Forbes.com recently published a very interesting essay that was written by Nick Main and Joseph Stanislaw. In the article, the authors correctly note that every company must be energy-conscious in order to achieve maximum profitability.

 “Energy consumes a significant portion of an enterprise’s spending, accounting for 5-20 percent of a typical company’s costs. Yet, many organizations have a poor understanding of their energy consumption and how to reduce it. Their unawareness of how they consume energy is analogous to an individual paying for a grocery cart full of food at the supermarket, but without knowing what is in the cart or how much any individual item in the cart costs…..There’s no reason for companies to wait a decade – or even a year – to move towards an energy strategy.”

Until a company acknowledges that energy consummation is a reducible expense, it will continue to unnecessarily expend resources that it could be using elsewhere.

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A follow up on Stakeholder Influence on a Company’s Public Reporting 

Energy is the telecommunications industry’s biggest operational expense. For example, a large cable television company can spend more than $300 million on electricity annually to deliver programming, Internet and digital phone service to its subscribers. However, rising global energy prices and the continued economic downturn are forcing many in the industry to seek ways of reducing the amount of energy they consume.

In today’s world, an increasing number of companies are beginning a journey towards environmental sustainability; however, many corporate leaders are finding that it is not the easiest road to travel.

Common issues, such as lacking the capital needed to make an initial investment towards sustainable practices and methodologies, or not having sufficient knowledge of which “green” changes will actually have a positive impact, can be a direct hindrance to companies seeking to improve their environmental performance.

However, there is a third hindrance that Kathy Miller, CEO of Miller Consultants, has identified-an equally restricting obstacle that can plague even the most enthusiastic visionary.

In her article, “Sustainability: Can Leaders Meet the Challenge?” Miller wrote, “Another significant roadblock is that many companies lack a common definition of what it means to be sustainable. Some companies define it in terms of compliance with environmental regulations, while others, on the opposite end of the spectrum, see it as creating products and processes with a primary focus on efficiency of environmental management and effects on social welfare. Without alignment around the definition of sustainability, leaders cannot craft realistic goals and plans which can actually be implemented. “

While having a definite, realistic goal structure is essential to making sustainable progress, the capability to actually fulfill these goals is equally required. In some cases, the simple act of completing the first objective can create momentum-like effect which can make achieving future sustainability targets seem more attainable.

One area that companies are targeting as an initial focal point for improvement is energy efficiency. Miller wrote, “To be sure, benefits of energy efficiency and compliance are substantial. Energy-savings programs affect the bottom line directly. Likewise, strategies such as the investment in renewable energy sources mitigate the risk of potential fluctuations in energy availability.  And companies that extend their focus beyond energy consumption and generation report that often sustainability initiatives become a springboard for learning and innovation. “

For leaders that are looking to jump-start their company’s trek to a more sustainable future, it is becoming evident that energy efficiency is an excellent place to start. 

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Despite current legislation in Congress attempting to block any requirements of greenhouse gas (GHG) emission regulating or reporting from organizations, there has been an increasing trend among large companies to voluntarily report on issues relating to sustainability. Giants such as Bank of America, Avaya, and Best Buy are among some of the many US-based companies who have released company-wide data on GHG emissions as well as details regarding their reduction goals. What has motivated these companies to release such information? According to Donald Delves, founder of a compensation consulting firm in Chicago and regular contributor to Forbes Magazine, such motivation comes from a company’s stakeholders.

Delves recently published an article on Forbes’ website in which he examined the influence of shareholders versus stakeholders within a company. In his article titled Whom Do Public Companies Now Serve? Delves writes, “Increasingly, large companies are demonstrating direct responsibility not just to shareholders, but also to employees, communities and the environment.” Stakeholders include any person, group or organization that has a direct or indirect stake in an organization, such as employees, non-government organizations (NGOs),  and communities. Delves highlights how in other countries, such as Germany and France, integrated reporting, a type of reporting that combines both social goals and financial results, has been the common practice among public companies. Companies in many other nations are “obligated to satisfy social expectations by tending to the interests of employees and other stakeholders.” This type of reporting, according to Delves, is becoming more common-place in the U.S. as companies strive to satisfy shareholders and stakeholders alike and increase public accountability.

