Climate Change & Environmental Services, LLC

Investing green in bad economic times

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Courtesy of Climate Change & Environmental Services, LLC

In early 2008, I wrote in the Advisor about the business case for implementing a climate change program at your company and the value it would bring to all elements of your business (“The Business Case for Reducing GHGs,” Advisor 704, February 4, 2008). The rationale included the following benefits:

• Proven reduction in operational costs through greater energy efficiency.
• Opportunities to generate carbon credits for potential additional revenue.
• Development of new, attractive products and re-package old ones.
• Use as a chip to fast-track important projects.
• Favorably impress customers.
• Satisfy shareholders and improve corporate image.
• Raise employee morale.

Since that time, the domestic and global economy has experienced a series of crippling shocks, reducing available capital for many companies. In the current economic turmoil, many organizations are being forced to re-examine their business strategies and how resources are spent.While all the above reasons for having a climate change program are still valid, the first item — the potential for significant cost reductions achievable in good times or in bad—is more critical than ever. In the past, reducing costs in areas such as energy use, water use, and waste generation and treatment was sometimes considered “not worth the aggravation.” Now the potential gains of doing so in a thorough manner are recognized as well worth the effort. In fact, tough times are prompting a leave-no-stone unturned attitude. Some business managers continue to believe that pursuing environmental savings and energy efficiency is a trivial pursuit or a hypothetical exercise, but experience is showing just the opposite.

For example, at the Bali global climate change conference in late 2007, a senior DuPont official reported that between 1990 and 2003, DuPont reduced total energy usage by 6 percent while business increased by 40 percent. According to DuPont, this saved the company over $3 billion in avoided energy costs.

While this surely required a major capital investment and may not be a valid benchmark for every company, it is an achievement that DuPont directly benefits from in these tough times. An energy assessment and upgrade is virtually guaranteed to have a direct economic savings for companies. EH&S managers who view their jobs as establishing and maintaining systems to demonstrate continuous compliance with rules may not see the kind of energy savings undertaken by DuPont as their responsibility. This may have been an acceptable position to take in the past, but business trends in US are changing. More and more companies are reassessing their structure by requesting that groups and departments of the organization demonstrate their business value.We know the value of reducing regulatory and public relations risk by avoiding or minimizing major disruptive incidents, injuries, deaths, and regulatory violations, but risk reduction may be hard to quantify by those assessing value. While sometimes a tough sell, having EH&S manage a program that will lead to direct cost benefits can increase your group’s value and visibility within your company.

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