Universal Corporation Announces Progress Towards Climate Goals

Rhea-AI Summary

Universal Corporation (NYSE:UVV) has entered into a virtual power purchase agreement (VPPA) with Clearway Energy Group for energy produced by a new solar project in Texas, aiming to address emissions from 100 percent of its annual purchased electricity demand in the United States. The project is expected to reduce greenhouse gas emissions by approximately 15,000 metric tons, which is 45% of Universal's Scope 1 and 2 emissions in the United States. The company also expects to create an estimated 350 construction jobs and produce significant new tax revenue for the local community over the life of its operations.

Positive

• Universal Corporation's commitment to a sustainable supply chain and minimizing greenhouse gas emissions is a positive step towards meeting environmental targets.
• The project is expected to create an estimated 350 construction jobs and produce significant new tax revenue for the local community over the life of its operations.
• The virtual power purchase agreement (VPPA) with Clearway Energy Group for energy produced by a new solar project in Texas is a significant move towards promoting the sustainability of Universal Corporation's operations.

Negative

• None.

Sustainability Analyst

The commitment by Universal Corporation to a virtual power purchase agreement (VPPA) with Clearway Energy Group signifies a strategic move towards sustainability and corporate responsibility. The procurement of 70,000 MWh of renewable electricity annually is a substantial volume that could set a precedent in the agri-products industry. This will not only contribute to reducing Universal's greenhouse gas emissions by an estimated 15,000 metric tons but also aligns with broader environmental, social and governance (ESG) criteria that are increasingly influencing investor decisions.

From a sustainability perspective, the initiative could enhance Universal's reputation among stakeholders and provide a competitive advantage as consumers and partners alike demand more environmentally responsible supply chains. The long-term nature of the VPPA suggests a stable and potentially cost-effective approach to energy procurement, hedging against volatile fossil fuel prices and contributing to long-term financial stability.

Energy Market Analyst

The involvement in a large-scale solar project in Texas positions Universal Corporation within the renewable energy market dynamics. Texas has a rapidly growing renewable energy sector and by investing in local infrastructure, Universal is likely to benefit from regional incentives and support for renewable projects. The creation of 350 construction jobs and the generation of new tax revenue for the community highlight the project's positive economic impact.

Furthermore, the VPPA allows Universal to lock in energy costs and manage risks associated with energy price fluctuations. The renewable energy certificates (RECs) received as part of the agreement also provide tangible assets that can be used to demonstrate Universal's renewable energy commitments to stakeholders or potentially traded within REC markets.

Financial Analyst

Universal Corporation's strategic investment into renewable energy through the VPPA with Clearway Energy Group could have favorable implications for its financial performance. By addressing 100 percent of its annual purchased electricity demand in the United States with renewable energy, Universal is likely to see a reduction in operational costs over time, given the falling costs of solar energy. This proactive approach to sustainability may also attract socially responsible investors and potentially improve the company's stock market valuation.

The reduction of Scope 1 and 2 emissions by 45% is a significant milestone for Universal Corporation and could lead to lower carbon tax liabilities in the future, assuming the introduction of stricter carbon regulations. Additionally, meeting their science-based environmental target ahead of schedule could position Universal Corporation as a leader in sustainability within its sector, potentially influencing the stock's attractiveness to ESG-focused funds and investors.

RICHMOND, Va., Jan. 29, 2024 /PRNewswire/ -- Universal Corporation (NYSE:UVV) today announced that, as part of Universal's commitment to a sustainable supply chain and minimizing greenhouse gas emissions, it has entered into a virtual power purchase agreement (VPPA) with Clearway Energy Group for energy produced by a new solar project in Texas. Universal's contracted portion of the project is intended to address emissions from 100 percent of Universal's annual purchased electricity demand in the United States.

 "This is a meaningful step towards meeting our science-based environmental target to reduce operational greenhouse gases emissions by 30 percent by 2030," said George C. Freeman III, Universal's Chairman, President, and Chief Executive Officer. "When the solar project is operational, we expect to hit this target for our U.S. operations ahead of schedule. Universal is proud of the steps we are taking to promote the sustainability of our operations and contribute to global sustainability goals, including supporting this project that will bring additional renewable energy to the electricity grid."

The project, which will start construction later this year and begin delivering under the VPPA in 2026, will create an estimated 350 construction jobs and produce significant new tax revenue for the local community over the life of its operations.  Universal has made a long-term commitment through the VPPA to purchase a portion of the renewable power delivered to the grid by the large-scale solar facility while also receiving the associated renewable energy certificates. Universal's agreement equates to around 70,000 MWh of renewable electricity per year and is expected to reduce greenhouse gas emissions by approximately 15,000 metric tons, which is 45% of Universal's Scope 1 and 2 emissions in the United States. GreenFront Energy Partners provided strategic and financial advisory services to Universal throughout the procurement process.

Universal Corporation (NYSE:UVV), headquartered in Richmond, Virginia, is a global business-to-business agri-products supplier to consumer product manufacturers, operating in over 30 countries on five continents.  We strive to be the supplier of choice for our customers by leveraging our farmer base, our commitment to a sustainable supply chain, and our ability to provide high-quality, customized, traceable, value-added agri-products essential for our customers' requirements.  We find innovative solutions to serve our customers and have been meeting their agri-product needs for more than 100 years.  Our principal focus since our founding in 1918 has been tobacco, and we are the leading global leaf tobacco supplier. Through our plant-based ingredients platform, we provide a variety of value-added manufacturing processes to produce high-quality, specialty vegetable- and fruit-based ingredients as well as botanical extracts and flavorings for the food and beverage end markets. For more information, visit www.universalcorp.com. 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/universal-corporation-announces-progress-towards-climate-goals-302046828.html

SOURCE Universal Corporation

FAQ

What is the purpose of the virtual power purchase agreement (VPPA) announced by Universal Corporation (NYSE:UVV)?

The VPPA aims to address emissions from 100 percent of Universal Corporation's annual purchased electricity demand in the United States by purchasing a portion of the renewable power delivered to the grid by the large-scale solar facility.

How much is the expected reduction in greenhouse gas emissions as a result of the VPPA?

The VPPA is expected to reduce greenhouse gas emissions by approximately 15,000 metric tons, which is 45% of Universal Corporation's Scope 1 and 2 emissions in the United States.

What are the expected benefits of the solar project in Texas for Universal Corporation?

The project is expected to create an estimated 350 construction jobs and produce significant new tax revenue for the local community over the life of its operations.