50001 Reasons to Improve

Energy Performance

Issue Brief
Julia Currie
Program Manager, Institute for Building Efficiency

Craig Isakow
Program Director, Institute for Building Efficiency

Kelly Smith
Program Manager, Institute for Building Efficiency

February 2012

Introduction
Management systems have been used to great effect in realms such as
quality and environmental control. Similar systems for managing energy
now have potential to help organizations reach their full potential for energy
efficiency and savings.
Energy management has multiple benefits: cutting costs, reducing greenhouse gas emissions, enhancing
property values, supporting sustainability commitments, increasing price stability, and others. Management
systems provide a framework for optimizing use of energy-consuming assets, evaluating and applying
energy-efficient technologies, and promoting efficiency throughout the enterprise. Key energy management
disciplines include management responsibility, an energy policy, energy planning, focused implementation,
monitoring and measurement, and management review.
One formal energy management system is the ISO 50001 standard, published in June 2011 by the
International Organization for Standardization. The standard is based on a simple Plan-Do-Check-Act
model. Some organizations may find that standard too complex for their purposes, but even in those
cases its basic concepts can outline a process for effectively managing and continuously improving energy
performance in a building, in a campus, or across an entire building portfolio.
Research documents that organizations with energy management systems or programs that use
proven management disciplines are more likely than others to take actions that measurably improve
energy performance. Case studies demonstrate how specific companies have achieved major savings,
met sustainability commitments, engaged employees, and achieved continuous energy performance
improvement by following sound management disciplines.

Management Systems: The Missing Link

in Capturing Energy Efficiency
Almost everyone agrees that saving energy matters: It lowers costs, cuts pollutant and greenhouse gas
emissions, builds public goodwill, and helps keep organizations competitive. Yet leaders struggle to use
energy optimally, whether they run small companies with a few offices or global corporations using millions
of square feet of real estate. One reason is that managing energy not nearly as simple as it seems. If what
isnt measured cant be managed, it is equally true that what isnt managed cant be improved. The key
element often missing in energy management is a framework a structured and disciplined approach
to establishing a baseline, formulating policies, setting objectives, devising action plans, and tracking
progress. In short, a management system.
Without a management system, energy efficiency projects may be haphazard, efficiency gains often
fade over time, and savings opportunities are easily missed. For example, a facility may install more
efficient lighting but years later fail to notice a newer lighting technology that than could save even
more. Temperature control setpoints optimized today may become obsolete and wasteful as building
use patterns and configurations change. An energy management system provides a process for regularly
reviewing energy usage, making adjustments, and improving continuously.

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Organizations have used formal management systems to great effect in other realms, notably the International
Organization for Standardization (ISO) standards for quality management (ISO 9001) and environmental
management (ISO 14001). June 2011 saw the release of ISO 50001, a global standard for energy management
(now available for download).1 It aims to help organizations create systems and processes to improve their
energy performance: optimizing use of energy-consuming assets, evaluating and applying energy-efficient
technologies, and promoting efficiency throughout the enterprise and the supply chain. While the intent is
for ISO 50001 to apply to any type and size of organization, its main value for some may lie less in achieving
certification to the standard than in simply following the disciplines the standard prescribes. A structured
management approach may be the key that helps unlock vast potential for energy savings in the worlds
factories and buildings. The ISO organization has estimated that ISO 50001 could influence up to 60 percent
of the worlds energy use.2

Tapping the Benefits of Energy Efficiency Measures

http://www.iso.org/
iso/catalogue_detail?
csnumber=51297

2
Win the energy
challenge with ISO 50001.
International Standards
Organization. June 2011.

With or without formal management systems, organizations are making strides toward improving their
energy usage. The benefits and imperatives of managing energy are clear.
Cutting costs. Managing energy effectively enhances cash flow, frees up capital for other initiatives
and adds to profitability. Energy is usually the third-largest business expense after employee
compensation and real estate, averaging 19 percent of total expenses.
Enhancing property value. Especially in commercial real estate, research points to a green
premium in rent potential and valuation for buildings shown to be energy efficient.3
Reducing greenhouse gases. On average, energy use accounts for 75 percent of a companys
carbon footprint.4 Reducing fossil fuel consumption directly cuts greenhouse gas emissions. For
organizations that report Scope 3 emissions, energy reductions affect a spectrum of upstream and
downstream activities. For example, reducing site electricity consumption multiplies carbon savings
almost tenfold, because so much energy is lost from source to site.
Improving sustainability. Organizations worldwide are signing up for voluntary commitments to
reduce energy and emissions. According to the Carbon Disclosure Project, 74 percent of Global
500 respondents reported emissions reduction targets in 2011, up from 65 percent in 2010.5 Such
commitments add value by creating shareholder and customer goodwill for demonstrating green
leadership and showing concern for the environment and the threat of climate change.
Turning policy to advantage. Governments are creating laws and incentives to increase energy
efficiency, reduce greenhouse gas emissions, and expand clean energy. For example, the German
government will require ISO 50001 certification or equivalent energy management measures for a
range of organizations as of 2013, and will provide significant energy tax reductions for compliant
organizations.6 Organizations can prepare for new laws and policies in advance by getting sound
energy practices in place today.

3
Institute for Building
Efficiency, 2011, Green
Building Asset Valuation:
Trends and Data

4
Sustainable Business,
May 26 2011 ISO 50001:
New Energy Management
Standard

CDP Global 500 Report

2011

6
TUV Rheinland,
http://www.tuv.com/
de/deutschland/gk/
managementsysteme/
umwelt_energie/din_16001/
din16001.jsp#tab6

Price stability. Organizations can hedge against energy price volatility simply by reducing their
exposure through better energy management.
Increasing innovation. Many organizations report that after they set energy reduction goals, occupants
became engaged in energy management and found new ways to drive down consumption and cost.

