Fifty-two percent of companies rank eco-efficiency as a high or growing priority, according to a PricewaterhouseCoopers (PwC) poll of more than 600 business professionals. The results of the survey, conducted during a recent webcast, indicate that businesses are increasingly looking to more environmentally and socially responsible methods of driving financial savings and creating competitive advantages.
“Identifying innovative cost reduction opportunities through a sustainability lens is top of mind for the C-suite,” said Don Reed, managing director of PwC’s Sustainable Business Solutions practice. “President [Barack] Obama’s recent speech on climate change heightened awareness of corporate action to reduce emissions. There are a range of financial, environmental, and reputational benefits for organizations taking a more eco-efficient approach, and well-positioned companies are using sustainability initiatives to gain a competitive advantage in their markets.”
The PwC’s survey results reveal that eco-efficiency initiatives meet a wide variety of business objectives. More than half (54 percent) of respondents named cost cutting as the main objective for their companies, followed by 30 percent who are focused on enhancing corporate reputation, and 12 percent on managing risks.
Reed told me in an interview that PwC defines eco-efficiency as “identifying innovative cost reduction opportunities by reducing consumption, increasing usage efficiency and unlocking incentives and rebates.” He noted that eco-efficiency is typically thought of as relevant only to energy consumption. “However, fuel, waste, and water eco-efficiency demand opportunities are gaining attention,” he added.
Eco-efficiency is part of a company’s total sustainability strategy, according to Reed. “By identifying opportunities across the full organization and taking advantage of the financial incentives offered by governments and utilities, companies can quickly realize direct and indirect financial savings. Beyond the cost focus, company leaders are looking at other motivating factors including strengthened reputation, reduced risk, and improved customer and employee experience,” he said.
According to the results, investment is a key to achieving goals. However, 38 percent of respondents said funding is one of the biggest barriers to implementing eco-efficiency. Other challenges include management support (21 percent) and internal capability (21 percent).
In a new report issued by PwC, the firm advises companies to highlight additional cash benefits including utility rebates, maintenance savings, and government incentive programs, in order to secure funding. In some cases, utility providers may cover or subsidize capital costs for energy-efficient equipment. In addition, some federal, state, and local governments provide tax credits, grants, or loans to spur the adoption of renewable energy.
Energy usage (52 percent) and waste reduction (27 percent) are the two top areas where respondents see room for improvement in their existing eco-efficiency strategies. Opportunities to implement eco-efficiency initiatives vary, but common areas that are ripe for returns include lighting, on-site solar, fleets, water, and raw materials, according to PwC.
The report offers four tips for how companies can maximize their own eco-efficiency:
1. Turn to your talent. The people in the trenches — facilities managers and other staff — are often the ones best suited to find efficiency opportunities, according to PwC. The report offers the example of apparel manufacturer Hanesbrands, which uses energy “treasure hunts” to encourage employees to find opportunities. These efforts have reduced energy consumption by more than 20 percent and water by 30 percent, saving $20 million over five years.
2. Watch new technologies. PwC recommends keeping an eye on emerging and established technologies which, while perhaps not economical yet, may become so in a year or two. U.S. solar energy prices, for example, dropped by 24 percent in the past year to $3.37 per watt.
3. Manage by metrics. The old adage “you can’t manage what you can’t measure” applies strongly to eco-efficiency. This type of performance tracking is expected by stakeholders across all industries that value a data-driven approach. PwC advises company leaders to ensure that all internal systems support performance tracking for both financial and environmental measures.
4. Design and repeat. Products and processes need to factor in eco-efficiency from the design phase. According to the report, leading companies use a “design once and deploy everywhere” philosophy, which allows them to repeat early successes and best practices.
“Being more efficient and reducing environmental impacts means thinking and acting differently and companies need to learn how to understand and measure benefits of their eco-efficiency initiatives to really maximize the value and returns,” said Reed.