Reporting on topics stakeholders’ value “can not only result in healthier customers, but in a healthier culture in which people will likely make it a point to patronize- and buy shares in- responsible companies.” To this extent, and as stakeholders become more and more environmentally conscious, we have to speculate on how long it will be before environmental data and, more specifically, carbon reporting will be required of all US companies’ operations by their shareholders. As more companies become involved in integrated reporting in which they share both sustainability and financial data, will competitors also feel the heat to do the same?

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Very important news on the GHG regulatory front - California voters defeated Prop 23 which would have put the State's Climate Law AB32 on hold. The State of California has long been setting standards in the environmental regulatory arena - this could be a sign for increased pressure across the entire United States for industries to report and reduce their CO2 emissions.

As reported in the article: "It's also viewed as a turning point for the U.S. in terms of whether the nation will back away from supporting stronger climate change laws or move toward stronger greenhouse gas (GHG) reductions"

In the last decade there has been substantial growth in interest related to environmentalism and sustainability on the global stage. As each international market adapts to this emerging demand for environmental awareness in business operations, a priority must be placed on first understanding the implications of existing cultural beliefs and norms. In January 2010, Coppervale Enterprises Inc. tasked a group of four students from Western Washington University’s International Business program to develop a market research medium that could effectively help our organization to better understand the business opportunities that exist relating to energy efficiency and sustainability consulting as we expand into global markets. In particular, Coppervale is interested to learn how we can tailor our sustainability services to best suit potential international clients’ needs within their own unique cultural frameworks.

The Western business students accepted our challenge and worked for the next three months to design a research methodology to approach this objective. There are two primary features that characterize the student’s market research model. The first feature includes a personal values, beliefs, and norms survey. The purpose of the survey is to elicit responses from actual subjects regarding their tendency to internalize and act on sustainable behaviors based on their pre-existing personal values, beliefs, and norms. The second feature is the development of regional profiles through a cultural assessment. The purpose of the regional cultural assessment is to function as a lens by which to review the feedback from the survey participants in the context of that participant’s cultural framework.

The survey was designed using the foundations of the peer-reviewed social-psychological theory, the Value-Belief-Norm Theory (VBN) by Paul C. Stern et al., to investigate how a person’s pre-existing values and beliefs can predispose them to adopt “pro-environmental” personal norms and behaviors. The VBN theory tests for four value sets including: altruism, egoism, traditionalism, and openness to change. Participants that score high on questions related to altruism and openness to change are considered more likely to adopt “pro-environmental personal norms”.  Those that score high on questions related to egoism and traditionalism tend to favor personal interests over environmental or societal interests.  The students based their questions for the survey off of the four value categories from the VBN theory, in addition to questions relating to the participant’s “awareness of consequences” and “ascription of responsibility”, or acceptance of personal responsibility for their contribution to environmental degradation. The survey questions are culturally sensitive and broad enough to be answered by any subject in any region.

The second feature of the market research model involved desktop research and profiling to understand the general cultural values and norms within North America, Latin America, Western Europe, Asia, and Oceania. These cultural assessments were determined using primary and secondary research from journal articles, government databases and statistics ranking national energy consumption habits. Cultural values and practices within each region were identified using the Hofstede Model of Cultural Dimensions by Dutch social psychologist Geert Hofstede. From the information the students gathered, several initial assumptions were formed as to how responsive each region would be to Coppervale’s energy efficiency and sustainability services. These assessments also provide a lens by which to review participant’s survey responses in light of their cultural context.

Both features of the model acting together will identify which regions and global markets will offer the most opportunities for Coppervale to develop future business relationships. The results of the model will also allow Coppervale to tailor their service package to potential clients based on their cultural awareness and willingness to adopt certain sustainability initiatives. The Western student’s regional cultural assessment already provides a number of insights related to a region’s interest in adopting sustainability initiatives. In part 2 of our blog, we will touch on some of the initial findings from the international business student’s desktop research.

