Liquid Flow Measurement Basics

Background: Global Demand for Flow Meter Technology

The global flow meter market size was valued at $7.3 billion in 2018, and is projected to reach $11.9 billion by 2026, growing at a CAGR of 6.3% from 2019 to 2026 (www.businesswire.com/news).

Some of the major market players operating and profiled in this sector are Honeywell International Inc., Siemens AG, Emerson Electric Company, ABB Ltd, Schneider Electric SE, Yokogawa Electric Corporation (www.businesswire.com/news).

Business Significance of Liquid Flow Measurement

Understanding liquid flow measurement and its underlying technologies enables us to appropriately select the right meter that will financially and operationally benefit your manufacturing facility, plant, or building.

Several different types of fluid flow measurement technologies exist, most notably (but not limited to):

  • Magnetic
  • Coriolis
  • Ultrasonic (Doppler)
  • Differential Pressure
  • Positive Displacement
  • Turbine
  • Vortex shedding
  • Thermal

 

Important considerations when selecting flow metering devices include:

  • Accuracy
  • Cost
  • Physical constraints
  • Flow rate range
  • Flow profile
  • Fluid characteristics including temperature and pressure
  • Head loss across meter
  • Operating requirements
  • Maintenance
  • Life requirement based on application or business need

 

For our clients, the case for ultrasonic technology is that it has major benefits.

Like its name suggests, an ultrasonic flow meter transmits ultrasonic sound waves (sound humans cannot hear) through a liquid in a pipe using transducers (Figure 1 below). The meter measures the time (called transit time) to and from the transducers, the diameter of the pipe, and, along with other input parameters to compute a flow measurement.

Figure 1

Significant benefits of ultrasonic liquid flow measurement include:

  • Non-intrusive
  • Quick to install permanently or temporarily
  • Requires no production downtime
  • Zero head loss across the meter as the meter has no probe in the fluid
  • Accurate to +/- 1% of reading

 

How can understanding fluid flow impact a manufacturing facility? 

First, we simply ask do fluid systems like chilled water, hot water or process water systems exist in your building or process?  If so, has the system or systems been balanced according to the engineered design?  Unfortunately, the answer most often is no.

I contend an unbalanced fluid system has the “robbing Peter to pay Paul” syndrome.  The consequence can negatively impact operations and bottom line costs.  I’ve listed 3 typical negative results of this “syndrome.”

  1. Systems or equipment starved for water (those providing less than design flow) cannot extract or inject heat at the design rates and, consequently, the system may not perform as intended.
  2. Systems providing excess flow also operate less efficiently.  Equipment is designed to operate with fluid at certain rates and exceeding those rates may also cause heat transfer rates to reduce when the fluid is too turbulent.
  3. Simultaneous heating and cooling easily occurs either directly or indirectly to mask the real issue and cost additional in utility expenses.   Under heating or under cooling often happens when systems don’t operate at design and the net difference needs to be made up somewhere, usually with supplemental equipment like unit heaters, portable coolers, etc.

 

Let’s look at a couple typical fluid system comments from building engineers, facility managers, maintenance managers, etc.

Common Myths Debunked:

Myth: More water is better.  Always.

Fact: The right flow rate is just as effective or more effective than excess water.  Excess water just costs energy to pump and causes other areas of systems to operate less efficiently or effectively or both.

Myth: The water system will balance itself out automatically.

Fact: Most water systems in the market will not balance themselves out automatically.

1. The system MAY balance itself out if the system is completely pressure independent.

2. A pressure dependent system MAY balance itself out if it was balanced and commissioned properly on install…which is a BIG IF.

3. The system MAY balance if all the valves are operating AND CONTROLLING properly.

Let’s just say very few fluid systems are balanced properly and many cost owners and managers thousands of dollars a year in some combination of waste, productivity, throughput, wear and tear of equipment, etc.

To find out more about how you can schedule an ultrasonic flow test at your facility, please contact us for details.  We perform flow tests or rent out meters by the week for longer tests.  More often than not, the project has a 100% ROI or better.

Matthew Strebe is a licensed mechanical engineer in Minnesota and holds certifications in building commissioning, and building energy assessments through ASHRAE.

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Rethink Energy: Manufacturing for The Future

Effective Solutions for ManufacturingWritten by Amon O’Connor.

Minnesota’s manufacturing sector is arguably the backbone of the state’s economy, 14.7 percent in fact. According to Enterprise Minnesota, it represents the largest portion of the state’s $255 Billion GDP and makes up 13 percent of the workforce. Moreover, for every $1.00 spent in manufacturing, an additional $1.40 is added to the economy. According to the National Association of Manufacturers, this is the highest return factor of any economic sector.

 

Here in Minnesota, the combination of our location by the Great Lakes and a strong manufacturing economy provides incentive for innovation. Manufacturing has historically fallen behind the curve when it comes to sustainable energy, connectivity, and technology integration. In these times however, there is substantial evidence to suggest that manufacturers of any size should be making business decisions that connect, streamline, and improve your facility, leading to reduced energy cost and increased efficiency in production.

 

Solutions such as smart sensors, devices that make “dumb” work-horse manufacturing machinery into intelligent, adaptive devices along the entire value chain, are now being implemented in many industry sectors. This type of device-level energy management is an auspicious approach to revamping an outdated system that can add value to an already highly lucrative industry.

 

With sustainability in the limelight, the pressure in 2017 for modernization is high. If you are a manufacturer in Minnesota, the chances of there being profit from such changes is incredible designerfashionconsignments.com. Companies like Sustainable Energy Savings, Inc. are creating answers and multifold returns to the growing need for strategic energy solutions, bringing manufacturers in line with both shareholders and the environment.

Sustainable Energy Savings, Inc. is proud to be part of this thriving, robust Minnesota community.  Our commitment to game-changing innovation is backed with more than seven years of expertise, bringing energy solutions that impact your bottom line.

 

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Sustainable Energy and the Road Ahead

Sustainable Energy and the Road Ahead

Jason Ackermann, CPPM

 

With the changes that are taking place in Washington and the selection of Rick Perry to lead the Department of Energy, many of the subsidies for renewable projects could very well be scaled back, if not phased out completely.  As a country, we have spent the better part of two decades weaning ourselves off of fossil fuels. Renewable energy was an industry in its babyhood with almost unlimited potential and most renewable energy projects were easy to sell with a major portion being funded by large government grants and subsidies. Now that the era of incentivization is coming to its conclusion, will the Sustainable Energy sector be sustainable?

 

Or, is this the end of renewable energy projects?

 

 

Riding with the Big Boys

 

In all new sectors of business, there comes a time when the government subsidy training wheels must come off.  This is the test of any good industry.  Can Sustainable Energy become the “big-boy-bike-riding” industry that it has been touted to be for the past 20 years?

 

The answer is absolutely.

