The time has never been more urgent to reduce energy costs. Electricity prices are increasingly volatile and external pressure to show progress on sustainability is at an all-time high. The Paris Climate Change Agreement was the most comprehensive, universally acknowledged framework ever signed, and despite current political conditions, it’s clear that businesses are facing increased pressure to reduce overall carbon emissions and to factor extreme weather and resource shortages into revenue projections. To that effect, more than 150 of the world’s largest companies have committed to use climate science to set targets for reducing greenhouse gas emissions. Moreover, the substantial, long-term cost savings that result from sustainability efforts cannot be ignored.
So, let’s say your organization faces some of these clear opportunities to reduce energy costs, and your key decision makers all agree that it’s time to do something. What’s the next step? Of course, you can communicate your priorities throughout the organization, but how will you know your strategy is being successfully executed throughout every arm of your business?
Unfortunately, it’s commonplace for businesses to fail to align their departments to communicate and collaborate effectively. In fact, this lack of organization was identified as the most common obstacle to energy management progress according to research recently published in the Harvard Business Review. It’s an easy stumbling block to trip on, and can limit your ability to identify and capitalize on savings opportunities to stem the flow of a long-term drain that energy costs can have on your organization’s financial performance.
The Harvard Business Review report based on this research provides some guidance on setting up your business to execute a successful energy strategy. Specifically, the article points to the importance of a C-level mandate. What does this encompass? It goes further than just weighing your options for energy management and choosing an approach: successfully aligning your organization requires action to make the CEO’s commitment to energy management a clear priority to the rest of the organization. One way to effectively communicate the importance of this effort would be to appoint at least one C-level executive to head up a cross-functional team tasked with developing and executing the organization’s strategy. This team should span all departments that may have a hand in energy—including operations, procurement, and sustainability, among others—and will foster accountability to ensure progress is being made.
Choosing this internal energy ambassador, if you will, and developing their team will be different for every business. The key stakeholders responsible with ensuring their teams are contributing will vary depending on your organization’s energy needs and financial priorities.
The Harvard Business Review article looked to Microsoft and EMC (now a division of Dell) as examples of two companies in the same industry with similar energy needs, but who have adopted different approaches when developing their cross-departmental energy teams. Microsoft’s team is accountable to the VP for cloud infrastructure and operations and the VP for technology and civic engagement. In contrast, the energy team at EMC reports directly to the CFO. This isn’t to say that either approach is more successful than the other, but that each was developed with the company’s individual business needs in mind. What it really boils down to is turning away from the commonly held perception that energy costs are not easily managed - to an understanding that long term savings are possible, and important to customers that value and expect sustainability efforts from the companies they do business with.
If you’re going to make these decisions, the first thing you need to do is determine where your business stands currently. Utilize research into emerging leading energy management practices to develop a visual breakdown of how your organization’s capabilities compare to industry benchmarks, and provide custom guidance on areas for improvement.