New Bottom Line Volume 4.7 – Eco-Efficiency: A Winning Investment Strategy (2)

April 5, 1995

In the last installment of The New Bottom Line, I discussed the impressive rates of return on investment (ROI) that are often available from investments in eco-efficiency–energy efficiency, water conservation, waste minimization, process re-engineering, design for environment–and their systematic integration. And I observed that all too often, businesses pass up these substantial savings, which represent some of the highest–and safest–legal rates of return in the global economy.

Why does this happen? Why would smart managers not take advantage of such an evident easy success? What obstacles stand in the way of more companies implementing eco-efficiency programs? What can be done to overcome those obstacles? Where can your company turn for help?

According to a recent study entitled “Designing Industrial DSM (Demand Side Management) Programs that Work”, Steven Nadel and Jennifer Jordon of the American Council for An Energy Efficient Economy, there are many reasons why companies have not implemented all of the cost effective energy efficiency projects identified in their facilities, including:

Other reasons may be less rational, but just as impeding. The investment in energy efficiency may come out of one department’s budget, while the savings benefit another’s, and the greater corporate good gets lost in turf battles. Or a manager observes “we tried something like that once before, and it didn’t work,” without considering specifically what didn’t work, or why, and how it could work better.

Utility companies have attempted to lower the financial barriers by providing companies with access to the long term capital and technical resources needed to identify, evaluate and implement energy efficiency projects. Cost sharing is often available to reduce the capital investment required. In the meantime (since the Utility role in energy efficiency may change as the industry is deregulated in many parts of the US), here are some things your company can do:

Above all, make the case in terms your managers or shareholders will understand. As Rob Shelton of Arthur D Little observes, in his article “Beyond the Green Wall”, environmental managers often fail to effectively communicate the benefits of their initiatives in business terms, not just “environmentalese”. Successful environmental managers today must be multi-lingual, speaking the language of engineering, biology–and finance.

(c) 1995 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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