2019 could be sustainability's finest hour — here's what stands in the way
This article is sponsored by Schneider Electric.
Last year was a landmark one for corporate renewable energy adoption and sustainability initiatives. However, these aren’t new endeavors. Sustainability has been on a slow burn for decades. So, what’s the motivation behind this new, more rapid push for corporate action? And what are the obstacles facing continued forward momentum?
As corporate trendsetting continues to set the pace for global environmental action, understanding the state of energy and sustainability progress becomes increasingly important.
Findings from a new report published by Schneider Electric and GreenBiz research shares survey data compiled from over 300 sustainability and energy professionals, all of whom represent businesses with $100 million or more in annual revenue. The data demonstrates corporate movement in key progress areas, including public commitments to sustainability and cleantech adoption. However, ineffective data management and mismatched perceptions on the importance of financial capital remain as obstacles.
Public commitments accelerate action
One of the most apparent signs of progress is the quickening pace of publicly announced corporate energy and sustainability goals. More than half of the companies responding to the survey already have made public commitments to reduce their environmental impact, while 9 percent of respondents are considering a public commitment in the near future.
The motivations for companies with public goals differ dramatically from those without. Respondents whose companies have made public commitments say the urgency to mitigate climate change is a large factor. They also see public commitments as a competitive differentiator and as a way to increase brand awareness. These business-forward motivations show the link between perception and progress. Companies that make public commitments understand that leadership in energy and sustainability fundamentally improve the business. And they’re not wrong. Recent research by CDP indicates that companies leading on climate action outpace others in the stock market.
To meet their public goals, companies are turning to energy efficiency and renewable energy in droves. Ninety-three percent of survey respondents have implemented energy efficiency projects and 63 percent are employing either on- or offsite renewable energy. Companies with public goals are also about 50 percent more likely to adopt distributed energy resources (DERs) such as energy storage.
Where corporate efforts fall short: Although companies with public goals gravitate toward DERs, these advanced technologies have less general support and adoption. This may be because, compared to energy efficiency and renewable energy, the perceived cost or efficacy of these technologies remains a barrier.
Companies are also missing opportunities to capitalize on strategic energy procurement. Especially as the levelized cost of energy continues to fall, strategic sourcing can help stabilize volatile budgets and pay quick returns. However, only 29 percent of respondents cited energy purchasing as one of their company’s top cost-saving initiatives.
Growing pains in the big data push
As the energy transition accelerates, continued reduction in the cost of sensing technology and cloud-based processing make it easier for organizations to collect granular data on their resource consumption. This provides more optimization opportunities than previously possible. However, the ever-increasing amount of data also can be daunting to use and share.
Forty-one percent of those surveyed report having insufficient tools to use the data they collect. Even more concerning, 40 percent of respondents note that they do not have the right internal data expertise to act.
Meanwhile, there is contradiction on how to best gain energy and sustainability project approval and funding. The research shows that senior executives tend to blame inadequate data and a poor business case as the reasons more projects are not approved, while operational teams typically cite a lack of cross-organizational collaboration and financial capital.
These problems were endemic to the research participants, regardless of how nascent or advanced their company was in its resource management. Both problems are tied to the same issue: proper data use and dissemination. The report shows that only 22 percent of companies properly share collected data across procurement, operations and sustainability departments, and 21 percent aren’t sharing data at all.
Where corporate efforts fall short: The research points to a variety of barriers that make data sharing a challenge. Many respondents reported issues with data quality. Plus, their companies struggle to manage and evaluate the information captured due to the sheer volume of bits and bytes, which in turn limits the value of the data and potential for collaboration.
These findings suggest that once energy and sustainability teams learn to effectively use and share data, they have more success in project approval. It becomes easier to make the business case to secure funding with the data to prove (or effectively predict) a project’s ROI.
Stepping up, leaning in
The report confirms that corporate sustainability and energy practices are evolving and accelerating. And major companies are leading the way for the rest of the private sector; regardless of size, all business have an important role in the effort to slow global warming.
Companies that are not optimizing their energy and sustainability programs are at risk of being left behind. What’s more: the economic downside becomes hard to ignore. By setting public goals, buying energy smarter and using data effectively, among other activities, companies from every industry can lead in and capitalize on the energy transition.