- Posted by Pam Hoddinott
- On August 10, 2020
One of the most dramatic areas of change in our business community and our society at large is taking place with the concept of sustainability. The number of Fortune 500 companies providing corporate level sustainability reporting rose from just 20% in 2011 to 86% in 2018, a staggering increase.
The majority of these companies are reporting on measurable commitments they have made to their stakeholders to reduce their consumption of energy and water, their generation of waste that is landfilled, and the overall carbon footprint their operations create. They have learned that they can achieve these commitments in large part by Making Energy an Asset® to be leveraged and optimized.
These sustainability reports, which are often publicly available, typically track and highlight progress versus a specific baseline year. The objective is to reach total reduction or improvement commitments by a given date, such as 25% by 2025. For greenhouse gases, corporations work to identify and track improvement in three scopes across their entire business operations. What are these scopes, and how can Making Energy an Asset® contribute to a reduction in each of them?
Scope 1 Direct Emissions
Scope 1 emissions are direct emissions from owned or controlled sources. For example, an airline company or a trucking firm reports as Scope 1 emissions the impact their planes or trucks or ships have on total carbon emissions.
Scope 2 Indirect Emissions
Scope 2 emissions are indirect emissions from the generation of purchased energy. For example, a retailer or a hotel chain reports as Scope 2 emissions the impact their energy consumption has on total carbon emissions from their stores or hotels to their distribution or fulfillment centers to their corporate offices.
Scope 3 Indirect Emissions
Finally, Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. For example, an operator of commercial real estate reports as Scope 3 emissions the total impact that commuters or delivery vans have on total carbon commissions due to the incremental distance in the trips these vehicles make to and from their offices.
Source: Green Element
For most large enterprises, nearly all Scope 1 and Scope 2 emissions are related to energy use. By reducing the amount of energy they buy and convert and use to meet their business requirements, they reduce their operating costs and their carbon footprint. This approach is truly Making Energy an Asset®, both to improve profitability and to drive progress toward sustainability improvement commitments.
It is not unusual, for example, to be able to reduce the energy intensity of facility operations by as much 25% by optimizing major end-use systems such as lighting, HVAC, and air compression. Depending on what energy costs at a given site, and the availability of rebates and tax incentives, these improvements can usually be adopted with attractive returns on investment. To accomplish this, consider hiring an experienced energy management firm like Chateau Energy Solutions to help you identify, prioritize, implement, and even finance these improvements using the savings they will generate on a cash flow positive basis.
Okay you say, I understand how I can utilize the concept of Making Energy an Asset® to help me with Scope 1 and Scope 2 emission reductions, but Scope 3 is a lot fuzzier. Can this approach help with that? The answer is yes, it can.
For example, consider providing EV chargers at your facilities to encourage employees and contractors who visit them to adopt electric vehicles. Or work with your suppliers to help them reduce the carbon footprint of the facilities they operate to create the products that you buy and use in your business. Teach them the basics of Making Energy an Asset® or introduce them to your energy management partner. Set goals with them for specific reduction targets and work together to creatively identify new cost-effective ways to benefit both organizations.
Sustainability, and tracking progress toward sustainability commitments, is here to stay. Energy consumption plays a huge role in determining any organization’s carbon footprint from Scope 1, Scope 2, and Scope 3 sources. By Making Energy an Asset®, leading organizations are showing what is possible and creating dramatic value for their shareholders and stakeholders.