By Ory Zik, founder and CEO, Energy Points
“’It seems very pretty,’ she said when she had finished it, ‘but it’s rather hard to understand!’ (You see she didn’t like to confess even to herself, that she couldn’t make it out at all.) ‘Somehow it seems to fill my head with ideas–only I don’t exactly know what they are!’” – Lewis Carroll, Through the Looking Glass
“It’s all in how you look at it.” Most of us have heard that at one time or another to describe corporate CSR programs and corresponding reports on resource consumption. But, used to describe financial ROI in an investor’s meeting, such cavalier phrasing would be unacceptable—begging the question— why isn’t a lack of solid, irrefutable information equally unpalatable when it comes to CSR?
Despite the best efforts of companies like Intel and Coca-Cola to increase overall transparency around their sustainability and resource consumption, the industry as a whole lacks a universal system to measure environmental impact in a way that is both accurate and simple.
Individually, energy savings programs, recycling initiatives, waste water reduction efforts and other measures are critical to reducing overall environmental impact. However, without a single metric to act as a common denominator for one-to-one comparison of resource consumption—accounting for critical differences like location and resource scarcity— providing an accurate representation of overall environmental impact is impossible
It’s the difference between putting together a puzzle that shows the full picture when completed, and attempting to put a broken mirror back together. You may figure out which pieces of the mirror go next to one another, but even with every piece glued into its proper place, the reflection will be a distortion of reality—i.e. forcing together kilowatts, BTU, gallons of water and tons of CO2 without the mechanism to create a seamless whole picture of how each unit and dataset relates.
So, how do we achieve a true reflection of impact and resource consumption? How can a company choose between sustainability projects if the proposals all offer a similar financial return on investment? How can an executive team weigh the pros and cons of saving water versus saving electricity? How can executives take resource scarcity into account? Currently, there’s no prioritized, one-size-fits-all way to make these decisions.
Let’s begin by taking a closer look at three of the biggest challenges facing the industry:
- Complexity or unclear units – The units currently used to measure environmental performance have one thing in common—they are not easy to relate or interpret. When asked to apply units like kilowatt hours, Btus or tons of carbon to their everyday lives, even engineers and scientists reach for their calculators. We need a single unit that is easy to understand and easy to apply across all resources.
- Non-actionable data or energy silos – The current approach to environmental measurement is deeply divided—the industry thinks in silos. There are separate categories for every environmental specialty and resource domain, each with a unique system of units. The industry lacks a common basis for measuring environmental impact in a manner that can be translated across the board and used for multiple purposes. As the discussion around the “water-energy nexus” shows, we need to change our thinking and remove the energy silos. Think of an international company trying to calculate its annual earnings without a common currency to combine euros, dollars, yen, etc. There would be no way to compare and compute revenue. Likewise, accounting for all resources as a form of energy gives us a common ground for comparing resource silos.
- Inaccurate information:
- “One Size Fits All” Approach – While there is a lot of ambiguity in the market today in terms of how we measure a business’ environmental impact, one thing is clear; sustainability is relative to time and location. Where and when a business consumes natural resources changes the environmental impact. Is consuming electricity from hydropower equivalent to using coal? Is consuming water equivalent in Phoenix and Boston? Is consuming on-peak and off-peak electricity the same? And, what about consuming water during a drought vs. a rainy season? These are all issues that need to be factored into the equation if we’re going to accurately measure our impact on the environment. The importance of time and location are why we can simply use the average amount of any resource consumption as the basis for decision making. If a business uses X kWh in electricity, but half of it is from coal and the other half hydro, the corresponding sustainability measurements need to take this into account.
- Energy efficiency vs. renewable energy – Although renewable energy use and energy efficiency measures have a similar effect on reducing overall resource consumption, with energy as the limiting factor in both cases, they often are discussed as two different topics. Companies must stop looking at these as disparate entities with an either/or price tag. Instead, they need to generate energy more efficiently by using renewable energy and consume less energy overall by making strategic, energy usage improvements and decisions.
- Carbon as used only as a reporting metric – Many companies calculate carbon reductions, and many nations, including the U.S., are striving to meet aggressive CO2 reduction targets. However, going back to the engineers and their calculators, while everybody seems to agree that carbon is critical, no one seems to be able to recall the key numbers. This is a formula for ineffective decision making. From our earlier example—it would be like walking into a quarterly CFO update meeting and being unable to articulate the impact of your cost-reductions project, because you can’t quite remember how dollars and euros add up.
To solve these three challenges for executives, investors, regulators and consumers, there must be a clear, reliable system of measuring environmental sustainability – not in terms of financial savings, but in terms of environmental performance. For optimal measurement, we must combine simplicity with accuracy in an actionable way.
The units used should be clear, understandable, intuitively straightforward and energy-based, presented in a universal language that cuts across energy units and environmental specialties, takes into account location and time and embeds carbon footprint considerations into calculations, so that organizations do not need to report carbon separately.
Without prevarication or uncertainty, we need one universal way of looking at resource consumption that enables our decisions and reports to flawlessly mirror our total environmental impact across the board.
[Image Credit: Abhijit Tembhekar, Wikimedia Commons ]
In 2010, Dr. Ory Zik founded Energy Points to enable corporations capture the value of sustainability in a practical way. Prior to founding Energy Points, he was the founding CEO of solar thermal augmentation company, HelioFocus Inc., which develops solutions for conventional power plants. Dr. Zik led HelioFocus from 2007 to 2010 and currently serves on its board. The company is now growing in Israel and China with strategic partners such as Israel Corp and the Sanhua Group. Dr. Zik holds a B.Sc. (cum laude) in Physics and Mathematics from Tel Aviv University; M.Sc. (cum laude) and Ph.D. in Physics from the Weizmann Institute of Science. He is a recipient of the National Amos De Shalit Physics prize. In 1993, he was the curator of Israel’s National Museum of Science. Dr. Zik holds worldwide patents for his inventions.