Expert Q&A: What's Driving Energy Conservation in Corporate America

Who can benefit from access to energy data in your company?

Today many organizations are beginning to view their business through very different lenses than they did ten years prior. By completely re-examining energy use practices and investing in various systems and technologies aimed at reducing environmental impacts, it is clear that the topics of sustainability and energy conservation are front and center in board meetings, annual budgets, and long-term strategic plans.

Our panel will discuss the drivers of this momentous change within the world’s largest companies, new consumer expectations, and the strategic efforts companies are engaging in to reduce their environmental impact.

THE PANEL:

PJ Newcomb, Program Manager, Sustainability

Bill Moir, Energy Program Manager

Robert Fairey, Senior Director, Energy Procurement & Waste Diversion

RESOURCES

EXPERT Q&A:

WHAT’S DRIVING ENERGY CONSERVATION IN CORPORATE AMERICA?

1

For the full panel, please refer to Urjanet’s video, “What’s Driving Energy Conservation in Corporate America?”

Have your companies made public statements about sustainability improvements? If so, how have your customers and internal stakeholders responded?

COCA-COLA: Last summer, we announced a new set of 2020 global goals that are related to sustainability. We’ve got what we call the “me, we, and the world,” — categories to incorporate a social dimension, a personal wellness dimension, and an environmental dimension in what we want to achieve.

All of our goals in each of these dimensions are very aggressive, and we’re pursuing them at a time when we’re also striving to double our revenue in a decade. Coca-Cola has been partnering with customers like the McDonalds, and the Walmarts of the world, because we cannot do it alone. So far it’s been very well received and our partnerships will enable us to reach our goals.

UPS: First, I’d like to agree that there are absolutely several different parts to the sustainability conversation. There’s obviously the environmental aspect that plays into energy and energy efficiency. There’s also the social dynamic, and then there’s the financial dimension if you really want to talk about it from an overall perspective. At UPS, these are the balance points we’re trying to achieve from a sustainability standpoint.

We published our first sustainability report back in 2002. We feel that we’ve been very active in this space for many years. We just published our 2013 report in July of 2014. The report has lots of information across all aspects of sustainability and it’s been very well received in the marketplace. We conform to all of the standard reporting criteria on what is considered proper exposure and transparency. Since our first report, we have seen that in addition to an increased level of public support, even our own internal stakeholders have an increased awareness and understanding of what UPS is trying to do from a responsibility perspective.

COX ENTERPRISES: We recently announced our new initiatives for Cox Conserves, which is our company’s sustainability initiative. We’re aiming to be carbon neutral and water neutral in the next 25-30 years and send zero waste to the landfill in the next 7-10 years. Our program has been very well received

by our vendors and customers. In fact, we held a sustainability summit meeting at our corporate offices recently and had great conversations with our vendors about what they’re currently doing on the sustainability front, and on ways we could partner on sustainability as well. Our sustainability initiatives have really been great for us.

We’ve seen four main drivers of this global wave of energy efficiency efforts: financial performance, customer expectations, government regulation, and sustainability itself. Have any of these drivers in particular been a catalyst for your company’s commitment to energy management?

UPS: Well my role has generally been on the facility side, and if you look at the facility side in reference to the four items you mentioned, for us, I would have to say that our main driver always has been and continues to be financial. We are pathologically efficient within UPS. We wouldn’t put new fixtures in if we didn’t need them and we have always installed the most efficient fixtures we could find. We’ve completed lighting upgrades across the United States, dating all the way back to 1992. These efforts are really driven by cost savings.

The government regulation piece has opened up avenues for us to do different things like install solar panels. It also plays a lot into our fuel decisions and logistics. Obviously we are huge consumers of fuel, whether it’s related to our airlines, package cars, or fleet of trucks. There’s a lot of regulatory conversation in that space. Solely looking at the facility side, we feel that we’ve always been very efficient because it was our mindset from the start and we’ve always been engaged in trying to improve that aspect of our business.

COX ENTERPRISES: The financials for us are very important, so we run a model through a lot of our projects before we take them on. We consider various state and utility projects and look at what our return on investment would be and how much our carbon footprint could be reduced. Urjanet’s automated utility bill data has really helped us benchmark our energy costs and figure this out.We have engaged in fuel cell, lighting retrofits, and biogas projects. We are always looking for ways to make our locations more efficient.