 

Now more than ever before, those that want to see sustainable practices and increased use of renewable energy sources need to change how we communicate the beneficial impact of energy projects. It is no longer enough to tout the environmental impact of these projects. Times have changed and the conversations around energy projects must also change in order to still be relevant today.

 

Bumps & Scrapes

I know it may be hard to believe, but not every company or the executives that run them, give a second thought about the environment. This doesn’t make them bad companies or executives.  To some, the capital outlays need to bring a return, because their role within the company is to steward the limited resources that they have, to bring the biggest ROI. With the potential of losing some or all government incentives, we need to better understand how to communicate to those that lead the financial realm of our companies. If you’re not a numbers guy, there is a great tool, provided by Xcel Energy here, to assist you in making your case.

 

Gaining Momentum

The benefits of renewable energy are proven to save money for many companies as well as provide an additional connection point with energy conscience consumers.  Technological advances are also continuing to improve upon the efficiency of captured energy (i.e., solar panels designed by Elon Musk’s company, Tesla), which add considerable promise for the future of many forward-thinking companies looking to shave expenses.

 

Beyond a simple cash on cash return there are many other factors within energy projects that need to be quantified in order to compete head to head with other projects. Studies have shown that energy projects not only can save on operating costs, but may lead to increased productivity and overall employee health creating a much greater impact to the bottom line than just the easily quantifiable monetary gain, check thelockboss.

 

As the industry grows from adolescence to adulthood it will prove time and again, that for the money, Renewable Energy Projects not only pay, but create the greatest value for the organization. Looking forward, it is a very exciting time to be involved in the renewable energy sector, watching it take its first few wobbly trips down the block.  It’ll soon enough be yelling, “Look Ma, no hands!”

 

 

Jason Ackermann, CPPM, is the Vice President of Sales & Marketing at SES, Inc and a Senior Consultant at Legacy Road, Inc.

 

Photo Credit: “Cycling” by Unsplash, licensed under C.C. by 2.0

 

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Five Benefits of Utilizing ISO 50001 EMS

Five Benefits of Utilizing ISO 50001 EMS

 

By Mary Stokes

For any business concerned with their triple bottom line (3BL), ISO 50001 is probably in the near future.  It’s an energy management system that hits each of the 3BL categories (people, planet, profit), gives a good return in each area, and is taking the world by storm.

 

There are numerous benefits to utilizing such a system, but here are the top five.

 

1) Structured approach to energy management

 

The ISO 50001 has a structured approach to managing energy that is invaluable to businesses and manufacturers alike.  While any business can resolve to manage energy more efficiently, anything less than a structured approach risks being ineffectual.  In fact, the pilot projects that used ISO 50001 found that it shifted their take on energy management; it “…became a way of doing business, instead of a project-by-project undertaking.”

 

Because the ISO 50001 utilizes the Plan-Do-Check-Act (PDCA) approach, it allows for continual improvement as well as integration with other management systems.  It creates an environment in which the goal is to strive and challenge not only the business, but its employees.

 

2) Involvement of management and employees

 

In this area, ISO 50001 excels.  Because it requires both employees and management to take part in gathering data and reporting it, it improves communication and accountability.  It encourages people to take an active interest and responsibility in their company’s energy management strategies, and creates a positive cycle of feedback and correction that gives a business the ability to take preventative action and adjust goals.  The ISO 50001 shares the responsibility for energy reduction among management and employees, thus spreading the increase in work manageably.

 

We already know that employees perform better when they take ownership of their work and feel that what they do matters.  The ISO 50001 takes this a step further, involving employees in the lifeblood of the business through the PDCA approach. Visit website here. It does cost in terms of time and effort, training, and maintenance, but it gives back in employee involvement, responsibility, and value.

 

3) Reduced emissions and energy waste

 

Additionally, the PDCA approach allows businesses to promote energy awareness and make informed decisions about energy use.  Energy is one of the largest costs, particularly for manufacturing businesses, but it is a controlled cost.  Better energy use and maximized performance makes it possible to decrease energy cost as well as consumption.  This in turn reduces energy wastage and emissions, which are quantified by a third party, lending credibility to your business. 

 

4) Increased profitability and savings

 

Because the ICO 50001 centers on reducing energy waste, it creates savings.  Its focus on continual improvement also creates not only better energy expenditure but better products, as businesses find more efficient processes and save on energy costs. Check site here . In the Superior Energy Performance (SEP) cost-benefit analysis paper, businesses were documented as having a 12% average reduction in energy costs within 15 months of implementing practices like ISO 50001.  In facilities with more than $2 million per year in energy costs, payback was less than 1.5 years, and less than 2.5 years for facilities with energy costs of $1 million a year.

 

In particular, the PDCA approach creates an environment in which products are improved and increase in value.  Additionally, the necessary changes and improvements are low-cost or even no-cost, which creates even greater opportunity for improving savings.

 

5) Potential business partnerships

 

Last but not least, implementation of ISO 50001 is beneficial for businesses looking to partner with other businesses.  Excellent management of energy is attractive to business partners, especially if they utilize ISO 50001.  It is already a widely known and trusted method of measuring and managing energy, and because of its transparency, it has proven itself to be a worthwhile investment.  It creates a competitive environment in which businesses and manufacturers thrive.

 

The ISO 50001 has been in play for only 5 years thus far, but businesses continue to adopt it; it has proven its worth over and over.  In fact, it’s projected that it could influence 60% or more of the world’s energy use in a variety of sectors.

 

It’s not too late to jump on the bandwagon—the benefits are clear, the return is good, and you strategically position your company to leave a greater impact on the world.

 

Photo Credit: “Road” by Larissa-K, permissions through C.C. by 2.0

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Why Tesla’s new solar roof tiles and home battery are such a big deal

Why Tesla’s new solar roof tiles and home battery are such a big deal

On October 28, Tesla unveiled its new solar roof tiles. Few of us in attendance, if any, realized the solar roofing tiles were actual functional solar panels until Elon Musk said so. Sure, it’s a neat trick, but what’s the big deal?

Why does it matter that Tesla is making a fashion statement when the point is green power and a future where we aren’t so dependent on fossil fuels?

I’ve heard from some people suggesting that this is nothing new, because of other similar previous projects, including Dow Chemical’s canned solar shingle project, for example. Others are wary of Tesla’s ability to sway consumers with a solar solution that sounds like it’ll still be quite expensive in terms of up-front (or, with payment plans, deferred but net) installation costs. Still others aren’t clear on Tesla’s goals with this product, or how it fits into the company’s overall strategy relative to its electric vehicles, like luxurious car service.

Looks matter

It’s easy to dismiss the aesthetic import of how Tesla’s tiles look, but it’s actually important, and a real consideration for homeowners looking to build new homes or revamp their existing ones. The appearance of the tiles, which come in four distinct flavors (Textured Glass, Slate Glass, Tuscan Glass and Smooth Glass) is going to be a core consideration for prospective buyers, especially those at the top end of the addressable market with the disposable income available to do everything they can to ensure their home looks as good as it possibly can.

