Fortune 500.
The dangers of inaccurate marketing claims
But it is important to talk about renewable energy purchases accurately. Here’s why:
- Legal risks: Companies that inaccurately promote their commitment to renewable energy run the risk of violating state and federal regulations and may be subject to litigation from state and federal agencies.
- Reputation risks: Companies that make false claims may be accused of greenwashing and lose the trust and loyalty of employees, customers and other stakeholders.
- Industry risks: Inaccurate claims can cause the public to distrust the value of renewable energy procurement, potentially reducing future demand for renewable energy.
So how do you avoid making inaccurate statements about your renewable energy commitment? First, you need to understand an important concept: renewable energy certificates.
Renewable energy certificates: ownership is key
When renewable energy is generated, two products are created — the actual energy that goes onto the electric grid and the environmental attributes of the energy. These products are separate and distinct and can be purchased either together or separately. In the United States, the environmental attributes of the energy are embodied in a renewable energy certificate (REC), a legal instrument that gives the owner the right to claim the environmental attributes associated with the renewable energy, including the right to claim renewable energy use. One megawatt hour of renewable energy generation creates one REC and RECs are uniquely numbered and tracked so as to avoid double counting or multiple claims on an individual REC. RECs are created and tracked for all grid-connected renewable energy projects, and they are often monetized and claimed by someone.
As a reminder, all power you purchase from your utility comes to you through the electric power grid. No matter what the source of that energy — coal, natural gas, wind or solar — it is all mixed together on the grid and it is impossible to differentiate based on generation source. This physical reality makes RECs necessary because buying RECs is the one way you can contractually purchase renewable energy and are required even if you have wind or solar facility onsite.One megawatt hour of renewable energy generation creates one REC and all RECs are uniquely numbered.
Accurately marketing your renewable energy actions
The key to making appropriate claims is understanding the contractual ownership of renewable energy. Importantly, in order to claim the use of renewable energy, you must own the RECs. Check your contracts carefully to understand if you own the RECs so that you can determine what you can and cannot say about your purchase. When you are negotiating contracts, make sure that you get the RECs if you want to be able to claim the use of that renewable energy (you may still be able to claim the support of renewable energy if you don’t own the REC).
Once you confirm that you own the RECs, you also must:
- Use language that is clear to the average consumer.
- Be accurate about quantity and time frame of purchase.
- Be very careful about claims of products made with 100 percent renewable energy.
Making an investment in renewable energy is becoming more common, but it is still not the norm. So, when your company does make the decision to invest in renewable energy, it is something to celebrate, something worth talking about. Just make sure you are doing so accurately, to protect your organization, support your stakeholders and support the market for renewable energy.The key to making appropriate claims is understanding the contractual ownership of renewable energy.
This article was adapted from our recent white paper, "The do’s and don’ts of marketing your renewable energy purchase," which provides more tips on how to accurately promote your investments in renewable energy and specific landmines to avoid.