Daryl Brewster, CEO of Chief Executives for Corporate Purpose, summed up the touchpoints of ESG influence: “From team member engagement to team member development to improving brand reputation to identifying and penetrating new markets and reaching new customers, to improving supply chain reliability, social responsibility, (ESG) touches every aspect of a business.”
- In a 2019 report, McKinsey noted that 3M had saved $2.2 billion with a pollution-prevention program in place since 1975. The firm also highlighted FedEx’s plans to eventually convert its entire 35,000-vehicle fleet to electric or hybrid-electric engines. At the time of the report, FedEx had converted 20 percent of its fleet, saving more than 50 million gallons of gas.
- McKinsey found that ESG benefits cash flow by increasing top-line growth, reducing costs, minimizing regulatory and legal interventions, increasing team member productivity, and optimizing investment and capital expenditures in the same report.
- A 2018 paper by Bank of America Merrill Lynch said that firms with better ESG metrics delivered higher three-year returns, saw less volatility in share price, and were less likely to declare bankruptcy.
- The Reputation Institute says acceptable ESG practices have a multiplier effect on the value, yielding higher share prices, lower risk, increased revenue, improved reputation, and enhanced team member recruitment.
- Korn Ferry, the executive recruiting firm, recently surveyed the professionals in its network. One-third of respondents chose “company mission and values” as the top reason they’d work for one company over another.
Buildings are crucial to cutting carbon and energy.
Commercial buildings are the nation’s single biggest energy consumer, with most of that going toward heating, ventilation, and air conditioning (HVAC). That makes buildings both a contributor and a potential solution to the unsustainable buildup of atmospheric carbon. It also makes them ideal opportunities for improving ESG scores.
When private equity firm Blackstone screens potential ESG portfolio candidates, it scrutinizes their energy use. The firm gets granular, looking at companies’ HVAC systems, thermostat and refrigeration controls, and maintenance protocols to gauge how they’re reducing energy and carbon.
Reducing energy use is imperative. It’s also the best way to attack carbon emissions. Another McKinsey study found that improving building energy efficiency is the least cost, most effective strategy for dramatically reducing carbon.
Smart Buildings, Smarter Benefits
The most efficient buildings are intelligent buildings.
Making a building smarter makes sense. Smart buildings not only save money, energy, and carbon emissions but are more comfortable. Greater comfort leads to more satisfied tenants, higher productivity, reduced vacancy rates, higher valuations, and reduced maintenance costs.
Smart buildings save energy and improve comfort by automating controls and optimizing systems. Intelligent buildings employ advanced sensors, automated controls, and data analytics to upgrade operations and whole-building performance. They’re like “supersystems” of interconnected building systems.
In a smart building, previously independent building systems—including fire protection, ventilation, climate control, lighting, and video surveillance— talk to and learn from each other. For example, sensors that detect extended inactivity in vacant offices feed that information to lighting and HVAC systems for savings.
Advanced technologies offer greater visibility into real-time operations and historical trends, allowing building operators and occupants to interact with the building. On the other side of the meter, connected buildings can communicate with the utility power grid. This opens up revenue and savings opportunities for the building owner, for example, through reduced demand charges and utility rewards for cutting energy use during peak hours.
Smart buildings compound energy savings, too. Upgrades to single components or isolated systems can yield savings in the range of 5 to 15 percent, the American Council for an Energy-Efficient Economy (ACEEE) estimates. But an existing building retrofitted with integrated smart building systems can realize even more significant savings, ACEEE says.
“Data collected and insights generated by smart building technologies can lead to changes in facilities management that reduce energy consumption for climate and sustainability goals and help improve public health and safety,” says Christina Jung, a senior consultant for Navigant Research.
Buildings with Brains: The Components
What makes a building smart? It starts with such components as advanced HVAC systems, smart lighting, advanced window shading, and smart plug loads. Tying all these together are advanced energy-management systems with automated controls, networked sensors and meters, data analytics software, energy management and information systems, and monitoring-based commissioning.
Energy Management Systems (EMS)
An EMS builds the core of smart building technologies. These scalable systems use open communication protocols to transform diverse and growing data streams into actionable information for performance improvements. They can save a minimum of 13 percent on energy, according to ACEEE. Beyond saving energy, an EMS helps operators see all facility operations clearly in real-time, manage utility bills, measure return on investment, manage budgets and capital expenditures, benchmark building performance, engage occupants, and manage tenant billing.
Lighting controls help prevent wasted energy. Smart systems go beyond turning lights off in vacant offices and spaces and varying light levels. A smart lighting system networked with a building energy-management system can, for example, figure out the best approach: darkening windows and turning the lights up or letting in maximum sunlight and dimming the lights.
HVAC can consume at least 40 percent of a building’s energy. Smart HVAC systems use multiple sensors to monitor and control temperature, pressure, flow rates, and gas concentrations while saving substantial amounts of energy. Technologies like variable-speed fans and demand-control ventilation can yield cost savings of 24 to 32 percent, depending on building type.
Even small- to medium-sized buildings that can’t afford whole-building HVAC controls can install smart controls directly on HVAC equipment. A Pacific Northwest National Laboratory study found 50 percent savings and a three-year payback for rooftop units outfitted with advanced controllers. A University of California at Irvine study credited real-time, demand-based ventilation controls with reducing energy use in 10 university labs by more than an average of 60 percent.
Like photochromic sunglasses that respond to light levels, smart windows lighten or darken depending on sunlight or temperature. Automated shades control light levels and solar heat gain. A Lawrence Berkeley National Laboratory study found significant savings on cooling and lighting with smart windows.
Instead of relying on preset schedules and setpoints, automated system optimization uses real-time feedback and a ton of data to operate building systems. Cloud-based remote building monitoring allows building operators (or third-party energy service vendors) to monitor real-time and historic building performance through web-based energy management platforms.
Operators can manipulate smart building systems through computer dashboards—interactive displays of building operations and energy use. Dashboards allow the building operator to centrally visualize and analyze building data and receive alerts on faults detected by the automated system optimization.
Distributed Energy Resources (DER)
Distributed energy resources are grid-connected energy generation and battery storage systems located behind the meter and close to the point of use. Adding smart inverters to distributed energy resources allows continuous two-way communication between the DER and the power grid. That makes them responsive to utility load signals, time-of-use electricity rates, demand-response events, and power disturbances.
Advanced power strips cut power to appliances when not used, minimizing so-called vampire loads. Smart ceiling fans sense when to turn and whether to pull air away or toward workspaces. Smart appliances can be programmed, operated remotely, and interact automatically with the grid during demand-response events.
The Time for ESG is now.
Operating your company in line with Environmental, Social, and Governance standards has moved from optional to mandatory. One tested approach to elevate your ESG metrics is reducing your buildings’ energy use and carbon footprint.
The good news? Today’s C-suite executive has the technology and knowledgeable consulting partners to design an effective energy strategy across the entire facilities portfolio. You can transform your portfolio into a smart asset with advanced energy management systems. Instead of contributing to climate change, your buildings can contribute to a better workplace, improved bottom line, supportive investors, and a more sustainable world.