Workday, Inc. (Workday) is a leading provider of enterprise cloud applications for finance and HR with solutions focused on planning, spend management and workplace analytics.. The company was founded in 2005 by software visionaries Aneel Bhusri and Dave Duffield, with the goal of revolutionizing the enterprise software market. Today their operations span globally, with a focus on sustainability and environmental responsibility. The company is committed to environmental stewardship and has set goals to reduce its carbon footprint, invest in renewable energy, and responsibly dispose of e-waste.
In their joint letter to the company and their stakeholders, Co-CEOs Carl Eschebach and Aneel Bhusri explained in Workday’s 2023 Global Impact Report that the company is “committed to doing our part to create a more sustainable future. Our approach spans Workday’s operations and how we can help our customers meet their sustainability goals. As part of our climate strategy, we’ve continued to match 100% of the electricity used at our global offices and data centers with clean, renewable sources, and we provide our entire customer community with a carbon-neutral cloud. While we’re proud of the work we’ve done already to mitigate our environmental impacts, we know there’s more to do.” Because of these top down commitments, Workday has made significant efforts to reduce its carbon footprint and transition to renewable energy sources. The company set science-based emissions reduction targets aligned with keeping global warming to 1.5°C above pre-industrial levels. In 2020, Workday achieved its goal of operating on 100% renewable electricity, making it one of the first companies to achieve a lifetime net-zero carbon footprint.
A Comprehensive Strategy with Renewable Energy As Its Focus
Workday has had an evolving sustainability journey that really took shape as early as 2008. That’s when they first decided to prioritize consumption of 100% renewable electricity. To reach that target, Workday has invested in clean energy projects and supported the development of renewable energy sources. Specifically their strategy includes the use of onsite generation, supplier sourced renewable energy, long term renewable energy investments like virtual power purchase agreements (VPPAs), utility green tariffs, renewable energy certificates (RECs) and public policy efforts to push local and state governments to drive renewable energy progress.
However, it’s their VPPA approach that shows their innovation. In 2018 the company signed the first ever “small buyer aggregated” VPPA. To do this they partnered with Bloomberg, Cox Enterprises, Gap Inc., and Salesforce to invest in a single renewable energy project called BayWa. Together the companies contracted to procure about 50% of the 100 MWh solar farm in North Carolina. We’ve noted before that the aggregated approach is relatively novel and rare as it allows companies to share a piece of a renewable energy project while limiting their exposure. See our previous article on Etsy. The benefits of this approach are that it allows the group to lean on the collective buying power of the other organizations in order to optimize procurement terms and process. "We believe that every business should be an active and committed participant in supporting the adoption of renewable energy," said Carrie Varoquiers, Workday’s Chief Philanthropy Office. "This project is a great example of the impact companies can make through strategic partnerships, and it aligns with our commitment to provide Workday customers with a carbon-neutral cloud globally."
In his 2022 blog, Workday’s Head of Global Environmental Sustainability noted that the company feels this aggregated approach creates a blueprint “for smaller energy buyers to engage in similar aggregation projects to achieve the large-scale impact that traditionally only the largest corporate buyers could achieve.” He pointed out that success in this effort has allowed Workday to advance exploration of procuring another VPPA. Varoquiers elaborated on this new project in her own 2022 blog stating that it will involve the Workday Foundation’s investment of $1 million in upskilling people for green jobs and a (VPPA) that will convert a reclaimed coal mine into a solar farm. “Our vision is to enable a one-to-one transition: Workers who have lost their jobs in coal can take advantage of retraining programs for solar jobs in the same community.”
The Impact of RECs with Additionality
While Workday’s commitments to procure 100% renewable electricity are highly laudable, and their procurement approach is quite innovative, there are still potential risks to consider. These include the consistent availability and reliability of renewable energy sources, as well as potential increases in costs over time. To mitigate these risks, Workday could consider including Renewable Energy Certificates (RECs) with additionality in its strategy.
In particular RECs with additionality could help Workday mimic its aggregated small buyer approach. Instead of seeking partners to help them procure renewable energy from one project at a time, Workday could consider purchasing RECs with additionality from a number of different projects. This would entail using a market based approach where Workday could set a fixed price for RECs from only new (pre-commercial operation) renewable energy projects. The impact would allow them to join other buyers in the market as they set fixed prices at scale across a wide number of projects looking for financing by selling RECs with additionality. As the market grows with more and more buyers and suppliers, this would help the grid change more rapidly to renewable energy sources by providing additional financial support for more and more new renewable energy projects. The result would also increase Workday’s buying power while helping to mitigate costs over time associated with continued renewable energy procurement. This procurement methodology would easily provide scale to Workday’s emission reduction strategies, covering increased consumption of electricity as the company grows without having to continually look for single projects to invest in. All of this would allow Workday to continue to continue a renewable energy procurement strategy that enhances its environmental impact, and its sustainability marketing claims intended to contribute to the overall transition to a net-zero future.
Notwithstanding, Workday’s sustainability commitments and renewable energy procurement efforts are highly impressive. So, they should be referenced by others seeking to procure renewable energy in an effort to source 100% renewable electricity as a mitigation strategy for their Scope 2 emissions.