When business leaders hear the word “sustainability,” they often think “expense.” Sustainability feels like the right thing to do, but only once all other business needs have been met. Unfortunately, this perspective misses the more important issue: sustainability is a core strategic asset.
Not only can a focus on sustainability generate cost savings and drive revenue growth, it provides the opportunity for key organizational investments and innovations. 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. Consider DuPont’s Bold Energy Plan, which helped the chemical giant reduce costs by hundreds of millions while helping to transform its reputation from massive polluter to innovator.
So, how does a company get started on reducing energy and cutting costs? Here are three steps to developing an effective energy reduction program:
1. Develop your baseline
What to do: As the saying goes, 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 launching its Bold Energy Plan, DuPont tracked energy reduction against 2010 usage. This baseline allowed DuPont to clearly monitor the impact of its operational changes on energy savings. Measuring against 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 as you go.
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 soon be wondering why your usage has so dramatically increased!
2. Grab the 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 include behavioral changes, regular maintenance, and other simple activities. Some examples:
- Post signage to remind employees to turn off the lights when leaving a room.
- Talk to your IT department about automatically putting computers into sleep mode at night.
- Make lighting upgrades, starting in one office or building.
- Make sure building systems are 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 fixes. Maybe you can’t upgrade your HVAC system right away, but you can invest in LED exit signs.
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 analyses with comprehensive ROIs.
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, the DuPont team first gained senior leadership buy-in and a commitment to provide oversight and then established leaders dedicated to energy efficiency at each of its individual sites. Each site set its own goals within the context of the company-wide plan. By dispersing responsibility for energy management across the organization, DuPont sustainability leaders helped ensure its program stuck for the long term.
Of course, a funding mechanism is required for taking on improvements that promise huge savings but also require large upfront investment. A number 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 framework for your energy reduction program that ties to your core business and corporate profitability goals. Then use that plan it to engage senior leadership by focusing on what they care about at a strategic level. 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 with any change program — communicate, communicate, communicate.
To learn more about energy reduction and other ways to operate more sustainably, check out the “Sustainable Operations” section of the video course “Introduction to Sustainable Business.”