As with other kinds of technologies that are looking to make the leap from outlier oddity to mainstream mainstay, solar has a hurdle to leap in terms of customer perception. Existing solar designs, and even so-called attempts to make them more consistent with traditional offerings like the above-mentioned Dow Chemical project, leave a lot to be desired in terms of creating something that can be broadly described as good-looking.

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It’s like the VR headset — Oculus and Google can make claims about their use of fabric making their headsets more approachable, but both are still just options somewhere along the curve of things with niche appeal. Neither is very likely to strike a truly broad audience of users as acceptable, and neither are solar panels that don’t succeed in completely disguising themselves as such.

Halo effects

Tesla has been referred to as the Apple of the automotive world by more than a few analysts and members of the media, and if there’s one thing Apple does well, it’s capitalize on the so-called “halo effect.” This is the phenomenon whereby customers of one of its lines of business are likely to become customers of some of the others; iPhone buyers tend to often go on to own a Mac, for instance.

For Tesla, this represents an opportunity to jump-start its home solar business (which it’ll take on in earnest provided its planned acquisition of SolarCity goes through) through the knock-on effects of its brisk Tesla EV sales, including the tremendous pre-order interest for the Model 3. It’s strange to think of halo effects with big-ticket items, including vehicles and home energy systems, but Tesla’s fan base shares a lot of characteristics with Apple’s, and because they’re already purchasing at the level of an entire automobile, the frame of reference for what constitutes a valid halo purchase is actually appropriate.

tesla-powerwall

Tesla, like Apple, scores well with customer satisfaction and brand commitment, and that’s something that no one trying to sell a solar home energy system at scale can match. As strange as it sounds, “buying a roof because you like your car” might be the new “buying a computer because you like your phone.”

Benefits beyond basic solar

Tesla’s solar tiles claim to be able to power a standard home, and provide spare power via the new Powerwall 2 battery in case of inclement weather or other outages. Musk says that the overall cost will still be less than installing a regular old roof and paying the electric company for power from conventional sources. But Musk’s claims about the new benefits of the new solutions don’t end there.

Tesla’s tiles will actually be more resilient than traditional roofing materials, including terra-cotta, clay and slate tiles. That’s because of the toughness of the glass used in their construction, according to Musk, who demonstrated the results of heavy impact from above, using a kettlebell as you can see in the video below.

Originally posted on TechCrunch.com

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Rethinking the Death Star: A Sustainable Approach to the Universe

Rethinking the Death Star: A Sustainable Approach to the Universe

 

By Mary Stokes

 

In response to the humorous petition for the U.S. government to begin construction on the third Death Star, White House Budget Manager Paul Shawcross replied, “Why would we spend countless taxpayer dollars on a Death Star with a fundamental flaw that can be explolited by a one-man starship?”

In this season of political rhetoric, it’s a relief to find that we as Americans can all agree on something.

Politics aside and as sustainability obsessed as we are, it got us scratching our heads, was the second Death Star destined to fail?

 

If the Empire had used today’s sustainable practices to boost production, reduce costs, and make the best use of the available materials, perhaps the Death Star would have been completed on schedule, and if it had been fully operational, would the Rebel Alliance have been able to destroy it?

 

Supply Chains, Budget Cuts, and Unrealistic Expectations

One of the main problems Moff Tiaan Jerjerrod, the commander in charge of the Death Star’s production, ran into with the Death Star project was supply chain breakdown and accompanying budget cuts.  When one considers the size of the Death Star (160 km in diameter) and the required materials, it’s not difficult to imagine that supply chains could be difficult to maintain.

However, this is the Galactic Empire we’re talking about—it has dominion over thousands of planets and trillions of people under its control.  Even while waging a war with the Rebel Alliance, there were plenty of sources for the raw materials.

 

So the real question is, why were there problems with the supply chains?

 

Well, consider that a sizeable portion of the Empire’s resources were sunk in finishing the Death Star.  While it would be logical to assume that, for a project of such importance and magnitude, they would make the acquisition of materials a priority, the fact remains that such a project was a huge drain on the Empire’s resources, considering they also maintained a huge military force.

 

The time factor is important to think about, too.  The first Death Star took 22 years to finish; the second was scheduled to be finished in 4–5 years. Despite considerations that the Empire wasn’t starting from scratch with design and R&D, the obvious obstacle was the increase in size in addition to drastically reducing the project schedule would have put a massive strain on all involved.

 

While we hope most of you don’t have to worry about being force choked on the job if you are unable to meet deadlines, unrealistic timelines are nonetheless a real problem.  While challenging deadlines may encourage employees to rise to the occasion, inversely, unrealistic deadlines will intimidate them and squash their creativity, removing their sense of value.

 

People: The Most Valuable Resource

Although, Moff Jerjarrod worked exhaustively on the Death Star, daily poring over its plans and wading through a sea of endless paperwork.  Nevertheless, he was threatened with death if the Death Star was not completed on time.

Talk about a dead-line!

Which leads us to another issue in which Moff Jerjarrod faced difficulty.  A shortage of workers.  While droids performed the majority of the building, it was still necessary for people to both oversee and repair said droids.  The Empire being a militaristic force, it’s possible that the majority of its able citizens were drafted into the Imperial Military, so we can assume available laborers and craftsmen were few.  The Empire had to maintain a strong military presence in order to control its citizens.

 

The use of fear as a motivator and method of domination was a core principle in the Empire, thanks to a prior Grand Moff, Wilhuff Tarkin.  The problem was, as evidenced by many dictatorships, fear can bring order and discipline—to a point—but there is no love lost between ruler and subjects, and that can lead to downfall as surely as poor planning skills and project management. Check out workerscompensationattorneysacramento.net.

In short, members of the Empire had no real stake in its future; all they had to look forward to was a violent death if they failed their Emperor.  Clearly, the Empire did not buy into the idea that “a person that who feels appreciated will always do more than what is expected.”

 

If the triple bottom line had been implemented, and if the people were encouraged to take an active part in development and were made to feel part of the bigger picture, who knows how far the Empire could have gone?  Alas, the Empire’s disregard for people shorted them in an area they really could not afford.  People who are not valued will not produce value.  But what else would you expect from one of the greatest institutions of galactic evil?

 

Learning from the Past

In addition to its other problems, the Empire seemed to have forgotten that, ultimately, simpler is better.  The terminal fault of the first Death Star, the vulnerable thermal exhaust vent, was reconfigured in the second Death Star.  Instead of one larger vent, there were numerous tiny ones that were heavily armored and could close to avoid any projectiles.  However, the problem was not merely the exhaust vents, but the Empire’s inability to learn from past mistakes.

