Building Owners May Be Losing Money by Not Investing in Energy Efficiency


If you were the Chief Financial Officer of a business with $120,000 in profits to invest, where would you park this cash? In a money market fund yielding 0.39% annually — or in deep energy efficiency retrofits for your building that provide an 18% annual return?

When building owners consider upgrades for their commercial properties, energy efficiency may seem like a bottom-line expense that could be postponed. But when you take a deeper look at the costs and benefits, it becomes clear that energy efficiency yields a better return than most alternatives.

The surprising economic benefits of energy efficiency

New reports from the Peninsula Advanced Energy Community (PAEC) show the economics of eight energy efficiency measures for five building types: office, municipal (fire station), school, multifamily residential, and retail. Using a consistent approach to calculate payback, each report analyzes these same eight technologies:

  1. LED lighting conversion
  2. Building Management Systems (BMS) and advanced controls
  3. Reduction in phantom loads
  4. Higher-efficiency windows
  5. Improved insulation quality
  6. Replacement of obsolete air conditioning with higher-efficiency systems
  7. Heat pumps as replacements for natural gas space heating
  8. Alternative water heating systems

Not surprisingly, the PAEC reports found that certain measures tend to have a faster payback, such as installing LEDs and reducing phantom loads. Other measures have longer payback times, such as replacing windows, implementing BMS, and switching to alternative water heating systems.

Building owners usually cherry-pick the energy efficiency measures with the fastest payback. But they’re missing a significant opportunity, according to the PAEC analyses. Bundling the eight energy efficiency measures, even those with longer paybacks, still offers an attractive rate of return — and ensures that deeper retrofits will happen.

For example, in the report on office buildings, the payback for each energy efficiency measure is shown in the following chart:

  Payback Analysis (years)   Source: PAEC report, Final Economic Benefit-Cost Analysis of Energy Efficiency and Fuel Switching Measures

Payback Analysis (years)
Source: PAEC report, Final Economic Benefit-Cost Analysis of Energy Efficiency and Fuel Switching Measures

When considered on its own, just replacing single-pane windows with dual-pane energy-efficient windows in an office would provide a 12-year payback. But when this measure is bundled with six others, the payback for office building retrofits is just 5.4 years. The PAEC report calculates that the internal rate of return for these eight measures together is 18%, a higher return than you could get with most other investments.

What accounts for the economic benefits?

The five PAEC analyses standardized their approach to include incremental capital costs, available incentives, incremental operations and maintenance costs, and annual energy cost savings — and the incentives are significant.

Pacific Gas & Electric (PG&E) offers businesses and government agencies in southern San Mateo County 0% on-bill financing. This means that when the property managers of commercial and government buildings agree to energy efficiency upgrades identified in a PG&E energy audit, the utility will pay for energy efficient equipment and installation work by contractors up to $100,000. Then PG&E will roll the costs and savings into the customer’s bill over the next five years. This program makes it much easier for commercial property owners to opt in to energy efficiency projects.

Further benefits from energy savings

In addition to attractive paybacks, bundled energy retrofits offer dramatic energy savings. To compare energy use between five different building types before and after retrofits, the Energy Use Intensity (EUI) provides a standard measurement of a building’s annual energy use per unit area. The following table allows us to compare the  EUI and average payback for each modeled building type.

  Energy efficiency before and after: Five modeled types of buildings   Source: PAEC report, Final Economic Benefit-Cost Analysis of Energy Efficiency and Fuel Switching Measures

Energy efficiency before and after: Five modeled types of buildings
Source: PAEC report, Final Economic Benefit-Cost Analysis of Energy Efficiency and Fuel Switching Measures

Energy efficiency’s role in building advanced energy communities

Energy efficiency is a critical first step in building advanced energy communities (AEC). Once that important first step is taken, the stage is set for these key elements of an AEC:

  • Low or zero net energy buildings
  • Abundant solar electricity
  • Energy storage and other distributed energy resources
  • Solar emergency microgrids for power management and islanding of critical loads during outages
  • Charging infrastructure to support the rapid growth of electric vehicles

These elements together scale up clean local energy, support grid reliability, and minimize the need for new energy infrastructure costs such as transmission and distribution upgrades.

The goal of the PAEC initiative is to advance the expansion of AECs in California. Millions of buildings in the state need to be retrofitted. The graphic below shows the types and numbers of buildings that the California Energy Commission would like to see upgraded to the latest building and energy efficiency standards.

As policymakers, utility executives, municipalities, and other government agencies attempt to overcome the barriers to AECs, the PAEC economic analyses shine a light on how to frame energy efficiency upgrades. By showing how financially attractive it can be to bundle energy efficiency measures, the PAEC initiative inspires property owners in the public and private sectors to take the first key step toward implementing AECs and advancing our clean energy future.