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How Management Systems Can Help

Management systems can help organizations make the most of these benefits. ISO 50001 provides a
blueprint for energy management that can be implemented in one facility, on a campus, or throughout an
entire global facility portfolio, including manufacturing plants, office space, warehouses and retail sites. The
standard is based on the Plan-Do-Check-Act model. Companies can use it for certification, registration,
and self-declaration of their energy management systems. It can be used independently or integrated
with other standards in the ISO suite. The ISO 50001 framework (Figure 1) provides a useful reference
for almost any organization designing an energy program. In some jurisdictions, incentives are offered for
adopting ISO 50001 or an equivalent program.
Figure 1. ISO 50001 Framework for Energy Management

Continual
improvement

Energy policy

Energy planning
Management review
Implementation
and operation

Monitoring, measurement
and analysis
Checking

Internal audit of
the EnMS

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Nonconformities, correction,
corrective and preventive action

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While conforming strictly to ISO 50001 may be beyond some organizations needs, its basic components
can help almost any entity understand what it takes to implement a successful energy management
program.
Table 1. Key Components of the ISO 50001 Approach
ISO 50001
Component

Description

Management
responsibility

Management leadership provides the foundation. Top executives can see how energy
management fits with organizations long-term plans. They must engage to establish
and implement the energy policy and see that energy management gets the appropriate
resources. A management representative should execute the plan and report back to the
leadership team.

Energy policy

The organization must develop an energy management policy to fit its needs and
objectives. It should include a commitment to collect information, comply with legal
requirements, and seek continuous improvement. This policy provides a framework for
setting objectives during the planning process. It communicates the energy policies to all
levels, including a focus on purchasing energy efficient products and services.

Energy planning

An energy plan should be developed and continuously updated. A first step is to analyze
energy use, such as by reviewing utility data and performing an energy audit. Based on
this analysis, the team should identify, prioritize and record opportunities, then determine
key energy performance indicators and set the baseline. The organization is then ready to
establish energy objectives, targets and action plans.

Implementation
and operation

Energy management requires focused implementation that includes training employees

on the benefits and how to take action, communicating internally and externally, and
maintaining documentation. The system must establish criteria and a process to ensure
effective energy performance. Besides reviewing ongoing operations, organizations should
review energy performance in the design of facilities and systems. When procuring energy
and equipment, they should evaluate the energy impact of decisions.

Checking

The checking phase helps ensure that the benefits of energy management do not wane.
Monitoring and measuring of key performance indicators may directly lead to additional
savings. This phase should include an internal or third-party audit and evaluation of
compliance with the plan and policy. Nonconformities found should be promptly corrected.

Management
review

Management should regularly review the energy management system, make sure the
program is following the plan and meeting objectives, and adjust the policy, objectives, and
resources as required.

Energy Management Practices Correlate with Results

A survey from CoreNet Global and the Johnson Controls Institute for Building Efficiency, Reducing Waste and
Increasing Value through Corporate Energy Management,7 showed that corporate energy management is
still in a nascent state. While most organizations have adopted at least one approach for managing energy
consumption, very few have comprehensive, enterprise-wide energy management systems. On the other
hand, according to this and other research, organizations that proactively implement energy management
practices are more likely to take action to improve energy efficiency in a real estate portfolio.

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CoreNet Global and

Johnson Controls Institute
for Building Efficiency,
Reducing Waste and
Increasing Value
through Corporate
Energy Management,
December 2010

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The CoreNet Global/Institute for Building Efficiency survey assessed the extent to which respondents
followed ten specific energy management practices (Figure 2) similar to those prescribed by ISO 50001.
Analyzing the results, the Institute assigned an Energy Management Maturity score (from one to ten)
to each company, reflecting the number of practices it had adopted. Most companies scored below 5,
indicating significant opportunity to improve and expand energy management systems (Figure 3).
Figure 2. Organizations Adoption of Energy Management Practices
Training for employees
Formal review of energy policy
Incentives for energy efficiency success
Effective and empowered energy team
Enterprise level energy data
Energy action plan for organization
Corporate reduction goal
Adopted energy standard
C-level responsibility
Formal energy policy
0%

10%

20%

30%

40%

50%

60%

70%

80%

Percentage of respondents adopting practices

Source: Reducing Waste and Increasing Value through Corporate Energy Management,
CoreNet Global/Institute for Building Efficiency, 2011

Figure 3. Distribution of Corporations Energy Management Maturity Scores

40

Number of organizations

35
30
25
20
15
10
5
0
02

34

56

78

910

Energy management maturity score

(Number of practices adopted)
Source: Reducing Waste and Increasing Value through Corporate Energy Management,
CoreNet Global/Institute for Building Efficiency, 2011

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In this analysis, about 40 percent of the organizations were classed as non-adopters, following two or
fewer of the management practices, and another 40 percent ranked as partial adopters (three to six
practices). The remaining 20 percent full adopters used seven or more of the ten practices. These were
the most likely to have taken energy efficiency actions and to have shown a link between organizational
practices and results.
Similarly, the 2011 Energy Efficiency Indicator (EEI) survey from the Institute for Building Efficiency
found organizations that had adopted key practices of an energy management system were much more
likely to implement energy measures than those who had not. In this survey, the management system
components included:
Setting energy or carbon reduction goals
Analyzing energy data at least monthly
Adding internal or external resources to improve energy performance
Using external financing to invest in energy projects
In general, the more of these practices an organization had adopted, the greater its energy efficiency
activity. Further, each individual energy management system attribute correlated with implementing more
energy efficiency, renewable energy and smart grid/smart building measures (Figure 4). The EEI survey
included more than 4,000 global executives and building owners responsible for energy and investment
decisions in commercial and public sector buildings.
Figure 4. Links Between Energy Management System Practices and Energy Efficiency Actions
EMS practices
11.2

