(Note: this is the first post in a series of articles on developing, validating, and implementing a sustainability growth strategy for current (and future) market conditions. Overview blog post is here. The target audience is CXOs in technology companies and global Engineering Procurement & Construction (EPC) firms who are chartered to lead efforts to grow new revenue streams in this general market sector; as well as those executives in global enterprises who are considering implementation of such strategies.)
In the fall of last year, I wrote about the need for sustainability programs in the industrial sector, given the current economic climate (link). Since that time, we have seen market conditions deteriorate, but conversely, have also seen companies (both services and technology) who are starting to hire again to provide sustainability solutions to their clients. The purpose of this column is to provide some guidance on the state of the sustainability strategy market need; particularly in regard to enterprise systems. Notes from leaders from both the ‘sell’ and ‘buy’ sides of the equation provide additional data points on current trends.
Perspective from Sustainability / Environmental Executives
Many corporations have been focusing on very tactical and survival -based activities, such as cost control and risk / exposure management. The awareness for sustainability solution need (strategy, projects, implementation, reporting) is still relatively high, based on discussions I have had with executives in the energy development and discrete manufacturing industries; but that need is tempered by reduced internal budgets (and available staff), along with more immediate operating concerns (such as equipment maintenance, process safety, compliance, etc).
When sustainability programs compete against operations for resources and internal ‘mindshare’, one can get the ‘rubber band effect’, as an energy development executive referred to it: “the sustainability team gets ahead of itself on programs, and then gets yanked back”. A key issue: what sustainability metrics should be developed and adopted initially?
Another exec from the discrete manufacturing industry offers advice to solution providers: “don’t try to sell the ‘hearts and minds’ programs at this time: aim for the basic needs in environmental programs, such as self auditing programs, and look for opportunities to add value over time”.
And while corporate environmental, health & safety (EHS) departments still provide overall policy development and guidance, many sustainability initiatives (and leadership thereof) are being developed within business groups in the organization. “Initiatives for sustainability are being implemented in engineering departments, who may serve as ‘internal consultants’ to EHS and corporate sustainability staff”, an upstream energy development exec told me. “Sustainability leadership is moving from EHS departments to staff running business processes, such as supply chain management”.
So, from a management systems perspective, such as that for enterprise level risk or carbon management, it may be difficult to develop & sell a ‘top down’ solution. Initiative – specific strategies may be an easier sell.
Perspectives from the Engineering Industry
As I wrote last year, the global engineering procurement & construction (EPC) segment is positioned to provide a range of strategy and implementation services within key sustainability and cleantech segments (article link is here). How has this industry been impacted by current conditions? Talking to a number of executives, the common themes are as follows:
- What was once significant, backlog has been slowly been tapped and is diminishing, especially in the industrial sector and in international markets (which had been strong up to this point)
- Similarly, the increase in signed projects has slowed, as client projects have been delayed
- But, new markets are emerging (i.e. projects associated with the federal / state recovery act funds, energy mgt programs, and GHG inventory development); albeit slowly
Short Term Solutions of Interest
Notwithstanding the opportunities currently to provide energy efficiency & management solutions and GHG inventory / assessments, what are some of the focused sustainability solutions that appeal to executive level buyers today? Based on conversations above, the likely candidates include:
- Initiative Strategy Review (where a client is already performing energy management, GHG inventory assessment, Green IT programs etc; can you help them adapt their strategy to maximize value with current operating constraints?)
- Sustainability Diagnostic Review (evaluate current sustainability programs with focus on current economic conditions. Also, bring in any benchmarking information to competitors or across industries)
- Regulatory Landscape Review (given the myriad of state, federal, and NGO guidelines and proposed regulations, provide client – specific regulatory impact scenarios)
- Emerging Technology Review (appealing to CTO / CIO execs on advances in both IT based technology and ‘cleantech’ hardware)
- Executive Coaching (assisting influencers and other internal staff in evangelizing, educating, and selling sustainability solutions / strategy to internal decision makers)
Summary
Following the current market trends and anecdotes provided above, what are some of the key concepts to consider when developing and promoting sustainability solutions today?
- Pick ‘tactical’ sustainability projects (which may be an oxymoron…) such as strategies for maximizing the efficiencies of existing systems, buildings, and assets.
- You should articulate an accelerated ROI for your clients, but provide a 'platform' (technology based or process based) to allow your client to leverage incremental successes over time across his / her enterprise
- Assessment and benchmarking: executives place a high value on validation of industry trends and insights
Again, initiatives in sustainability ‘sectors’ such as Green IT, energy efficiency, and GHG inventory assessment are areas where solution providers may (and are) provide value to their clients. The purpose here is to find opportunities to assist clients in developing and implementing their sustainability strategies, in context with ongoing operating concerns.
The next article in this series will focus on technology – based sustainability solutions.
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