9 Keys to Effective Energy Management
There is no one-size-fits-all solution for achieving organizational alignment on sustainability in general, and specifically, energy management. Each company faces a unique set of challenges and constraints, either internally driven or externally generated. Companies leading the way in energy management are proactively looking to align their sustainability actions across departments by beginning with a deep dive into organizational sustainability and energy practices.
Here are the 9 key questions that executives seek to answer in their path for effective return on investment for energy resource management:
How does your company define sustainability and energy?
What are the boundaries? Are there multiple groups working on these initiatives? How do quality, environmental and facilities initiatives and strategies interact? Will these integrated initiatives lead to greater effectiveness and reduced internal labor utilization?
Do we have an asset inventory of all the sustainability and energy projects, going on at the company?
You will be surprised who is talking about sustainability and energy or pursuing sustainability and energy initiatives on your company’s behalf. Are there unknown initiatives? Do we know these as well? Are their cross functional teams?
Does our company have a sustainability and energy overall strategy and goals?
What is the overall strategy? Are the initiatives integrated with this wider corporate strategy and directly relevant to business priorities and underlying energy use and consumption to ensure alignment? Random projects (a program here, individual project, or even new efficient equipment there) while well-meaning, can be ineffective or even counterproductive if they don’t align with broader corporate strategy.
Where does the buck stop? Many companies have energy and sustainability teams. Who is empowered and who are the gate keepers? Who owns the training budget, communications budget, etc.? Who is accountable for facilitating cross departmental actions?
Is there a forum our company can use to align and cross-pollinate ideas on sustainability and energy?
How is sustainability and energy coordinated throughout the organization? Is there a sustainability team that convenes cross-functional groups? If someone at your company has an idea related to sustainability or energy, whom do they take it to?
Does our company have management processes in place for incorporating sustainability in decision-making?
Is sustainability a criterion for purchasing and design specification? Do you have a project gating system? Do you have a system to vet energy and sustainability marketing claims to prevent ‘green washing’? Does energy and sustainability factor into your acquisition due diligence process? Do you consider sustainability in your R&D and tech investments?
Financial valuation, do you value these projects and programs the same way?
Do you apply simple payback methodology for certain projects while using Internal Rate of Return (IRR) or other financial measures for others? Are life time benefits of the management systems measured the same way as other investments?
Can everyone articulate the company’s point of view on sustainability and energy?
Does the program educate employees on sustainability and energy? This is particularly important if, say, the company or industry is dealing with high profile energy or environmental issues such as commercial buildings, industrial process where reporting shareholder value is public.
What is the CEO’s relationship to sustainability and energy?
What is your chief executive saying about energy and sustainability? How, if at all, has his or her message changed across the years? Is it aligned with actual performance and future plans? Your CEO can make or break these initiatives and investments, so a little proactivity in preparation goes a long way. Each organization has an opportunity to be great when it comes to sustainability and energy management. In the excitement to keep up with the crowd, it is easy to overlook small discrepancies in energy, sustainability-related actions and messaging not to mention actual performance.
What is the ISO 50001 Energy Management Standard?
The need for deriving financial value from under-utilized resources, for cost savings in energy consumption, and the necessity of fulfilling each organizations bottom line objectives are driving American companies to take action.
Before the backdrop of rising energy costs, “energy efficiency” has become a major topic on the agenda from the C-suite to the shop floor, especially for energy-intensive industries, but more so for cash-strapped organizations in the supply chain of every sector. Opposite this, global government organizations are driving legislation and tax incentives tied to evidence of continuous improvement. So where does all this lead? Perhaps the ISO 50001 energy management standard is part of the solution.
Sustainability is the driving social force behind this innovation disruptively unlocking wasted resources, corporate valuations, and will certainly be one of the strongest growing areas in corporate organizations for years to come. Unfortunately for many, sustainability was perceived to be born out of the tree-hugging communities and brings with it an incorrect notion of little regard for financial shareholder value or profit motive. This, however, is changing, as organizations connect energy use and consumption with greenhouse gas and carbon programs, rising prices and profit pressures. This congruence of concerns around cost, supply, reliability and environmental impacts of the energy needed to sustain our business and way of life are increasingly influencing business at the highest levels.
As a result of this rapid change in perceptions, corporate America has reached a tipping point, with companies across all industries now making the cost, availability and environmental impact of their end-to-end energy consumption a strategic priority. They are now frequently viewing energy management as risk management. What once was managed as a cost of doing business is increasingly being managed as a strategic risk – and as a source of new value and opportunities. UL DQS even sees cutting edge organizations using ISO 50001 energy assessments as part of the due diligence process. Organizations that have adopted energy management plans have achieved major improvements, whether for certification or not. See results and adoption information in an executive briefing paper and case studies link.
When sustainable actions are based on verifiable management systems, organizations realize value-unlocking benefits in operational areas ranging from cost savings to cash-flow improvement to preservation of CAPEX budgets. The end product of the EnMS (Energy Management) standard is to provide a measurable performance benchmark, enhancing ROI (Return on Investment) calculus and achieving improvements in changes to how energy is managed. Standardized energy performance assessment processes are the foundation of sound greenhouse gas (GHG) and carbon reporting.
Organizations are improving their environmental balance sheets regardless of location, size, industry sector or type of energy consumed applying these behavioral management system tools. Additionally, governments in many countries and supply utilities increasingly make use of “carrot and stick” opposite these to demonstrate evidence of well-deployed funds of energy, GHG or carbon savings.
Organizations that have adopted effective energy management strategies and built successful energy programs, typically have similar operating results for GHG and carbon management: Ford Motor Company has saved over $75 million through effective energy management; Schneider Electric is savings millions through implementation of ISO 50001; Hines estimates the difference in operational costs between its energy efficient buildings and inefficient buildings at more than $13 million; Fairfax County Public Schools estimates an annual energy savings of $4.5 million from energy efficiency improvements; and Case New Holland (CNH) recently certified to ISO 50001 with similar results.
Innovative IT-based tools are exploding onto the marketplace. Many traditionally coming from dashboard analytics with robust energy reporting engines are now being complimented or themselves include behavioral management systems processes to ensure continuous improvement. One such innovative tool is ENERIT’s ISO 50001 Platform. ENERIT recognized early on the need to combine both energy engineering and a behavioral management system solution.
To date, ISO 50001, on a comparable basis, has eclipsed ISO 14001 in terms of adoption rate. Today, over 4000 entities have completed this process and many, many more are applying this standard as a best practice.
Get more information on the ISO 50001 in this on-demand webinar with Don Macdonald!
*This blog was originally published at www.TriplePundit.com and is updated with current information.