Insight: Green and black
How the bottom-line is driving corporate sustainable energy moves
If sustainability is on the boardroom agenda it is typically seen through a green lens rather than the CFO’s microscope. Could C-suite decision-makers be missing the point?
Corporates may be enlightened as to the environmental benefits of sustainable energy but not all are cognizant of the financial business case. A 2016 Telegraph/YouGov survey of Business Directors and Senior Managers found that 46% had ‘no idea’ what their company spent on energy. A UK government paper, The Clean Growth Strategy, October 2017, stridently heralds cleaner economic growth as “one of the greatest industrial opportunities of our time.” Do renewable energy solutions have the power to drive competitive advantage and positively impact the bottom line? And if so, why aren’t more corporates engaged?
Internet of things drives smart energy changes but cost concerns are still a reality
As increasing number of homes make the switch to smart energy metering, it is clear that the Internet of Things is having a huge impact on the energy market. Behind the scenes of UK PLC, smart tech is weaving itself into the fabric of businesses across a range of sectors.
A recent B2B survey by PWC, indicated that over a third of industrial firms and one in five commercial organisations are planning to invest over £1m on smart energy technology in the next five years. However, the main challenge to adopting smart technology was cited as cost; with benefits not outweighing the set-up outlay.
Businesses reap the bottom line benefit of energy investments
Whether cost or other concerns are impeding the adoption of green energy practices, a number of corporates are clearly seeing benefits.
David Hughes, Chairman, Affordable Solar Energy says that businesses often ignore the leak in their profits because it seems hidden from view and inevitable. “When our clients choose a renewable energy strategy, it’s because the savings go right to the bottom line. That is whether they buy a solar system outright or lease their roof space to guarantee a lower energy cost for the next 20 years.”
ACC Liverpool – a landmark £164 million regeneration project on Liverpool’s waterfront, firmly placed energy efficiency at the top of its business agenda and is predicting a sizeable bottom-line benefit with its solar venture. Finance Director, Gerald Andrews, said, “We have lots of initiatives in place to help us keep track of the electricity we’re using through half hourly metering and consumption monitoring. We’re now even generating our own renewable energy with solar panels. As a result, we’ll save around £20,000 off our energy bills every year for at least the next 20 years.”
BSW Timber Group, the UK’s largest sawmilling business, has also seen positive impacts through energy solutions that guide the timing of their purchasing. Mill Manager, Andy Rogers said, “We needed real cost transparency and we have gained by buying direct from the wholesale market. We have optimised our energy consumption and benefit from cost saving opportunities such as by avoiding peak energy periods.”
And huge conglomerates like Mars Confectionary are also adding to the voices making the financial business case for adopting a renewable energy strategy. Speaking to the Washington Post, Stephen Badger, Chairman, Mars Inc. said, “Investment in operating sustainably delivers cost savings. Mars is already capitalizing on the falling prices of renewable energy… we now purchase enough renewable energy to fuel our entire operations in five countries and plan to make that 11 countries in 2018.”
Capitalizing on green – big business leads the way
Apple, Bloomberg, BT Group and Diageo are just a few of the 100+ influential RE100 members who are championing renewables and demonstrating that being green and bottom line gains are not mutually exclusive.
Talking to The Climate Group, Alejandro Castro Pérez, Head of Home Solar Business, IKEA says: “Growth, electrification, connectivity and automation will keep global energy demand rising for the foreseeable future. The good news: decisive action to introduce clean energy solutions faster will result in greater profits and prosperity; especially for those taking the lead.”
£6 Billion to the bottom line by 2030?
With businesses accounting for over 25% of the UK’s emissions, the UK government’s Clean Growth Strategy suggests that up to £6 Billion could be saved by 2030 through investment in cost-effective energy efficiency technologies.
The report further states: “Roughly half of these savings are available through improving the efficiency of buildings and processes, including by fitting better insulation and smarter energy controls. The other half can be realised through eliminating electricity waste in business for example.”
As we march towards 2050 and a government target of reducing emissions by 80%, is the climate change imperative nudging corporates to make changes to their energy sources?
Phil Gilbert, Head of Energy Solutions at E.ON, suggests we’re not quite there yet: “Whilst climate change and being sustainable are key factors in corporate decision-making, in my view, ROI continues to be a far greater prompt for adopting green technologies. Improving competitive advantage and bottom line impact can really trigger change – combining it with sustainability makes it all the more powerful.”
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This content was orinally published by the Financial Times through a sponsorship with E.ON