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Deloitte: Sustainability Not a Fad; Businesses Committed to Renewable Energy

June 21, 2017

10 key findings from the latest Resource Study

By Peter Bronski

The headline reads loud and clear: “Sustainability is not a fad.” The fine print from consulting and advisory services firm Deloitte continues: “…businesses are committed to managing their energy usage more efficiently and responsibly. Despite low energy prices and dwindling federal support for environmental and climate protections, they remain dedicated to reducing their energy consumption and expanding their use of renewables.”

These conclusions come from Deloitte’s just-released seventh annual Resources Study, produced in collaboration with strategy and market research firm Harrison Group. The subtext for the 2017 edition is “Energy management: sustainability and progress.” Consider it further reinforcement that—as attendees of the recent Environmental Leader conference found—energy management is indeed as central as ever to the broader corporate sustainability story.

Researchers from Deloitte and Harrison surveyed more than 700 business decision-makers responsible for energy management practices at their respective companies. Here’s what researchers found.

Corporate energy strategies are maturing. While businesses remain focused on sustaining energy use reductions they’ve made to date, their broader strategies are evolving and maturing to include deeper energy efficiency measures, on-site renewable energy generation, and growing comfort with procuring additional renewable energy from third parties.

Energy management has become “table stakes” for competitiveness. Some 80% of businesses surveyed see reducing electricity use as essential to staying competitive from an image perspective; 84% see it as essential from a financial perspective. Yet perceived competitive advantage is declining, in large part because responsible energy management has become the new business as usual. Companies can’t afford not to do it. The situation is akin to green or sustainable real estate in markets where developers are “penalized” with a “brown discount” for not building to green standards.

Cost savings are only part of the story. While 54% of respondents still cite cost savings as the most important motivations behind their companies’ energy strategies, this number has dropped to its lowest level since 2014. More than 80% of companies now see energy management as inclusive of not only cost savings but also an opportunity for reducing risk, improving resilience, and creating new value. More than 60% note that their customers are demanding renewable energy procurement, and 65% actively publicize the portion of their electricity demand that renewable energy meets.

Clarity of corporate vision increasingly drives corporate energy mission. Half of respondent have a clean energy mission that fully aligns with the broader corporate vision. Nearly half (45%) further report that energy management is a key element of corporate strategy. And nearly as many (40%) say that new and innovative solutions are actively encouraged, experimented with, and deployed. All three of these factors have seen a year-over-year bump in 2017 vs. 2016.

Energy management hurdles are surmountable. Some energy management challenges—whether real or perceived—do exist, ranging from staffing challenges with internal resources and expertise, to strategic challenges such as identifying where to have the biggest impact and how to demonstrate ROI, to implementation hurdles such as internal bureaucracy. But encouragingly, none of these evidenced a deal breakers, perhaps reinforcing the growing maturity of corporate clean energy strategies.

Corporate investment in energy management is growing. While the number of companies that have dedicated energy management budgets has declined slightly (from 93% in 2015 to 90% in 2017), of those that do have a dedicated energy management spend, the portion of corporate capital budgets dedicated to energy management has grown over that same period, from 17% to 21%.

A “no regrets” portfolio of low-hanging fruit emerges. Installing motion/occupancy sensors and other timing sensors, leveraging building energy management systems, participating in utility programs such as demand response initiatives, and installing or procuring renewable energy such as rooftop and offsite solar PV represent a tried-and-true suite of low-hanging fruit that continues to pay dividends for corporate energy strategies.

Businesses are achieving greater year-over-year energy savings. Corporations averaged annual energy use reductions of 14% in 2014, which grew to 19% in this year’s report. Many corporations are achieving even greater year-over-year energy savings. Some 21% achieved >30% annual energy use reductions and more than half (53%) achieved >10% reductions.

On-site renewable energy takes a majority stake. Nearly 6 out of 10 businesses (57%) now have at least some on-site renewable energy generation, primarily solar PV. No surprise: energy supply diversification, resilience, price certainty, cost savings, and achieving sustainability targets ranked among the chief motivators. Notably, those corporations with on-site renewable energy generation still got an equal amount of renewable energy from offsite renewables.

The power purchase agreement (PPA) gains popularity. Just 6% of respondents are using unbundled, purchased renewable energy credits (RECs) to achieve corporate clean energy targets. In contrast, roughly half are actively working to procure more renewable energy. The traditional power purchase agreement (53%) and virtual power purchase agreement (43%) are the most popular strategies, followed by on-site renewables (30%) and utility green power programs (24%).

To read the full report, the PDF is available from Deloitte here.

Image credit: iStock | shansekala

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