The imperative to engage senior management in energy

Energy Strategy / 03.15.19

The imperative to engage senior management in energy

Public sector organizations like school boards, municipalities and hospitals face a requirement to update their public Energy Conservation and Demand Management plans by July 1, 2019.

While energy has long been on the radar as a facility cost to manage, energy strategy is becoming an imperative at the senior management level as well. For example, an article in the Harvard Business Review makes the case for energy strategy to be a C-suite issue.

This year’s deadline for a new CDM plan is a tailor-made opportunity for energy managers in these organizations to foster a new level of engagement on energy management by their senior leadership.

Why now?

Structural impediments to lowering costs in Ontario’s electricity system in the short term mean higher electricity prices are here to stay for the foreseeable future. With the federal government’s commitment to carbon pricing across the country and water costs as an emerging issue, utility costs are increasingly relevant to senior level operational decisions.

Many organizations face expectations from customers, shareholders, and other stakeholders to reduce energy use and minimize their Greenhouse Gas (GHG) emissions, while controlling energy costs and risks. These sometimes competing objectives require choices and trade-offs, and the implications can indeed be strategic.

In our advisory work, we’ve seen that organizations who manage their energy costs most successfully from year to year all have in common the clear support of senior management. This finding is echoed in the HBR article. And we find this across sectors.

Energy practitioners in less successful organizations do what they can but often in isolated, ad-hoc, reactive type activities. When a senior executive is a committed advocate, they establish an attention level across the organization for vigilance and action around wasted energy and water use. They make it easier for energy staff to do their jobs with less work friction and inefficiencies. Senior management engagement is essential if organizations are going to rethink energy use and achieve step changes in conservation and emissions reduction.

Organizations are beginning to look to strategies like renewables procurement, battery storage and behind-the-meter generation to reduce electricity costs, but these strategies can involve a level of capital expenditure or contractual commitment that naturally require senior management approvals. If management is not engaged and informed in energy issues, are they prepared to make these decisions?

What’s required

Data: Most organizations have consumption data somewhere but it’s often not readily available in a form that can convey meaning and impact to management. Make consumption and cost data accessible. There are lots of tools to help here.

Senior managers relate to benchmarks of peer facility energy performance which can establish realistic goals and savings potential.

Policy and accountability: Guided by the senior manager, set energy strategy direction, rules and programs of energy management and align across the organization. For example, explicitly include energy performance metrics in equipment procurement criteria. Establish clear roles and responsibilities which support individual performance and empower energy management staff to fully harness the resources at their disposal.

Goals and targets: Using consumption data and benchmarking, set clear objectives for consumption reductions year over year. Adopt and integrate management practices. policies and programs to better control energy and water use and energy purchasing while considering energy and carbon risk.

A roadmap: The senior manager oversees development of the strategy and roadmap by energy staff and ensures other departments are aligned with the plan. The energy roadmap should specify areas of focus and priority, resource commitments and management systems such as reporting and communication.

Organizational benefits

The most direct and obvious benefit of senior management commitment is the organization will manage their facility energy and water costs much better, in both use and energy procurement. Management will be better informed when approving those resourcing decisions - operational, staffing or capital investments – and have greater confidence in the outcomes.

Senior management will be more assured the energy budget is optimized to cover what is needed and no more. Then the savings can be put to other core priorities of their organization. Budget surprises are reduced and at the same time, resilience increases against energy price shocks.

Elevating the energy file to senior management oversight provides them with a ready catalyst to move an organization’s culture. Employees will pay more attention to consumption data, foster sharing across departments on opportunities to reduce waste and be more sustainable, celebrate successes that make a difference beyond the organization and be proud of their work and accomplishments.

In our work with clients to facilitate strategic energy planning, we are hearing some exciting success stories. One senior manager at a school board challenged its new energy manager to change the board’s culture to become more sustainable. Another resolved interdepartmental priority conflicts through the shared value of continuous improvement.

How an organization prioritizes managing energy and water is a reflection of its environmental stewardship. This is visible to stakeholders. It’s also a proxy for sound management and how well an organization can adapt.

The creation of an energy roadmap is an exercise itself in engaging stakeholders, from senior management to dispersed staff. Done well it integrates energy into daily operations, employee mindsets and enhances an organization’s culture. In today’s environment, it’s an opportunity that’s become a strategic imperative.