Co-Authored by: Susan Salgado, Western Washington University

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Most of the Congressional attention in Washington D.C. over the last three months has been directed solely on Health Care Reform. As the dust settles, the Senate Climate Bill will soon emerge as the next landmark decision awaiting the Obama Administration. As opposition to EPA regulatory measures continues to rise and as mid-term elections draw closer, the hope for the passage of a similarly contentious piece of American legislation hangs in the balance. Despite the challenges ahead, the latest news indicates that passage of the Senate Bill could still be a possibility in the coming months. 

One source of pressure fueling movement on the Senate Climate bill is the EPA’s GHG Endangerment Finding. This ruling requires the Federal agency to regulate GHG emissions in the economy under the authority of the Clean Air Act (CAA). The EPA has come under fire from business lobbyists, the oil industry and conservative senators, among others, who have issued letters, lawsuits and plans to thwart the Agency’s attempts at regulating GHG emissions. Those in opposition cite the potential for economic collapse and the stalling of investments as a primary reason to avoid regulation. Summarizing the thoughts of those against Agency regulation, Senator John D. Rockefeller IV (R-W.Va.) said “E.P.A. actions in this area would have enormous implications, and these issues need to be handled carefully and appropriately dealt with by the Congress, not in isolation by a federal environmental agency,” (NYTimes, 2010).

The EPA has responded to such criticism by relaxing the threshold for emissions reporting and has decided to delay the initial timetables for regulating industry emissions. EPA Administrator Lisa Jackson confirmed on March 30th 2010 that no stationary sources would face regulation this year, as was originally determined. Instead, plans have been put in place that will target large facilities in early 2011, medium-sized emitters in late 2011, and smaller emitters by 2016. Both Senators John D. Rockefeller and Lisa Murkowski (R-Alaska) have expressed approval of the EPA’s efforts to relax their initial implementation plan.

As EPA efforts to regulate GHG emissions flounder, a more commercially palatable Senate Bill equipped with a cap and trade approach has been brewing behind closed doors. Senators John Kerry (D-Mass), Joe Lieberman (I-Conn.), and Lindsey Graham (R-S.C.) have been working for months to put together a “hybrid” Climate Bill that infuses elements from a number of pieces of draft energy and climate legislation. Energy efficiency and renewable energy language for the bill is being pulled from the American Clean Energy Leadership Act which passed the Senate Energy and Natural Resources Committee in 2009. Ideas on “cap and dividend” carbon market regulation crafted by Senators Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) in the CLEAR Act are also being considered.

The latest news from Environment and Energy (E&E) Daily indicates that the Senators plan to unveil their draft bill on the 40th anniversary of Earth Day, on April 22nd 2010. While the Senate Bill waits in the wings, the EPA continues to plan the implementation of its regulations against GHG emissions under the Clean Air Act. It is clear that climate policy in the United States will come alive in some form or another in the next year. Businesses will have to wait with baited breath to see what form it will take and what impact it will have on them. Do you think a Climate Bill will actually come to fruition in 2010? Which GHG regulatory method do you anticipate coming into action first: EPA emissions regulations under the Clean Air Act or a yet to be named Senate Climate Bill?

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When considering ways to create a more energy efficient work environment, lighting upgrades can be a smart, cost-effective solution that also reduces your company’s carbon footprint without substantial capital investment. Over the past three decades, the lighting industry has seen great advancements. Lighting engineers and designers have been able to improve the overall quality of indoor lighting with lumen output and improved color rendering, while simultaneously achieving an average of 25-40% energy savings in each advancement phase.

For example, next generation indoor fluorescent lamps, such as T8 and T5, offer substantial energy-savings over the older T12 models. With the improvements in microchip technology, light emitting diode (LED) products are also finding their way into indoor lighting systems. LEDs present many advantages over incandescent light sources including lower energy consumption, longer lifetime and greater durability.

Companies with older facilities have recognized this and are turning to lighting upgrades or “retrofit projects” as an economical way to save energy, improve the overall working environment and reduce operating costs. Also, many energy providers are offering rebates and incentives to companies who upgrade to efficient building lighting, thereby reducing the initial project capital investment.

The good news is that these lighting upgrade projects can generally be conducted around the normally scheduled work hours of the facilities. By conducting the initial lighting audit and performing the upgrade project during non-business hours, there is little or no disruption to the operation.