What Puerto Rico teaches us about power resilience for all communities

  Manatí, Puerto Rico after Hurricane Maria | Photo: José Reyes

Manatí, Puerto Rico after Hurricane Maria | Photo: José Reyes

guest post by the Clean Coalition

In September 2017, Hurricane Maria slammed into Puerto Rico, knocking out power for the entire island and damaging 80% of the island’s energy transmission and distribution system. The United States Federal Emergency Management Agency (FEMA) is tasked with repairing the current system, a process that is expected to take months and cost $5 billion.

FEMA will be repairing, not upgrading, an antiquated electricity distribution and transmission system powered primarily by fossil fuels.

On the island of Puerto Rico, which is roughly the size of Connecticut, 3.4 million people depend on the Puerto Rico Electric Power Authority (PREPA). PREPA uses a fuel mix of 47% petroleum, 34% natural gas, 17% coal, and 2% renewable energy. With the grid currently down, diesel generators are providing power to those who can afford them.

Both the diesel generators and PREPA’s fuel mix provide the island with dirty electricity — and both are barely affordable options for the people of Puerto Rico. Puerto Rican Americans pay $0.24-$0.48/kilowatt-hour (kWh) for their electricity, compared to an average price of $0.13/kWh on the United States mainland. Now is as good a time as any for Puerto Rico to upgrade to clean local power.

Since the hurricane, both Tesla founder Elon Musk and Virgin head Richard Branson have publicly advocated for microgrids to provide a cleaner, cheaper, more resilient option for islands in the Caribbean that depend on imported fossil fuels for electricity. In an area with abundant solar energy, using clean local energy is the obvious choice to get Puerto Rico up and running as soon as possible.

After disasters like Hurricane Maria, a bare minimum of power is essential for relief and recovery efforts. Emergency responders, hospitals, and water utilities that provide clean drinking water need electricity. Solar emergency microgridscombine solar photovoltaic panels, energy storage, and monitoring, communications, and controls, could deliver electricity instantly and indefinitely for disaster response.

Puerto Rico’s difficulty in performing emergency response services highlights the importance of resilient backup power systems. This need is not limited to Puerto Rico. Every village, town and city should be thinking about what services they need to keep running in the event of a natural disaster. In California, the Peninsula Advanced Energy Community (PAEC) is working with hospitals and municipal governments to plan affordable, clean, and resilient power systems that combine energy efficiency, local renewables, electric vehicle charging stations, energy storage, and monitoring, communications, and controls. During a power outage, essential services can island themselves from the grid and still function.

In San Mateo County, CA, the City of Atherton is preparing for resilience in the face of earthquakes and fires. When planning their new zero net energy Civic Center, the city included a solar emergency microgrid for their police station. If a large earthquake or fire knocks out power, emergency responders will still be able to field calls and respond to community requests for assistance.

Planning for disasters is more important now than ever. This year, the back-to-back hurricanes hitting the Gulf Coast and Caribbean, and the wildfires that have decimated communities in the West, shone a light on the importance of a resilient electricity grid. It’s time to upgrade our aging, dirty grid with cleaner electricity systems that can withstand shocks from natural disasters and provide emergency power when it is needed most.

The PAEC is a groundbreaking initiative to streamline policies and showcase projects that facilitate local renewables and other advanced energy solutions like energy efficiency, energy storage, and electric vehicle charging infrastructure. The PAEC will create pathways to cost-effective clean local energy and community resilience throughout San Mateo County, the City of Palo Alto, and beyond. The PAEC is a collaboration between the Clean Coalition, the California Energy Commission, Pacific Gas and Electric, and an array of municipalities, emergency response jurisdictions, schools and universities, and corporate entities. For more information, please visit

Be A Cathedral Builder


The people who started construction of Santa Maria Cathedral in the 13th century knew they would not live to see the gothic cathedral finished.

The original architects, workers and patrons built the church in Northern Spain as a prayer, hoping to ensure their place in heaven. They also wanted to create something beautiful that would leave a legacy for future generations.

Seven centuries later, the cathedral is showing its age. Gothic arches have started leaning as subterranean dampness has compromised the foundation. The town of Vitoria-Gasteiz in Spain wants to preserve this important piece of their heritage for generations far into the future. To do so they have been working hard to stabilize the foundation.

Walking through this church I wondered if the United States is thinking about the well-being of generations seven centuries from now. My first thought was that we are doing the opposite of this. In many ways we are actually leaving a legacy that will be a curse for future generations: radioactive nuclear waste, greenhouse gas emissions in the atmosphere that are changing the global climate, and depleted top soil around the world.

At the same time, there are many people working to build a sustainable future for the benefit of the future. The number of renewable energy systems being installed continues to grow. We are building more zero net energy buildings. In some places topsoil is being regenerated. Creating resilient systems that allow society to bounce back when there are natural disasters and other shocks could be our legacy that benefits future generations.

