Realising positive ROI for ambitious net zero action
Author : David Pownall, VP Services at Schneider Electric UK&I
07 March 2023
Ahead of the seminal COP26 climate summit in November 2021, over half of the UK’s largest businesses had already committed to eliminating their contribution to carbon emissions by 2050. In the months since, more and more global organisations have made net zero pledges. However, there is considerable space between making a pledge and seeing results.
While there has been widespread acceptance of the need for global action on climate change, many organisations are unsure how to implement effective change while ensuring cost viability. Companies are well aware of the need to act swiftly, but the perceived economic costs can seem formidable. However, this assumption is a false and dangerous economy.
The return on investment for pushing ahead with net zero strategies goes beyond saving the planet. ROI in this arena encompasses significant organisational cost reductions, streamlined operations and enhanced business insights. Ultimately, meeting green targets runs in parallel with achieving business goals – the two are now inseparable.
Realising this positive ROI involves a holistic strategy that emphasises sustainable electrical distribution. Reducing power consumption is one strand, as is greater electrification through next-generation power supplies like EV chargers, smart meters and microgrids, all of which can contribute to net zero success, alongside business returns.
Becoming more sustainable through enhanced power management provides an excellent opportunity to transform sites for the better and utilise sustainability goals to meet business objectives.
Visibility pays dividends
According to global management consultants McKinsey, "about 85 percent of the emissions reductions that we need to get to net zero in Europe are viable with today’s technologies. Technology is a fundamental pillar of sustainability. In particular, power management – supercharging the visibility organisations need to make and achieve net zero targets through reduced consumption and emissions."
The first step on the decarbonisation journey requires complete visibility of emissions. Without understanding where you are, it is impossible to identify opportunities for improvement year on year. This requires consolidated data – a single view of your carbon footprint.
Connected technologies make it possible to access real-time data about current energy use, alongside identifying where emissions can be reduced. Digitising helps to streamline operations so that more intelligent decisions can be made about electrical infrastructure. The better the insight, the greater opportunity for return on investment.
Connected insight and acumen
Crucially, understanding your electrical infrastructure provides confidence that it will run safely, securely and sustainably. Connected infrastructure enables the identification of risks and allows predictive maintenance, which will help minimise downtime and increase the longevity of equipment.
Proactive monitoring can avoid unscheduled downtime, thus avoiding unplanned costs. Beyond this, by connecting assets to a connected services hub, the job of monitoring can be handed to an expert partner. Switching from traditional manual maintenance to remote monitoring reduces operational costs and provides opportunities to put your mass of data to better use.
For example, the data insights delivered through connected devices can enable an expert sustainability partner to provide bespoke strategic direction and tactical support on your journey.
The skills required to complete this journey are often scarce within organisations themselves; extensive and holistic experience is necessary to reach net zero targets. Not only that but working alongside a partner provides more time for the organisation to focus on broader transformation to achieve business objectives while ensuring alignment with net zero goals.
Sustainable strategy as an income generator
The way we power our world is changing, and organisations have a tremendous opportunity to support the green energy revolution while enjoying returns for themselves. For example, investment in renewables such as microgrids, with the implementation of battery storage, provides an opportunity to create sustainable energy that, over time, companies can sell back to the grid at a profit.
This strategy provides long-term ROI and contributes to resilience with the advantage of not relying heavily on the national grid as a sole source of power. With the impacts of climate change and the increasing regularity of extreme weather, it is now vital to invest in alternative systems to ensure business continuity in the face of threats to national infrastructure.
Of course, it is also essential to consider the broader implications of failing to act. External pressure to act on climate change increases, from the Government to investors and local communities. Companies that cannot showcase their approach to addressing climate change risk losing reputation, investment and customers. Very few companies can afford to risk any such blow in an increasingly competitive market.
The window of opportunity for combating climate change is closing. To have the best chance of limiting temperature rises to 1.5°C, we must halve global emissions by 2030. We will not achieve this without all organisations taking immediate energy-reduction measures right now. The effects of climate change are already apparent, putting all at risk. Simply put, there is no ROI on failure to act.
However, the returns on climate action are all-encompassing – for companies’ bottom lines and our collective higher ambitions.
Look to those already achieving great strides in their journeys to accelerate your strategy. Every day, we are working with businesses that are already making a real impact whilst achieving healthy ROI, including a European retail chain that has already achieved a 20 percent reduction in energy costs.
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