The loss of the first Death Star was an unprecedented disaster.  The loss of the second one was foolishness on the part of the Empire.  The Rebel Alliance succeeded in destroying the fully operational Death Star, which was capable of movement and complete defense.  Even if its planet-destroying laser could only fire every 24 hours, it had a multitude of other weapons.

The simple truth is that building a second Death Star was a terrible move for the Empire.  If a fully operational one couldn’t survive its first space skirmish, what chance did an incomplete Death Star stand?  It was a black hole, sucking up resources and manpower that could have been allocated for more productive ventures.

Sometimes, the projects that seem promising turn into dead ends, and must be scrapped.  It takes wisdom to make such a decision, but while it can be difficult or disappointing, it’s also an opportunity to learn and grow.

While confidence is not necessarily a bad trait for a business, arrogance often leads to ruin.  Project failure is not an ideal part of business, but it can be incredibly constructive for your business and employees if you can turn it into a learning experience.  Celebrate the individuals you employ; encourage them to take ownership of their work.

 

May Sustainable Practices Be With You

The Empire demonstrated a lack of self-awareness that is crippling; no one seemed to realize the toll their regime took on the galaxy or, indeed, on itself and its own people.  It failed to follow many basics of running a successful venture, including sustainable practices.

Sustainability practices involve frank assessments of a business’s impact on people and the environment.  It is a struggle to better not only your business, but yourself, and encourage your people to do the same.

The Empire failed to overcome basic problems like supply chain breakdowns, budget cuts, and unrealistic deadlines because it had no contingency plan for failure.  It failed to make the most of its most precious resource -its people- because it had no value for its individuals, and it utterly failed to learn from its past mistakes and move past unsuccessful projects.

 

Photo Credit: “Space” by Guillaume Preat permission through C.C. by 2.0

 

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Like It Or Not, Sustainability Is Now Core to Your Business

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What used to be considered green virtue has now morphed into a crucial competitive tool.

 

That business has a role to play in improving the environment and dealing with climate change is certain. What is much less so is how to do that, and for some, whether to try. After all, companies feel comfortable doing business as usual, and few want to threaten their competitiveness in favor of green virtue.

Our point is that this is not an either or question. A growing number of examples—from diverse industries—show that sustainable business practices can be good for business from the bottom-line up. For example, Unilever (UN -1.70%) has developed washing-up fluids that use less water—and sales are growing fast, particularly in water-scarce markets. And most everyone can name a favorite product or two whose brand is intimately associated with its green credentials. My point is that sustainability can be much more—that it has a role in any and all sectors.

Here are a few examples that McKinsey has been involved with that prove the point. (For confidentiality reasons, we cannot use the company names).

 

⦁ A major brewer identified some 150 possible improvements that could reduce GHG emissions—while saving $200 million over five years.

⦁ When a water utility benchmarked its performance against that of other utilities, it figured out where the biggest opportunities were—in this case energy and chemicals. After four years, the results were in: less leakage, fewer customer complaints—and $178 million in savings—a 25 percent reduction in operating costs.

⦁ A state-owned industrial company in China increased the energy yield of its coal significantly simply by tracking it better, making sure the first mined was the first used. That improved energy efficiency as well as carbon intensity, while reducing costs 13 percent.

The nitty-gritty of sustainability programs can get complicated. But the principles are actually pretty simple—and should be familiar to executives. First, and most important, is to acknowledge that sustainability is serious. The case is not that difficult to make. In a McKinsey survey of 340 executives, more than 90 percent said risk management—whether from consumers, regulators, or the market (for example, high resource prices)—was an important factor in pushing them toward sustainability initiatives, check  chiropractic techniques.
Once the decision is taken, define priorities, set measurable targets, evaluate costs and benefits, and create consistent incentives, including those related to executive compensation. For example, Nike (NKE -2.05%) tracks its suppliers on a range of metrics, including quality, timeliness, cost—and sustainability. Falter for long on any of these, and the consequence is fewer orders. Result: many more suppliers are hitting their sustainability mark. DuPont (DD -1.22%) has no trouble justifying its sustainability initiatives to shareholders: it is generating billions in revenue from products that reduce emissions. Intel (INTC -0.32%) has a dedicated finance analyst whose job is to calculate the value of its sustainability efforts. To reduce emissions and improve other environmental metrics in its food chain, Wal-Mart (WMT -1.48%) tracks not only GHG output, but also yield, water use, and other factors per ton of food produced. In addition to achieving environmental improvements, it cut the price of food and vegetables in the United States by $3.5 billion.

It is important to define targets that are both specific and achievable; it’s better to say “Eliminate X million pounds of packaging,” than the vague “Reduce the footprint of our packaging.” As of August 2014, though, a McKinsey analysis found that only one in five companies in the business marketing 500 had explicit, long-term sustainability goals, even though more than a third (36 percent) said sustainability was a top-three priority.

The larger point is this. Real sustainability efforts are core business efforts; because they are not always easy, they can help a company to raise its game and perform better in all kinds of ways. In mid-2014, McKinsey did a study that found a strong correlation between resource efficiency and financial performance; the companies with the most advanced sustainability strategies did best of all. In a study for the Harvard Business School that drew similar conclusions (higher return on equity and assets for higher-sustainability companies), the authors concluded, “developing a corporate culture of sustainability may be a source of competitive advantage in the long run.”

To think of sustainability as a niche gets it wrong. To do it right, companies need to be rigorous, goal-oriented, and accountable. The evidence is building not only that sustainability initiatives work, but that they are an important factor in creating long-term value.

 

Jeremy Oppenheim is a director of McKinsey & Company, based in London and a global leader in the Sustainability & Resource Productivity network. In 2014, he served as program director for the Global Commission on the Economy and Climate. Martin Stuchtey is Director of the McKinsey Center for Business & Environment and is based in Munich.

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3BL for the People, Planet, & Profit

 

 

By Mary Stokes

Despite it’s catchy name, 3BL isn’t the newest craze in boy bands.  3BL , also known as The Triple Bottom Line, was a phrase first coined by John Elkington in his 1994 book, Cannibals With Forks.  He identified it as a method of reporting profit that considers a business’s impact on the environment and society, in addition to its regular bottom line.  Its foundation – sustainability of people, the planet, and profit – is just as applicable today as it was 22 years ago.

Clients and employees alike pay more attention to businesses if they are committed to people and the environment.  Utilization of 3BL positively affects a business’s publicity by creating accountability to the public concerning societal and ecological bottom lines.

Clients want to purchase products and services that come from responsible businesses; in fact, in the Cone Communications 2015 consumer study, “91% of global consumers expect companies to do more than make a profit but also operate responsibly to address social and environmental issues.”