Our society needs to think beyond satisfying our own needs and think about the investments we need to make in building a sustainable future. Our gift to future generations could be renewable energy systems, zero net energy buildings, efficient transportation systems, regenerative agriculture and a circular economy. We just need to spend more time thinking like the 13th century cathedral builders.   

Creating Battalions of Green Jobs: Upgrading Buildings

Creating Battalions of Green Jobs: Upgrading Buildings

Think of the green jobs we could create by retrofitting the 12 million residences and 600,000 commercial buildings for net zero energy in California by 2030. While we're at it, each of California's 345 hospitals and 482 municipalities would benefit by replacing dirty diesel back-up generators with solar emergency microgrids. Then expand these numbers out for the entire U.S. 

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Net Zero Superhero

After watching one of the many superhero movies Hollywood churns out, have you ever wished you had a superpower? The Avengers, Batman, Superman, Spiderman, and next summer Wonder Woman, all inspire us, if only for a moment, to heroism in service of a higher calling. Then we realize we can’t fly, shoot a sticky spiderweb or vanquish an army by slamming down our oversized hammer, and we go back to our comfortable daily lives.

But consider that in a way we all have superhuman powers. A superpower can just mean being exceptionally skillful at one thing. My question to you is what is your superpower and how will you use it to save the planet? Given the rapid unraveling of nature’s resilience in the face of climate change, the Earth needs your superpower now more than ever.

We need your talent, your passion, your charisma, your financial analysis skills and your technical skills to help businesses become more efficient. Not just a little more efficient, a lot more efficient. Net zero efficient.

Here is how net zero will make the business community more sustainable and protect our planet.  

·        Net Zero Energy – After reducing lighting, HVAC and plug load energy demand, size on-site solar so the building generates as much electricity as it uses

·        Net Zero Waste – After mapping the quantity and flow of materials through the operation, find ways to reduce, reuse, recycle or compost 90% or more of waste

·        Net Zero Water – Reduce total water consumption, use non-potable sources as much as possible, and recycle and reuse water in order to return the equivalent amount of water as was withdrawn from all sources, including municipal supply, without compromising groundwater and surface water quantity or quality.

Fortunately, the value proposition of net zero saves companies money, enhances employee productivity and increases market share.

What’s stopping you? Rather than waiting for someone else to come save the planet, let’s do it ourselves.  

Create Your Dream Sustainability Job

Are you unhappy with your job? Many people are.

Every time I teach my 15-hour class “Managing Sustainable Change in an Organization” at UC Berkeley Extension at least a few students ask how they can find a job in sustainability. The truth is, there aren’t as many jobs as there should be doing energy efficiency, water conservation, waste prevention, alternative commute mentoring and pollution prevention within a business. These projects are usually done on an ad hoc basis by whoever within the organization cares most about making them happen.

Just like the idea that if you can’t find the book you want to read you should write it, if you can’t find the job you want you should create it. Where you already are.

I have seen a number of people create their own sustainability project manager job at the company where they work. They start small. They find a few small projects to work on during their lunch hour or at night then give their boss a heads up they want to work on these projects on their free time.

Once they implement these projects and can quantify the benefits, they ask to be able to work on additional projects a few hours/week during the work week. Then half time and eventually full time if they can prove the value proposition.

The key algorithm involves calculating tangible bottom-line benefits. Consider the following hard and soft benefits.

  • Operational cost savings (energy, water, materials, waste)
  • Employee engagement
  • Employee productivity
  • Increased sales from green branding
  • Competitive advantage
  • Risk reduction

Management is always looking to trim operational costs. Those are the hard costs. The much larger potential benefits are in the soft costs within the other bullets. If management has been talking about wanting to improve employee engagement or increase sales from green branding, this may be the perfect time to initiate a business sustainability program. 

Harness 360 Degree Virtual Reality to Tell Your Company’s Sustainability Story

Several years ago at a business sustainability conference I attended a session titled “Why Are Corporate Social Responsibility Reports So Bad?” The presenter asserted that CSR reports didn’t tell you much about a company’s environmental impact or present context for their sustainability efforts.

Over the past several years, CSR reports have evolved into slick on-line websites with lovely pictures and colorful graphics. They state sustainability goals and the company’s progress toward those goals. But there’s still something missing.

Where’s the Energy?

When I’ve heard people from New Belgium Brewery or Seventh Generation speak at conferences about their company’s sustainability efforts, their enthusiasm for the topic is contagious. Watching their slides and hearing their stories I am swept up and a voice inside me says “I want to work there!” These presenters are excited to be part of a company where business is a force for social and environmental change, to be a part of something bigger than themselves.

By contrast, when reading through CSR Reporting’s Top 10 CSR reports of 2015, the palpable energy I hear from sustainable business conference presenters is missing.   

Take CSR Reporting to the Next Level

In the spirit of continuous improvement, which is the cornerstone of corporate sustainability efforts, it’s time to take sustainable business storytelling to the next level. Give the public a tour of your net zero energy buildings, smart microgrid and zero waste program with a five minute 360 degree virtual reality video.

