Part 1: Energy
This blog post is Part 1 of a 3-part series focusing on energy, water and waste optimization in commercial facility management and industrial operations. Subscribe to The Protiviti View to follow the series.
With growing interest from stakeholders and regulators, it’s becoming increasingly important for organizations to get their environmental, social and governance (ESG) reporting right. Last March, the U.S. Securities and Exchange Commission (SEC) proposed new requirements for registered businesses to include climate-related disclosures in registration statements and periodic reports. Protiviti issued a report with an analysis and recommendations, but in brief: The disclosures would include the climate-related risks likely to have material impacts on business operations, such as greenhouse gas (GHG) emissions, whether directly or indirectly made (Scope 1 and 2, respectively), or incurred via upstream and downstream activities in the business’s value chain (Scope 3). These disclosures would be included in an organization’s audited financial statements, and SEC registrants would also be required to furnish attestations in some cases.
At present, reporting those emissions is somewhat of an improvisation exercise for many organizations, hamstrung by limited access to GHG data, especially data not produced within the immediate enterprise. Still, identifying what needs to be measured — and then improving performance against those metrics — remains the most meaningful approach over the long term.
GHG emissions and energy are just one component of the environmental performance picture, which also includes water, waste, packaging and more. In this first post, we focus on ways to reduce emissions and energy consumption in business operations because we see it as the most impactful of sustainability practices. We’ll discuss actions leaders of facilities (whether office buildings or oil refineries) can take to actually move the needle on sustainability, as opposed to simply checking the box for regulatory compliance.
What a baseline buys you
Data drives operational change. Creating a baseline using data is critical for an organization to understand its GHG emissions and energy consumption and establishes a foundation for reporting year-over-year improvements in a way that’s credible. Emissions baselines and inventories are encouraged by the U.S. Environmental Protection Agency (EPA) and can help organizations participate in GHG programs and markets, even winning them recognition for early action.
Many organizations start by reviewing their facilities’ energy bills in line with mandatory benchmarking ordinances for buildings’ environmental performance. Baselining energy consumption and its sources is a good way to uncover quick wins that can result in immediate or near-term improvements. It sets the stage for understanding the ROI and carbon mitigation opportunities of simple projects like switching to more energy-efficient LED lighting or installing occupancy sensors to build smarter workspaces.
Tracking and monitoring
A myriad of energy dashboards are available for tracking and analyzing building performance, from free tools such as the EPA’s ENERGY STAR Portfolio Manager to commercially available building management tools. This class of tools helps businesses identify underperforming buildings, set investment priorities and verify efficiency improvements by assessing whole-building energy performance and tracking changes over time. Such tools help pinpoint the improvements that demonstrate progress toward sustainability goals.
A building management system (BMS) can provide a deeper level of analytics, beyond free tools like the one from the EPA. These solutions offer dashboards to visualize operational-performance data against regulatory standards and the organization’s own key performance indicators. BMS solutions provide near-real-time data to inform operational decision-making. These systems can integrate with other ESG software to support an overall sustainability strategy. The insights they generate can inform energy procurement and energy portfolio strategies, optimizing costs and identifying areas of underperformance.
Many commercial and industrial entities, however, find that they have already exhausted those improvements, deemed the “low-hanging fruit,” and are looking for more strategic and impactful opportunities.
Beyond the basics: driving improvement
For companies seeking a granular understanding as well as finger-level control of building performance, Internet of Things (IoT) building sensors and other smart technologies can deliver that next level of intelligence. An IoT-enabled building can help facilities managers proactively take charge of the health and performance of electrical and mechanical systems and industrial processes to drive improvements. IoT sensors can detect or switch off inefficiently running equipment, enable predictive maintenance to maintain equipment at its optimum efficiency, automatically adjust systems to respond to temperature or humidity changes in sensitive environments, and more.
An interconnected system of IoT sensors can go even further, putting a real pulse on a facility’s mission-critical infrastructure and enabling real-time orchestration to advance sustainability goals for the business without adversely affecting operations. Such systems, for example, are well-suited for integration with the demand-response programs many utilities offer. A utility receiving sensor information will automatically send alerts about high-usage equipment during peak times or signal low-demand periods to leverage in real time. Participating in these programs not only can move the needle on energy usage but often comes with significant financial incentives for companies.
Beyond that, organizations can consider implementing renewable energy solutions, microgrids and onsite generation, as well as advanced metering systems that support real-time energy management, cost allocation and sub-meter billing.
Last, organizations should test and recommission electrical systems and buildings to ensure that they’re set up to operate efficiently and reliably. Recommissioning projects help control costs and ensure timely equipment updates to maintain the health and safety of the electrical systems and facility occupants.
Final thoughts
Demand for ESG metrics and reporting from regulators is unlikely to subside, and organizations cannot afford to wait and see what final rules will be in place before they start to pay closer attention to their energy and emissions footprint. Leaders are looking for opportunities to run smarter, more energy-efficient operations and bring facilities into the digital age. It falls on operational and facilities managers to identify these opportunities and any help or resources needed to assess, design and implement the road map for improvement.
In our next two posts, we’ll address programs to manage water consumption and waste reduction — for offices, industrial facilities, and everything in between. Subscribe to this blog to receive these next installments and to stay informed as the conversation about disclosure requirements evolves.
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