Employees are more engaged when they feel their employing business has the same values they do.  3BL also encourages businesses to give back to their communities through charity, volunteering, and other means.  Implementing 3BL also has the benefit of both short-term and long-term profitability, just as other formats of sustainability do.

The key is that 3BL is more than just sustainable practices with regard to environmental impact; it’s about a balanced approach to business.  While actual measurements for 3BL can be tricky, it is vital to study the interactions of each bottom line and understand how they affect one another.  As a business begins to equalize each bottom line, profit does not decrease in importance. However, as each area becomes a focal point, the overall profit shifts from financial value alone to societal and ecologic value combined.

Some notables that have embraced 3BL are Patagonia, Southwest Airlines, and Seventh Generation.  While these companies are somewhat larger, there is a movement within smaller businesses to utilize 3BL as well.  Though they are not always as visible with regard to societal and ecological impact, there are similar benefits to implementing the practices of 3BL for smaller businesses, including “increased employee engagement, improved standing in the local community and the building of a sustainable business model.”

3BL is an invaluable system for evaluating your business’s profits on several levels.  As Mitch Tyson, Chief Executive Officer of Advanced Electron Beams puts it, 

“You can rationalize that the triple bottom line will make your company more successful, which it will, or you could pursue it because it reflects your values as a person. . . .  The triple bottom line and sustainability aren’t new management techniques.  They aren’t the latest management fads. They are concepts that challenge each of us to balance the way we successfully run our business and the world that our children’s children will inherit from us.  3BL is about creating a future for your business-a future in which it is financially, ecologically, and societally prosperous.”

 

Mary Stokes is a technical and creative writer based in Minneapolis, MN. Photo Credit: “Hands” by stokpic, licensed through C.C. by 2.0

 

Sponsored by SES, Inc.

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Engineering Studies: a Tool in Your Belt

A Tool in Your Belt

By Matthew Strebe

What if you could reduce utility costs 5-20%, have a more comfortable work environment, and improve productivity and throughput?

Engineering Studies are a tool in your management tool belt to do just that. A study can also reduce operating costs and improve building performance. Simply put, studies can be to a building what a tune-up is to a vehicle.

The How-Tos Of A Successful Engineering Study
With a few simple steps, a plant manager or owner can execute a successful Engineering Study.

Schedule An Initial Consult With A Study Provider
At S.E.S., Inc., this initial consult is free. A consult will provide valuable information in four primary areas:

  1. Eligibility – a consult will determine a facility’s eligibility for studies and other rebate programs such as lighting, heating, cooling, etc.
  2. Rebate strategy – a consult will help develop a strategy to maximize rebates available.
  3. Internal resource requirements – a consult will give the customer an idea of the potential magnitude of the rebates. Knowing the rebate amount helps determine out-of-pocket costs as well as additional resources required.
  4. Management buy-in – by being more informed, you will have the knowledge critical to getting the buy-in you need from your management/ownership.

Get The Management Team And Maintenance Staff On Board With The Idea
Since business alignment is crucial to the success of a study, this is your next step. Let the information do the talking. Management often pays attention when one shows that a typical study will save between 5% and 20% of the annual gas or electric bill.

Example: A food processing plant operates 5 days a week, 24 hours per day, and has approximately 200,000 square feet of production space. About $50,000 to $200,000 in electric and gas reductions may be identified during the investigation process.

Identify And Connect With the Property’s Utility Representatives
The utility representatives are a great resource and often understand the history of the property. In addition, they can save you paperwork time by providing bill history and other facility information required directly to the Engineering Service Provider electronically.

Initiate A Study With A Study Provider
A study provider will complete an  in-depth study, provide a report, and follow up with the project team to discuss associated energy saving opportunities, and building and production improvements. A study may provide the financial justification needed to address more complex and capital intense projects. Examples of this may include that new condensing boiler that was waiting until next summer, or a large controls upgrade that will improve the existing user- unfriendly system.

For more information, visit us on our website at www.ses-inc.org or contact us here.

Uponor

Case Study:

Uponor, Inc., Apple Valley, Minnesota
Year Founded:
Its origins go back to 1620 as Wirsbo in Virsbo, Sweden. Current corporate parent headquarters is Vantaa, Finland
Operations:
24 hours/day, 7 days per week

Uponor, Inc., a Manufacturer’s Alliance partner, has worked with Xcel Energy, CenterPoint Energy, and associated consultants for a number of years and continues to build on past successes, especially in the area of sustainability. 2015 is no different. The Uponor team partnered with S.E.S., Inc. for engineering and technical measurement support to identify and develop strategies for additional process improvements.

The Uponor team provided detailed operation and technical information to S.E.S., Inc. This information and further investigation led to controls upgrade opportunities, HVAC improvements, and an air compressor upgrade. S.E.S., Inc. maintained close communication to Xcel Energy to garner additional incentives and rebates making larger capital investments more attractive. Ultimately, the project provided the technical and financial justification to make changes needed to:

1. Make tighter process control improvements

2. Reduce the energy intensity on a per foot basis

3. Improve equipment and process reliability

 

From A Director Point Of View – Rusty Callier:
At Uponor we believe in the triple bottom line – people, planet, and profit – and operational excellence. One does not take away from the other but need to balance and blend in a way that our actions, while sustainable, make for better people process and provide a return on our investment.

Uponor has had many successes working with S.E.S., Inc. over the past two years. All highlight some great story of collaboration, research, evaluating, testing, and implementing changes. A few do stand out more than others.

Here are some successes:

  • Air compressor upgrades have resulted in a 50% reduction of preventative maintenance (PM) costs
  • Electric cost per unit of compressed air has been reduced
  • Electric utility billing rate structure changes have resulted in substantial savings
  • Ability to speed up extruders while maintaining the same rate of kilowatt-hour consumption

While this list does not include all we have been able to accomplish partnering with S.E.S., Inc.,  it is a good representation of the relationship that has developed over the years. It is a lot to just keep up with growth and the daily grind of running a 24/7 operation, and having a trusted resource like S.E.S., Inc. in your corner to sniff out sustainability wins helps tremendously.

