Written 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 This type of device-level energy management is an auspicious approach to revamping an outdated system that can add value to an already highly lucrative industry.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.
The Solar Industry has changed tremendously since it first came on the scene in the 1970’s. As with any mature industry the technology has improved and cost have dropped by 90%!
Over the past decade, the amount of residential solar has risen exponentially while both commercial and industrial property owners have been slower to adopt even with a generous federal tax credit that will offset the installation cost. The solar investment tax credit allows investors in solar energy systems to claim up to 30 percent of their solar installation costs as a credit on their taxes. In December of 2015, the program was extended by five years in order to spur the growth of commercial and industrial solar projects. If we looked at both commercial and residential rooftop solar solutions there is enough suitable, sunny rooftops in the U.S. to provide nearly 20% of the power in every state.
In my home state of Minnesota, we have approximately 282 million square feet of public building rooftops. If we were to place solar arrays on the roof tops of just our K-12 public school buildings, we could create enough to power to satisfy the needs of 125,000 homes. The 30% reduction in utilities would save those school district 110 Million dollars per year, enough to hire an additional 2,200 teachers. Visit supercleaningservicelouisville.com.
Where would a commercial or industrial property owner interested in solar energy even begin? The best place to howells ac start is always with a comprehensive energy plan that has been customized to your building. Our expert team is ready to guide you through every decision point, maximizing your investment dollars and saving you money.
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.
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!”
The Googleplex, Google’s corporate headquarters in Mountain View, Calif., is covered by solar rooftop panels. Credit: Creative Commons Lic.
Google today said it will be able to power all of its global data centers and corporate offices from 100% renewable energy in 2017, a goal the company has been working toward for years.
Six years ago, Google began signing long-term contracts to buy renewable energy directly from solar and wind farm suppliers. The company’s first contract was to purchase all the electricity from a 114-megawatt (MW) wind farm in Iowa.
Last year, Google purchased another 842MW of renewable energy, nearly doubling the clean power it had purchased, which took it to 2 gigawatts (GW) of cumulative renewable power.
“Today, we are the world’s largest corporate buyer of renewable power, with commitments reaching 2.6 gigawatts (2,600 megawatts) of wind and solar energy. That’s bigger than many large utilities and more than twice as much as the 1.21 gigawatts it took to send Marty McFly back to the future,” Urs Hölzle, Google’s senior vice president of technical infrastructure, stated in a blog.
Google pursued a multi-pronged approach to reach its 100% renewable energy goal, buying electricity through power purchase agreements (PPAs) that locked in contracts for carbon-free energy at a set price. The guaranteed revenue from PPAs also allowed renewable energy suppliers to invest with confidence in additional capacity, such as wind turbines and photovoltaic panels. Google also started creating more efficient facilities that would use less energy.
Google has signed onto 20 renewable energy projects around the world — about two-thirds of which are in the U.S. — amounting to more than $3.5 billion in clean energy investments.
Google also purchased its power through renewable energy credits, each one of which represents 1 megawatt-hour (MWh) of electricity sold separately from commodity power sources and fed into the general electrical grid.
“Over the last six years, the cost of wind and solar came down 60% and 80%, respectively, proving that renewables are increasingly becoming the lowest cost option,” Hölzle said. “Electricity costs are one of the largest components of our operating expenses at our data centers, and having a long-term stable cost of renewable power provides protection against price swings in energy.” Check out find cleaning service brooklyn.
“Our ultimate goal is to create a world where everyone — not just Google — has access to clean energy,” he added.
Corporations increasingly demand more renewables
Google is far from alone in working toward achieving 100% renewable energy usage.
In September, Apple announced its commitment to running all of its data centers and corporate offices on renewable energy, joining a group of other corporations committed to the same clean energy goal.
Also in September, Microsoft announced plans to power its data centers around the world using 50% renewable energy by 2018. Click over here. The company also plans to boost its use of renewable power for its data centers to 60% by the early 2020s.
Increasingly, corporations are also pressing governments to change policies to favor the use of renewable energy, which — depending on the region — can be less expensive than power from traditional sources such as coal-fired power plants.
Increasing the use of renewable energy has become a targeted goal of almost half of Fortune 500 companies, according to one report. In 2014, more than half of Fortune 100 companies collectively saved $1.1 billion in energy costs by rolling out renewable energy programs. Visit website for more details.
“Operating our business in an environmentally sustainable way has been a core value from the beginning, and we’re always working on new ideas to make sustainability a reality,” Hölzle said.
This Article originally appeared on ComputerWorld.com
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
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.
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.
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.
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, 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
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
Anyone who’s ever covered a wall with sticky notes to clearly map all of the steps in a process knows how valuable that exercise can be. It can streamline workflow, increase efficiency and improve the overall quality of the end result. Now, a public-private team led by the National Institute of Standards and Technology (NIST) has created a new international standard that can “map” the critically important environmental aspects of manufacturing processes, leading to significant improvements in sustainability while keeping a product’s life cycle low cost and efficient.
According to the U.S. Energy Information Administration, manufacturing accounts for one-fifth of the annual energy consumption in the United States–approximately 21 quintillion joules (20 quadrillion BTU) or equivalent to 3.6 billion barrels of crude oil. To reduce this staggering amount and improve sustainability, manufacturers need to accurately measure and evaluate consumption of energy and materials, as well as environmental impacts, at each step in the life cycles of their products.
However, making these assessments can be difficult, costly and time consuming, as many manufactured items are created in multiple and/or complex processes, and the environmental impacts of these processes can vary widely depending on how and where the manufacturing occurs. Additionally, the data collected are often unreliable, frequently not derived through scientific methods, and do not compare well with those from other types of manufacturing processes or from processes at different locations.
“It’s similar to using personal finance software at home where you have to gather income and expenditure data, ‘run the numbers’ and then use the results to make smart process changes–savings, cutbacks, streamlining, etc.–that will optimize your monthly budget,” said NIST systems engineer Kevin Lyons, who chaired the ASTM committee that developed the manufacturing sustainability standard, check sanmembers.
“We designed ASTM E3012-16 to let manufacturers virtually characterize their production processes as computer models, and then, using a standardized method, ‘plug and play’ the environmental data for each process step to visualize impacts and identify areas for improving overall sustainability of the system,” Lyons said.
For their next step, Lyons and his colleagues on the ASTM sustainability committee plan to define key performance indicators (KPIs)–metrics of success–for manufacturing sustainability that can be fed back into the E3012-16 standard to make it even more effective.
“In the long term, we’d also like to establish a repository of process models and case studies from different manufacturing sectors so that users of the standard can compare and contrast against their production methods,” Lyons said.
Through a collaboration with Oregon State University, NIST held regional industry roundtables in Boston, Chicago and Seattle to learn how best to introduce the benefits of the sustainability standard to U.S. manufacturers, especially small- and medium-size firms. A report about those meetings will be published later this year.
Materials provided by National Institute of Standards and Technology (NIST). Note: Content may be edited for style and length.
Photo Credit: “Pumpjack” by Skeeze used with permission from C.C. by 2.0
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.