The European Union is steadily moving toward a united energy front. In 2012, the EU created the Energy Efficiency Directive and set out to reach 20 percent energy efficiency within eight years. According to the European Commission, the executive body of the EU, this directive will require all EU countries to use energy more efficiently during all stages of the energy chain. This will include production to final consumption.
What has to be completed
European companies have been aware of this directive for several years now, and many countries will begin enforcing the rule beginning this December. Executives who see the business value or operational benefits of increasing efficiency, particularly within the automotive industry, stand to benefit the most from complying and implementing applicable solutions.
A large majority of manufacturers receive various parts from suppliers, typically classified as tier one and tier two. While supply chain coordination and full-scale compliance benefits companies of all sizes by allowing them to avoid fines which subsequently drive up business costs, it doesn't necessitate immediate action on the part of individual companies. It is important to note that if a supply chain affiliate or auxiliary operation falls out of compliance, associated companies that conduct business with these noncompliant affiliates won't necessarily fall out of compliance themselves or face business interruptions. The directive applies only to individual companies, which means noncompliance risks are individualized as well. On the other hand, companies that aim for a united compliance stance may be on the forefront of implementing a comprehensive energy efficiency strategy, which has its own rewards in the form of cost-savings and general business continuity.
To better understand the immediate and long-term financial payoff of sustainability programs, manufacturers can conduct extensive audits, or work with third-party EHS experts to complete this task in a more efficient manner. In effect, auto executives can compile all of the risks, whether known or unknown, and burdensome processes their organizations face into a single cost-benefit analysis, allowing themselves the ability to locate costly inefficiencies and potential health problems. The key is that sustainability is best addressed when incorporated into company-wide budget matters, from the boardroom to the plant floor, allowing executives to derive the benefits of sustainability within the confines of long-term financial feasibility and growth potential.
In addition, the directive doesn't only relate to, or govern, the development of new plants. Research, development and sales offices also fall under reporting obligations. This fact further reinforces the necessity to confront the directive in a holistic manner, looping in all business functions under the larger 'energy efficiency' umbrella.
In the long term, audits can pay off through increased efficiency - a byproduct of keeping workers safe and happy - and through laying the groundwork for full compliance with the directive. As more companies begin enforcing the directive, adhering to its standards and meeting its goals will become a matter of following the law of the land. The necessity of integrating and sticking to an effective action plan cannot be understated, as potential legal penalties and fines will be avoided once organizations implement necessary changes. And in a world of increasingly competitive markets and regulatory oversight, continued infractions will negatively affect bottom lines and counteract any measures to cut costs or drive revenues.
Thinking big, starting small
Sustainability efforts are a 'here and now' reaction to required compliance mandates, such as the EU energy directive. Recognizing the need to not only comply, but to adjust company culture to align with current energy demands and business opportunities can be a beneficial objective of every executive. Dramatically overhauling operations may not be necessary, either. Smaller adjustments such as stricter monitoring and reporting procedures can be essential to ascertaining corrections that can be made and tracking progress toward sustainability goals. With these audit snapshots, auto manufacturers can supervise their compliance status with EHS regulations and uncover where their business can capitalize on opportunities inherent in the new global energy-efficiency business climate.