Report: Energy should be viewed as a corporate asset

Deloitte white paper makes the case not only for protecting against future shortages and price increases, but for treating energy management functions as a competitive edge.
Written by Heather Clancy, Contributor

I have been blogging about green technology and energy efficiency efforts and such for close to four years now for the CBS Interactive family of Web sites, so I'm always taken a bit off guard when I pause to realize that some businesses still haven't begun the journey of managing their energy consumption. But the Deloitte Center for Energy Solutions has a great new white paper out that makes the case not only for managing corporate energy consumption more closely but for treating corporate energy as an asset.

The report, "Every Company is an Energy Company," provides plenty of concrete examples of why energy efficiency is helpful from a bottom line standpoint. But the analysis also shows there are close ties to a company's ability to innovate and to become more competitive. One of the examples it discusses most prominently is that of UPS, which has embraced a broad array of fleet management activities, including the recent addition of more than 245 compressed natural gas (CNG) trucks to a fleet of around 900 vehicles. Consider this one simple fact: during 2009, UPS drivers logged 77.3 million MORE miles than they did in 2000, but they used 3.2 million LESS gallons of fuel. The financial sorts have got to LOVE that factoids.

Deloitte's thesis is pretty simple: although some energy efficiency strategies may have minimal short-term gains, there is a compelling long-term case to be made for more closely managing a line item that today accounts for 5 percent to 20 percent of a typical company's costs. Who knows what that percentage will be if public policy follows down the same path as it has historically.

The Deloitte authors write:

"The sooner companies begin to understand and to activity manage their energy use--and their energy sources, including possible ways to produce their own energy--the faster they'll enter a more enlightened world, one with the potential for a number of advantages including significant savings, a better bottom line, greater customer loyalty, a cost-edge over competitors, lower business risk and a company-wide awareness of sustainability that can rein in resource waste across the board."

For those of you wondering, "So what's new here," Deloitte points to China, which has made a concerted effort to improve the "carbon efficiency" of its economy for the past 15 years. Since that time, that nation's reductions per unit of gross domestic product have averaged 4.9 percent annually. That compares with just 1.7 percent for the United States, the report reveals.

If you aren't motivated by positive things, than consider the risks if you choose not to do anything. The report's authors note: "The most crucial spur for action may be the risk that a company's operations could be disrupted by energy shortages, outages or an unplanned an unmanageable rise in the price of energy." In the United States, since the government seems little inclined to take meaningful action to address this likelihood, it's up to companies to protect their backs.

Here are several of the recommendations the white paper makes as a starting point:

  1. Give energy board-level attention
  2. Invest in detailed measurement of consumption
  3. Establish performance incentives for meaningful progress
  4. Include your supply chain in the strategy

This post was originally published on Smartplanet.com

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