Utilities are facing increased scrutiny to demonstrate they are making the world a better place, but electric cooperatives are well-positioned to turn this into an opportunity, noted CFC CEO Sheldon Petersen, speaking in a video message during the NRECA PowerXchange general session February 24.
Petersen said the growing acceptance of the ESG (environmental, social and governance) investment framework used to measure the sustainability and ethical impact of a company’s business activities underscores the heightened scrutiny taking place. “It’s worth noting that it’s not just investors, banks, credit rating agencies and activists that are paying attention to ESG,” he noted. “Indirectly it has achieved far-reaching public acceptance.”
Values-Based Consumers Drive Changing Expectations
Ultimately, this trend is being driven by “the values-based consumer,” Petersen said, defined as the type of consumer who makes purchases “not just to satisfy a need, but to feel validated about their values.” The end result, he said, is changed expectations. “Companies must have a purpose beyond profit,” he explained. “Core values must be reflected in everything a company says and does, including the products it makes and sells, as well as their supply chains.”
With the popularity of ESG only increasing during the pandemic, electric cooperatives need to be prepared for questions from members about their ESG goals, Petersen said. He added that the level of scrutiny will likely only increase. Rather than view this as an obstacle, Petersen said it’s an opportunity “to better understand the needs and goals of residential and commercial and industrial customers, and learn how we can meet them within an ESG framework.”
Co-ops Have a History of Pioneering Energy Efficiency
Petersen also noted that electric cooperatives have a great story to tell. “Co-ops are pioneers in the field of energy efficiency and market leaders in community solar,” he said. “Our cooperative business model is ideally suited for a future increasingly driven by the values-based consumer—we have seven cooperative principles that guide everything we do.”
The relevance of the cooperative business model itself was touted as an opportunity to address current and future challenges during a virtual roundtable discussion with Petersen, NRECA Board President Curtis Wynn and NRECA Chief Operating Officer Jeffrey Connor.
The power of the electric cooperative network allows smaller cooperative organizations to “punch above their weight” and compete with some of the largest utilities in the world through economies of scale while remaining local, Wynn said.
“We just have this grassroots, ground-up way of responding to the local community’s needs,” Connor added.