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Heartened by net-zero pledges, advocates look for corporate climate action

SNL Image

Solar panels on the roof of The Heineken Co.'s brewery in Den Bosch in the Netherlands.
Source: The Heineken Co.

A flurry of promises last year to eliminate corporate emissions of carbon dioxide set high hopes that the business world will help lead the fight against climate change. Observers now are watching to see how companies deliver.

"2020 was the year of net-zero pledges," said Ilesh Patel, head of global strategy and markets for energy and resources at Baringa Partners, a consultancy, said on a Jan. 27 webinar. "Now's the time to begin that kind of strategic and operational focus for those companies ... on embedding climate change into investment decisions."

By one measure, corporations entered 2021 on solid footing. Despite the economic downturn caused by the coronavirus pandemic, more than 130 companies signed contracts last year for a record 23.7 GW of clean energy, an 18% increase from 2019, according to research firm BloombergNEF.

"To not only maintain, but grow, the clean energy procurement market under these conditions is a testament to how high sustainability is on many corporations' agendas," BNEF Senior Associate Kyle Harrison said in a statement. "Companies in all sectors, including hard-to-abate ones like oil [and] gas and mining, are feeling the pressure to purchase clean energy and decarbonize. This group is only just scratching the surface on the amount of clean energy build it can catalyze."

However, Larry Fink, chairman and CEO of BlackRock Inc., the world's largest asset manager, worries that businesses could be caught wrong-footed as the transition to a "net zero world" accelerates. In his annual letter on Jan. 26, Fink urged corporate executives to disclose how their businesses are preparing for an environment in which greenhouse gas emissions are eliminated by midcentury.

"As more and more investors choose to tilt their investments toward sustainability-focused companies, the tectonic shift we are seeing will accelerate further," Fink wrote. "And because this will have such a dramatic impact on how capital is allocated, every management team and board will need to consider how this will impact their company's stock."

'Meaningless greenwashing'

The Sierra Club recently took aim at utility companies that the environmental group says are failing to align their investment strategies with the broader push toward decarbonization.

"Many utilities have stated climate goals. However, those goals are meaningless greenwashing without utilities taking the necessary actions to decarbonize," the Sierra Club wrote in a Jan. 25 report entitled "The Dirty Truth About Utility Climate Pledges."

"With few exceptions, utilities' current clean energy commitments are not sufficient to solve the dual crisis of climate change and pollution."

Duke Energy Corp., one of the utilities with a net-zero goal that was named in the Sierra Club report, pushed back against critics who have called for a swift end to fossil fuel generation.

"The scenario of building no new natural gas sounds simple, but it's the most expensive option for our customers and actually requires coal units to operate longer," a Duke Energy spokesperson wrote in a Jan. 26 email to S&P Global Market Intelligence. "It also relies heavily on emerging technologies and could present challenges in reliability for the families, businesses and industries who rely on us."

Still, corporate customers continue to demand clean energy to power their operations.

NextEra Energy Inc., which owns the largest producer of wind and solar power globally, on Jan. 26 raised its projection for renewable energy development through next year and said it expects to have its largest construction program ever in 2023 and 2024 as the company moves to capitalize on rising demand for clean energy.

"We anticipate our development program to be further enhanced by an ability to attract new nontraditional customers, particularly in the commercial and industrial sector, as improving renewable economics are increasingly aligned with corporate objectives to procure energy from clean generation sources," NextEra Chairman, President and CEO James Robo told analysts Jan. 26.