Energy powers our connected homes, healthcare, smart cities, smart farm manufacturing, connected global supply chain, and data-driven business models. With the digital transformation well underway, companies are at a critical juncture: they must prioritize sustainability in their decision-making in order to remain competitive while also facing increasing cost-cutting pressure.
Modern companies must identify solutions to meet and exceed ESG (Environmental, Social, and Corporate Governance) metrics, while also delivering results and preserving cash savings. Companies must rise to the challenge, as failing to address ESG factors puts companies, communities, and investors at significant risk.
Consumers and investors alike recognize the importance of organizations that show they have ESG concerns at the top of their minds and in their decision-making process. According to a study conducted by IBM and the National Retail Federation, two-thirds of consumers prefer eco-friendly brands to brands that disregard the environment. Investors recognize this, as well. Institutional investors like BlackRock, State Street, and Vanguard issue guidelines to evaluate companies’ adherence to ESG metrics. With these metrics, investors can determine the potential risk to the company and community if a tragic event were to occur. Companies that prioritize ESGs can avoid preventable pitfalls with proactive investments. These investments can potentially save them from an event damaging to the P&L, reputation, and, more importantly, the community.
Beyond risk mitigation, there is a significant opportunity to be gained by addressing energy consumption. The Urban Land Institute (ULI), a global research non-profit focused on land use, has been tracking a portfolio of U.S.-based buildings for the past 10 years as part of an ongoing initiative led by its Greenprint Center for Building Performance. The portfolio of buildings has decreased energy usage by 17%, which has generated a savings of nearly $260M in energy costs alone. The “unseen” cost savings are delivered to the community in which they operate. ULI calculates that the 17% reduction in energy usage across those 10 years saved $400M in potential environmental costs to the community. Focusing on the environment can protect a company from a potentially damaging situation that puts investors and consumers at risk while also saving a considerable amount in operational costs and improving their reputation.
Recognizing the value of confronting sustainability measures head-on, businesses must navigate a maze of options to deliver technology solutions that provide operational cost savings while delivering benefits and valuable insights to the business. Understanding and optimizing energy use can deliver quick wins in terms of savings and sustainability.
Accenture notes three components necessary to optimize energy across an organization: the Internet of things (IoT), Analytics, and Data Scientists. Retrofitting and connecting existing systems with sensors (IoT) can produce data from those systems that can be used to take action and create efficiencies. This sets the stage by making data accessible and understanding how, where, and when energy is used. From here, the company can start making changes. Analytics and data scientists must take the data collected from the system being tracked, HVAC, servers, lights, and others, and program them to be optimized based on usage. Making use of all this data can deliver the operational savings business leaders are looking for while also addressing potential environmental issues through curtailing energy consumption. All technological solutions that focus on consumption and produce environmental benefits will require a motivated senior leadership team who understands the value in understanding their energy consumption.
Investors focused on the sustainability space are evaluating solutions that combine IoT with AI and machine learning. Kaiserwatter’s ARISTOTELES platform leverages smart data analytics, predictive analytics, and machine learning algorithms to maximize the power generation of connected renewable energy installations. This is relevant for two reasons; first, it allows for more powerful renewable power generation and a turn towards “smart energy.” Second, technology will be transferable across industries, eventually being utilized by businesses to strategize on their internal energy consumption, developing even more possibilities for efficiencies.
Cloud infrastructure enables businesses to cut internal energy consumption by moving internal data center costs to the cloud. That energy is not lost; it is just outsourced. AWS (Amazon Web Services), the largest cloud infrastructure platform, can replace entire enterprise data centers through their services. How does AWS manage the massive energy consumption costs of holding data center infrastructure costs for thousands of businesses worldwide? Amazon is keenly aware of their energy costs and environmental impact and thus have committed to using only renewables by 2025. But aside from using renewables, AWS is able to run its operations 3.6 times more efficient than the median of US enterprise data solutions through efficiency programs that are focused on every facet of the center, a deep understating of their data, highly efficient servers, and less server downtime through smart usage. Other companies should study Amazon’s commitment to sustainability and consider making enhancements to remaining in-house operations. As cloud data centers’ utilization grows, it will be important for businesses to understand where their data lives and how it fits into their sustainability plan.
The Governance and Accountability Institute reports that in 2018, 86% of the companies in the S&P 500 index published a sustainability report, up from only 20% in 2011. Companies are clearly taking note of how valuable sustainability can be to their organization, but it takes motivation, technology, and data to push into the modern business world. Utilizing IoT, data analytics, and considering future sustainability trends can produce operational savings while protecting companies against ESG risks. Consumers are also taking note and recognizing companies that are not working towards a solution, pushing companies to understand their role in protecting the environment and the benefits associated with taking action.
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