As businesses set ambitious emission reduction goals, many are looking beyond their own operations to reduce their overall carbon footprint. As discussed in our last blog post, decarbonizing electricity consumption in the value chain is an accessible starting point due to the availability of multiple renewable electricity procurement options. One particular strategy gaining traction is to procure Renewable Energy Certificates (RECs) on behalf of others to decarbonize electricity use in a company’s value chain. But why would a company take this step, and how can they ensure credibility in their claims?
Supporting Upstream Suppliers’ Transition to Clean Energy
For companies with complex supply chains, relying solely on suppliers to independently procure renewable electricity may significantly delay progress towards corporate sustainability targets. Many suppliers may face barriers such as limited expertise, financial constraints, or a lack of motivation to make the transition. By purchasing RECs on behalf of their suppliers, companies can accelerate the transition to renewable energy, set a strong example, and pave the way for suppliers to take independent action in the future.
Encouraging Downstream Customers to Green Their Electricity Use
On the end user side, many customers are unaware that they can voluntarily account for their electricity use by purchasing renewable energy. Even when aware, navigating the procurement process can be challenging for individual users. Companies can address this gap by procuring RECs on behalf of their customers, enabling them to reduce their carbon footprint and foster broader clean energy adoption. This strategy is particularly relevant for industries where downstream electricity use is a major source of emissions, such as in consumer electronics, electric vehicles, and digital services like streaming or cloud computing.
Through the procurement of RECs to cover the electricity consumption of upstream suppliers and downstream customers, companies can effectively reduce their own Scope 3 emissions.
Ensuring Credibility: Documentation and Transparency with LockStatements
According to the EPA document Renewable Electricity Procurement on Behalf of Others: A Corporate Reporting Guide (2022), when a company purchases RECs on behalf of value chain partners, it has an obligation to maintain clear, transparent, and auditable documentation. This ensures that renewable electricity claims are accurately allocated and verifiable by third-party auditors.
To satisfy this need for an audit trail, Lock Two Three developed the LockStatement, a document that provides a link between a company’s value chain electricity decarbonization and their Scope 3 emission reductions.
The LockStatement contains information about what share of a value chain partner’s electricity consumption the company is responsible for, the electricity consumption period, and geographic location of electricity consumption. With this LockStatement, companies can confidently procure RECs for value chain partners, calculate their reduction in Scope 3 emissions and report their progress.
For companies looking to drive meaningful decarbonization across entire value chains, LockStatements can provide an immutable and verifiable record of REC allocations, ensuring transparency and accountability in emissions reporting.
Next post: Decarbonizing Value Chains with Supply Sheds
Be sure to check out our upcoming blog post where we’ll explore the Supply Shed concept and its role in decarbonizing value chains. Or contact us now to learn more about how Lock Two Three can help with your organizations’ value chain decarbonization journey.