Setting a reduction goal

5.7
11.1

Analyzing energy data monthly

6.3
10.6

Adding internal or external resources

6.6

Yes
No

10.6

Using external financing

5.7

5
10
Number of Measures implemented

15

Source: 2011 Energy Efficiency Indicator Survey, Institute for Building Efficiency

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Energy Management Disciplines at Work

Here are a few examples of how major companies are using full-blown energy management systems or
key energy management disciplines to improve their energy and environmental performance.
Formal Energy Management System: The Dow Chemical Company8
The Dow Chemical Company was spending some $3 billion a year 40 percent of its costs to operate
its plants. In the early 1990s, to enhance global manufacturing competitiveness, the company sought to
reduce its exposure to energy volatility, reduce energy costs, and cut greenhouse gas (GHG) emissions
from its processes. Dow formalized its energy management system in 1994 with a goal to reduce energy
use per pound of product by 20 percent by 2005. The company applied Six Sigma continuous improvement
tools along with U.S. Department of Energy programs like Save Energy Now, Energy Saving Assessments,
and Superior Energy Performance and applied knowledge gained across business units. The company
then began publicly measuring, tracking and reporting energy performance. Dows manufacturing energy
intensity, measured in BTUs per pound of product, has improved more than 40 percent since 1990, saving
the company a cumulative $24 billion and 5,200 trillion BTUs.
IBE Interview with
Adam Muellerweiss,
The Dow Chemical
Company, May 2011.

Energy and
Water Conservation.
http://www.starbucks.com/
responsibility/learn-more/
goals-and-progress/energy
Accessed August 4, 2011.
9

Creating a Baseline: Starbucks Corporation9

To help develop a strategy to reduce energy consumption, Starbucks needed an energy baseline. In
August 2007, the company hired a consultant for a six-month monitoring process in a representative
sample of 19 stores. Starbucks found its beverage- and food-related equipment comprised much less of
the energy load than expected the biggest opportunities were in HVAC equipment and lighting. Another
big discovery came from a greenhouse gas inventory assessment: Electricity use made up about 75 percent
of the firms Scope 1 and Scope 2 carbon footprint. Armed with its baseline, Starbucks set three aggressive
environmental goals in 2008 for company-owned stores:
Reduce energy consumption by 25 percent by 2010
Purchase renewable energy equivalent to 50 percent of electricity used by 2010
Reduce water consumption by 25 percent by 2015.
Leadership and Employee Engagement: Marriott International10

Global Superior Energy

Performance Partnership.
http://www.ipeec.org/
task_gsep.html
Accessed June 13, 2011.
10

11
Case study, Johnson
Controls Inc.

Marriott International demonstrated a commitment to environmental stewardship in 2001, creating

three Regional Directors of Energy to support commodity contracting, demand response participation and
energy conservation efforts in the U.S. The company also developed an Energy and Environmental Action
Plan (EEAP) program for its full-service hotels that enables onsite hotel staff to develop and implement
operational plans to reduce environmental impacts. The EEAPs are supplemented by a spreadsheet-based
tool with more than 170 energy-saving and environment-enhancing actions driven by staff behavior. By
quantifying the value of the small behavior and operational changes, Marriott has given hotel managers
and staff a straightforward tool and structured planning process for energy management.
Measuring, Tracking and Reporting: Johnson Controls11
Johnson Controls joined the U.S. EPA Climate Leaders program in 2003 and has been reporting to the
Carbon Disclosure Project (CDP) since 2006. The company publicly committed to reduce its GHG emissions

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per dollar of revenue by 30 percent from 2002 to 2012. The company met its global GHG reduction target in
2008, after only six years, and committed to reduce its global GHG intensity by another 30 percent by 2018.
Johnson Controls realized that to continuously improve the efficiency of its plants, it needed to establish
a monthly performance scorecard. Today, more than 250 plant managers use the monthly scorecard to
compare the energy required to produce an equivalent unit of manufacture across 40 different product
lines. The performance of the top-achieving plants is averaged to create a benchmark, and improvement
targets for each product line are set. With this plant-level information, the top performers across
the company are recognized for their energy, water and waste reduction efforts at an annual benchmarking event.
Taking a Portfolio Approach: Diversey, Inc.12
Diversey, Inc. signed on in 2008 as one of 30 companies in the World Wildlife Fund Climate Savers
program, committing to reduce its overall greenhouse gases by 8 percent from 2003 levels by 2013.
Diversey committed $19 million to upgrade facilities, change processes, and rethink products to meet the
goal. Treating that amount as an investment rather than a cost, the company looked beyond financial return
with an integrated bottom line approach. Diversey used the dedicated funds for its energy efficiency
program and developed a process that looked at payback period, net present value, and cost to reduce
GHG. Taking a portfolio approach, the company identified low-cost avoidance measures, then efficiency
measures, and then clean power generation with wind turbines and combined heat and power fuel cells
at its headquarters. In the end, the company captured $32 million in savings and was able to make its
emissions reduction target more aggressive, at a 25 percent reduction from 2003 levels.

