While the news has been heavy with reports on the US government’s de-emphasis on the environment, the benefits of solar energy remain unchanged. There may be less top-down pressure on companies to go carbon neutral, but customers and investors increasingly demand a triple bottom line commitment.
Climate Change and Business Strategy are Hard to Untangle
Companies across America have come to the following conclusion: climate change is real, and it’s going to affect the way that they do business. A good example of this was a few years back, when Chipotle released a version of its annual report with an added caveat: if climate change leads to increasing droughts, then the price of water-intensive crops such as avocados would inevitably rise. In other words, they predicted that climate change could force them to stop selling guacamole.
While this warning was initially snarked at by some commentators, other companies have begun to quietly follow suit.
- Ski resorts in New England have begun changing their business models to account for inconsistent weather patterns.
- Heineken, the Dutch beer conglomerate, has begun integrating its sustainability report into its annual report—an indication that its investors care about environmental impacts.
- Even the oil giant ExxonMobil is lobbying the United States government to remain in the landmark Paris climate accord and impose a tax on greenhouse gas emissions.
There’s really no way for companies to conceal the fact that climate change will also change the way they do business. If a business operates a ski resort, but doesn’t tell investors what it plans to do if the snow stops falling, those investors might believe that the business is not operating in good faith. But what does this have to do with the benefits of solar energy?
Companies Can Be Part of the Solution
Investors may be happy when companies acknowledge the risk of climate change in their annual reports—but they may be happier if those companies say they’re doing something about it by reducing their carbon footprint. A single company converting to solar power isn’t going to solve a planetary crisis on its own, of course. Nonetheless, when a company is threatened by climate change, the business case for solar goes hand-in-hand with its environmental benefits.
When a crisis emerges that may threaten a company’s ability to profit, what’s the first commonsense step that companies take? They cut costs. For many organizations, switching to solar represents a definite cost cut. Under the right circumstances, a commercial solar panel system can significantly reduce or even zero out a company’s energy bill.
Secondly, there’s a strong customer consideration. Nearly every day brings another article outlining the marketing benefits of solar energy. Companies that brand themselves as sustainable can attract younger and more conscientious customers who are willing to pay more for products that are environmentally sustainable and carbon neutral.
Essentially, cutting down on greenhouse gas emissions by switching to solar energy could be the difference between telling investors this:
“Climate change may negatively affect our revenue. Unfortunately, there’s nothing we can do about it.”
“Climate change may negatively affect our revenue. As a response, we’ve cut our energy costs by switching to commercial solar. By rebranding ourselves as a sustainable business, we intend to attract a younger and more environmentally-aware consumer base that will pay more for our product. We can’t solve climate change on our own, but we’re happy to be a part of the solution.”
Bottom Line: Major Investors Are Deeply Concerned with the Climate
The world’s largest investors agree: the environmental impact of solar power also benefits business. Jeremy Grantham, the founder of GMO, and the manager of over $118 billion in assets, believes that investment in sustainable business is paramount to the future of the planet. Both BlackRock and State Street Global Advisors, with over $7 trillion in assets between them, have followed suit in this commitment.
If your company’s investors are part of the strong majority who believe in fighting climate change, it’s now more important than ever to embrace the many benefits of solar. Not only will a solar investment potentially boost investor confidence, it also does its part to forestall changes that may one day crimp their ability to make money.
This post originally appeared on the SunPower Business Feed.