Now may be the right time to make a modest investment to make a long term impact on your bottom line.

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In the late evening on December 18th, 2009, all eyes were on Copenhagen waiting to see if the Conference of the Parties 15 (COP15) of the United Nations Framework Convention on Climate Change (UNFCCC) would produce a global climate treaty that would require the nations of the world to reduce their output of greenhouse gas (GHG) emissions. The outcome of COP15 was expected to impact every aspect of society, and most prominently, the corporate world. At the end of a two week long negotiating session, Copenhagen produced a non-binding “agreement” void of any real emissions reduction targets or timetables to achieve them. The Copenhagen Accord was a decision made by the 193 nations participating in the Conference to “take note of” for further review in 2010. The Accord recognizes the following major action items:

• There is a scientific case for keeping global temperature rise to no more than 2°C.
• Developed Nations (Annex 1 Parties – the largest emitters) will determine economy-wide emissions reduction targets for 2020 by January 31, 2010. 
• Developing nations (Non-Annex 1 Parties) will determine methods to implement mitigation actions by January 31, 2010. 
• Developed nations will collectively generate USD $30 billion for the period 2010 through 2012 and USD $100 billion from 2012 to 2020 to assist developing nations in their climate change adaptation and mitigation activities.

Although legally-binding emissions reduction targets were not included in the Accord, most nations have proposed unofficial emissions reduction commitments which they claim they will implement through domestic policy. Most nations, like the United States and China, are steadfast in their position to achieve the following goals:

• USA proposed to cut GHG emissions to 17% below 2005 levels by 2020, pending congressional approval (this is equivalent to 4% below 1990 levels).
• China: Proposed to cut CO2 emissions per unit of GDP by 40-45% below 2005 levels by 2020.
• European Union proposed to cut GHG emissions by 20% from 1990 levels by 2020, or 30% if other big emitters take tough action as well.
• India proposed to cut CO2 emissions per unit of GDP by 20-25% from 2005 levels by 2020.

The current emissions targets on the table are expected to lead the world on a path toward a global temperature rise of 3°C. Stronger commitments are needed from the largest emitters, including the United States and China, to reach the goals set out in the Copenhagen Accord. As of January 29th, the United States appears to remain firm on its 17% target reduction in emissions by 2020 from 2005 levels. In a letter to U.N. Climate Officials, President Obama pledged to uphold our target emissions reduction goal set out at Copenhagen, and that more details were to follow pending Congress’ decision on the Climate Bill.

Despite this positive and ambitious first step, it is still uncertain as to when the “details” of the U.S. commitment will be worked out. As climate legislation sits idle in Congressional subcommittees, Corporate America waits with baited breath to follow through on Cleantech investments. In a recent press release, Alstom Power President Philippe Joubert said that “Uncertainty about the legal and regulatory framework around carbon dioxide emissions is holding back needed investments”. In a letter to President Obama, a group of 80 U.S. companies stated that “[Climate] legislation would spur a new energy economy and with it create 1.7 million new American jobs, many in struggling communities across the country” (Environmental Leader, 2010). In addition to the desire for a green light on Cleantech investment, corporations are pushing for Congressional movement on a more flexible and “business-friendly” Climate Bill for fear of being pinned under the strict and expensive regulatory thumb of the EPA.

No matter how the U.S. decides to regulate carbon dioxide emissions, the world will be holding us responsible for upholding the pledge President Obama made to the U.N. Climate Officials this week. U.N. Climate Chief Yvo de Boer said recently that "Whatever route is taken, the president of the United States committed to a 17 percent emissions reduction in Copenhagen. The president of the United States committed to more ambitious emissions reductions for 2030 and 2050. And it is those statements to which the international community will hold the government of the United States accountable” (Greenwire, 2010).

Without the support of congressional legislation, President Obama met the U.N.’s January 31st deadline by confirming to uphold the United States’ pledge at Copenhagen. The details surrounding the implementation of that emissions target and the accompanying timetable are yet to be determined. The waiting game for the creation of solid and defensible action to regulate carbon emissions at home and abroad continues…