Matthew Strebe is a MN Licensed Engineer and ASHRAE certified
professional at Sustainable Energy Savings, Inc.  
Article originally posted on the Manufacturers Alliance Insider, “Engineering Studies: Why They Could Be the Best Thing You Do For Your Plant in 2016“,  January 2016.   Header Photo Credit: Licensed through C.C. by 2.0.  Photo Credit: Uponor with permission

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Take Credit for Your Business Part II; New Opportunities on the Horizon

 

In a 2011 blog Article, Take Credit for Your Business, we discussed how the R&D Tax credit provided potential sources of cash for manufacturers of all sizes that have incurred expenses in pursuit of new or improved process (e.g. Additive Manufacturing), products (e.g. new product engineering, or applications of AM throughout the product development lifecycle), performance, reliability, or quality. However, until 2016 the reality was that many small and mid-size companies and their tax advisors felt it was simply not viable to pursue this tax credit. The reasons included the complexity of the documentation, the cost of hiring experts to do documentation, and general confusion over what expenses qualified and which did not. In many other cases, the tax credits generated could not be used because of limitations created by current tax rules. So it’s not surprising that the majority of companies that have historically taken advantage of this benefit were big businesses. visit here milfster.org

We are pleased to report, that this situation has changed due to some late legislation that was passed in December 2015: the Protecting Americans from Tax Hikes (PATH) Act of 2015. That legislation, in addition to making the tax credit permanent for the first time in the credit’s 35-year history, significantly enhanced how small and mid-sized manufacturers (SMMs) can benefit from the research tax credits they can generate, utilizing the following significant provisions:

  • Eligible SMM’s may now claim the credit against the Alternative Minimum Tax (AMT) to offset AMT for tax years beginning after December 31, 2015.
  • Some start-up companies may offset payroll taxes with the credit: beginning in tax years beginning after December 31, 2015, certain start-up companies will be allowed to utilize the research credit to offset the employer’s payroll tax (i.e., FICA) liabilities.

How are these significant changes? In years past, a large number of eligible SMM’s (especially S Corporations and other flow-through entities) did not pursue the R&D Tax Credit because the AMT prevented them from using the R&D Tax Credits that they could generate. In addition, young companies typically don’t have a need for tax credits because their expenditures are higher than their sales, thus creating operating losses. Both of these new changes will allow a higher number of companies to immediately monetize the credits they can generate!

According to Scott Schmidt of Black Line Group, the definition of R&D under the law remains much broader than most people realize. For example, time and materials spent prototyping using AM technologies and equipment, costs to experiment with different designs and materials, the design/engineering of new parts and components, and periodically activities related to software development, can all potentially generate R&D Tax Credits.

Manufacturers of all kinds, including those that design and develop their own products, as well as contract manufacturers and job shops, can all take advantage of the R&D Tax Credit. Both the customer and vendor (job shop/contract manufacturer) of an R&D part can take the credit, since the customer will have qualified expenditures around the “PRODUCT” development/improvement activities of the part or component, while the vendor will have qualified expenditures associated with developing the “PROCESS” for making the part.

Schmidt encourages potential and first time users of the R&D tax credit to get ahead of the game and immediately start documenting their “qualified costs” in preparation to start pursuing the R&D Tax Credit in 2016. He notes that companies that make parts for their larger customers in particular (e.g. metal stampers and fabricators, precision machinists, mold builders and plastic injection molders, tool and die makers) should seriously begin to evaluate whether they are eligible for the credit.

Note:  the information contained in this article should not be interpreted as advice or as an endorsement of any product or service, and cannot be used by the reader for promoting, marketing, or recommending any matter or actions addressed in this article to other parties. Mr. Devereaux is not a tax expert and anyone who wishes to pursue this credit should consult a tax accountant for advice.

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Sustainability in the most – ahem -unlikely places

 

Demonstrating Blue Box

Photo Credit: Sanivation

How far can a company go in it’s efforts for sustainability?  You’d be surprised.  But we here at SES, Inc believe that the best sustainability efforts push boundaries in an effort to produce the best results for the people we serve, and while we can’t take credit for the efforts of the company in the article below – we certainly applaud them for, umm, thinking inside of the box.

This sanitation start-up in Kenya turns poop into a sustainable source of fuel

It’s easy to take something as ubiquitous as a toilet for granted when you live in a developed nation like the US.

But for many people around the world, lack of proper waste disposal and sanitation systems can cause widespread disease and even death.

To help solve this problem, Andrew Foote and Emily Woods started Sanivation — No. 55 on the BI 100: The Creators — a sanitation startup that installs in-home toilets in East Africa and turns the waste into briquettes of sustainable, environmentally friendly fuel.

Foote and Woods came up with the idea for turning waste into fuel as undergraduate students at Georgia Tech in 2011. The pair developed a thermal treatment system for human feces as a research project and later entered their work into Start-Up Chile, a business accelerator in South America.

While in Chile, they explored the sanitation space, encountering several startling statistics about developing countries, including the fact that 90% of waste is disposed of without treatment and that diarrhoeal disease is the second-leading cause of death of children under the age of 5. From there, Foote and Woods decided to go all in with the business.

Sanivation Blue Box storefrontThe storefront for blue box toilets. Courtesy of Sanivation

Sanivation set up shop in Naivasha, Kenya, in 2013 with Foote as CEO and Woods as chief technology officer. Today, the company serves 650 people in the community there.

Foote and Woods knew from the beginning that to succeed they’d need to cover the entire system from start to finish. The lack of existing infrastructure in some parts of Kenya means that providing toilets or a treatment system wouldn’t make much of a difference; both must exist to effect systemic change.

So instead of providing one component of the waste-treatment business, Sanivation operates an end-to-end service. It installs private, container-based toilets in homes, and they are maintained for a $7 monthly fee. The waste collected from the toilets is taken to a processing plant, where it’s turned into fuel briquettes that work as an alternative to charcoal. This full-circle model takes a necessary system and elevates it into something sustainable and useful.

“People always joke that we’re running not one business but 10 businesses,” Woods says. “As a startup, it’s complicated, it’s logistically difficult. But we haven’t found anyone to reliably source any one component of this to. Right now, if we want it done right, we have to do it ourselves.”

Getting toilets into homes

The concept of in-home toilets was a hard sell to locals, much less an entire system.

“How do you market something that people feel uncomfortable talking about?” Woods says.

In Naivasha, where outdoor pit latrines are the norm, the mention of an in-home toilet led many to immediately picture an open latrine inside their home — not a preferable alternative to the outdoor version. So Sanivation branded their version as “blue boxes” to dispel the negative connotations potential people had with the word “toilet.”

Burning briquettes_CoSanivationBurning briquettes. Courtesy of Sanivation

On top of that, Sanivation had to convince clients, many of whom can’t count on a steady monthly paycheck, that paying the monthly fee for the toilet was a worthwhile expense.

Training customer-service representatives and maintaining communication with clients proved to be another challenge, especially once the team realized that many homes in Naivasha don’t have addresses. Undeterred, they developed an address system themselves.

In the end, these bumps in the road, and a host of others, helped Sanivation improve its product. The company thrives on client feedback, constantly seeking constructive criticism directly from their customers.

“If we’re not doing a good job, our client is not going to pay the next month,” Foote explains. “By being beholden to our clients and delivering quality services to them, we always learn that keeping good, open communication channels is really important.”

From feces to fuel: how it works

No existing toilet system meant that no existing treatment plant existed in Naivasha, so Sanivation designed and built one from the ground up. Led by Woods as CTO, the team developed a parabolic mirror treatment system themselves, harnessing the natural energy from the sun to heat up waste and kill germs.

