Any credible corporate climate strategy must have a public and ambitious energy efficiency commitment at its heart.
The problem? The vast majority don’t. Only 13% of Fortune 500 companies have a specific energy efficiency goal, while 54% have overarching carbon emission reduction targets¹. We need to urgently fix this.
Climate Group's EP100 initiative brings together over 120 companies, all of which place energy efficiency at the centre of their business strategies. They're unique in that they have all publicly set an ambitious target and are committed to transparently reporting on their progress. As well as giving added credibility to their individual decarbonisation efforts, their commitments are building a powerful market signal that is creating demand for the technologies, capital flows and policy frameworks needed to accelerate global action on energy efficiency.
This article shines a spotlight on Siemens and JSW Cement, as two existing EP100 members, and asks:
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Why place a public energy efficiency target at the heart of their climate strategies?
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How are they confident they can deliver on it?
Why set a public energy efficiency target?
It’s the starting point for any credible corporate climate strategy.
For Siemens and JSW Cement the energy hierarchy sits firmly at the heart of their decarbonisation efforts. The science says that the first step is always energy efficiency and making an EP100 commitment is the best way to communicate this understanding. This differentiates them as taking credible climate action in the eyes of important stakeholder groups such as investors, clients/customers, employees and the climate advocacy community.
“The first thing [in corporate decarbonisation] is always to look at energy use.”
“The first thing [in corporate decarbonisation] is always to look at energy use.”
It secures buy-in across the many limbs of global corporations.
A single ‘North Star’ energy efficiency target is essential, yet difficult to define, for diversified multi-national companies. In joining EP100, Siemens and JSW Cement have successfully rallied their sustainability decision makers at all levels around a single target, helping take energy efficiency from the boiler room to the boardroom.
It provides commercial advantage.
Siemens, together with many other EP100 members, offer sustainable energy-saving solutions to their customers. Committing to an ambitious target that covers their own operations enables them to ‘walk the talk’ on energy efficiency; ensuring that their product offerings and operations are energy smart. This improves brand image, providing commercial advantage beyond the direct financial savings gained from actual efficiency measures.
“We are also in a unique position because energy efficiency is a big part of what we do for our customers. For many years we have been working with customers to help them realise cost and carbon savings through energy efficiency. So, through our EP100 commitment we wanted to underline our belief that energy efficiency is one of the main levers for decarbonisation.”
“We are also in a unique position because energy efficiency is a big part of what we do for our customers. For many years we have been working with customers to help them realise cost and carbon savings through energy efficiency. So, through our EP100 commitment we wanted to underline our belief that energy efficiency is one of the main levers for decarbonisation.”
How are they confident they can deliver on it?
They begin with smart data.
Energy is one of the biggest cost areas for companies, yet it’s surprising how frequently it goes unmonitored. EP100 companies don’t make this mistake. Strong data acquisition sits at the heart of Siemens’ and JSW Cement’s energy efficiency strategies; capitalising on the latest in digital technology gain insight and scope new projects. They understand that smart data unlocks smart energy use.
“Is our energy use coming from building operations, production-related activities or EV chargers? Being able to answer these types of questions enables our facilities managers to optimise our energy use in a much more effective way.”
“Is our energy use coming from building operations, production-related activities or EV chargers? Being able to answer these types of questions enables our facilities managers to optimise our energy use in a much more effective way.”
They are trialling innovative ways to overcome upfront costs.
Tackling upfronts costs is part of what it means to be a corporate leader on energy efficiency. The low hanging fruit has all been picked. EP100 companies employ a wide variety of solutions to help get around this issue, such as ‘zero cost zero carbon’ financing mechanisms that invest the savings from lots of small efficiency measures into more expensive more technologically complex ones. Others, like Siemens and JSW Cement, highlight the effectiveness of voluntary internal carbon pricing in creating a consistent revenue stream for the often overlooked topic.
[1] World Wildlife Forum, 2021. Power Forward 4.0. Available at: https://wwfint.awsassets.panda.org/downloads/power_forward_4_0.pdf
This article is based on insights from an online panel discussion titled “Net zero's cornerstone: Championing corporate energy efficiency goals” held by Climate Group on Wednesday, 9th March 2022.
