Sustainability leaders are continuing to evaluate their renewable energy strategies in light of new SEC climate disclosure mandates. As outlined in SEC Climate Disclosure, companies designated as large emitters are required to disclose their climate impacts by 2026. One critical element to reconsider is the renewable energy narrative your company will present to investors in 2026, reflecting decisions you are making in 2024, and why it may be important to act now to deliver on your desired narrative
Additionality: Key to Leading the Renewable Energy Narrative
To meet the bar set by industry leaders such as CISCO and Clorox, who have made significant virtual power purchase agreements (VPPAs) for renewable energy, your strategy will need to focus on "additionality." This term, as defined by the Greenhouse Gas Protocol, emphasizes the importance of demonstrating that your renewable energy investments are leading to new project developments that would not have occurred otherwise.
Preparing a Positive Renewable Energy Story for 2026
To ensure that in 2026, you can share a compelling story of how your actions have directly contributed to bringing new renewable energy sources to the grid—thereby combating climate change and addressing the Scope 2 emissions from your grid energy usage—it's critical to explore your options today.
The Timeline and Risks of PPAs and VPPAs
Implementing power purchase agreements (PPAs) or virtual power purchase agreements (VPPAs) can take anywhere from 12 to 24 months. These are complex agreements that not only require time to execute but also expose your company to significant energy market risks. By the year 2025, many projects that could attribute environmental benefits to your company might already have their RECs spoken for, highlighting the urgency to act now.
Exploring the AREC Market: A Simpler Alternative
For those who are particularly concerned about the volatility of energy pricing associated with traditional VPPAs, the Additionality Renewable Energy Certificates (AREC) market offers a promising solution. This approach allows companies to support new renewable energy projects without the direct risk tied to fluctuating energy prices. By investing in ARECs, you can still claim additionality and demonstrate a clear, measurable impact on renewable energy development, in the most easy and efficient way possible.
As we move closer to the 2026 SEC climate disclosure deadline, it’s imperative to strategize and invest in renewable energy initiatives that not only comply with new regulations but also set your company apart as a leader in sustainability. Exploring diverse options like the AREC market will be essential in mitigating risks and maximizing the impact of your renewable energy investments.
The actions you choose today will define the sustainability story you tell tomorrow.
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