What Sustainability Strategy Solutions do Global Clients want today?

(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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Article on 'AEC Bytes' for Green Technology Trends in Buldings / Facilities

I contributed to AEC Bytes, a leading source for AEC technology trends, and edited by Lachmi Khemlani. This article follows up on past articles and blog posts I have written on the transformation of the buildings industry and influence of key market drivers such as BIM and virtual modeling. I incorporate new insights I have gained to provide additional market strategies for both AEC tech firms as well as 'cleantech' firms in the energy efficiency, energy modeling, CSR reporting, health & safety, and lifecycle assessment segments.

Link: http://www.aecbytes.com/viewpoint/2008/issue_39.html Read more!

Trends in Energy Analysis, from the BE 2008 conference

One of the presentations at the Bentley BE 2008 conference I had a chance to view was by Drury Crawley; Team Leader of Commercial Buildings R&D at DOE (Dept. of Energy).

(Side note: his title is WAY long……but he knows it, too….).

He covered trends in energy analysis, high performance buildings, and new business models for sustainability in buildings and facilities. I thought his high – level view of where the buildings / facility industry is going was very interesting, and it re-iterates a number of issues that I have seen in my work. Key themes included:

• Consolidation of the Buildings industry (mergers & acquisitions)
• Worker Health / Productivity / Comfort
• Green House Gas (GHG) inventory and management (note: 39% of carbon emissions come from buildings….)
• Green Buildings
• Zero Energy Buildings (ZEB)
• Energy Services Companies (ESCOs)
• Bioterrorism

Some thoughts on his presentation and viewpoints are below:

Water

Evaluating the impact of buildings on WAGES (Water, Air, Gas, Electric, Steam), Crawley cited figures indicating that buildings (including the electric power required) account for 45% of water use in the US alone. Not including electrical power, domestic use is 100 gpd per capita, and total water use considering the impact of electrical power generation is 140 Billion gallons a day. While most of the industry is currently focusing on driving down energy use and costs in buildings as a first step in achieving sustainability, it is clear that the ‘delta’ for improving water resource conservation is very high, and should also provide a strong market driver for adoption of technologies to maximize conservation and efficiency of water use in buildings.

Building Simulation

Similar to the advent of intelligent modeling driving adoption of green technologies (which I posted on here), Crawley maintains that building simulation allows for earlier decision making in the design – build process, particularly as it relates to energy use and analysis. In regards to technology, he sees the following major drivers: visualization, risk assessment (particularly for insurance), interoperability between systems, toxicity of the built environment, calculating ‘embodied’ energy via life cycle assessments (LCA), and integration of tools for thermal analysis, acoustics, and CFD for examples. It is clear that there is no one toolset to allow owners or consultants to conduct building simulations, and there is still a very strong need for training in simulation methodologies; not just the technology itself.

Another interesting point was that Green buildings and accreditation was driving the use of these simulation methodologies and tools; not higher energy costs.

Websites for more info on DOE’s commercial building R&D:

Buildings.energy.gov

http://www.energyplus.gov/

http://www.highperformancebuildings.gov/

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Some thoughts on sustainability in the supply chain

As the sustainability technology market develops, it appears that there are a number of segments within (such as CSR reporting, supply chain mgt, etc) that are gaining traction, and may 'drive' general adoption of sustainability within organizations. I find it interesting that there are a number of different tech firms such as Aravo, Stakeware, CSRware, Credit360 and many others, that are coming at sustainability from different business processes. The recent Forrester report on sustainability technology (which I commented on in this post) details the general groups as well, but does not identify supply chain solutions as a specific segment. I think this may be an area that could drive faster adoption, and also be a platform that could integrate with other sustainability processes & metrics as they were developed in an organization.

Initiatives to ‘green’ the supply chain generally follow these key metrics:

• Lower energy use and increase energy efficiency in storage and transportation
• Minimize packaging via improved product design and use of recycleable materials
• Lower carbon footprint and emissions via improved energy (above), use of alternative energy sources (where appropriate)
• Substitution or elimination of toxic materials when possible
• Effecient use of resources; i.e. "embedded water" costs
• Optimize the supply chain as to minimize impacts on stakeholders

The market drivers for greening are:

• Product - specific compliance, such as REACH
• Sustainability reporting
• GHG emission reductions and credits
• Improved risk management (in light of recent supply chain incidents with Mattel, others)
• Cost savings of shippers / suppliers; leading to better value pricing
• Stronger relationships & transparency with key suppliers; strategic value

In discussions with many supply chain management solution providers, it appears that many end user clients are deploying 'green' solutions in the supply chain to achieve better energy efficiency, because it is the most visible and generally the easiest issue to solve with key suppliers and logistics partners. But it remains to be seen whether that issue will continue to drive the growth of this segment. There is a general feeling that any additional 'incidents' with global brands will increase awareness and urgency on the part of corporations to gain complete transparency in their supply chains and manage them beyond just energy efficiency gains. Along those lines, continued regulation enactment similar to REACH and RoHS in the EU will also force companies to align their supply chain (and product management) processes so as to be in compliance with product - centric regulations.

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Report says that Green Buildings are the fastest way to control GHG Emissions

Recent post in Cleantech.com refers to the "Green Building in North America" report by the Commission for Environmental Cooperation in Canada. Some interesting items:

- The potential reduction in CO2 from net zero - energy and carbon neutral buildings could equal the entire carbon emission loading of the US transportation sector from 2000.

- Key elements for acheiving goals of carbon reduction: ultra efficient materials and equipment; improvement in design processes; innovative financing; and construction and operations

- We need the development of environmental parameters and targets, and use of modeling to assess water & air impacts; use of renewable materials; maximize urban renewal and use of 'brownfields'; and meet water needs of the watershed

From an information management standpoint, it would seem that this is another validation point for the need for integrated lifecycle solutions (i.e. data modeling from the design phase all the way to operations & retirement of assets). This integrated information approach is also consistent with use of a sustainability platform to 'link' and access data sources (GHG emissions, toxic material use, environmental impacts, etc) and provide a roadmap for improvement and also report performance to all stakeholders and regulatory bodies.

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