GreenBiz Executive
Network Presentation
Summary, http://
www.greenbiz.com/
blog/2011/03/07/diverseysportfolio-approachtoward-sustainabilityroi?page=0%2C0

12

Schultz, Steve.
Implementing a Corporate
Energy Management
System. June 3, 2010.

13

Energy Policy: 3M
3M adopted a corporate energy policy for all its global operations as part of its Energy Management
Program. The policy objectives were to improve energy consumption efficiency, reduce cost, optimize
capital investment for energy efficiency, reduce environmental and greenhouse gas emissions, and conserve
natural resources.13 Elements of the policy emphasize a focus on energy efficiency in manufacturing,
workplaces, and employee behavior; development of energy efficient technologies; and support and
cooperation with government agencies and utility companies. The policy helped 3M meet its energy
reduction goals: total energy use in 2009 was 22 percent less than in 2000.

http://www1.eere.energy.
gov/energymanagement/
pdfs/ccp_sep_case_study.
pdf. Accessed Jan. 25, 2012.

14

Integrating Management Systems: Cook Composites and Polymers Company (CCP)14

CCPs plant in Houston, Texas, worked with the U.S. Department of Energy Industrial Technologies Program
to implement a management system for energy, have two major energy-using systems assessed for
energy efficiency, and implement projects to improve efficiency. All this led to a 14 percent improvement
in energy performance over two years. The plant is now certified at the Gold level in the DOEs Superior
Energy Performance (SEP) program and has an ISO 50001 energy management system in place to
proactively manage energy resources in the future and sustain energy performance improvements. The
company integrated the energy management system into management systems for quality (ISO 9001)
and environment (ISO 14001). It then developed an energy management policy, set energy performance
improvement objectives, developed an energy profile for the Houston site, and calculated its energy
baseline. Finally, the company conducted a self-audit and management review before a third-party audit
that led to certification under SEP and the ANSI Management System for Energy (ANSI/MSE 2000:2008).

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Extending the Reach of Energy Management Systems

Just as quality and environmental management systems were born and grew in the industrial sector,
industrial companies in energy-intensive businesses have tended to be the earliest adopters of energy
management systems. Programs such as the U.S. Department of Energys SEP continue to succeed at
reducing energy usage in industrial facilities.
At the same time, organizations in the commercial, government and institutional sectors increasingly take
more programmatic approaches to energy management. While full compliance with ISO 50001 may prove
to be unnecessarily complex for these entities, they could readily adopt its key features to make sure they
maximize benefits from energy efficiency programs and policies.
Furthermore, ISO 50001 concepts ultimately could extend to span organizations national or global
enterprises, in much the same way the LEED green building certification program grew from a focus on
individual buildings to cover campuses, communities, and now entire building portfolios.
As a worthy endeavor for the future, corporate facility owners and commercial real estate companies could
use ISO 50001 as a starting point to create a simplified energy management system framework that fits
their business processes and helps them operate their buildings more efficiently.
Energy efficiency is an imperative today. Sound energy management systems can help organizations of all
kinds reach their full potential to cut energy costs, reduce emissions, and meet growing expectations for
corporate sustainability.

Appendix: Case Studies

Case study: The Dow Chemical Company
Company Profiled
The Dow Chemical Company, based in Midland, Michigan (U.S.), is a provider of plastics, chemicals, and
agricultural products with annual revenues of $54 billion.
Situation
Approximately 40 percent of Dows costs came from energy to run its plants, costing about $3 billion
dollars a year. In the early 1990s, as a way of promoting its global manufacturing competitiveness, Dow
sought to reduce its exposure to energy volatility, reduce its large energy cost, and reduce the greenhouse
gas emissions in its processes.
Action
Dow formalized its energy management system in 1994 with a goal to reduce energy use per pound of
product by 20 percent by 2005. The company began institutionalizing a comprehensive energy management
system by implementing continuous improvement tools like Six Sigma as well as U.S. Department of Energy
(DOE) programs like Save Energy Now, Energy Saving Assessments, and Superior Energy Performance in
order to meet that goal. As education, training, and validation of approach improved, the knowledge
gained from these programs was replicated across business units. Dow then began publicly measuring,
tracking and reporting energy performance.

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Results
Dows manufacturing energy intensity, measured in BTUs per pound of product, has improved more
than 40 percent since 1990, saving the company a cumulative $24 billion and 5,200 trillion BTUs.15 We
are accelerating our energy efficiency innovations as part of our global commitment to our company,
communities and the environment, said George Biltz, Vice President of Energy and Climate Change at
Dow. These projects really represent the Power of And delivering environmental effectiveness and
economic efficiency. We are harnessing Dows extensive expertise in energy conservation to provide
financial returns to our company and help fuel growth around the world.

15
IBE Interview with
Adam Muellerweiss,
The Dow Chemical
Company, May 2011.

Formalizing the Process

The Dow Chemical Company recognized early in its history that its profitability depended on reducing
energy demand in its energy-intensive chemical processes. For example, Herbert Dow, the companys
founder, collaborated with George Westinghouse to develop a high-efficiency cogeneration power plant
in 1906. Fast forward to the early 1990s, when the company recognized the need to formalize its energy
management program and, in 1994, made a public commitment to reduce energy intensity per pound of
product by 20 percent by 2005. In order to drive the importance of meeting this commitment throughout the
business, a Strategy Board of senior leaders was created to define Dows approach to climate change and
energy policy. Additionally, each of the companys 28 business units established its own energy reduction
goals, provided resources for programs, and measured and rewarded individual leader performance in
delivering energy efficiency. Andrew Liveris, Dows CEO since 2006, is known for his commitment to
sustainability and his ability to drill down into the details of the companys efforts.
Figure 5. Energy Intensity Performance
7,000
6,750
6,500

BTU/lb.

