Our team of energy experts suggests five inspirational tactics to ensure energy efficiency’s star is in the ascendancy in your business.
At EMEX this year, Lord Redesdale said, “There are two things boards never discuss, IT and energy.” Altering this is crucial, not only for success among individual firms, but for a leaner, greener and more profitable UK.
Why don’t boards discuss energy? Surely they should; quick wins are available, payback can be fast. Every estate can benefit, and every technology, plant or office is ripe for improvement.
The problem is, for many companies, energy spend remains a stable lump of money, where expenditure is going neither up nor down. The assumption, an incorrect one of course, is that therefore the gains and potential of investing in efficiency are limited. Unfortunately, this paradigm doesn’t help energy efficiency rise up the priority list.
There is another challenge; it is very difficult to persuade boards to invest in anything which offers a payback of longer than 2 years. They are interested in the short term. Right now, and into the future, energy prices are going up. But it’s hard to persuade the Board to invest in capex now, for energy efficiency projects, to save OPEX in the future. For many, that future scenario just isn’t tangible.
With all this in mind, we’ve developed some striking tips and compelling reasons to help persuade board members to drive energy efficiency higher up the agenda.
5 top tips to bring the Board onside
1. Energy costs and continuity of supply
This key point must be hammered home to the board; industry experts believe blackouts are coming. Recently, Caroline Lucas wrote in The Guardian; “The only way to beat the blackouts is smart, clean, affordable energy.” Energy-efficiency must be a part of this new world.
Hinkley Point, and the new gas power stations demanded by Amber Rudd, are way off completion. There is little left to power the UK, old coal stations are coming offline and our demand for energy is soaring.
With more risk and scarcity, the more prices will rocket; especially during red band periods. It all means price uncertainty and security of supply are genuine, immediate risks. The issue must be on the risk register; it has huge financial implications.
2. Prove to the Board how much energy costs, and how much saving energy saves
How to do this? Equate costs with something the board can quantify! The Carbon Trust estimates a 20% cut in energy costs represents the same bottom line benefit as a 5% increase in sales in many businesses.
Further, illustrate the cash relationship between energy efficiency investments, and the money they can win back. Tom Delay, Chief Executive, Carbon Trust, writes; “A £15 million programme supporting industrial energy efficiency could unlock energy savings of more than £140 million.”
Every UK firm can unlock a similar ratio of savings, as long as the board gets behind them.
3. Don’t stand back.
You need to get in front of the Board in the first place! So, request a meeting. If you can’t get in front of all of them, ask the Finance Director (FD) for a ‘one to one’. You only need a short meeting to convey the seriousness.
Are you affected by ESOS? For all those captured under this scheme, the result has been a real mind focuser for the board; a statutory director must sign off the ESOS audit. For those affected, the board level conversation should already be under way. ESOS deadlines will soon pass (5th Dec 2015); now the implementation of audit recommendations must begin.
4. Come armed with robust figures.
A good energy efficiency supplier will advise you on ideal technologies, with quick paybacks for your situation. They can provide you with estimates and real life case studies to make your case. Having a trusted supplier, who can offer you the right metrics to help convince the board, is key.
5. Board reservations about upfront capital.
Does your board have reservations about investing capital upfront? Many do. This needn’t slow progress; there are finance options available, and they aren’t too good to be true.
Fact: 62% of companies cite lack of access to finance and capital as their biggest barrier to progressing energy-saving upgrades. This situation is commonplace, so there is every reason to seek flexible financing. It should be set up to suit your exact payback, ROI and technical requirements.
Try, try and try again
Getting Board-level buy-in on energy-efficiency is tough. But the benefits are compelling. Do your sums, build a robust case, and use ESOS as the catalyst to start improvements in your organisation.