Here is a net zero energy building in Sunnyvale, California. Would you like a guided tour to hear about how they achieved net zero with the building envelope, lighting controls, HVAC system and solar? I would.  

 Photo: Bruce Damonte

Photo: Bruce Damonte

The latest 360 degree VR cameras are being used to give virtual reality tours of $35 million estates for sale or tours of Amsterdam. Let’s put these $60,000 cameras to use helping companies tell their sustainability stories in engaging new ways.

Attract and Retain the Next Generation of Employees

For companies that want to attract the best and brightest Millennials, keep in mind that their generation likes trying new technologies, appreciates openness and transparency, and cares about environmental issues. Using 360 degree VR to bring a corporate social responsibility story to life is a strong recruitment tool. The first step is to think through the story you want to tell.

What more information about a talented group that can help you with this? Message me on LinkedIn.


Commercial Property Owners Who Retrofit for Zero Net Energy Win Big Now and Later

Conventional wisdom tells us zero net energy (ZNE) buildings are difficult, risky and expensive. This perception comes mainly from people who have not built any yet. They will soon. By 2030, all new commercial buildings in California will be required to generate as much energy as they use. Fortunately, there are intrepid innovators who are figuring out how to drive down the costs of ZNE retrofits. Not only are they showing us what mix of building technologies can achieve this goal but that doing so has immediate benefits and is less expensive in the long run.

Kevin Bates with Sharp Development Company was one of the speakers on a Zero Net Energy panel I moderated earlier this month for the policy and planning non-profit SPUR in San Francisco. Running through the costs and benefits for a recent ZNE building he developed, Kevin showed how much value he created for his real estate investor who received a 6.5% market capitalization rate (rate of return).

With an up-front investment of $49.84/square foot, SharpDevco created additional value of $100.29/sf. The costs and benefits include:

·       Reduced operating costs over 15 years of $83.08/sf

·       Value of above-market rent over 15 years of $36.92/sf

·       Additional rent received due to early lease-up (3 months to rent out instead of the average market time of 18 months) of $22.81/sf

·       Additional leasable square footage due to 6” of exterior insulation (building grew 326 sf) of $7.32/sf

Over and above the $100.29/sf of additional value, the building owner enjoys lower reserve requirements (for HVAC replacement, tenant improvement reserves, etc.) of $29.85/sf.

Building Technologies Used to Achieve ZNE

The development team used the following mix of air handling, lighting and solar photovoltaic technologies to retrofit the building for ZNE.


- Insulated the outside walls to R-20 with insulation and electrochromic glass

- Insulated the roof to R-40 with 1.5” of foam and reflective coating outside and 10” of BAT inside

- Used exposed interior concrete thermal mass to help maintain indoor air temperature overnight

- Installed ceiling fans, operable skylights and windows for natural air exchange and night-purge ventilation of warm air (night flushing)

As a result of these measures, the size of the HVAC system needed dropped from 100 tons to 22 tons resulting in impressive first-cost savings.

Light Loads

- South-facing skylights maximize daylight harvesting 365 days a year while minimizing thermal gain

- Electrochromic glass eliminated the need for blinds

- From an hour after sunrise to an hour before sunset all year long the building has 19 footcandles of light which reduces the need for artificial light.

Energy Usage Intensity and Solar Photovoltaics

Employing this mix of technologies resulted in an Energy Usage Intensity (EUI) reduction from 91 to 22.5 which shrank the size of the solar PV system by 75% and allowed the building to achieve a ZNE bill at a lower initial investment cost.

Unexpected Benefit

This property was completed on spec, meaning Kevin Bates did not have an owner or tenant in mind when renovating the space. The fact that the commercial space rented in just three months is a testament to how appealing the ZNE space was to potential tenants. Abundant natural light, healthy indoor air quality, soothing native plant landscapes and solar panels all contributed to the desirability of the property. Hopefully this project will inspire others.

Find Funding for Your Business Sustainability Projects

Your CEO agreed in theory to the slate of sustainability projects the company’s green team developed. Installing solar panels, doing an LED lighting retrofit, installing a native plant landscape, and going for zero waste would be great. Even better, she agreed that having someone work part time for six months to manage all these projects would benefit the company. Unfortunately, your CEO isn’t sure where the money will come from for the equipment and labor costs. Time to check the couch cushions for loose change.

Every company thinks they run a tight ship, that there’s no extra money around. Here are four places to look.

1)     Pull together 12 months of energy, water and garbage bills   

This may sound obvious but operational costs are variable. Energy, water and garbage bills deserve more scrutiny. Adding up 12 months of bills will help you decide which bill is worth focusing on and whittling down. One distribution company we worked with was surprised their garbage bill was $80,000/year. We then set to work expanding their recycling program and cut that bill in half.

2)     How much are you spending to replace and train employees each year?