24.0
22.0
20.0

6,000

18.0

5,750

16.0

5,500

14.0

5,250

12.0

5,000

10.0

4,750

8.0

4,500

6.0

4,250
4,000

4.0

3,750

2.0

3,500

Base 1992 1994 1996 1998 2000 2002 2004 2005 2007 2009 2011
year
Energy intensity (BTU/lb.)

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Cumulative savings ($ billions)

6,250

Since 1990 through 2011

Energy Intensity Reduction Savings $24 Billion
Over 5,200 Trillion BTUs

Cumulative savings ($ billions)

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11

The Power of Partnerships

Through external partnerships, Dow has been a principal participant in the development of key energy
efficiency best practices, programs and standards. Dow took advantage of outside expertise and processes
to drive its energy efficiency programs. Dow began to use Six Sigma in 1999 as a corporate methodology
to accelerate continuous improvement in quality, productivity, and efficiency. Dow has also committed
to the DOEs Save Energy Now LEADER initiative, pledging a 25 percent improvement in energy intensity
across its manufacturing operations. Through this commitment, Dow accessed the DOEs Energy Saving
Assessment teams, who identified over $300 million in annual energy cost savings at 200 of its most
energy-intensive manufacturing sites in the U.S.16 In 2010, Dow was recognized for achievement at two
pilot sites for the DOEs Superior Energy Performance program.
Table 2. Using External Programs to Drive Energy Reductions
Six Sigma

Save Energy Now

Superior Energy Performance

Freeport, Texas

Hahnville, Louisiana

Texas City, Texas

Found suboptimal
boiler efficiency leading
to wasted condensate

SEN assessment
identified steam
system inefficiencies
and quantified energy
and cost savings

Location
DOE Conducts Energy
Saving Assessment at
Dow Chemical Co. in
Ludington, MI.
http://www1.eere.
energy.gov/industry/
saveenergynow/
Accessed June 6, 2010.

16

Action

Identified opportunities
to optimize plant
heat integration,
improve efficiency and
emissions

Almagauer, J. Testing
the Elements of Superior
Energy Performance.
University of Texas.
Summer 2010.

17

Results

Detected failed steam

traps and implemented
repair project

Utilized engineering
tools and brainstorming
to identify actions for
improvement

Reduced peak load

through optimizing
steam meters
parasitic load

Reduced energy use by

80 MMBtus per hour
through improvements
to distillation tower,
process furnaces,
boiler efficiency, and
heat integration

Annual energy
cost savings were
$1.9 million
Annual energy savings
amounted to 272,000
MMBtu

One of the four original pilot

sites for the SEP program in
the United States
Used SEP process to
translate process bottleneck
improvement into energy
improvement and improved
efficiency of steam turbine
generator
Implemented correct controls
identified through SEP process17
Isopropanol unit received
Platinum Partner Certification
with 17.1% energy intensity
improvement in 3 years
Energy systems plant received
Silver Partner Certification with
8.1% improvement in 3 years

Spread and Replicate

Piloting and early engagement with external programs amplified Dows energy savings efforts across the
company: Six months after performing the Save Energy Now Energy Saving Assessments, participating
plants reported replicating their efforts in other plants. The other plants added 10 percent cost savings to
the original effort. Dow has used the assessment tools and training offered by the DOE across its sites by
using a network: a small group of leaders attend the DOE training and spread the knowledge back to more
sites in the companys portfolio.

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Practice Assessment
Energy efficiency must be a priority for companies whose costs are so largely made up by energy
or whose margins are perpetually low. Bottom line growth can increase competitiveness by making
capital available for other investments.
Leadership openness is necessary for companies who want to access external programs like Save
Energy Now or Superior Energy Performance. Transparency of data is imperative for program
success at sites. (Not all industries or companies are able to reveal the inner workings of their
business.)
For companies that have sites laid out in a prototypical fashion, Dows approach offers a tremendous
example of prioritizing, incubating, and enabling replication. For industries like retail, where store
locations are often designed and multiplied across many geographies, the ability to replicate can be
extremely useful.
It is important to embed a feedback loop in the scaling-up process to ensure communication of best
business practices for energy efficiency projects across the organization.

Case study: Marriott International

Company Profiled
Marriott International, based in Bethesda, Maryland (U.S.), is a global operator and franchisor of hotels and
lodging facilities with over $13 billion in annual revenues and over 150,000 employees.
Situation
Marriott operates and franchises hotels under 16 brands, including full-service and select-service lines, in
66 countries and territories. Looking to establish partnerships in setting a standard approach to meeting
its environmental targets, Marriott became a U.S. EPA ENERGY STAR Partner in 2001. Large-scale efforts
were initiated to get the majority of hotels in the Western Region documented in Portfolio Manager as
a means to establish a useable energy baseline. The long-term goal is to improve energy management
procedures and energy intensity through a uniform auditing and measuring process across the hospitality
portfolio. In recent years, the company has moved toward using energy intensity data contracted through
Advantage IQ as the baseline tracking metric.
Action
Marriott demonstrated its commitment to environmental stewardship in early 2001 by creating three Regional
Director of Energy roles to support commodity contracting, demand response participation and energy
conservation efforts in the U.S. Shortly after, the Western Region team created an energy tool and process
to engage employees at each hotel. Since a global reorganization in 2010, the directors have been combined
into the Americas Energy Group, and an energy and environmental plan is now an annual requirement
for every full-service hotel in the U.S.. In order to participate, the hotels team must download and use a
spreadsheet-based tool to review over 170 energy and environment-related actions and select eight to 10 to
implement each year. The intent is for the hotels to select challenging energy reduction goals.