Briquette manufacturingManufacturing briquettes. Courtesy of Sanivation

Sanivation combines two waste streams in a metal bucket — human excrement and carbonized agricultural biomass waste, which comes from things like sugarcane gas, corn cobs, rose farms, and rice husks — and heats it to a temperature that neutralizes harmful pathogens and allows the waste to be transformed into a briquette of fuel.

The briquettes have been a hit with local businesses, which purchase them directly from the Sanivation team.

“Our charcoal briquettes outperform traditional charcoal,” Foote says. “So we’re actually selling them at a higher price than traditional charcoal per kilogram, and we’re saving our clients money because they burn longer and have less smoke.”

Sanivation sells 7,000 kilograms, or 15,400 pounds, of the alternative fuel each month and consistently empties its stock.

“We need more poop to be able to keep up with demand,” Woods says.

The entire treatment process demonstrates a core aspect of Sanivation’s business model: relentless innovation. With no outside infrastructure to rely on, Woods and Foote must adapt and change almost daily to meet needs and advance their mission.

Looking to the future

Going forward, Sanivation’s biggest goal is also its biggest hurdle: scaling the company.

Sanivation operates 100 toilets in Naivasha and plans to expand to more than 500 by the end of 2016. The company is also working with refugee camps to build customized systems and train residents to operate them on their own.

Sanivation_tour of BlueBoxSanivation cofounder Foote explains the blue box toilets. Courtesy of Sanivation

Though a few other businesses are attempting similar container-based sanitation systems, none have reached a large scale yet, which leaves the space open for innovation and growth.

Woods says the company is going to have to change to be able to reach the scale it wants.

Sanivation may still be small, but it’s already affecting people’s lives. Foote recalls an older customer coming up to him one day and bending over with her hands pressed together in a salute of gratitude.

“You could just see that the toilet had so much more impact than as a public-health thing,” he says. “This lady typically had to squat over some feces and urine-laced slab, and now she had a nice, comfortable way to go to the bathroom. And she was so thankful for that.”

*Originally posted in the Business Insider by Emmie Martin

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Getting the most out of your sustainability program

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                                                                Photo Credit: StockVault

Sustainability initiatives won’t create lasting value if they’re poorly managed. Here are four lessons from companies that are doing it right.

Among retailers and consumer-goods manufacturers, commitment to environmental and social objectives can take many forms—whether it’s distributing fair-trade products, reducing materials used in packaging, or ensuring humane working conditions at suppliers’ factories. Unilever, for one, has a detailed Sustainable Living Plan, and among the company’s goals for 2020 is to halve the greenhouse-gas impact of its products over their life cycles. Swedish furniture maker IKEA has installed more than 700,000 solar panels in its buildings worldwide and has committed to own and operate more than 300 wind turbines. British retail group Kingfisher’s sustainability plan, which it calls Net Positive, aims not only to make frugal use of natural resources but also to restore and regenerate the environment—“putting back more than we take out,” as the company says.

These programs can be powerful agents of change, both toward greater alignment between customer and corporate interests and toward a culture of systemwide innovation in products and business models. Yet some skepticism remains as to whether sustainability efforts have any impact on financial performance in the short and medium term. Our recent research provides answers to both of these questions.1 In this article, we discuss how companies are creating value from their sustainability programs and what practices enable companies to keep these programs running smoothly and effectively.

How sustainability programs create value

In previous work, our colleagues have outlined the various ways that companies can use sustainability initiatives to manage risk, drive growth, or improve returns on capital (Exhibit 1).2 In our latest research, we sought to unearth examples of how companies are actually doing it. We found that companies that built sustainability into their operations saw immediate benefits, which gave them the momentum to do even more.

Risk management

Of the companies we surveyed,3 more than 90 percent could point to a specific event or risk—such as consumer pressure or soaring commodity prices—that directly triggered their commitment to sustainability. More than half cited long-term risks to their businesses: 26 percent said they wanted to avoid damage to their reputations, 15 percent were seeking to prevent regulatory problems, and 15 percent said they wanted to eliminate unnecessary operational risks. Indeed, we found that the value at stake from risk-related sustainability issues can be as high as 70 percent of earnings before interest, taxes, depreciation, and amortization (Exhibit 2).

What do these risk-management efforts look like in practice? The US-based candy companies Mars and Hershey offer two examples. To secure their future supply of cocoa, both companies are investing in the sustainability of their suppliers. Mars supports smallholder cocoa farmers in Côte d’Ivoire by providing high-quality seeds and fertilizers as well as training; it is also investing in research to improve the quality and performance of cocoa plants. Hershey sends experts to teach its suppliers best-practice farming methods; its CocoaLink mobile-phone service offers advice and market information. The company also contributes to local education initiatives and the fight against child labor. Both companies have set a goal of having their entire cocoa supply sustainably sourced by 2020.

Growth

Nearly half the companies we surveyed (44 percent) cited business and growth opportunities as the impetus for starting their sustainability programs. Redesigning products to make them more sustainable, for instance, can yield tremendous financial benefits. Unilever developed a brand of dishwashing liquid, Sunlight, that is equally effective but uses much less water than other brands; sales of Sunlight and Unilever’s other water-saving products are outpacing category growth by more than 20 percent in certain water-scarce markets.

Apparel companies such as Europe’s C&A now use organic cotton, which is grown without synthetic chemicals or genetically modified seeds. Consumer demand for organic cotton is rising: in 2014, C&A sold 130 million garments made from the fabric, up from 85 million in 2012. C&A plans to use organic cotton in 100 percent of its cotton products by 2020.

Returns on capital

Most of the companies we surveyed said their sustainability initiatives began with a focus on reducing resource consumption: 97 percent of them are conducting initiatives to increase energy efficiency, 91 percent to reduce waste, and 85 percent to save water in day-to-day operations.

Puma, the sporting-goods manufacturer, has been measuring its ecological footprint and that of its largest suppliers since 2005. It aims to reduce the waste it generates, as well as its water and energy consumption and carbon dioxide emissions, by 25 percent compared with 2010. The company is making steady progress: between 2010 and 2013, Puma reduced waste generated per employee by 35 percent and cut energy consumption by 4.2 percent.

Bringing discipline to sustainability programs

Even with a sustainability agenda in place, companies often encounter problems with execution. To bring more discipline to their sustainability efforts, companies would do well to follow four principles commonly associated with performance management: select a few focus areas, set measurable goals, conduct cost-benefit analyses, and create incentives for employees and suppliers.

Focus, focus, focus

We found that many companies choose more than 10 areas in which to concentrate their sustainability efforts; some choose more than 30. It’s hard to imagine how a sustainability agenda with such a large number of focus areas can get the necessary buy-in and resources to be successful. In our experience, the best approach for maximizing impact is to select three, or at most five, strategic priorities.