Companies spend 13 -213% of annual salary to replace each employee. Less for lower wage workers and more for executives. Total up how many employees left and were replaced last year. A portion of this is your potential savings. Sustainability projects help attract and retain the top people.

3)     How much would revenue increase if potential customers perceived your company as green?

For businesses that want to expand sales among Millennials and people who identify with Lifestyles of Health and Sustainability (LOHAS), a strong sustainability program helps. Competition among breweries and wineries is particularly fierce. Wineries and breweries source ingredients for their products from nearby water ways and the land. Customers have an intimate connection with these products since they go into their bodies. 

How much potential revenue does your marketing department project could be gained by growing market share with these two groups?

4)     Conduct a deeper hunt for cost savings

There may be treasure buried in your accounts payable ledgers. Careful examination of supplier expenses could yield savings that add up to real money. We start by examining 10 quick wins. Based on 25 years experience doing expense analyses, we find an average of 23% savings in each of the 10 expense categories


Contact Appraccel by email (info at or on LinkedIn for more information about how we can help you uncover savings that you can invest in a strong sustainability program.

10 Ways to Reinvigorate Your Company’s Sustainability Program

Employee enthusiasm for sustainability ebbs and flows. If your company’s energy around sustainability needs a boost, here are some steps you can take.

1.      Games – Online game Energy Chickens encourages employees to reduce energy use in their office. Each employee is assigned a cartoon baby chicken. If they use less than the average amount of energy in the office, their cartoon baby chick grows and thrives. Use more than the average amount of energy in the office and their baby chick becomes sick and dies. The game is a fun way to encourage people in the office to adjust their computer power settings

2.   Contests – Tired of being the “Recycling Police” in your office? Set up a recycling contest where employees compete for prizes. With a “Cash for Trash” contest, remind employees what can and can’t be recycled, then pick one department each week and check all the trash and recycling bins. Out of all people recycling perfectly, randomly draw two names and give them each a $25 gift certificate or pair of movie tickets. Then publicize their names to the office. If your company has eight departments this contest will only cost $400.

3.    Highlight one to three new initiatives – A long list of potential office greening tips is exhausting to most people. Highlight a few at a time and present them as little things people can do to make a big difference.

4.      Reinvigorate your green team –Breathe new life into the green team every six months with a new approach, emphasis, or team building activity.

5.      Harness the genius of net present value – Want to upgrade the HVAC system or install a heat pump? Pitch management to invest with a Net Present Value calculation. Many business managers want to see a one or two year return on investment. NPV is a way to garner support for projects with longer paybacks. NPV adds up the costs and benefits of a project over the life of the equipment. Simply stated, if the NPV is positive, the company should seriously consider investing in the project compared to other investment opportunities

6.      Update performance appraisal metrics – Employees prioritize projects listed in their performance appraisal. Human Resources plays an important role in whether or not sustainability projects happen at work. Facilities Management personnel performance appraisals are key for companies that want to make sure sustainability project happen. At the end of the year facilities managers are often rated on how many trouble calls they resolved. Having performance metrics like reducing energy use per square foot and completing a course on heat pumps would help. 

7.      Update mission statement – Companies with a loyal organizational culture have the following elements in common:

  • a mission statement that reflects the company’s value as a driver of social and environmental change,
  • management that provides open access to financial information and the business plan, and
  • training to grow their employees.

8.      Provide paid time off to volunteer each year – Companies with loyal employees are given paid time off to volunteer for non-profits doing environmental or social work in their community.

9.      Ask for support from green celebrities - At, you can find a celebrity’s favorite charity. Matt Damon of the Bourne Conspiracy movies champions Water.Org which brings clean drinking water to those living in extreme poverty. Once your company makes a tax-deductible donation to that celebrity's favorite non-profit, send a note to the non-profit about your company’s greening efforts and ask their people to send a message in support of your company’s sustainability program. Publicize this support to your employees.

10.   Ask for the mayor’s support – Mayors in various cities have professional athletes and celebrities on the payroll to talk up how sustainable and green their city is. At U.S. Conference of Mayors events, mayors want to be perceived as green. Tap into this competition by asking your city’s mayor for a written statement of support for your company’s greening efforts to date. Then publicize it to your employees.

Global environmental trends and sustainability can be heavy topics. The best way to generate support and rally the troops is to keep your company's efforts simple, interesting and fun. 

The Secret Weapon of Effective Sustainability Project Managers

A few years ago I interviewed dozens of sustainability project managers (SPM) at medium-sized businesses to better understand what enabled their success. The interview boiled down to three questions. Think about your best sustainability project. What conditions external to your company helped you be successful? What conditions supported you within your organization to complete the project? What qualities do you possess that helped you realize a successful outcome?

One person’s answer to the last question surprised me. When I asked what it was about him that helped him complete a challenging project he said “my charisma.” He explained “Look, I was asking my co-workers to give up their lunches, nights and weekends to help our company achieve LEED green building certification. It’s a lot of work. People only spend their free time on things that are meaningful to them with people they enjoy.”

