“If a company is only thinking of profit, it is not going to last long. People are seeking out companies that help future generations on this planet.”
—Sunil Tewarson, TEKsystems, New York, New York, USA
PHOTO COURTESY OF L'ORÉAL USA
L'Oréal USA solar installation at North Little Rock, Arkansas, USA
With customer interest growing and the cost of renewable energy sources such as wind and solar dropping, major organizations are setting aggressive targets to reduce or offset carbon impact.
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Google headquarters, Mountain View, California, USA
Google reached carbon neutrality at the start of this year after investing US$3.5 billion in renewable resources and infrastructure globally. And scores of companies including Apple, BMW Group, IKEA and Tata Motors have joined the global RE100 initiative, committing to sourcing 100 percent of their electricity from renewables. Some have set target dates for reaching carbon neutrality. Since its launch in 2014, the initiative has expanded from Europe and the U.S. to China and India.
“It's table stakes now. If a company is only thinking of profit, it is not going to last long. People are seeking out companies that help future generations on this planet,” says Sunil Tewarson, a senior business analyst with the IT consultancy TEKsystems in New York, New York, USA. He's currently working with Applied Energy Group on projects to help utility companies track natural gas and electric energy savings and resultant emissions reductions.
But while the business case for carbon neutrality might be clear, the mix of projects necessary to achieve it often isn't. Sometimes organizations focus on reducing emissions through renewable projects, while others decide it's cheaper to purchase renewable energy credits to offset their use of fossil fuels. Cosmetics company L'Oréal USA has taken the former approach, installing solar panels on its manufacturing plants in the states of Kentucky and Arkansas. The decision to greenlight the projects was rooted in financial stability: The solar panels will provide about US$7.5 million of electricity over 30 years and reduce the organization's carbon dioxide emissions by 10 percent once operational later this year. (L'Oréal USA is aiming for eventual carbon neutrality.)
Urban Movement
It's not just companies on the carbon-neutral bandwagon: Cities around the world also are pledging to go carbon neutral and planning change programs. But the mix of projects to achieve neutrality is as diverse as the cities themselves.
AUSTIN, TEXAS, USA
Neutrality target: 2020 The Texas capital was the first city in the world to build a citywide smart energy grid; as of 2012 all city facilities have been powered using only renewable energy. The city government also encourages water and electricity conservation.
BERLIN, GERMANY
Neutrality target: 2050 To reduce emissions, the city is focused on transforming how heat and power is generated and how residents move through the city. It has identified solar energy, virtual power plants—which aggregate power from a variety of smaller sources—and public transportation as keys to success.
Bill Halter, CEO of Scenic Hill Solar, Little Rock, Arkansas, USA, whose organization is executing the L'Oréal panel installation projects, says the benefits go beyond the bottom line, however. “These projects can also help provide more sustainable products that customers want and enhance employee morale,” Mr. Halter says. (He notes that many employees want to work at companies they perceive as having a broader purpose.)
“These projects can also help provide more sustainable products that customers want and enhance employee morale”
—Bill Halter, Scenic Hill Solar, Little Rock, Arkansas, USA
Other organizations are taking more of an all-of-the-above approach in pursuit of carbon neutrality. For example, Bank of America has worked to reduce the carbon footprint of its operations while also installing solar panels in some locations and purchasing renewable energy credits to offset carbon emissions. The company, which aims to be carbon neutral by 2020, has invested about US$53 billion in sustainable and low-carbon projects since 2007.
MAKING IT LAST
Project professionals must carefully consider which projects will produce efficiencies that minimize operating costs, Mr. Tewarson says, so they can demonstrate ROI over the long term. He advises project managers to conduct a life cycle analysis that evaluates a company's entire energy usage, from supply chain to product disposal. Starting with this broad perspective can prevent carbon neutrality programs from failing down the road, he says.
Frank Clary agrees that when it comes to carbon footprint reduction efforts, the initiation phase is the key to success. “We always try to prioritize projects based on how we answer the critical question, ‘Is there a need for this project?’” says Mr. Clary, director of corporate social responsibility at global logistics provider Agility, Kuwait City, Kuwait.
Since September 2016, Agility has been working with container ship operator Maersk Line to cut carbon emissions by 15 percent per container transported on Agility shipments by 2020. The project entails using more fuel-efficient ships, optimizing routes and improving emissions measurement. Mr. Clary says the biggest challenge is measuring the impact of such projects—it can be hard to clearly make the business case because the potential ROI can be fuzzy.
“There are a great deal of variables in getting a good estimate of carbon dioxide emissions and their impacts. Sailing conditions vary from voyage to voyage, and equipment and routes may change. Impact estimation is a dynamic and moving target,” he says. But project managers must be able to rationalize costs associated with emissions-related projects: “Any investment costs need to fit the needs of the business, especially as those needs relate to risk, regulatory and commercial environments.”
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COPENHAGEN, DENMARK
Neutrality target: 2025 The Danish capital is home to the world's largest district heating network, where waste heat from power plants helps warm buildings, and harbor water provides cooling for stores, offices, hotels and data centers. Wind power also is in the city's energy mix, along with biomass and solar.
REYKJAVIK, ICELAND
Neutrality target: 2040 The city wants to reverse urban sprawl and promote walking, cycling, electric cars and public transport.
RIO DE JANEIRO, BRAZIL
Neutrality target: 2065 South America's fourth-largest city aims to use carbon pricing to reduce emissions and overhaul public transportation, waste management and water management systems.
SMART SUSTAINABILITY
To maintain credibility in the organization, project leaders “must choose wisely when selecting which projects to endorse,” says James Herbert, of Sydney, Australia, who works on sustainability projects for construction and engineering giant AECOM. The company pledged in 2016 to reduce its global emissions by 20 percent by 2020 through fuel and electricity consumption reduction projects.
Determining the ideal mix of projects to create a viable sustainability program requires evaluating supply chains, customer demographics and geography, says Mr. Herbert. Since 2014, he has helped develop a low-carbon usage design for a five-year, AU$8.3 billion Sydney Metro rail project; the goal is to reduce emissions during the construction phase and, ultimately, during operations.
It's important for project managers to verify projects’ anticipated emissions reductions under an approved offset scheme to enhance credibility when making carbon neutral claims,” he says.
Getting stakeholder approval for capital expenditures is often a challenge, so project managers should look for revenue-generating projects where possible, Mr. Herbert says. They should evaluate the sustainability benefits of developing internal projects or purchasing carbon credits from the market to become carbon neutral, he says. “To reduce the burden of offset costs, an organization should first prioritize carbon efficiencies across its operations to lower total emissions.” But such credits can be an attractive option for large organizations looking to quickly offset their global carbon footprint.
“We always try to prioritize projects based on how we answer the critical question, ‘Is there a need for this project?’”
—Frank Clary, Agility, Kuwait City, Kuwait
No matter the organization's size, however, leaders of emissions-offset projects must focus on the big picture—and the long-term benefits. Says Mr. Herbert: “The key is to do your homework. If you do the appropriate feasibility studies and multi-criteria analysis, you can quantify long-term benefits and convince even the staunchest skeptics. And shift the focus from short-term ‘green’ initiatives toward long-term sustainable ones.” PM