2

3

COCA-COLA: I would say that we do a lot of our projects because they make financial sense for us. Reducing your energy bill goes straight to the bottom line. I also want to highlight that our global sustainability program is driven by a license to operate concept. We have this license to operate that we need to pursue and maintain because we’re a global company with a strong local presence as well. We operate in every country and have over 1,000 manufacturing bottling facilities across the globe, so it is imperative for us to maintain our license to operate.

The financials often drive us in the direction of specific projects, but we also carry out certain projects that don’t necessarily make bottom line financial sense, such as our water neutral efforts. Our initiatives here actually cost us money, so it is clear that we don’t always do everything for the immediate financial return.

Views towards sustainable brands are rapidly changing. Today’s consumers value companies that support sustainable processes, products, and make an investment in current and future generations. How have consumer attitudes shaped your company’s commitment to sustainability?

COCA-COLA: We listen to our customers and we’re constantly doing research to understand what our consumers want from us, in our products and in all of our offerings across the board. We take into consideration the packaging, the flavor offerings, calorie options, etc., but we are also asking, “What do our customers think about sustainability?” They have told us that they are primarily concerned about water first, and then packaging next. It’s harder for them to relate to the overarching energy and climate dilemma because it is a bit more intangible, but we still take those issues and we have designed our sustainability programs to be responsive to them as well. Similar to that of our customers, our number one concern is water, our number two is packaging, and our number three is energy and climate.

UPS: On the customer side, we certainly are seeing

more awareness. We get a lot of requests to fill out questionnaires about our role in the sustainability space. People are asking the questions and they want to understand our commitments from a responsibility perspective. On the transportation side there will always be carbon emissions that we have to deal with. We strive to offset the carbon cost. There is also a certified type of program that we participate in for packages. We have seen positive reactions from our customers as a result of our participation, especially domestically.

COX ENTERPRISES: I’d say one of the ways we’re able to touch our customers is through our retail stores. We have provided reusable bags to our customers so that they can bring in electronics they’d like to recycle. We have also included new branding on some of our trucks. We recently partnered with our freight provider and have a CNG tractor trailer that goes from Wichita to Omaha. We added a label on the vehicle to let our customers, and anyone who is driving on the interstate, know what Cox is doing.

Government regulations can be a large motivator for energy programs. Many companies go beyond mere compliance to make sustainability a key part of their long term strategies. How have government regulations impacted each of your organizations?

COX ENTERPRISES: Our zero waste-to-landfill goal partially originated from our need to meet government regulations and protect ourselves from them in the future. We have seen states such as Massachusetts, Connecticut, and New York City focus on food waste and start to ban certain practices.

In 2012, a UK studied showed that 35 million tons of food waste went into the landfill. That got us thinking about the impact our 55,000 employees have. We have a lot of cafeterias, so we wanted to do something about our own food waste. Thus, we put a Somat Machine in our corporate office to compost waste that otherwise would end up in the landfill. The compost created in our machine is actually used to fertilize vegetation along roadways. We also invested in a dehydrator to reduce the weight of our food waste. The food that has gone through the dehydrator can be used in animal feed supplements or fertilizer. We have rolled out our

“Our global sustainability program is driven by a license to operate concept.”

4

food waste reduction program in over ten parts of the country.UPS: Government regulations can go two ways. Sometimes they open doors for you, like what goes on the solar front, and other times, they tend to hamper or challenge you. We are seeing that more local governments are requiring energy benchmarking and reporting through ENERGY STAR Portfolio Manager. It’s not easy to do with a special purpose facility like a parcel distribution center. It’s not a standard that’s within the ENERGY STAR program so we’re kind of forced to do a lot to conform or get the information in properly.

COCA-COLA: Like all of you guys out there, we try to get ahead of the regulations and have our sustainability programs surpass them so that compliance is just the mere floor of what we are doing at any given point in time. For example, Coca-Cola has a goal to transition 100% away from HFCs by December 31st, 2015 and it just so happens that the UK has drafted a proposal to outlaw HFCs as refrigerants in vendors by January 1st of 2016. Legislators in the UK took a hard look at us and decided that if Coca-Cola can eliminate usage of HFCs, then others can, too. We are trying to stay ahead of regulations, but that can sometimes prove difficult. On another note, we try to use ENERGY STAR standards to set a good example and reduce our energy consumption to avoid risk. We do not want to be caught off guard with stricter regulations in the future.

Companies often suggest that their energy conservation commitments enable them to attract and retain top talent. What are you seeing regarding this claim as you compete for talent in the marketplace?

UPS: I certainly am seeing an increased awareness of sustainability with the folks we bring in. They are very intelligent, capable people. We have specifically attracted people who are interested in sustainability and logistics.

