Home Depot and 3M commit to renewable energy following investor engagement

Leading US firms respond to shareholders

In December last year, DIY/home improvement chain Home Depot announced its commitment to producing 135MW of renewable energy annually by 2020. Of this total, 100MW will come from wind and solar power and 35MW will come from fuel cells. A very brief announcement of the commitment was made in a press release on 21 December. Like many such commitments, this was driven not simply by the company’s belief that renewable energy sources might be good for its bottom line but by shareholder activism. Early in 2015, investment management firms Trillium Asset Management and Zevin Asset Management co-filed a shareholder proposal calling for quantifiable targets to be set for renewable energy sources. The co-filers then withdrew the resolution on 5 March when Home Depot agreed to set targets.
However, it is difficult to understand how significant an announcement to source 135MW of power from renewable sources is. To put the commitment into context, Home Depot confirmed that this would represent about 608,000MWh – some 15% of their projected energy usage annually. Most of the alternative power will be procured from elsewhere, though some wouldl be generated by the company. At the same time, the company announced a 20 per cent target reduction (from 2010 levels) in energy use by 2020.In a statement regarding the announcement, Brianna Murphy, Trillium’s Vice President Shareholder Advocacy and Corporate Engagement, said: “In setting – and ultimately reaching – their renewable energy goals, Home Depot will reduce emissions while also reducing the company’s exposure to volatile energy prices. The company’s leadership on the issue has the possibility of driving significant change in the demand and consumption of clean energy.”
This is not the first success for Trillium in this area. A month before withdrawing the Home Depot resolution a similar proposal was withdrawn at conglomerate 3M because it had committed to, in fact, a much higher goal than Home Depot’s: “Increase renewable energy to 25% of total electricity use. Nearly 800,000MWh of renewable energy use will be added globally. The primary sources of renewable energy will be wind and solar.” To meet these goals, 3M said that it will use a “mix of on-site production and long-term Power Purchase Agreements (PPA) with specific renewable energy projects.” As well as the renewable energy goals, 3M announced in its 2015 sustainability report that it would reduce greenhouse gas (GHG) emissions to at least 50 per cent below its 2002 baseline over the next 10 years.
“This is the first renewable energy goal for both companies and I think we’ll see significant progress over the next few years ultimately leading to even more ambitious goals over time,” said Murphy in an e-mail to Responsible Investor.