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13

Results
By the second year of Marriotts Energy and Environmental Action Plan program, nearly 2,300 actions had
been submitted by over 250 full-service hotels throughout the U.S. Marriott estimates the savings from this
effort at $650,000 annually. Marriotts other conservation programs, such as MRCx (retro-commissioning),
demand response and Energy ROI projects, will bring an additional estimated $7 million in improved profits
in 2011. Marriott is also serving on the Hospitality Committee of U.S. Department of Energys Commercial
Real Estate Energy Alliance and is a pilot site partner for the lodging category for the Global Superior
Energy Performance program.18
18
Global Superior Energy
Performance Partnership.
http://www.ipeec.org/
task_gsep.html
Accessed June 13, 2011.

Optimizing In-sourcing
Marriott operates 250 full-service hotels in the U.S. The lodging leader has made a commitment to a
25 percent reduction in energy use and greenhouse gases from the baseline year off 2007. The idea for
hotel-based and hotel-driven Energy and Environmental Action Plans (EEAPs) started over 10 years ago
with the Western Region Engineering and Facilities team and Vice President of Engineering and Facilities
for the Americas, Rob Bahl. Bahl formed the Americas Energy Group, a corporate Energy and Environment
team made up of experienced facilities engineering staff and utility and environmental consultants, who
have seen firsthand the reduction opportunities throughout the companys hotel portfolio. The team
realized that with the many competing initiatives and deadlines in todays environment, expecting the
facilities managers to surface capital ROI projects and drive correct energy behaviors at the property
level was placing success in jeopardy. The reality is that competing proposals and immediate needs were
taking precedence over energy conservation efforts. The concept that energy management knowledge
and shared responsibility needed to be in the operational hands of the back-of-house staff was born of
necessity. Hotel management needed to be involved and support operational changes while continuing to
focus on satisfying guest expectations. Their combined efforts and full collaboration on new energy and
environmental initiatives would most certainly benefit the bottom line.
Figure 6. Marriott Managed Brands

14

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The Tool for Success

Bahl enlisted Doug Rath, Director of Energy and Environment, to update and institutionalize the mechanism
between the corporate directive and day-to-day hotel operations. Raths 26 years of experience in facilities
engineering at Marriott allowed him to tackle the project quickly, since he had seen the same opportunities
for energy reduction over and over at hotel sites around the world. He created a spreadsheet-based tool
with over 170 different energy and environment enhancing actions that would involve little to no cost
and were able to be implemented by on-site hotel staff. For the environmental side of the audit tool,
he enlisted another Energy Director, Marianne Balfe. The 170 actions have detailed links for additional
information for decision-making, (some with a Marriott-created best practice Wiki) as well as calculators
designed to value annual behavior change. For example, full-service hotel sales teams regularly use
staged model guest rooms to show potential customers. Since the model rooms are shared space, there
was unclear responsibility for shutting off lights at the end of the day. Because the rooms are prototypes,
the tool estimates annual energy and cost savings of correcting this behavior by calculating the wattage
of light bulbs in the room times the number of hours that the Sales Department guest rooms are not used
in off-hours.
Figure 7. View of Marriott Energy and Environment Action Plan (EEAP) Tool

Energy or Environmental
Action Description

Program Created and

Not
Rolled Out
Applicable
to
(documentation prepared, ACTION
my Property.
training complete, and
dont
Shut
off lighting in We
show
rooms
follow up
in place)
have this
[Yes / No/ Not
equipment.
Number of light fixtures
/ room
Applicable]

Audit Question

Number of light fixtures / bath

BEHAVIOUR CHANGE
CALCULATOR

INPUT VALUESLinks to Calculators

RESULTS
Date Completed
(or to be
and Additional
completed)
Resources
6
4

Lighting

Average wattage of fixtures

Housekeeping turns off all lights

when finished cleaning and/or
inspecting guest rooms

Total wattage of all lights / room

Process is in place to shut off

lighting in daily Sales Department
guest level show rooms at the end
of the day.

Total wattage all lights, all rooms

Hotels nightly VIP turndown

process has been reviewed to
reduce lighting loads as much as
possible without impacting sense
of care and arrival.

Reduce lighting 1 hour / 365 days

$472.00

Reduce lighting 2 hours / 365 days

$943.00

Reduce lighting 3 hours / 365 days

$1,415.00

Reduce lighting 4 hours / 365 days

$1,886.00

Average number of show rooms

Cost of a kWh
Cost to light all rooms for one hour

30
300
4
1200
$0.092
$1.29

Planning Process
The tool is used at each hotel during an annual goal-setting and action-planning process. Each hotel is
required to have a Property Energy & Environment Committee (EEC), which engages in a four-month
process of creating an Energy and Environment Action Plan (EEAP) for the hotel. First, the EEC agrees to
review 170 current hotel practices in 12 categories from lighting to laundry to HVAC distribution to find
out if their hotel has rolled out an initiative for savings in that practice. The EEC reviews the practices by
doing a series of walk-through tours in the hotel over a course of three months. According to Rath, this
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15

walk-through process is key to engaging employees: It is a powerful experience for every employee to
see the audit. They learn about measures that they can do that make a difference. After surveying for
current practices, the EEC selects eight to 10 items to implement in the EEAP for the coming year and
sets quantifiable targets associated with each. The EEAP is then loaded into the corporate-level project
management system, where the practices and targets are monitored and reviewed by the corporate
Energy and Facilities team.
Figure 8. Marriott Energy Review and Planning Process
Annual EEAP Process

