CEO priority: Energy efficiency, sustainability | Business Roundtable


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CEO priority: Energy efficiency, sustainability

May 17, 2012

Business Roundtable-member CEOs are leading the way on energy efficiency and sustainability. There are many reasons why, but the most important is the bottom line.

BRT President John Engler made those points on Wednesday during a panel discussion at the Great Energy Efficiency Day, an annual program sponsored by the Alliance to Save Energy. The panel was entitled "The Business Case for Energy Efficiency," and other panelists were Cal Dooley, President and CEO of the American Chemistry Council; Thomas Kuhn, President, Edison Electric Institute; and Dave McCurdy, President and CEO, American Gas Association, representing the natural gas industry.

Engler built his opening comments around the BRT's most recent sustainability report, "Create, Grow, Sustain," emphasizing that it's not just big manufacturers or other heavy energy users that pay attention to energy efficiency. Concerns for efficiency crosses all business sectors.

He also highlighted a report by Ernst & Young, done in partnership with BizGreen, about business' motivation for sustainability programs. (See "Six growing trends in corporate sustainability.")

Bottom line? It's the bottom line.

An edited version of Engler's opening remarks are below:

The 210 member companies of the Business Roundtable are in the business of energy efficiency.  Now some of them are really in, all in: The Honeywells and the Siemens, the ABBs, Johnson Controls, Corning, GE, but virtually every other company as well.  And I know that there’s a tendency to think about manufacturers and industries that are massive energy consumers – the chemical industry -- and they do think a lot about energy efficiency.  But it’s also a priority for companies that are in any kind of activity today, financial services, storefront, retail ...

We have a sustainability report that we put out each year.  What’s interesting is more than 60 percent of those 210 companies participated in this report. They go through company-by-company some of the things they’re doing...

The title of the report ... is “Create, Grow, Sustain.”  When they described their initiatives, a lot of them are remarkable.  And some of our sponsors of this day, and their representatives are certainly in the room here as well, they’re going to be talking about sustainability on the Hill and energy efficiency is key, key part of that.

A great tech factoid – probably the week that Facebook’s IPO goes to market – Dell’s server performance per watt has improved 10,000 percent over the last decade.  Now that’s pretty good, 10,000 percent.  And it’s probably important given how much technology everybody's carrying around in your pocket, or how much you’re using, 40 percent of you logging on to things each day. 

But here’s a government factoid. When you’re over there saying, well, gee, here’s what the private sector’s done -- pretty good.  We still have over 6,000 federal government data centers. We probably need 50.  Now there’s energy efficiency and savings.  I mean, that's a win-win.

Our report – we go through a lot of things in that report.  LEED certification on buildings is a pretty obvious one.  Energy Star products the Congressman [Peter Welch] talked so well about. You get reports: Companies like CVS Caremark, they’re moving to more efficient LED lighting and energy management systems.  Well, is that a big deal?  Does it mean a lot?  They’ve got 7,300 pharmacy retail outlets.  That’s a big deal.

And a lot of times when you think about aggregation, I mean, you think about big plants. You know, if you get a steel mill or a chemical plant like Dow Chemical operates, and you can do a lot in one place.  But you got 7,300 locations, guess what?  A little bit each in one of those places adds up a whole lot.  And I think that’s – you know, we’re really talking about scale here and that scalability matters. 

The insurance companies, they have a role in this? Sure.  Companies like ACE Group, The Hartford, they’re now providing coverage that allows owners to rebuild to green standards if their properties get damaged.  Telecommunication companies like Verizon, AT&T – they’ve got global technology that uses the cloud.  So what they’re doing is they’re putting all this remote monitoring in place today.  And what are they monitoring?  Machines and the efficiency of those machines.  And that’s everything from not only a machine making some widget, but the very security system, the air flow, the water heater, everything that – everything that consumes energy, how much and how do we regulate that.

The CEO of Ernst & Young is a guy named Jim Turley; he wrote about motivations in the report that I mentioned.  And what Ernst & Young did, working with GreenBiz, they surveyed 272 U.S.-based sustainability experts.  And these are executives at companies that have got specific line responsibility.  This won’t be a big surprise, I suppose, if you think about a company. But the top driving force for sustainability was energy cost.  Ninety-three percent cited that.

So what you’re talking about is a win-win.  You don’t even have to be altruistic here.  I mean, there are national security implications, there’s certainly a lot of environmental considerations, but the old pocketbook is a pretty good place to start too, and especially at a time when all this cost has a direct bearing on competitiveness of an enterprise that’s located here.  At – for Roundtable member companies, virtually all of ours have to compete in a global economy.  So this is a big deal.

We’ve got the potential for a major energy advantage over a lot of the world.  But the way you lengthen that, the way you lock that in, it’s not just because you got a cheap and available source today such as gas coming from shale, but you also do it through your energy efficiency strategies.  And we just believe there’s a lot of opportunity.

Some other things on that survey:  87 percent cited changes to consumer demand and risks as factors.  Eighty-one percent mention competitive  threats; that’s probably another way of saying cost.  Eighty percent saw revenue opportunities as part of their sustainability programs.  And that’s interesting, because what’s happening is that companies – and I mentioned a few at the front end – they’re looking at where there’s an opportunity to have a  market.  And guess what those need? Markets need jobs.  And guess what we need?  Jobs.

Regulations were really a minor consideration.  The bottom line that drives business investment is the bottom line, for energy efficiency.  It pays off.  It’s a win-win.  Thank you.  (Applause.)



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