SPECIAL SECTION/RESOURCE MANAGEMENT: Green and Profitable
June 1, 2008
When reading through the strategic vision of any leading corporation, the main focus includes image, ethics, morality and competitiveness. Key examples include “To solve unsolved problems innovatively” from 3M; “Organize the world’s information and make it universally accessible and useful” from Google; and “To enable people and businesses throughout the world to realize their full potential” by Microsoft. These statements drive the companies at every level, in every product they make, and in every service they provide.
Historically, however, energy has been left out of company mission statements. Also omitted from annual reports were mandates to reduce overall environmental impact through effective energy management. For many organizations, improvements to existing energy practices were not a priority. Even if companies were able to achieve savings through the initial procurement of energy, these gains often disappeared quickly through preventable, wasteful consumption that negatively impacted the environment-and the cycle of missed opportunities continued.
This trend is beginning to change. For example, Ford’s vision statement includes a clear environmental message: “We do the right thing for our people, our environment and our society, but above all for our customers.” Such links between energy and other business activities are essential for promoting an energy efficiency culture within or outside the company. When a culture of conservation is created, a corporation’s image is enhanced in addition to the measurable environmental benefits it enjoys through sustainable planning and minimized usage.
Understanding SustainabilityThe term sustainability is usually thought to mean the purchasing of green products. Some organizations turn to purchasing environmentally friendly materials like office supplies, for example. Others often participate in community events such as tree planting or fund raising.
Recently, going green has meant the purchase of green power provided by wind farms or solar systems. However, this participation is only half the story. To complete the picture, an organization must adopt a full-fledged approach supported by top management. A truly sustainable company would also be aggressive in reducing energy consumption on-site.
In the past, the reduction in energy was seen as a simple energy checklist that noted what old equipment would need to be replaced. This approach is not effective, however, as up to 50% of energy savings can be realized through simple behavioral changes implemented by staff that can accompany equipment efficiency investments.
Your Company-Specific PlanThe five key factors that help create a sustainable company include energy monitoring and verification, an energy team or steering committee, a long-term energy plan, a corporate energy mandate, and a culture open to adopting sustainable behavior. A company can only be successful when each of these components is working in concert with the others. If isolated, the returns gained by each will be limited. Traditionally, the failure to adopt one of these approaches has also damaged any initiatives preceding the isolated initiative. To be truly effective, energy projects must turn into energy management programs.
The importance of monitoring and verification can be realized on two levels. First, monitoring energy usage gives a clear understanding of when, why and how energy is being used in the organization. Second, once a change is made, the savings can be quantified in a simple, effective approach for multiple levels of the organization. Without a monitoring and verification system, a company will not be able to set realistic targets for energy management or, more importantly, track the avoided costs from year to year.
For example, the circled portion in Figure 1 shows that equipment was left on at the time of a shutdown. If energy reporting software had not been used, this mistake would have continued and multiplied into additional costs. However, since this information is reviewed on a daily basis, corrective action was taken and this company was back on track for the rest of the month.
Furthermore, a percentage of the savings can be allocated into an internal energy savings fund so companies can re-invest in future conservation projects. If tracked properly, scrutiny from top management will be reduced since this money would have been spent prior to implementing the changes.
The energy team or committee is the next critical component. The traditional approach relies on a single individual to handle the energy management of a facility. However, it’s become evident that a team approach is needed since different departments have different needs, expectations and skills that will be used to launch sustainable energy management initiatives. The team approach ensures that energy management does not become a burden to one individual and that responsibilities are split among members from different departments. Also, as with any project, a fresh set of eyes can bring awareness to items that might have been overlooked in the past.
When the team members are in place, a sustainable energy plan must be produced to outline who, what, when and how energy management initiatives will be rolled out throughout the organization. Ideally, the plan should have a one- to three-year horizon and assign specific timelines for each initiative. The plan should also enlist the assistance of the accounting department to determine cash flows and the expected time and resources allocated to each item. The plan cannot be complete without having a corporate mandate attached demonstrating top management’s support to the direction of the company, which should drive and guide a site’s day-to-day practices.
Unfortunately, there is not a “Ceramic Industry Company Plan” that can be bought and implemented, and simply copying a competitor’s plan will not be effective. For the plan to have any value, it must be created internally. Creating the plan in-house ensures that all team members take ownership of the plan and, subsequently, energy awareness is raised throughout the organization.
The final required component is the most difficult. The existing culture within an organization is the largest stumbling block and is the area where most initiatives fail. Any organization hoping to change the day-to-day behavior of its staff must ultimately implement changes that can also be practiced at home. Without a benefit to the quality of life of the staff, very little momentum will be generated at work. A truly sustainable organization will invest in the quality and sustainability of its work force.
A Better WayAfter the site has put all the right pieces in place, it is time to realize the benefits of the puzzle and reap the rewards of being a truly sustainable organization (see Figure 2). Facilities can do this in a number of ways to convey the value and benefit of the energy reduction initiatives within the site. Share prices are becoming more sensitive to energy, and environmental reporting that includes updates to the site’s sustainability approach would yield additional benefits.
Other than the financial savings associated with energy reduction initiatives, the procurement of environmentally friendly energy, as well as green equipment and supplies, will also create a benefit for shareholders. More and more industrial participants are voluntarily reporting emissions and energy usage to their stakeholders.