COX ENTERPRISES: We see that conservation commitments rank very highly with our employees, especially the younger ones, so we’ve given them opportunities to partner and volunteer with organizations like The Ocean Conservancy and American Rivers. We’ve also rolled out a solar program for employees out on the west coast and

that’s been very successful. Here at our corporate headquarters, we’ve provided premium parking spots for higher efficiency vehicles and even offered electric charging stations. Now the interesting thing is that a lot of people have started to buy or lease electric vehicles, and we only have a limited number of charging stations, so we see some jockeying for spots. It has been exciting to see people really adopt and pick up the programs that we’ve put in place.

How has your company implemented energy reduction goals in a franchise model?

COCA-COLA: We have a significant franchise bottling operation system. We do own some of our bottling operations, but most of them are part of a franchised model. We provide support for our franchise locations and expect them to meet our global goals. We still require energy tracking and reporting. We also partnered with the World Wildlife Fund to develop what we call the “Energy Top Ten.” The list is comprised of the ten things that we realize that every bottling plant could be doing to drive their energy use ratio down. We don’t audit each facility to see if they are following the ten principles, but we do encourage them to do so by quantifying the financial return for them. Having guidelines like these in place improves our company culture and rallies excitement around energy conservation.

UPS: We have been reporting on our scope three emissions from our franchise operations for about three years now. A UPS store is about 1,100-1,200 square feet and has some lighting and a cooling and heating system. Because we have a large number of locations across the U.S., we use Urjanet data to build reports on our stores’ energy consumption and help them reduce it.

COX ENTERPRISES: We don’t have any franchise locations, but we do have divisions. One of the things that we’ve done in Manheim in particular is come out with working groups. Employees participate in a program and compete against each other to reduce water usage, waste, energy and fuel consumption, and more. It’s been very effective.

“More local governments are requiring energy benchmarking and reporting.”

5

What does your return on investment on efficiency projects typically look like?

COX ENTERPRISES: I would say that looking across the board at all of our projects, we have a return around 20%. These projects vary by type, so there are a number of factors that go into this calculation, but 20% is right in the ballpark.

How easy is it for executive teams and upper management to see profitability in sustainability?

COCA-COLA: One of our biggest challenges that we have in sustainability is capturing the things that are not easy to capture. Sometimes it can be easy for us to relate sustainability projects directly to the bottom line. For example, if we reduce 100 million kilowatt-hours of energy from the year before, it is easy to calculate the ROI on the project. On the other hand, sometimes it can be challenging to explain what sustainability does to our top line. It is difficult to monetize how our sustainability initiatives impact brand reputation and how much more customers are incentivized to buy our products. This frontier needs a lot of work. Marketing is good at figuring out exactly how much they will get in return for something like a $5 million contribution to the Super Bowl. It’s much harder to calculate what we will get in return for the next generation of the plant bottle.

UPS: I think it depends on how you view sustainability. The answers to the question, “What does sustainability mean to you?” can be very different. It depends on how you balance the

financial, environmental, and social aspects. What matters to Coca-Cola on the water front is entirely different to what matters to UPS because our processes and natural resource dependencies are different. I think it’s obvious that people want to be involved with responsible companies that are focused on sustainability. But, the financial portion may not be intuitively obvious if you don’t have a good understanding of things like total cost of ownership.

What is the one innovation in the energy space that we should expect from your organizations in the upcoming year?

COX ENTERPRISES: We will be looking into more innovative waste technologies and products. We want to dig deeper into these types of companies to help us implement our strategies.

UPS: I would expect that there will be something coming up on the fuel side that excites people. That’s where I think you’ll see something in the near future.

COCA-COLA: We have a goal to reduce the carbon emissions associated with the life cycle of our drinks by 25% by 2020. The largest component of those carbon emissions is by far the packaging. Therefore, we will continue to drive packaging innovation. We have already developed a bottle that is made up of 30% plant material. We will continue to push to get the generation two plant bottle, which will reduce our carbon footprint even further. Packaging is a significant area in which we can pull some serious levers.

ABOUT URJANET

Urjanet’s mission is to provide the world with easy access to automated energy data. Our cloud-based platform seamlessly extracts and normalizes disparate utility bill and interval data directly from the source, and delivers it into the business systems and products that rely on it. Leading commercial enterprises and energy solutions providers use Urjanet data to gain deeper insight into energy consumption and spend. Urjanet is a privately-held company headquartered in Atlanta, Georgia. For more information, visit www.urjanet.com.

“People want to be involved with responsible companies that are focused on sustainability.”