Form Team

Perform Audit

EEC performs
audit at hotel to
gauge practices
and educate
employees
Ongoing

Months 03

Set Plan

EEC sets annual

targets for 610
practices

Month 4

Monitor and Review

610 Energy
Action Items
implemented
and monitored

Months 512

Practice Assessment
Enabling employees to understand best practices, set targets and maintain actions to meet their
targets is necessary when energy demand is driven more by behavior than by processes.
Education is key many people care deeply about the environment and their impact on it, but do
not fully understand the optimal energy behaviors related to their day-to-day tasks and the bigger
picture. Through the three-month audit process, the EEC touches operational actions throughout the
hotel and is able to gain a clear understanding and help raise awareness about optimizing behavior.
Quantifying the value of the small behavior changes such as turning off lights, reducing underutilized cooking burners, and minimizing the run time of laundry processing across an entire
hotel during its 365 day operations adds up to
measurable energy and cost savings. Managers
We give the associates the tools and then
get out of their way each hotel makes its
have expressed a need for a way to quantify their
goals and then strives to deliver them. The
intended changes and ideas and the Marriott
EEAP is all about teaching, educating, and
tool makes it easy for them.
engaging throughout our hotels. Getting
Bottom-up involvement to meet corporate goals
everyone involved is powerful when a
requires tight coordination, oversight, flexibility,
company has nearly 150,000 employees.
and trust. Employees need to understand and buy
Doug Rath
into corporate goals and getting involved in the
Director of Energy and Environment,
EEC and including their input in the process is a
Marriott International
great way to accomplish that.

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Case study: Starbucks Corporation

Company Profiled
Starbucks Corporation is a retailer of coffee, tea, food, and related products and the largest international
chain of coffeehouses. Based in Seattle, Washington (U.S.), Starbucks posted nearly $11 billion in revenue
in 2010, with over 17,000 locations in 50 countries and 137,000 employees.
Situation
Known for its social responsibility ethos and business success, Starbucks wanted to understand its third
pillar of the sustainability triad its impact on the natural environment. Because of the geographic spread
of its stores, the company needed a simple yet accurate way to get a sense of the source of its environmental impacts.
Action
Starbucks already had piloted light emitting diode (LED) lighting options in its stores. It had executive
buy-in to pursue energy reductions. In order to collect its baseline, the company hired an external
consultant to find the primary sources of energy use in stores and help set reduction targets.
Results
By 2008, Starbucks had a sense of its greenhouse gas (GHG) emissions sources and began strategies
to reduce impact. It set ambitious goals related to energy and water reduction and renewable energy
procurement for 2010. In 2010, Starbucks purchased renewable energy credits equivalent to 58 percent of
the electricity used in its North American company-owned stores.19
Collecting a Latte Energy Data
Starbucks needed to do an energy baseline to understand how to develop a strategy to reduce its energy
consumption. The company realized that it did not have the internal expertise necessary to calculate its
baseline, so it hired an external consultant, who began a six-month monitoring process in August 2007.

Energy and Water

Conservation.
http://www.starbucks.com/
responsibility/learn-more/
goals-and-progress/energy
Accessed August 4, 2011.

19

According to Brad Simcox, Starbucks Manager of Programs and Initiatives in the Global Energy & Resource
Management team, much of the operational equipment in Starbucks locations is similar, such as pastry
warmers, refrigeration equipment, lighting, and hot water equipment. Because of this, 19 U.S.-based
stores were chosen as a representative sample of typical energy use. The 19 stores had geographic and
store-type (drive-through versus caf) diversity.
Starbucks discovered that its beverage-making and food-related equipment comprised much less of
the energy load than expected the biggest opportunities for reducing consumption came from HVAC
equipment and lighting. The company found that the performance of its HVAC equipment was less
predictable although Starbucks does have a specification for company-purchased HVAC, water, and
food and beverage equipment, all but a handful of the buildings the stores occupy are landlord-owned,
meaning that the company has limited control over the type of HVAC equipment serving many of facilities .
The other big discovery for the companys operations came from its greenhouse gas inventory assessment,
which was taking place simultaneously with the store energy assessment: Electricity use in Starbucks
facilities makes up approximately 75 percent of its Scope 1 and Scope 2 carbon footprint (see Figure 9),
and the stores consume the vast majority of the companys total electricity.

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Figure 9. 2007 Greenhouse Gas Emissions Scope 1 and 2 from Starbucks operations.

Purchased electricity
for our stores, offices
and roasting plants
(Scope 2)
75%

Company-owned jets
and vehicles (Scope 1)
0.5%

Store operations and

coffee roasting
(Scope 1)
24.5%

Source: Starbucks Corporation

Next in Line, Please

Armed with its baseline, Starbucks set three aggressive environmental goals in 2008 for its companyowned stores: 1) Reduce energy consumption by 25 percent by 2010, 2) Purchase renewable energy
equivalent to 50 percent of the electricity used by 2010, and 3) Reduce water consumption by 25 percent
by 2015. In 2010, the company realized its renewable energy goal but fell short of its energy reduction goal,
achieving only a 1.6 percent decrease in average electricity use per square foot (see Figures 10 and 11).
Figure 10. Starbucks progress on meeting
its energy reduction goal.

