This Small Accounting Tweak May Boost Demand for Renewables

  • CDP will start crediting companies that buy green certificates
  • Change may spark fresh investment in wind and solar power

A small change to the way companies report their carbon footprint could spark fresh demand for renewable energy.

CDP, the consultant formally known as the Carbon Disclosure Project, will start giving greater recognition to businesses that buy renewable energy certificates, not just those who invest in building new wind farms and solar parks, said Pedro Faria, CDP’s technical director.

The London-based non profit group each year scores companies on how they measure environmental risk, giving points for transparency as well as greenhouse gas reductions. Its independent rankings are meant to guide investors seeking information on the greenness of their holdings. Higher scores are granted to companies more prepared for the impacts of climate change and a carbon-constrained world.

In the past companies, shied away from revealing how much renewable energy they buy through certificates, fearing they will be accused of “greenwash.” New CDP rules due to be published in the coming weeks will start rewarding companies that report on their purchases of renewable energy. In the future, they will get points for the amount of green energy they actually buy. CDP is eventually expecting to reward businesses that set a target for 100 percent renewable energy too, said Faria in an interview.

“We think the changes in the reporting will incentivize more companies to buy renewable energy, and the fact that we will score the level of transparency will incentivize more companies to disclose,” he said. 

CDP’s tweak comes after a similar change last year by the Greenhouse Gas Protocol, which sets international standards on the correct way to calculate carbon footprints of products and organizations.

“We do hope these various incentives will be enough for more corporates to want to pay the premium for renewable energy, but only time will tell,” said Paul Swift, a consultant for the Carbon Trust, a British research group. “Then, if they do, whether they will do so in sufficient numbers to have an impact on the price and development of renewables is another uncertainty.”