More businesses are discovering the positive outcomes associated with reaching carbon reduction targets transcend the expected ethical and sustainable spheres. Once considered potential fringe benefits, these additional advantages of emissions reduction are now validated and traceable.
It’s a major shift to transition business critical energy sources from utilities that we rarely think about (until they fail us) to systems residing on or near facilities. This is especially true for renewable generation resources, which require capital expenditure (CAPEX) investments, yet little ongoing operating expenses (OPEX) investment. This dramatically differs from the monthly utility bill of old
Operational Benefits of Carbon Reduction Commitments
Boards or leaders weighing the benefits of an emissions reduction target or sustainability leaders seeking to socialize an energy initiative with key decision makers would be wise to educate themselves on the exciting opportunity to deliver many operational benefits beyond carbon reduction. When calculating the value of achieving carbon reduction targets, it’s critical to account for all operational gains. These additional advantages include cost reduction, resiliency, brand perception, and talent attraction. We explore each one below.
Decrease Energy Costs Without Capital Outlay
Utility prices have risen as much as 3.86% annually in some parts of the U.S. Even businesses that have implemented efficiency measures, thereby leveling their consumption, have continued to see their utility bills increase. Developing renewable onsite energy systems to address carbon emissions can also decrease energy costs over the 20 to 30-year lifetime of the installed system.
While some organizations invest their own capital to build out onsite energy system, this isn’t the only option. Capital providers are more eager than ever to fund these projects with a contracted rate-per-kilowatt hour, which, in some cases, is lower than the business’s current utility rates depending on the location and system configuration.
Increase Energy Reliability
For industries such as food and beverage, biotech and pharmaceuticals, mining, grocery, and retail, reliable energy is mission-critical. Even a single energy interruption can cost businesses millions. Whether energy disturbances are due to public safety power shutoffs or wildfires in the Western U.S., hurricanes and flooding in the Southeast, deep freezes in the midwest, or other inclement weather, these events can negatively impact operations and the bottom line.
Unlike using carbon credits to offset emissions in an effort to reach carbon neutrality, onsite energy systems, especially those including energy storage technologies, can provide resiliency when the larger grid experiences blackout. During the February 2021 deep freeze in Texas, the CEO of Select Milk Producers stated, “Farmers who can’t get their milk processed are dumping $1 million worth [of milk] daily.” In today’s ever changing environment, the resilience benefits of onsite energy is a major benefit in the value equation.
Improve Brand Value and Outpace Competition
Consumers vote for sustainable brands and products with their dollars. Recent data from Harvard Business Review states, “In more than 90% of the CPG categories, sustainability-marketed products grew faster than their conventional counterparts.”
Emissions continue to be a primary focus in sustainability discussions. Onsite energy can address Scope 2 (emissions from purchase of electricity, heating and cooling) and in some cases Scope 1 (direct emissions). Taking action on carbon neutral commitments by developing onsite energy will set companies apart from those making empty commitments. Consumers are becoming increasingly aware of greenwashing without action. The brand damage of not acting on commitments made could end up being worse than not making commitments in the first place.
Contribute to Workplace Appeal and Employee Morale
Lastly, attracting top talent is an often overlooked benefit of enacting carbon reduction commitments. According to a Pew Research Center analysis, millennials are now the largest generation in the U.S. labor force. Millennials are more environmentally conscious than any previous generation. Attracting and retaining quality talent is the lifeblood of any longterm business, so tangible sustainability action must be part of every company’s human capital plan. Furthermore, the satisfaction of being part of a company that is making a difference is an intangible value add for existing employees.
Company-wide Endorsement for Energy Initiatives
Sustainability, facilities, and operational leaders who are aware of the far-reaching and uniting benefits of renewable onsite energy can enroll advocates across risk management, finance, marketing, and HR in the quest to meet carbon neutral commitments. Onsite energy initiatives should no longer be viewed as exclusively addressing ESG considerations, rather the value equation becomes even more compelling when the holistic business benefits are taken into account.
Written By Dan Roberts
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