In the world of energy efficiency and sustainability, the biggest financial and environmental opportunities are often right under a company’s nose. However, if the company does not have the proper tools and data -- or if it is too focused on making smaller efficiency tweaks while losing sight of the big picture -- these larger opportunities can be easily overlooked. This is one of the most substantial takeaways from my summer-long EDF Climate Corps fellowship at Diversey, Inc.
Diversey is one of the world’s largest manufacturers of commercial cleaning, sanitation and hygiene solutions with about 10,500 employees, annual sales revenue of $3.2 billion and distribution channels in over 165 different countries. Headquartered in southeastern Wisconsin, the privately held company manages a global footprint of offices, distribution warehouses and manufacturing sites.
Drawing on its 100+ year heritage of strong leadership in environmental issues and sustainability, Diversey continues to lead its industry and the global business community in contemporary thinking on these issues. One of the most significant examples of this leadership is its participation in the WWF Climate Savers program. Initially, Diversey committed to reducing its total carbon emissions on an absolute basis by 8 percent by 2013, using its 2003 levels as a baseline. Last year, Diversey impressively tripled this commitment to 25 percent by 2013, demonstrating its progressive approach and commitment to the program. In order for Diversey to deliver on this commitment, the company first had to better understand and quantify its current footprint by collecting energy consumption and carbon emissions data for all its global locations.
As the company assessed its carbon emissions within its own operations, it quickly learned that the largest opportunities for both cost savings and carbon reductions would be realized in improvements to the fuel efficiency of its global auto and truck fleet. This can be done by switching to vehicles with the best fuel efficiency in their class (this alone has saved the company more than $1,000,000 annually) or finding innovative ways to reduce their global internal travel. Additionally, instead of analyzing projects individually, Diversey began to manage its sustainability initiatives as a holistic and synergistic portfolio. Under this operating model, projects with a stronger financial performance help to offset and finance those projects with longer paybacks but significant opportunities for future savings.
The energy and carbon savings Diversey has been able to find so far have largely resulted from a focus on a three-part strategy: avoidance, efficiency and generation.
- Avoidance: The first and most often overlooked strategy of avoidance involves asking difficult questions such as, “do we really need to do things this way?” and “what are the minimum resources needed to accomplish the given business objective?”
- Efficiency: Once opportunities for avoidance are examined, Diversey then focuses on efficiency by redesigning and optimizing its business processes and energy systems to be as efficient as possible.
- Generation: Finally, the company looks at ways to supplement its energy needs through generating solutions such as the installation of wind turbines and fuel cells.
By looking at opportunities through a big-picture lens and applying this systematic three-part strategy, Diversey finds significant savings and redefines how the company looks at sustainability initiatives.
My role as a Climate Corps fellow this summer has been to help develop and systematize the financial and business tools that will allow Diversey to continue to identify and prioritize these new opportunities for energy savings and carbon reductions in the years to come. It is certainly true that you can’t manage what you can’t measure. Therefore, by moving toward data-driven models, Diversey’s executives are able to make better-informed investment decisions in real time. For example, due to significant differences in global energy costs and carbon emissions factors, the same two energy-reduction investments can have vastly different economics and carbon benefits depending on where in the world they are implemented. Having the right data and tools in place allows Diversey to make the right choice in situations like this every time.
By sharing the aforementioned tools and strategies with both suppliers and customers, Diversey hopes to spread the knowledge and best practices of sustainability across its supply chain and further differentiate itself from the competition.
Adam Ostaszewski is a 2010 EDF Climate Corps fellow at Diversey Inc. and a member of Net Impact. He is an MBA candidate at the Olin Graduate School of Business, Babson College. More coverage of the Climate Corps program is available at GreenBiz.com/edfclimatecorps. This content is cross-posted on the Environmental Defense Fund Innovation Exchange Blog.