Getting energy efficiency to stick
Christopher Gleadle
Getting cost cuts to prevail over the long term has always been a problem. In a great many cases there is a lack of understanding as to the true drivers of costs and how to apply maintenance to any reductions over time. Additionally, there is a lack of motivation to conduct a top-down and bottom-up examination of which costs can, and should be cut. Other times, severe measures are taken to cut costs with un-realistic targets set and no accountancy of which cost cuts add or destroy value. Lastly, other cases show the use of inappropriate or incomplete data for tracking costs, so, missing opportunities – and thus throwing confusion into accountability.
Therefore, a sustainability strategy needs to be developed, of which, energy efficiency is a crucial constituent. As such, the sustainability strategy needs to be aligned to the corporate strategy, making energy efficiency accountable, and treated with the same level of transparency as the financial metrics and makes the process of tracking true costs and benefits across the organisation and operational activities easier.
This leads to energy efficiency and strategic planning working together in understanding what the future horizon looks like in terms of accountability life cycle and developing clear key performance indicators and budgets. Additionally, it protects the company from random efficiency projects and creates a sustained process with intended actions and clear outcomes.
The metrics developed in undertaking the sustainability journey reveals risks and opportunities and so begins the process of continual improvement. Furthermore, new skills and competencies develop within the organisation in valuing efficiency opportunities from operations to buildings – hence, delivers value in cost reduction.
Sustainability and driving energy efficiency acts as a catalyst for change. It also acts as a new lens with which to view the business. It shows the interdendencies of all functional areas, and shows how they react with one another causing cost. The opportunity is to better understand these interdendencies, driving down costs and making a positive effect on the environment through both asset and operational optimisation.
It follows; a holistic approach is called for, to significantly increase the financial returns over isolated technological solutions. This approach must be developed and deployed to encapsulate the whole organisation both in terms of operations and value chain. Furthermore, it is vital to actively manage and provide credibility to energy usage and savings in order to incentivise behaviour modifications driving adoption of efficiency programmes to individual employees.
The economic return - for any company willing to embrace the values of sustainability - in operational efficiencies and the achievement of cost savings, will free up capital for re-investment into new technologies. Yet, while investment in low-carbon technologies will help reduce energy consumption and greenhouse gas emissions, to optimise such investments, the procurement of such technologies must be linked to the company wide sustainability strategy; holistically linking organisational processes to these new technologies. Such strategies will – and are – rewarding companies who deliver more efficient products and services, so reducing the exposure of their customers.
Christopher Gleadle