For example, Coca-Cola’s sustainability framework—which it calls Me, We, World—encompasses its initiatives to improve personal health and wellness, the communities in which it operates, and the environment. The company reports making material, tangible progress on metrics related to three specific areas of focus within this framework: well-being, women, and water.

To emulate Coca-Cola’s success in identifying focus areas that are a good fit with corporate strategy, a company should study what matters most along its entire value chain through internal analysis and dialogue with suppliers, customers, regulators, and nongovernmental organizations. The end product of these efforts shouldn’t be a mere laundry list of vague ideas but rather a systematic sustainability agenda.

Set measurable goals

For each focus area, a company then needs to set clear, quantifiable goals with a long-term orientation (five years or more) and communicate those goals both internally and externally. Notice the difference between a general aspiration to “reduce the impact of our packaging on the environment” and a specific, measurable goal to “eliminate 20 million pounds of packaging by 2016.” Another example of a specific goal comes from a coalition of apparel retailers and manufacturers including Benetton, H&M, Inditex, and Marks and Spencer: these companies are aiming for supply networks with zero discharge of hazardous chemicals by 2020.

Publicizing quantifiable goals motivates the organization, forces leaders to allocate resources, and promotes accountability. An analysis of companies that are part of the Carbon Disclosure Project found that those that announced their goals to the public did better when it came to cutting emissions—and also had better financial returns on such investments.

Conduct cost-benefit analyses and communicate the results

Making the business case for sustainability might sound like an obvious thing to do, but apparently it isn’t. Only around a fifth of survey respondents reported that the financial benefits are clearly understood across the organization.

Many companies have struggled to quantify the financial impact of their social and environmental initiatives, in part because of the distributed nature of that impact: savings or profits arising from sustainability initiatives are commonly spread across various parts of an organization. It is therefore advisable to appoint an executive as the “owner” of each target, meaning his or her team continually tracks the costs and benefits of sustainability actions. Tracking should also extend to indirect effects, such as an enhanced corporate reputation and increased customer loyalty, which pay off over the longer term.

Marks and Spencer tracks progress against its sustainability commitments, as laid out in the company’s Plan A program. The commitments generated £145 million in net benefits in 2013–14. These benefits are regularly communicated to shareholders, employees, and consumers; for instance, the company’s latest annual report mentions Plan A more than 70 times.

Create incentives for employees and suppliers

The top reason that survey respondents gave for their companies’ failure to capture the full value of sustainability was the lack of incentives to do so. Only 1 company in 12 includes sustainability criteria in calculating performance-based compensation for executives, and only 1 in 7 rewards suppliers for good sustainability performance. Among survey respondents, 37 percent named short-term earnings pressure as a reason for poor sustainability results; about a third named lack of key performance indicators and not enough people being held accountable.

Companies could learn a lesson from sporting-goods maker Nike, which directs more of its business to suppliers that receive high scores on its Sourcing and Manufacturing Sustainability Index. This index, one of Nike’s tools for assessing factory performance, gives sustainability factors equal weight with quality, cost, and on-time delivery actionac.net. Nike requires lower-performing factories to resolve issues in a timely manner or else face penalties such as reduced orders or even a termination of the business relationship. The incentives seem to be working: between 2011 and 2013, Nike saw a 19-percentage-point improvement in the number of suppliers that met its standards.


Ultimately, each company must define its own sustainability philosophy in the context of its specific business and mission. The examples described here illustrate the competitive advantages that sustainability initiatives can offer. That said, even the most exemplary commitment to sustainability doesn’t change the fact that the earth’s natural resources are limited. A longer-term solution will therefore require new—circular and regenerative—business models that decouple economic growth from resource consumption.

Download the full report in which this article originally appeared, Perspectives on retail and consumer goods, Number 4, Autumn 2015 (PDF–7.01MB).

About the author(s)

Achim Berg is a principal in McKinsey’s Frankfurt office, Nils Schlag is a principal in the Düsseldorf office, and Martin Stuchtey, based in the Munich office, is the director of the McKinsey Center for Business and Environment.

The authors wish to thank Sheila Bonini, Kerstin Humberg, and Steven Swartz for their contributions to this article.

*Originally posted in McKinsey Insights

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Where Sustainability Thrives, So Does Longevity

Sustainability is a word oft batted around, but what does it actually mean for your company?

road2-web-1

By Mary Stokes

There is certainly confusion concerning what sustainability is, and which parts of business it affects.  The UN’s Bruntland Commission in their 1987 report, Our Common Future, defined it as, “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.  While this is applicable as a way of life, it is equally important for businesses, especially with regard to manufacturing and business practices.

The goal of sustainable development is to create an environment that lends itself to longevity.  In an age where many businesses are not expected to pass the 18 year mark, longevity is a desired yet elusive trait.  However, it does not have to be; sustainability is the key to not only corporate longevity, but also corporate success and flourishment.

Sustainability does not mean the end of innovation.  Rather, it encourages a different type of creativity in each aspect of a business’s workings.  This may mean updating and changing practices in the manufacturing aspect, or simply modifying the surroundings to create a more energy-efficient environment.  The ideal approach is a blend of short-term and long-term changes, with a focus on both the immediate return and the future return.  A balanced approach will improve the potential for longevity without causing strain by reducing profits.  Implementing sustainability actually encourages innovation by challenging businesses to brainstorm new approaches to decreasing waste and improving production.

Recently, Dell started recycling carbon fiber and plastics into new products, a major change that could potentially create $1 trillion of additional value.  While this is a recent change, the point Vice Chairman of Operations Jeff Clarke makes is that while their recent changes are eco-friendly, they have also created a better product with increased value, which is of equal importance.

In an interview with blogger Taylor Eason, Jon Ruel, CEO of Trefelthen Vineyards, has a slightly different take on sustainability practices.  While the demand for organic and sustainable products has increased in recent years, as the public has become more informed, he notes that the green and sustainable part of business is less for the creation of a “delicious and authentic” wine product and more for the longevity of the business, so “[they] can keep making delicious wine for years to come.”

Both businesses are concerned with sustainability, but they present a picture of both long-term and short-term gains find the best roof tiles in san diego ca.  A balance of both is necessary for the longevity of a business; additionally, putting sustainability to practice is encouraging a new level of innovation in business practices.

Rather than viewing sustainability as difficult or having no substantial short-term return, businesses ought to see it in light of the innovation and challenge it can bring to their practices and employees.  In fact, sustainability can drive growth by creating a competitive environment and encouraging employees to be knowledgeable and care about sustainability.

In order to have a lasting impact and create future value, sustainability is an absolute must.  The futures of businesses are impingent on their sustainable practices.  Where sustainability thrives, so does longevity.

Mary Stokes is a technical writer based out of the Twin Cities metro area.  You can contact her at www.tyrison7.wordpress.com.

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