As we discussed in a previous blog, a league of businesses signed into the Science-Based Targets Initiative (SBTi) has doubled-down on their renewable energy and net-zero commitments, pledging to keep their focus on combatting climate change amidst the global pandemic. In this time of extreme disruption, as the SBTi has put it, ambitious climate action is as urgent as ever. The calls to pursue a green, resilient recovery echo through every media outlet and NGO.
Meanwhile, the day-to-day challenges of running a responsible business have grown considerably. Even with newfound motivation, buy-in on a sustainability business case can be tough when budgets are tight and management’s focus is understandably divided.
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When asked by our clients, our number one suggestion for moving programs forward when faced with competing priorities is to build a strong business case that brings together resource conservation and sustainability efforts. This can dramatically increase the speed and scale of decarbonization across an enterprise portfolio, while unlocking hidden sources of cash flow.
Here are 5 key steps businesses can take to build the business case for resilient recovery:
- Align corporate ambitions with the realities of business operations
Defining a “new normal” may result in changes to a site portfolio or core business operations which can impact energy and sustainability performance. For example, during the pandemic, we saw some manufactures ramping up production while others converted their production lines to support PPE demands. More recently, we are hearing of businesses shuttering offices in exchange for permanent work from home.
As priorities change, aligning business continuity plans with energy and carbon reduction targets is a fundamental first step towards a resilient and green recovery. This means that all stakeholders — from the factory floor or storefront to the C-suite — must be involved in defining, or recalibrating, goals and roadmaps.
Further, cross-departmental collaboration across energy, sustainability and operational functions ensures carbon reduction and efficiency improvements are long-lasting. When afforded the opportunity to actively participate in target-setting, procurement and operation teams can be proactive in process or supplier changes as an example.
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- Recalibrate baselines and performance KPIs
Along with corporate goals, performance plans at the site-level must updated to align with the “new normal”.
Data analytics and modeling can be a powerful tool in this regard. Companies operating multiple sites will benefit from a comprehensive view of resource usage and performance across sites. With an enterprise data management system, like EcoStruxure Resource Advisor, it becomes easier to establish benchmarks and prioritize opportunities for planning and budgeting. And, in our experience, the costs of maintaining differing systems across an organization are far higher than with a centralized, real-time software.
It’s also important to establish a process for normalizing energy usage with input from site-level stakeholders to account for data anomalies, which could be caused by extreme weather or another unscheduled shutdown. This ensures that the results of baseline recalibration are accurate and meaningful, while skipping this step may lead to poor project performance and may even harm credibility during future project approvals.
- Develop an opportunity portfolio with a holistic investment strategy
When carbon is quantified in terms of risk containment or cost savings, upgrading systems and processes for low carbon alternatives becomes a business priority and not just a sustainability mandate. A co-gen, for example, may not be the most cost-effective solution when considering offset costs for Scope 1.
Additionally, a joint investment strategy that blends savings and decarbonization initiatives into a cohesive program scope has several advantages for planning and performance. For example:
- Mapping out project investments, savings, and payback schemes to identify funding gaps and potential bottlenecks that could slow down performance and prolong payback
- Combining long and short payback projects into a single opportunity portfolio to create a positive cash flow and bring more capital projects into the fold.
Pre-planning reinvestment of opex savings into solutions like onsite renewables or carbon offsets will further accelerate progress towards long range emission reduction goals. Made part of the “new normal”, these best practices will ensure carbon becomes part of the investment decision-making process.
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- Localize plans with implementation owners
The ripples of disruption following the pandemic may have paved a way for change and innovation but, as with any change, getting everyone bought in and moving in the same direction can be tough. It’s one thing to create a plan, but it’s quite another to implement measures across a site portfolio spanning the country or even the globe.
Now, more than ever, maintaining an open line of communication with your individual facilities is crucial for consistent implementation and timely progress towards emissions targets. This includes involving local operational leaders in initial planning to ensure efficiency and sustainability plans do not compete with other site priorities. Checking-in regularly on implementation helps troubleshoot issues early. Employees must understand how these initiatives affect their organizational functions to “buy-in” to the strategy and make it a priority.
- Increase transparency internally and externally
Consumer vigilance on how companies behave is at an all-time high. Consumers will reflect on how organizations handle the pandemic for many years to come, and their sustainability response is no exception.
By keeping sustainability top of mind and showcasing to customers a steadfast commitment to the communities they serve and the environment, even during these challenging times, businesses can rise above the competition and maintain a positive brand reputation.
Internal awareness is just as critical to any successful sustainability program. A clear explanation is necessary not just for business leaders or facility teams, but also for groups such as human resources, purchasing, sales, communications, and marketing to ensure success of initiatives. Internal gatekeepers—those trusted employees with strong credibility in any given business unit or department—play a key role in company-wide participation and external communications that impact brand, employee recruitment, and business development.
Exploration of the convergence point between energy and sustainability offers companies a unique advantage during times of disruption. Companies that operate energy efficiency and sustainability initiatives in tandem improve productivity, maximize impact and see a greater return on investment. Combined with the demonstrated benefits of a holistic energy and sustainability strategy, building a strong business case is essential to reaching your goals.