Global Corporate Renewable Energy Index 2011 (CREX)

Executive Summary

The world’s largest corporations have become increasingly important in promoting the deployment of renewable energy sources across the globe. This report brings transparency to these corporate actions and ranks companies according to their voluntary renewable energy procurement over the last two years. The ranking is called the global Corporate Renewable Energy Index (CREX).

Global investment in clean energy surged to a record $243bn in 2010 – a 30% jump from 2009 levels of $186bn despite the lingering impacts of the worldwide recession. 1 Much of the growth in clean energy investment in 2010 was mandated as developers and utilities sought to comply with targets or emission reduction requirements. However, there was also another driver: motivated by corporate sustainability efforts, companies around the world have sought to purchase clean energy to power their facilities and to reduce their environmental impact.

The voluntary markets for renewable energy procurement have grown briskly in recent years but there has been little transparency on their size or participants. This report aims to fill this gap by quantifying and communicating corporate investments in renewable energy through the global Corporate Renewable Energy Index . 2

The results are based largely on responses to an online survey conducted by Bloomberg New Energy Finance of the world’s 1,000 largest companies by market capitalisation. 3

The CREX represents the most comprehensive snapshot to date of corporate voluntary renewable energy purchases. As the survey depended on voluntary responses, it is not wholly comprehensive and as only the largest companies were canvassed, the survey has an inevitable tilt toward the developed world where these organisations are headquartered. Figures relate to the years 2009 and 2010, corresponding to two iterations of the survey, and will be updated on a regular basis going forward. With more than 100 responses for each of the two iterations, the survey is the largest and most global ever conducted to measure this corporate activity.

The voluntary purchase of renewable energy is increasing, but for most companies it only meets a few percent of their total electricity needs

•Renewable energy accounted for 8.2% of respondents’ annual electricity consumption in 2009 and 12.1% in 2010. Of the companies for which we have 2009 and 2010 data, 74% increased their procurement from one year to the next.

•The percentage of electricity consumption sourced from renewables ranged from zero to more than 100%, but more than 40% of companies met less than 5% of their power consumption with renewables. Generally, the more electricity a company consumes, the smaller the percentage of renewable energy it buys voluntarily – most likely due to the price premium of renewable power.

Wind is by far the most popular renewable energy source:
•Companies regularly purchase renewable energy voluntarily to publicise their corporate social responsibility, but 30% of respondents did not know or did not disclose which technology (wind, solar, biomass, etc.) was responsible for the renewable energy they consumed in 2010.

•Wind was by far the most popular renewable energy source for companies that knew how their renewable energy was generated. The technology represented 51% of renewable procurement covered in the survey, compared to 1% for solar, 11% for biomass, 14% for hydro, 10% National blend, and 14% Other. Over 6,083GWh of wind power was procured by companies in 2010 – approximately equal to 2.05GW of installed wind capacity – and up from 5,517GWh in 2009.

Overall, Europe appears to favour renewable electricity more than other regions, but the top companies are distributed evenly between Europe and North America

•Although most respondents to the Bloomberg New Energy Finance survey came from the US, those based in Europe sourced on average the largest amount of their electricity from renewable sources. The 25 European respondents met 40% of their electricity needs through voluntary purchases of renewable energy. The 48 US companies said they met 22% of their needs with renewables and those from Japan (12) averaged a 3% renewable energy purchase rate.

• The five companies with the largest absolute renewable electricity procurement in 2010 were Intel Corporation, Kohl’s Corporation, CLP Holdings, Whole Foods Market, and Koninklijke KPN. In 2009 these were Deutsche Telekom, Intel Corporation, PepsiCo, BT Group and Kohl’s Corporation.

• The companies with the largest share of renewable electricity procurement in their respective sectors in 2010 were Plum Creek Timber (basic materials), News Corp (communications), Kohl’s Corporation (consumer goods), CLP Holdings (energy & utilities), Toronto- Dominion (TD) Bank (financial services), Vestas (industrial), and Adobe Systems

The predominant method of procuring renewable energy is through renewable electricity certificates

•More than 80% of all renewable electricity purchased in 2009 was done via renewable electricity credits (RECs), either via the market or directly from renewable projects. RECs are popular as they are generally in sufficient supply and available at reasonable prices. Contracting renewable electricity through a green pricing programme offered by a power supplier was the second most popular method.

• Only a limited amount of renewable energy was purchased from projects that were directly financed by the company (1% in 2009 and 0.6% in 2010). Direct project finance is relatively time-intensive and costly when compared to other forms of renewable energy procurement.

From a shareholder perspective, CREX constituents have historically outperformed their peers

•Over the past three years, companies that have a dedicated effort in place to procure renewable electricity (CREX constituents) have substantially outperformed its benchmark, with a cumulative performance of +24.7% against -12.6% for the MSCI World Index over the past three years. This outperformance also holds up when considered over ten year, five year, and one year periods. Although the correlation is very interesting and certainly valid, it does not imply that these activities have caused this outperformance. In fact, the inverse might be more likely: healthy businesses may be more inclined to undertake renewable procurement.

Please download the full report for more detailed analysis.

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