“The Serious Business of Corporate Energy Reduction” originally appeared on the Safari Blog.
When business leaders hear the word “sustainability,” they often think “expense.” Sustainability often feels like the right thing to do once all other business needs have been met. If we shift our perspective, however, and stop viewing sustainability as a series of one-off programs, we can see the value it brings as part of overall business strategy.
Not only can sustainability generate cost savings and drive revenue growth, it provides the opportunity for strategic organizational investments and innovation. Perhaps nowhere is this more the case than in the area of energy reduction.
Companies of all different sizes and industries are now realizing the value of investing in energy reduction strategies. Even chemical giant DuPont jumped on board in with their Bold Energy Plan and went from being seen as the nation’s biggest polluter to being seen as an innovator. Initially formed in 2008, the plan has grown to become a key part of the company’s strategy and is aligned with its corporate goals. It’s also saved $270 million year over year.
So, how does a company get started on reducing energy and cutting costs? Here are the three main steps to developing an effective energy reduction program:
1. Develop your baseline
What to do: The age-old adage applies to energy: you can’t manage what you don’t measure. Establishing a baseline — for both cost and usage — has to be the first step in any energy reduction plan.
When DuPont created its Bold Energy Plan, the company decided to track energy reduction against a 2010 baseline. This baseline let DuPont actually “see” the impact of operational changes to save energy. Utilizing a baseline isn’t just good for tracking progress toward a goal; it lets you show your executives exactly how much money you’re adding back to the bottom line.
How to do it: In the simplest sense, establishing a baseline means picking a year and calculating all energy usage and cost for that year. This might mean digging through utility bills yourself, hiring a firm to do so or seeing if your utility will generate a report for you. Whatever your approach, remember to pick a baseline year that is fairly representative. That is, if you’ve recently added to your facility, don’t pick a year from before the addition or you’ll wonder why your usage has dramatically increased!
2. Knock down those low-hanging fruit
What to do: There are many ways to significantly reduce energy in your business that require little or no upfront cost. These might include behavioral changes or just more regular maintenance. Here are some easy examples:
• Create signage to remind employees to turn off lights when leaving a room.
• Talk to your IT department about putting computers into sleep mode at night.
• Make lighting upgrades, starting in one office or building.
• Make sure building equipment is working according to specifications.
• Utilize power strips in offices to avoid energy vampires – devices that suck power even when switched off.
In 2013, DuPont went after 250 individual energy improvement projects for annual savings of $23 million — and only 50 of the projects required capital investment.
How to do it: Energy audits are the best way to find out how energy is used in your organization. Audits can tell you not only where you’re losing the most money (those single-pane windows installed in the 70s, perhaps?) but also how to prioritize. Maybe you can’t upgrade your HVAC system right away, but you can invest in LED exit signs and start to see some savings right away.
Energy audits can typically be performed by your utility provider or you can hire an energy management firm, and it’s really up to you how deep you want to go. Audits vary from simple walkthroughs with rough payback estimates to detailed analysis with comprehensive return on investment information.
3. Systematize it
What to do: Like any big organizational initiative, energy reduction will only stick if it rests on well-established systems. In order to achieve energy savings across its organization, DuPont worked to establish senior leadership commitment and oversight and then chose leaders dedicated to energy efficiency at each of its sites. By assigning responsibility for energy management across the organization, DuPont made sure its program was successful in the long term. Individual sites also set their own goals but in the context of company-wide goals.
A funding mechanism for energy projects can be key to taking on improvements that have huge savings but also require large upfront investment. Lots of organizations create “energy revolving funds” by funneling savings from smaller projects into a pool to fund larger ones.
How to do it: Develop a frame for your energy reduction program. Tie it to your core business and corporate profitability goals, and then utilize this frame to engage senior leadership. Illustrate how energy reduction can be another vital element of existing business initiatives. Identify key individuals to “own” the program at different sites, and as is the case with any program, communicate, communicate, communicate.
If you’re still wondering why investing in energy reduction is worth it, think of how it impacts your bottom line. DuPont spends $1.1 billion (with a “B”) on energy annually – why would they not want to manage that kind of expense? Establish your baseline, go after low-hanging fruit…and turn one of your major expenses into a revenue generator.
To learn more about energy reduction and other ways to operate more sustainably, check out the “Sustainable Operations” section of our course “Introduction to Sustainable Business” on Safari.