When Green Century first engaged Verizon Communications, the company sourced 2 percent of its energy from renewable sources—and had a goal to increase that amount to 4 percent by 2025.

We thought 4 percent was the wrong number for Verizon, the largest telecommunications company in the country. Starting in 2016, therefore, we sent letters of inquiry and filed shareholder resolutions asking the company to address its climate risks and reduce its carbon footprint. In November 2018, we filed our third shareholder resolution with the company, urging it to increase the pace of its renewable energy commitments and explore how it might reduce its exposure to the material risks associated with the use of fossil fuel-based energy.

In spring 2019, we met with Verizon executives and detailed the benefits and cost competitiveness of renewables. We pointed out that T-Mobile had adopted the RE100 pledge in 2018, committing to 100 percent renewable energy by 2021, and AT&T had announced “one of the largest corporate renewable energy purchases in the U.S.” Meanwhile, an environmental organization was waging its own renewable energy campaign aimed at the telecommunications industry, raising the reputational risk for the companies.

We withdrew the resolution when Verizon announced a new commitment to source 50 percent of its entire electricity usage from renewable energy sources by 2025. 

Verizon is one of the largest energy consumers in the United States, so this commitment represents significant progress. In fact, it should prevent the annual release of approximately 2.3 million metric tons of carbon dioxide—the equivalent of taking nearly 500,000 cars off the road. 

The commitment also represents a success for the company and its shareholders. In addition to obvious environmental benefits, there are sound financial justifications for sourcing more renewable energy, because the economics around renewables have changed dramatically in the last decade. Renewable energy is now cost-competitive with conventional fossil fuels. In the last decade, the price of wind energy plummeted 70 percent and solar photovoltaics collapsed 89 percent, according to Lazard’s 2019 Levelized Cost of Energy report. By increasing its use of renewable energy, Verizon also may reduce its exposure to reputational risk and volatile energy prices.

Verizon is not the first corporation to decide to reduce its energy costs, carbon footprint and exposure to business and reputational risks by using more renewable energy to meet its business needs. In 2019, corporations in the United States purchased twice as much renewable energy as in the previous year, which had nearly doubled from the year before.  Progress is being made, but there’s still a long way to go.

Approximately 83 percent of the energy used in the United States in 2018 came from fossil fuels or nuclear energy, with just 17 percent attributable to renewables. The quicker we transition to a clean-energy economy, the better chance we have of avoiding the most catastrophic effects of the climate crisis. Corporate commitments, such as Verizon’s, are critical to maintaining the momentum to that transition.

Leslie Samuelrich
President, Green Century Capital Management