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Companies Should Take A More Proactive Approach When It Comes To Climate Change. Here’s Why

Ryan Morris

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As climate change continues to be a global issue requiring a coordinated worldwide solution, new technologies are empowering more bottoms-up impact at the corporate and local level.

Unfortunately, climate change isn’t everyone’s top priority. Even as we’ve understood more about the severity of climate change, it’s struggled to emerge from the “important but not urgent” category of problems. Most people struggle to comprehend the impact of global warming since many of its effects aren’t directly visible to them, and because they’re not sure how to address it meaningfully. With over 70% of global emissions since 1988 coming from just 100 companies, significant change really will come at the corporate level, not the individual one. 

If more companies took simple steps to reduce their energy consumption to fight pollution, we could be making huge strides to achieve carbon neutrality. 

Here’s how your company can actively implement climate change initiatives—and why doing so can actually be good for business.

Focus on what your company and team can do together to fight climate change.

At Software Motor Company, we’ve developed a product that helps companies drastically reduce their HVAC energy consumption. While “energy consumption” often invokes a mental image of a lightbulb, the air conditioner actually uses 2-3 times as much electricity. 

When we envision the effects of pollution generated by corporations, a lot of abstract numbers like “kWh” or “tons of carbon emissions” are thrown around. These are sort of like revenue or profit—high-level terms that are in fact the consequence of many small decisions made every day, whether deliberately or not. 

Business owners should consider the impact their day-to-day operations have on climate change. Just like the choice to exercise and eat a healthy diet can drive both the short-term benefit of feeling better today and the long-term one of living a longer, healthier life, reducing waste in your business is good for your short-term bottom line and the long-term future of the planet. 

As a corporation, one of the easiest ways to lessen your environmental impact is to more consciously reduce the resources you consume: frugality drives ingenuity. By all means, if using more energy in a particular area creates economic value, then do so—the tragedy is wasted energy, usually caused by a lack of discipline or awareness. 

To address this issue, business owners could utilize climate incentives—similar to wellness programs that encourage employees to use the gym or quit smoking. You can set the tone for your employees to be more environmentally aware by educating them and doing things like:

  • Reducing paper usage by going 100% electronic with records, internal communication, and customer communication via cloud services
  • Video conference with clients or co-workers in place of expensive business trips to reduce the amount of carbon dioxide released into the atmosphere from flying
  • Creating remote positions for employees who live far away, initiate carpool incentives, or reimburse staff that uses public transportation
  • Catering lunch for your employees to build team bonds and reduce driving to lunch
  • Encouraging recycling to reduce unnecessary waste and also extend the life of pre-owned products

These are just a few examples of how companies can create a community that embraces deliberate energy use practices. Such programs work to build a more responsible company culture while directly improving both your employees’ and company’s effort to become carbon neutral.  

Climate change initiatives are good for business.

It’s proven that consumers want to support companies that embrace corporate responsibility when it comes to climate change. Studies show people enjoy buying from companies that actively work to fight climate change as part of their business culture. In fact, about 63% of Americans are hopeful businesses will take the lead to drive social and environmental change moving forward, even in the absence of more overreaching government regulation. 

Today, large organizations—companies, governmental systems, NGOs—are both the biggest energy consumers on the planet, and also the leaders of how to best implement operational technologies and green practices that reduce energy use. Additionally, organizations can also motivate employee behaviors that end up having a larger impact on the way society as a whole perceives the issues of energy conservation, resource use, and pollution. 

  • Both the Ford Focus and Ford Escape vehicles are 80% recyclable.
  • Google, in addition to optimizing their supply chains and powering its facilities with renewable energy, finds ways to encourage employees to conserve energy. Not only do they charter buses to reduce individual car commutes, but they also promote simple employee actions like turning computer monitors off when they leave to head home.
  • In 2017, Amazon announced plans to install rooftop solar systems on 50 of their fulfillment centers across North America. The company also has wind and solar farms in Indiana, Ohio, Texas, North Carolina, and Virginia to power its data and distribution centers.

In all of these examples (and many more), finding ways to make your company energy efficient isn’t just good for the planet—it’s also good for the long-term health of the business. There is no trade-off between saving energy, ending pollution, and reducing the amount of money you spend on wasteful business practices. 

Who’s thinking about your energy project financing?

Energy-saving projects are absolute no-brainers. The payback periods are strikingly short: many solar projects have a less than 10-year payback (equivalent of a 10% IRR) and many energy efficiency projects have a less than 5-year payback (20% IRR equivalent). And our motor retrofits have shown paybacks of less than three years (33% IRR)!

Interest rates are at record lows and many large companies can finance projects at less than 5% cost of capital. 

SMC’s motor retrofits are almost always less than a 3-year payback. If you can borrow at 5% and invest at 33% you should rationally do that all day long!

But a key hurdle to economic projects that simultaneously serve the company and the planet is the management focus to finance them. Energy savings usually drop in the priority queue, compared with the main key drivers of a core business. 

Having a dedicated role to financing energy projects will show a massive payback for companies, by increasing the specialized attention to such a huge area of opportunity. No company today would consider not having a senior IT executive to make sure they are taking advantage of the best IT tools to run their business. In the near future, companies will realize that they can maximize their return by focusing attention on all the “green-returns” they can earn.

Moving forward, business owners should consider actively working to redefine what corporate responsibility means in terms of energy use. If not, they’re only placing more pressure on the government to force environmental policy change. And anything less would be to ignore the reality of climate change and its potential impact on the future health of our planet.

Ryan Morris is an entrepreneur and investor and has served as Executive Chairman of Software Motor Company (SMC) since October 2017. Ryan founded Meson Capital Partners LLC, an investment firm in Feb 2009. Meson Capital applies AI/ML, Industrial IoT, and sustainable energy technologies to established businesses to transform them into leaders in their domains. Ryan has served as Chairman of 3 publicly traded companies including most recently Sevcon, Inc. which was a world leader in power electronics for high performance electric vehicles. Sevcon was sold to BorgWarner in September 2017.

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