A message from the Executive Director
The Business Case for Energy Efficiency
Energy Efficiency as a Competitive Advantage is the theme of NEEP’s upcoming 2007 Northeast Energy Efficiency Summit (May 10, Providence, R.I.). It is also the focus of several recent news articles, book publications and corporate and project announcements. Everyone addressing this subject agrees: considering environmental risks and incorporating environmental responses into corporate strategies (including and most importantly energy efficiency) drives innovation which in turn increases revenues, reduces costs and fuels economic growth.
In “Competitive Advantage on a Warming Planet” (published in March 2007 in the Harvard Business Review), Jonathan Lash and Fred Wellington of the World Resources Institute provide a guide for identifying the business risks associated with climate change. They outline steps to manage those risks while pursuing opportunities. Lash and Wellington urge businesses to consider the implications of climate change on their costs and revenues. They identify regulation, litigation, technology, supply chain, reputation and physical risks as impediments to corporate success moving forward in a world addressing climate change. Noting that “it’s not enough to do something; you have to do it better-and more quickly- than your competitors,” the authors point out specific steps businesses must take to remain profitable, including quantifying the carbon footprint of your businesses, identifying risks and opportunities and adapting business practices in response to these risks – including increased energy efficiency.
Like Lash and Wellington, Dan Esty and Andrew Winston also address the business world’s response to environmental issues in their book Green Into Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value and Build Competitive Advantage. Esty and Winston explain that environmental considerations kick start innovation, increase revenue and are increasingly a focus of corporate strategies. The authors note that “a Green Wave is sweeping the business world” and that those who ride that wave “find ways to be more innovative than their competitors.” As a result, businesses are able to pioneer more inventive products that generate customer loyalty and increase revenues; reduce operational costs through environmental and energy efficiency improvements; and mitigate business risks leading to a competitive advantage within their field.
Another leading voice for energy efficiency as a competitive advantage is David Goldstein, Energy Program Director for the Natural Resources Defense Council and author of the new book Saving Energy, Growing Jobs. David contends that environmental policy is not the enemy of business but is in fact a key driver of economic growth. David’s book explains that policies that protect the environment lead to greater business innovation by encouraging creative thought, cutting edge product development and improved business processes. This in turn leads to more productive, profitable and cleaner business practices. Economic growth and new job development are a consequence of increased productivity. He points to several examples of influential companies undertaking innovative improvements to address environmental concerns and realize bottom line benefits, including Dow Chemical. Dow implemented a waste minimization program in response to complaints about the amount of toxins it was releasing from one particular plant location. By minimizing waste, the plant was able to provide the same product output while reducing toxic emissions by 43 percent. As a result, Dow gained a 180 percent return on investment and has undertaken a broad program of efficiency and waste minimization for its operations and that of its suppliers. An excerpt from Saving Energy, Growing Jobs is available in this newsletter.
Wal-Mart, the largest retailer on the planet, has likewise committed to energy efficiency and waste minimization as a core business strategy with a commitment to reduce energy use in all of its new facilities by 30 percent by 2009 and by 20 percent by 2010 in all of its existing stores. Likewise committed to zero waste and 100 percent renewable energy, Wal-Mart operates two experimental stores as living laboratories to test innovative designs, technologies and products to achieve its goals. Wal-Mart extends its aggressive sustainability goals to its suppliers and to its customers. For example, to reduce the energy bills of its customers (and increase disposable income) Wal-Mart is in the midst of a national campaign to sell 100 million compact fluorescent bulbs to its customers in 12 months.
The Bank of America is also cashing in on sustainability. Chief Executive Officer Kenneth Lewis announced in March a $20 billion, ten-year initiative to support the growth of environmentally sustainable business activity to address global climate change. The bank’s initiative encourages development of environmentally sustainable business practices through lending, investing, philanthropy and the creation of new products and services. Energy efficiency is a key strategy supported by the initiative with $18 billion in lending, advice and market creation to help commercial clients finance the use and production of new products, services and technologies to increase efficiency and sustainability. The bank’s sustainability initiative includes a commitment to increased efficiency in its own operations including $100 million for energy conservation measures in its existing facilities and $1.4 billion to achieve LEED certification in all new construction of office facilities and banking centers.
Also on the cutting edge of sustainability and energy efficiency, the City of Cambridge, Massachusetts announced in March a $70 million energy efficiency program through the Cambridge Energy Alliance to conserve energy in virtually every home and building in the city. With the goal to reduce energy demand by 50 megawatts and energy use by ten percent - city officials expect that the large majority of the savings will come from educational institutions and large commercial and industrial facilities which account for 69 percent of the city’s energy use. The collaborative effort assisted by the Henry P. Kendall Foundation will rely largely on private financing provided by Bostonia Partners LLC, revenues from participation in ISO New England’s recently established Forward Capacity Market, and support and services from NSTAR, the distribution company serving the city with ratepayer funded energy efficiency programs. The initiative inspired Governor Deval Patrick to announce a $2 million fund to assist Boston and four other Massachusetts cities to similarly undertake massive energy efficiency campaigns. This recent attention to energy efficiency as a competitive advantage has made it clear that a new strategy for business development has emerged and that energy efficiency can be an effective response to the business risks of climate change.
NEEP’s 2007 Northeast Energy Efficiency Summit will focus on these very themes. Through presentations and panel discussions, the conference portion of the Summit will address energy efficiency policies supportive to economic development and will highlight several successful examples of the business applications of energy efficiency. An exhibition of innovative energy efficiency products and services will be available throughout the day. For more information on the Summit, see the related article in this newsletter.
The Summit also features a dinner celebration to honor the 2007 Northeast Business Leaders for Energy Efficiency. Led by a keynote address from David Goldstein, this event will recognize organizations across the Northeast who have taken innovative steps to incorporate efficiency improvements into their corporate strategies and who are realizing competitive business advantages as a result.
I hope you will join NEEP at the 2007 Northeast Energy Efficiency Summit to learn more about this hot topic from those who are implementing energy policy and those who are using it to their competitive business advantage.
Sue Coakley
Executive Director