The more I thought about the most effective SPMs I knew, the more this answer made sense. The SPMs I was thinking about not only had strong technical, financial analysis, and communications skills. They also had charisma. SPMs often struggle with limited resources and need to enlist help from people in the organization that do not report directly to them. Green teams usually have employees from various departments. For the leader of the company’s sustainability efforts to be effective, they need the three essential components of charisma so they can charm people to want to help them. Those three essential elements are presence, power and warmth.

Fortunately, charisma is a quality people can cultivate. Olivia Fox Cabane’s book The Charisma Myth explains the fine points she fosters with CEOs and other leaders to help them become more influential, persuasive and inspiring. What’s interesting is that developing personal magnetism starts with figuring out which kind of charisma best fits your personality: focus, visionary, kindness or authority. Oprah Winfrey’s presence is key to her focus charisma. Apple’s Steve Jobs had visionary charisma. Radiant warmth from the Dalai Lama shows he exhibits kindness charisma. U.S. Secretary of State Colin Powell has authority charisma.

Companies often hire sustainability managers with strong technical skills. While understanding the engineering aspects of renewable energy, energy efficiency, water conservation and zero waste projects are important, those sustainability managers who also have strong people skills that inspire behavioral changes will help their organization reach their ambitious sustainability goals faster. 

Accelerate Greening the Supply Chain

A fast-growing manufacturing start-up is spending $36,000/year on garbage hauling. If they set up a strong recycling program, they could cut their garbage bills in half.  Their main customer wants suppliers to work on waste reduction but the company is too busy hiring and delivering product for their client to work on greening projects.

In San Joaquin County, Calif., 25 businesses have signed up to become green business certified but can’t find the time to do energy efficiency, water conservation, and waste reduction projects.

Large corporations like WalMart, Samsung, IBM, and Hilton Hotels have greened their own operations and are now asking their suppliers for evidence of Environmental Management Systems and Greenhouse Gas Emissions Inventories to green their operations.

Why aren’t more medium-sized businesses greening their operations? What is standing in their way?

To break through this logjam, suppliers need to have a conversation about two topics. They need to sit down and calculate the bottom line savings of three potential benefits.

1)      Operational costs - The first step is to gather 12 months of energy, water, materials and waste bills. This gives an overall sense of the potential savings and helps managers figure out where to focus efforts.

2)      Employee retention – How much does it cost to replace an employee: recruiting, relocation (if applicable), training and lost productivity? Companies with strong sustainability programs have better employee retention.

3)      Increased sales – What is the value to the company of potential increased sales from greening operations? WalMart wants a score of 80/100 or higher to qualify for its Sustainability Leaders certification. Operational greening provides a competitive advantage.

Once top management calculates the potential benefits, figuring out how to get the projects done is the next challenge. Do they reassign someone internal to work on the projects or do they hire a new full-time employee? Often the prospect of a new hire can be daunting when a company only needs six to twelve months of part-time effort.

This is where Appraccel can help. After scoping out priority greening projects to define the level of effort needed, Appraccel embeds highly-trained “sustainability temps” with strong technical, financial analysis and communication skills to quickly implement greening projects. This is a great solution for suppliers that have been wanting to realize the benefits of greening their operations but have been focused on their core business activities. 

Graphic: The Sustainability Consortium

What Are the Real Reasons Behind Low Adoption of Commercial Solar?

 Solar Parking Structure, Fremont, CA

Solar Parking Structure, Fremont, CA

When I talk to sustainability managers at medium-sized businesses about whether they plan to install solar photovoltaics for their building, many say they don’t own the building so they can’t. This raises an interesting question for those of us who want to see widespread adoption of net zero energy buildings with solar photovoltaics. After all, we will not reach California’s goal to reduce greenhouse gas emissions 80% by 2050 without solar panels on every possible rooftop or parking canopy.

From a Community-Based Social Marketing perspective, identifying the root cause barriers to commercial solar adoption allows development of effective solutions. We need to dig deeper into the reasons why so few medium-sized businesses have solar panels when the prices have fallen precipitously and financing options are plentiful.

Concerns Voiced

When trying to figure out the root cause barriers to commercial solar adoption, look beyond the many medium-sized businesses that rent their office, warehouse or factory space. Management of the building is often in other hands: the commercial property owner and property manager.

The non-profit Clean Coalition has done a great job laying out the perceived barriers and solutions to commercial solar in their Solar Solutions Guide. The most common concerns commercial property owners and property managers have about solar include:

1.      Initial cost (if purchased up front)

2.      Lien on property (if financed through property taxes)

3.      Rooftop integrity (risk of rainwater leakage)

4.      Return on investment relative to normal business operations

5.      Outside core business area (described as a "complicated distraction")

6.      Reliability of system (workmanship, project management)

7.      Wanting to wait because solar technology efficiency and cost are constantly improving

8.      Effort to gain permits and approvals


According to some commercial property owners I’ve talked to, if their tenants asked for solar, they would do it. From the tenant’s perspective, if they are interested in seeing their building have solar, they should express interest with their landlord. In terms of the property owner’s perspective, their concerns have been addressed by others in these ways.

