Corporates are setting sustainability goals they don’t know how to achieve


A new report by Black & Veatch and the GreenBiz Group explores how global corporates are setting their sustainability goals and the measures being implemented to ensure these goals are achieved. The report has identified seven key trends associated with corporate sustainability goals, the most salient of which is that corporates are setting goals they don’t yet know how to achieve.

1. Increase in goal setting yet there are no clear roadmaps

As the energy transition accelerates and calls for decarbonisation intensify under efforts to address climate change, companies globally are increasingly including sustainability as a core element of their businesses. However, although many companies are setting sustainability goals, the majority of them do not have a clear understanding of how to achieve these goals.

More than 80% of companies with revenues greater than $250 million surveyed by Black & Veatch have set greenhouse gas reduction goals, but 25% are unsure how they will achieve these goals. The study has found that the solutions currently on the market may not be able to help corporates to achieve the sustainability targets they are setting.

Rob Wilhite, leader of Black & Veatch’s distributed generation services team, said: “This report confirms that sustainability strategies increasingly are becoming complex and require companies to consider operational planning views that can extend for decades.

“With decarbonisation a critical element, roadmaps will help companies set realistic targets in the short and medium terms while offering the flexibility and agility required to comply with complex regulatory changes and rapidly evolving technology.”

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2. Electric vehicles (EVs) an important element of corporates’ sustainability achievement

With the transport sector accounting for a large share of the global greenhouse gas emissions, corporates are investing in decarbonising their fleets by buying EVs and ensuring there is adequate charging infrastructure on-premises to encourage adoption by their employees as well. The transport sector accounts for around one-fifth of global carbon emissions with road traveling accounting for three-quarters of these emissions. The International Energy Agency projects these emissions to increase as the demand for transport also expands and more and more people afford to own cars. However, corporates are increasingly becoming aware of the benefits EVs can bring to their sustainability with more than 50% of the companies with revenues over $1 billion surveyed by Black & Veatch highlighting that they are piloting EVs.

Pietro Fiorentini, a smart meter manufacturer based in Italy recently received some VW EVs as part of efforts to reduce its carbon footprint, Commenting on the development, Mario Nardi, CEO of the Pietro Fiorentini Group, said: “We expect that our investment, in terms of the total cost of ownership, will have a satisfying return in a short time.

“That said, this specific project was not just about seeking an economic benefit, it was about the desire to move towards a greater environmental responsibility by changing the culture of mobility in the Company.”

Shell has highlighted that EVs will be crucial in its efforts to lower carbon emissions as the company seeks to have 2.5 million charging points by 2030.

3. Data-driven energy and water management vital to sustainability

Energy efficiency has been identified as a critical mechanism to accelerate the energy transition and reductions in carbon emissions owing to its ability to reduce demand on grid networks. Energy efficiency can help energy companies to speed up their renewable energy infrastructure development and retirement of conventional energy generation plants. Reductions in energy demand would help utilities to address the intermittency of renewable energy and ensure the baseload power demand is not as huge as it might be without energy efficiency mechanisms in place. More than three-quarters of companies with revenues of at least $10 billion surveyed are using analytics to reduce energy and water usage, as are more than half of all other companies.

4. Companies funding sustainability projects using capital expenditure and operating expense

Owing to the importance of reducing carbon emissions, companies have incorporated sustainability programmes into their day-to-day business operations and as such are using capital expenditures and operating expenses to fund these projects. The study has also found green and sustainability bonds gaining traction. In 2020, the green bonds market passed its greatest milestone by reaching more than $1 trillion in issued bonds since the mechanism emerged in 2007. In 2020 alone, more than $200 billion in green bonds was issued and large international investors are expected to continue to issue bonds directed to climate mitigation in the following years.

5. Investors influencing corporates to go green

Corporate management and investors are the top stakeholders driving sustainability commitments, far outweighing other influencers such as customers or regulators, the study has found. For instance, although the UK government is one of the leading countries that have set ambitious climate change targets, Britsh company bp is not only aligning its operations with the UK targets. Since the company operates globally, one can argue that targets set by the group’s investors are the ones driving the firm’s sustainability programmes. bp is embarking on various clean energy projects in multiple countries and has set a target to deploy 50GW of renewables capacity by 2030 by increasing its annual investments in low-carbon energy technologies by 10 times to $5 billion.

6. Corporates want to do business with climate-friendly companies

Of the survey’s largest companies – those with revenue exceeding $10 billion – two-thirds have set Scope 3 emissions targets, reflecting the growing trend to influence emissions of other companies and activities in their value chains.

7. Corporates using a combination of energy efficiency and renewable energy

Greenhouse gas reductions through the combination of energy efficiency and renewable energy sourcing are viewed as essential for many large companies. Given that enterprise-level power assets can have operational horizons that span decades, companies setting or adjusting targets must understand all options available to them to avoid getting locked into one technology path. By having a clear understanding of technology maturity and cost, as well as the changing regulatory environment, companies can avoid these pitfalls.

Despite all the efforts corporates are putting in to reduce their emissions, the study reiterates that it will take time to transition to green operations. However, innovative technologies already on the market such as low- and zero-emissions power generation, alternative-fueled vehicles and advancing energy storage have the probability to help corporates move closer to their sustainability goals.

Black & Veatch has urged corporates to identify their impact on the global carbon cycle, comprehend the associated climate risks and identify opportunities to conceive, update or alter their decarbonisation roadmaps.

The report is available for download.