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Corporate buyers’ guide to Guarantees of Origin

June 21st, 2024
Sustainability image

We all know that sustainability is no longer just a ‘buzzword.’ Instead, it has become an integral part of corporate responsibility. One tool that has emerged as very important to businesses and corporations alike is Guarantees of Origin (GOs). These electronic certificates verify that a specific amount of electricity is produced from renewable energy sources, which is evidence of a business’ sustainability efforts. Let’s take a deep-dive into GOs from a Corporate buyers’ perspective.

Understanding the importance of GOs for corporations

Guarantees of Origin (GOs) are certificates that verify the source of energy, ensuring that the electricity a company uses comes from renewable resources. These certificates are essential for corporations aiming to bolster their sustainability credentials and meet environmental, social, and governance (ESG) reporting requirements. By purchasing GOs, corporations can credibly claim their use of renewable energy, thereby enhancing their brand image and demonstrating a commitment to environmental stewardship.

GOs play a crucial role in achieving sustainability goals. They provide a transparent and verifiable way to track renewable energy consumption, which is essential for companies striving to reduce their carbon footprint. Let’s not forget that stakeholders such as non-government organisations (NGOs) employees and consumers now expect companies to demonstrate sustainability as part of their credibility and offering to the market.

Step-by-step process to acquire GOs

Acquiring GOs involves a series of steps that corporations need to follow to ensure they are obtaining credible and verifiable certificates:

  • Assessment of energy needs: begin by assessing your corporation’s energy consumption. Then identify the amount that needs to be covered by renewable sources.

  • Selection of a reliable supplier: choose a credible supplier who provides GOs. Verify the supplier’s certification and track record.

  • Contract negotiation: negotiate with the supplier to determine the terms, including the volume of GOs, pricing, and delivery schedule. This is important and would usually involve the corporation’s renewable procurement team.

  • Purchase and verification: once the terms are agreed upon by all parties, proceed with the purchase. Ensure that the GOs are registered in the appropriate registry to verify their authenticity.

  • Monitoring and reporting: after the purchase, monitor the use of GOs and report their impact on the company’s sustainability goals and ESG reporting. Then, you can decide how best to promote their usage to achieve the company’s targets.

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Integrating GOs into energy procurement strategies

Integrating GOs into a corporation’s energy procurement strategy involves aligning them with the company’s overall energy consumption and sustainability targets. Here’s how to do it effectively:

  • Comprehensive energy review: conduct a thorough review of your corporation’s current energy consumption, usage patterns and predict future needs. This helps in determining the volume of GOs required.

  • Strategic procurement plan: develop a procurement plan that incorporates GOs as part of the broader renewable energy sourcing strategy. This plan should support the company's sustainability targets and also include financial considerations.

  • Diversification of energy sources: ensure a mix of energy sources to balance costs and sustainability. Incorporate GOs to cover the renewable portion of the energy mix.

  • Stakeholder engagement: involve key stakeholders, including procurement, sustainability teams, and top management, in the decision-making process to ensure alignment with corporate goals.

  • You may also want to consider risk management. For example, long-term Power Purchase Agreements (PPAs) with GOs provide cost stability and reduce your company’s exposure to energy price fluctuations. Encouraging your suppliers to explore GOs is also a tactic to increase sustainability across the supply chain.

Aligning GOs with corporate energy goals

Achieving synergy between corporate energy goals and GOs demands a thoughtful strategy that weaves sustainability into the DNA of the corporation. Here's a roadmap to help:

  • Set clear sustainability targets: define clear, measurable sustainability targets that GOs can help achieve. These could include reducing carbon emissions, increasing renewable energy usage, or achieving net-zero energy consumption.

  • Integration with ESG goals: ensure that GOs are part of the company’s broader ESG goals. This holistic approach ensures comprehensive sustainability reporting and resonates with stakeholders.

  • Monitor and adapt: regularly assess the impact of GOs on energy goals and make necessary adjustments. This ensures that the corporation stays on track to meet its targets.

  • Transparency and communication: communicate the role and impact of GOs in achieving energy goals to internal and external stakeholders. Transparency builds trust and demonstrates commitment to sustainability.

Risk management in the acquisition of GOs

While GOs offer numerous benefits, there are risks associated with their purchase that corporations must manage effectively. Consider:

  • Market volatility: GO prices can fluctuate due to market dynamics, such as supply and demand. Corporations should adopt strategies like long-term contracts and PPAs with GOs to mitigate price risks.

  • Quality and authenticity: to avoid issues related to quality and authenticity, ensure that the GOs acquired are from reliable and certified sources. Verification through recognised registries is crucial. Governance is key here.

  • Regulatory changes: stay on top of regulatory changes that may impact the availability and cost of GOs. Adapt procurement strategies accordingly to remain compliant and cost-effective.

  • Reputation risks: misrepresenting GO usage can lead to reputational damage. Ensure accurate and transparent reporting of GOs in sustainability reports and communications.

Evaluating the impact of GOs on corporate sustainability efforts

Evaluating the impact of GOs on corporate sustainability efforts involves assessing both quantitative and qualitative benefits:

  • Quantitative assessment: measure the reduction in carbon emissions directly from the use of GOs. This can be quantified in terms of CO2 savings and percentage of energy sourced from renewables.

  • Qualitative benefits: assess the broader impact on your corporate reputation, stakeholder trust, and market positioning. By demonstrating a commitment to sustainability, GOs can enhance brand value and customer loyalty.

  • ESG reporting: integrate GOs into ESG reporting frameworks. Highlight their role in achieving renewable energy targets and reducing environmental impact. This enhances the credibility of your sustainability reports.

  • Continuous improvement: use the insights gained from the evaluation to refine sustainability strategies. Continuous improvement ensures that the corporation maximises the benefits of GOs.

In summary, Guarantees of Origin empower corporations to demonstrate their commitment to renewable energy while managing risks and aligning with sustainability goals. GOs are a powerful tool that can be integrated into energy procurement strategies to help create a greener future. This contributes to environmental stewardship and strengthens corporate reputation and compliance with ESG requirements.

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