·        Financing - Choose the financing method that best meets your needs (solar leasing, finance through property taxes, or bank financing if buying the system)

·        Solar installer – Choose a solar developer and installer with a long track record of successful project development

·        Turnkey solutions – A solar developer can act as sole liable party for insurance, repair and replacement of roof, and can take care of permitting, paperwork, rebates and fees

Top 5 Ways a Sustainability Program Can Help Your Company Act More Like a StartUp

Last month at a conference for startups in Silicon Valley, I met several people who work at large corporations and institutions. I wondered why people from WalMart, NASA and the company that makes waterproof fabric GoreTex were attending a conference for budding entrepreneurs. Each said they wanted to help their organization be more innovative.

More than a popular buzzword, innovation is the essence of a startup. Steve Blank, the co-author of The Startup Owner's Manual, defines a startup as an organization that "works to solve a problem where the solution is not obvious and success is not guaranteed."

Several years ago I worked at a green social media startup called Greenwala. Our team was excited about the possibility of making a big impact but also knew we would probably need to launch before we were ready. The project felt like taxiing down a runway while we were still bolting wings on a plane. Still, the experience was fun because everyone on the team was so engaged and committed.

Companies that are more established can generate the energy and employee commitment that startups enjoy even if they have already developed a product or service they are happy with. This is where expanding the company’s sustainability program comes in.

Sustainability adds value to the company while using fewer resources. Think about energy efficiency, water conservation, waste prevention, green building and alternative commuting. Sustainability projects not only require employee engagement to successfully implement, they also result in increased employee engagement. Benefits include not only saving money for the company, but improving employee health and increasing employee productivity.

Here are several examples of medium-sized companies that understand the connection between corporate environmental sustainability projects and the best qualities of startups.

1)      Sustainability is about innovation

Robert Jones, Marketing Manager at National Raisin near Fresno, CA, believes that his company’s sustainability program is part of what makes them special. He explained:

“Our production process is fairly straightforward. We grow grapes, we dry grapes, we package raisins and we ship raisins. There’s not much that’s innovative about it. But you should have seen our employees when Pacific Gas & Electric came to present a $200,000 rebate check for our 12 million gallon methane digester. Between that and our 3.53 MW of solar, our employees were so proud.”

Robert believes that their sustainability projects are their innovation and help make them “one of the elite companies in Fresno.”

2)      Sustainability helps organizations operate better cross-functionally

Startups are generally non-hierarchical, networked organizations that encourage employees from various departments to work together. The open floor plans of startup offices facilitate cross-functional collaboration. Traditionally businesses segregate office functions by department which creates a silo effect and restricts interdepartmental communication. Employee involvement in sustainability projects helps to overcome the silo effect.

A construction company in Austin, TX, started a green team for environmental reasons but ended up enjoying an unexpected separate benefit. Karen Heet, the Sustainability Manager at Journeyman Construction, said:

“One thing that came out of the green team that you wouldn’t think had anything to do with green or sustainability is because we were all in different parts of the company, operations and accounting and such. One of the things we realized, talking to each other on a monthly basis, was that there was no communication across departments.”

Green teams with members from each department also end up operating better cross-functionally because employees with different job functions get to know the challenges and concerns of each other. This results in more empathy and effective problem-solving among colleagues.

3)      Sustainability helps retain top talent

For companies that are growing and want to retain their top talent, sustainability projects provide key support. Dave Stuart, a technical services manager at Ghirardelli Chocolate in San Leandro, CA, explains that losing a valued employee is expensive. On-boarding a new person costs about $60,000 including recruiting, relocation costs, lost productivity and training, according to Dave. Ghirardelli is currently making investments in their main manufacturing building and offices because they want to keep the high quality employees they have happy and productive. Many of these upgrades are also measures that green their operations.

What’s interesting about Ghirardelli is that they have a LEED green building, have several electric car chargers, encourage alternative commuting, have switched to reusable transportation packaging and are about to install a large solar system. Yet they don’t mention these sustainability projects on their website. Their sustainability web page talks about the West African farmers from whom they purchase cocoa beans.

4)      Sustainability attracts top talent

Thinking beyond the talent a company already has to the talent a company wants to attract, sustainability programs assist here as well. Baby Boomers are starting to retire in large numbers. Many top level managers are struggling to replace them. In order to attract top talent from the Millennial generation, one key differentiator involves sustainability. According to the Journal of Sustainability Education, between 92 and 96 percent of Millennials want to work for environmentally conscious organizations. Recruiting the next generation of workers will be easier for businesses that have already greened their operations.

