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Why Don’t More Companies Have Efficiency Targets?
Energy efficiency is good for the environment, your company’s brand and its bottom line, but few companies have set specific energy efficiency targets. BUILDINGS editor-in-chief Janelle Penny explores how facilities managers can turn the tide. Listen now >>
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Hi, everyone and welcome to another FM Friday Podcast. I am Janelle Penny, the editor-in-chief of BUILDINGS. And this week I’m talking about the role companies play in energy conservation.
The American Council for an energy efficient economy, the ACEEE, came out with a study late last year that found that companies directly control about three-fourths of the energy use in the US. And that’s not just buildings. It also covers emissions from places like your fleet, or the suppliers you order from and even power plants. And even though companies influence how all that energy is used, the study also found that fewer than half of the large companies they looked at even have explicit targets for energy efficiency.
Usually, the corporate sustainability report has energy efficiency in it, but it’s usually not in a very detailed way where everyone knows what the goal is. So, what can companies do about this, and what roles do facilities professionals play in setting and reaching those goals?
This report from the ACEEE made four recommendations. They were to set specific energy efficiency targets, which seems like a no brainer; pursue efficiency opportunities throughout facilities, transportation systems and value chains; use strategic energy management; and report on efficiency measures and progress in reaching those targets.
Now, I want to drill down into those one at a time because FMs are a crucial part of achieving all four of these things. Of course, it’s not solely up to the Facilities Department, but these efforts are destined to fail if they don’t have input and help from facilities because you know as well as I do that facilities professionals know their buildings better than anyone. Right?
So, let’s start with the first recommendation that they made setting specific energy efficiency targets. The idea here is that it’s not enough to say, ‘We just want to be more energy efficient this year.’ You have to actually set a concrete target, and then you need to take some steps to reach it. This step is a big deal because ACEEE estimates that just energy efficiency measures on their own could cut US greenhouse gas emissions in half by 2050, just by being smarter about how our buildings use energy.
It also helps you kind of work backward to figure out which projects are the real priorities. When you know what the goal is, you can figure out how to get there.
[On topic: How Much Embodied Carbon Is In Your Building?]
The study also found that greenhouse gas targets were much more common than efficiency targets, which is unfortunate because those two things really should go hand in hand. Of all the Fortune 500 companies, the study found that more than 40% of them had greenhouse gas targets by 2018. But just over 10% had energy efficiency targets specifically.
And it doesn’t even have to be a super drastic target at first. The study calls out Home Depot’s goal to reduce energy use at its stores by 20% by 2020, which they ended up achieving in 2017.
But you can certainly aim higher than that, too. Caterpillar is aiming to reduce its energy use intensity by half from their 2006 baseline by the end of this year. And Bank of America has a goal to reduce their energy use by 40% from what they were using in 2010 and having 20% of their real estate portfolio LEED-certified, too.
When you set those goals, that leads to the report’s second recommendation, which is pursuing efficiency opportunities. The next logical step after setting the goal, right? The study calls out the greenhouse gas protocol from a World Resources Institute and the World Business Council, which is the standard most companies use to measure their emissions. And it uses three scopes to classify emissions that are related to companies.
So, scope one is the direct emissions from sources that your company owns or controls—like things you’re actually generating energy on site with. Scope two is indirect emissions that are caused from generating the electricity that you purchase from the grid, so the stuff from your utility bill. And then scope three is all the other indirect emissions that come from your value chain upstream and downstream, like suppliers and vendors.
Scope one is the easiest to control, because it’s just fuels you’re burning directly. If you generate any power on site, like I know some universities and other larger campuses like hospitals do, you might replace some of your fossil fuels with biomass or just try to use less of it. Prime example, my alma mater, the University of Iowa, is burning oat hulls and miscanthus grass and these pellets made from paper manufacturing byproducts, so that they can reduce how much coal they burn. So, that’s pretty cool.
Scope two—emissions from electricity—is right in the facility managers wheelhouse, that’s everything from lighting upgrades to buying ENERGY STAR equipment when it’s time to replace things or smart building tech that helps you use your HVAC system more efficiently.
Scope three is where it gets hard, but facilities professionals can exert some influence here, too, when it comes to anything the Facilities Department specifies. It’s important not to forget about scope three, because a lot of times that’s the largest source of emissions. You can work with your vendors to improve their efficiency, which will not only reduce their emissions, it will save them money. You can buy products that are made closer to your facility, so they don’t have to be transported as far.
The third recommendation from this report—using strategic energy management—can also help you overcome some of the barriers to efficiency initiatives that you might find at your company. This is about investing in energy management software to figure out where you can achieve some operational energy savings. And the data that you gain from a monitoring system like that can also help you back up your funding requests when it’s time to invest in other energy initiatives.
You can also compare your post initiative results with the data that you gathered before you made any improvements to prove that what you did worked, which brings me to the fourth and final recommendation in the study: report on efficiency measures and progress in reaching the targets. Not just here on C-Suite, although they will want to hear it.
But your efficiency progress belongs in your corporate reporting, too, and there are a few reasons for that. Investors really like to hear that you’re lowering your financial risks and causing environmental damage is definitely a financial risk. Potential customers appreciate that you’re doing your part.
And if you publicize the specifics of how you reached your goals, like if you did large retrofit projects across a portfolio, or you made some other really compelling and interesting improvements, you can also inspire other companies to do the same thing. And your organization can set a trend instead of just following it. It’s the right thing to do, and on top of that, it’s really good for branding, too.
So, this report is available at aceee.org, and it’s called energy efficiency and corporate sustainability. Please check it out and then let me know what you think by messaging BUILDINGS on Facebook, Twitter or LinkedIn. Thanks for joining me today.
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