The Estée Lauder Companies (ELC) has been committed to sustainability for many years and has made significant progress in reducing its carbon footprint. In 2020, the company achieved Net Zero carbon emissions and sourced 100% renewable electricity globally for its direct business operations.
ELC “has been deeply committed to climate action for many years and, in 2020, we not only stayed true to our commitments, but took steps to further accelerate progress. At such a critical time for our planet and communities around the world, we know this work is more important than ever” says Nancy Mahon, ELC’s Chief Sustainability Officer in a November 2020 online article by Fashion Network.
In a company statement from August of 2022, Mahon further noted that “The Estée Lauder Companies has a deep commitment to helping accelerate the transition to a low-carbon future, and the electrification of our corporate fleet is an important next step in our sustainability journey,”
ELC’s President and CEO, Fabrizio Freda, echoed these sentiments to the Fashion Network stating that “[i]n this decisive decade for climate action, we will continue to accelerate efforts to ensure a healthy, beautiful planet for generations to come.
Estée Lauder's Decarbonization Approach: Employing a Renewable Energy Portfolio Strategy.
There is no silver bullet. According to edie.net, reaching ELC’s Sustainability goals has required a number of different, but well-organized approaches requiring investments in energy-efficient technologies and processes, along with renewable energy. ELC established a foundation for its strategies when it joined the RE100 in 2017 and set an ambitious target to increase its renewable electricity sourcing from 45% in 2016 to 100% by 2020. CleanTechnica September 2017. Along the way, ELC employed a number of methods to achieve this target consisting of onsite generation and Virtual Power Purchase Agreements (VPPAs).
The result is an installation of more than 5MW of solar capacity globally on its rooftops and estates and a VPPA that provides 22MW from Oklahoma’s Ponderosa wind farm. For any remaining Scope 2 emissions not covered by the above, ELC procures Renewable Energy Certificates (RECs) where the onsite generation and VPPAs or PPAs are not viable options.
However, there are potential risks associated with maintaining ELC’s market-based accounting strategy to sourcing 100% renewable electricity. As the grid evolves and renewable energy penetration increases, the cost of solutions like VPPAs and PPAs is only expected to increase with higher demand.
The Potential of RECs with Additionality
Mitigating that risk while scalably achieving a way to maintain ELC’s 100% renewable energy claim could be just around the corner. An emerging option could include RECs with additionality in ELC's sustainability strategy. This could lead to further improvements in their progress. Additionality refers to the notion that renewable energy projects supported by RECs go beyond what would have happened in the absence of such support. By investing in RECs with additionality, ELC could further accelerate the transition to renewable energy by directly subsidizing the development of new projects at a fixed price, and without the lengthy term of a PPA or the risk associated with a VPPA. This approach would hasten the transformation of the grid and increase the speed at which renewable energy replaces fossil fuels.
Moreover, by incorporating RECs with additionality, ELC could address the potential challenges associated with procuring renewable energy as their business grows. The costs of procuring renewable energy can vary depending on the region and market conditions. Expanding their use of RECs with additionality can offer more flexibility and scalability, allowing ELC to cover their growing energy consumption while supporting the development of new renewable energy projects.
Make no mistake, ELC’s achievement of sourcing 100% renewable electricity is a testament to its unwavering commitment to sustainability. Through a combination of RECs, VPPAs, and on-site generation, the company has successfully reduced its Scope 2 emissions and paved the way for a greener future. However, considering the inclusion of RECs with additionality in their strategy, ELC could further amplify their positive impact by accelerating the transition to renewable energy sources, addressing costs and scalability, and ensuring the continued success of their sustainability goals.