   Zero waste sorting at organic produce distributor Veritable Vegetable

Zero waste sorting at organic produce distributor Veritable Vegetable

Sustainability is a journey, not a destination. Companies do not need to achieve ambitious goals of net zero energy and zero waste right away. Consider Auris Surgical, a startup that develops surgical robots. Given the sophisticated technical work the company does, this fast-growing company has an extensive and rigorous hiring process to find top talent. Their employees, mostly in their 20s and 30s, expect the basic green amenities they’ve grown up with: a comprehensive recycling program, bulk snacks that minimize packaging, and bicycle racks for the large number of employees who bike to work. Auris doesn’t call the projects a sustainability program. They consider them the bare minimum Millennial employees demand.

5)      Sustainability engages employees

When trying to recruit or retain employees, one goal of Human Resources is to engage employees so they are happy and productive at work. Unfortunately, an annual Gallup poll found that less than one-third of U.S. employees are engaged at work. This number has held steady for the past decade.

While about 30 percent of employees are emotionally committed to their work and their company, 50 percent are not engaged and 17 percent are disengaged according to the Gallup poll. Clearly there is room for improvement and sustainability programs can help.

Susan Hunt Stevens, the founder of WeSpire, a technology company that focuses on employee engagement with sustainability, has found that:

“Employees who engage in the company’s sustainability and corporate social responsibility initiatives have statistically significant increases in their overall engagement rate.”

Evidence of this can be found at American Licorice, a zero waste candy manufacturer in Union City, CA. Joaquin Almaguer, the Safety and Sustainability Coach, credits the company’s employee engagement program as a major reason turnover at the company is so low. Each month the company randomly chooses one employee who takes mass transit to work and gives him or her a $25 gift card. Even small efforts can make a big difference to employees.

Employees who feel appreciated, listened to and engaged are at the heart of successful companies. One element that engages them is a sense of purpose. Sustainability projects lend meaning and help employees feel part of something larger than themselves. The energy and sense of purpose that are alive in startups can be embedded in more established companies through expanded sustainability programs.

One company that particularly understands this connection is Rainin, a lab supply company in the San Francisco Bay Area that makes pipettes for university labs and biotech. David Greenwood, the manager of Quality Assurance and Sustainability, pulls it all together. He explains:

“We consider ourselves fairly green already. It’s one of several things you can do as a package to attract Millennials. One of them is your green message. Another thing is your general work environment. Is it collaborative in the way the furniture is designed and laid out? Do you have conversation areas? Being a green company is definitely a piece of it. My boss and I are planning to take down the cubicle walls to have more of an open office space and bring in a touch of Silicon Valley.”

Companies that are larger and more established than startups are borrowing elements of Silicon Valley’s organizational culture of innovation when they expand their sustainability programs. The benefits these larger companies realize stretches way beyond environmental benefits. David Greenwood from Rainin sums up what they're trying to accomplish when he says "A happy employee does a better job."

Attracting the Next Generation of Workers

Business forums throughout California are discussing how businesses can attract Millennials. Now that Baby Boomers are starting to retire, companies need to be able to hire younger workers. The challenge for business managers is that Millennials want to work for green companies.

A 2010 study by Johnson Controls found that 96% of Millennials, those born between 1981 and 2000, are highly concerned about the environment and expect that employers will take steps towards becoming more sustainable. The study also found that:

·        57% said they want their employers to perform well above minimum compliance

·        70.3% want access to recycling bins

·        47.4% want water-saving devices

·        71.6% want to share office printers

·        47% want solar panels on site

Clearly there is some work to be done at many businesses. Implementing energy efficiency and water conservation projects, installing solar panels and electric vehicle chargers, and expanding recycling programs will not only reduce operating costs but help with employee recruitment and retention.

Calculating Benefits

While cost-benefit analysis, net present value and internal rate of return calculations are valuable tools to sell a business on a sustainability project, other factors should be used when discussing the value proposition.

Author Bob Willard, The Sustainability Advantage, has done interesting research to calculate bottom-line benefits to businesses that implement sustainability projects. Employee recruitment, attrition and productivity factor into the calculus. So do market share and insurance costs. 

  • Reduced recruiting cost (-1%)
  • Reduced attrition cost (-2%)
  • Increased employee productivity (+10%)
  • Eco-efficiencies in manufacturing (-5%)
  • Eco-efficiencies at commercial sites (-20%)
  • Increased revenues/market share (+5%)
  • Lower insurance and borrowing costs (-5%)

In the aggregate, Willard argues that these benefits offer a profit increase of at least 38%. Add to this calculus the difficult to quantify, but nonetheless meaningful, spiritual benefit of being a good steward of our environment for future generations. 

For those who try to motivate business managers to implement sustainability projects, broaden the conversation beyond operational cost savings. Some of the benefits listed above may resonate with your target audience and inspire her/him to agree to implement your proposed sustainability project. 

Photo courtesy of Tecnowey