6.8 kWh

2008

6.69 kWh
1.7% decrease

2009

6.58 kWh
1.6% decrease
25% decrease

2010
2010

Average electricity use per square foot/store/month

U.S. and Canada company-owned stores.
Baseline year: 2008

Figure 11. Starbucks progress on meeting its

renewable energy purchasing goal.

1 Billion kWh Total

211.3 Million kWh

20%

2008
1 Billion kWh Total

259.5 Million kWh

25%

2009
1 Billion kWh Total

580.0 Million kWh

58%

2010
2010

50%

U.S. and Canada company-owned stores.

Source: Starbucks Corporation Source: Starbucks Corporation

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Next steps for the Starbucks Global Energy & Resource Management team include piloting a number of
initiatives that will optimize the controllable energy- and water-consuming devices in its stores, including
an energy management solution. Starbucks completed a pilot phase for LEED-Volume certification and
made a commitment in December 2010 that all new company-owned stores will seek LEED certification,
in part by incorporating innovative features that conserve water and energy. Additionally, Starbucks has
renewed and updated its commitment to energy reduction and renewable energy purchasing: the goal is
to reduce electricity consumption by 25 percent and purchase renewable energy equivalent to 100 percent
of company-owned stores usage by 2015. Last, the chain has implemented LED lighting in its stores,
expecting an 80 percent reduction in lighting energy consumption.20 Starbucks has revised its energy goal
of a 25 percent reduction in company-owned stores to be achieved by 2015, rather than by 2010.

Starbucks to cut
energy consumption by
80% with LED lighting.
http://www.envido.
co.uk/resources/434starbucks-to-cut-energyconsumption-by-80with-led-lighting
Accessed August 5, 2011.

20

Practice Assessment
Creating an energy baseline requires time, patience, and knowledge about the best approach for a
company. Starbucks used a sampling approach, since much of its energy use comes from standard
equipment. Additionally, since Starbucks focused on its portfolio of over 17,000 stores with one use
type (retail coffeehouses), it could synthesize its results with a high level of certainty. For companies
with multi-use portfolios, a simple sampling approach may not be as effective a more complex
sampling technique may be required.
Through its store assessment and greenhouse gas inventory, Starbucks gained key insights about
targeting its next steps. For example, GHG footprinting confirmed that energy usage at its stores
was a large contributor to emissions and thus a
If you look at our approach, its not only
prime candidate for action.
understanding what the impact of climate
Starbucks underlying commitment to
change is, its also a matter of addressing our
sustainability allowed the team to get executive
own contribution to it by using less energy and
buy-in for energy management efforts and to
using better, even greener energy.
seek improvements in the future. With baseline
Ben Packard
information, the company is ready to benchmark
Vice-President of Global Responsibility
itself internally and externally to measure, verify,
Starbucks Corporation
and report future energy projects and programs.

Case study: Diversey, Inc

Company Profiled
Diversey, Inc. is a leading global provider of commercial cleaning, sanitation and hygiene solutions for busi
ness, manufacturing products and running service businesses in more than 60 locations across the globe.
Situation
Diversey made an aggressive commitment in 2008 to sign on as one of 30 companies to partner with
the World Wildlife Fund (WWF) to reduce overall greenhouse gas emissions. As part of the WWF Climate
Savers program Diversey had to develop an approach to meet its commitment to sustainability while still
meeting the needs of shareholders. The company pledged to reduce emissions to 8 percent below 2003
levels by 2013.

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Institute for Building Efficiency

19

Action
Diversey committed $19 million to upgrade facilities, change processes, or rethink products to meet the
goals. Instead of looking at this $19 million as a cost, the company decided to approach it as an investment.
The investment went beyond financial return: The company took a portfolio approach called the integrated
bottom line that considered multiple factors, including greenhouse gas reduction.
Results
Using the dedicated funds for the energy efficiency program and the process developed that took into
account payback period, NPV, and cost to reduce greenhouse gases, Diversey met its goals and captured
$32 million in savings. By taking a portfolio approach, the company was able to take low-cost avoidance
measures, then efficiency measures, and finally add on-site generation. This approach allowed the
company to make its target an even more aggressive 25 percent reduction from 2003 levels.
Dedicated Energy Efficiency Funds Can Be About More than Profit
Diversey decided to adopt an approach beyond financials when evaluating investments for the dedicated
fund. Instead of only evaluating projects based on payback or ROI, the company took an Integrated bottom
line approach. For these funds in addition to traditional financial measures, the evaluation looked at
enhanced top-line and bottom-line growth.21
Figure 12. How to Measure Return the Integrated Bottom Line

GreenBiz
Executive Network
Presentation Summary,
http://www.greenbiz.com/
blog/2011/03/07/
diverseys-portfolioapproach-towardsustainabilityroi?page=0%2C0

21

Enhanced top-line growth

Brand value, customer relationship,
talent recruiting/retention,
innovations, new business models

Reduced operational costs

Energy, water, waste, compliance,
health, labor, liability

GreenBiz
Executive Network
Presentation Summary,
http://www.greenbiz.com/
blog/2011/03/07/
diverseys-portfolioapproach-towardsustainabilityroi?page=0%2C0

Growth
+
Cost Savings
=

22

Integrated Bottom Line

Create the Tools to Compare Projects Across Portfolio

In order to implement an integrated bottom line approach, it is important to analyze projects across all the
relevant dimensions. Diversey set up a spreadsheet and data collection mechanism to gather financial as
well as environmental data. For example Diversey looked at the source of power: A project at a facility that
reduced dirty energy may be more likely to receive funding than a project that reduced clean energy
even if the latter project reduced more total energy.22

20

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Figure 13. Tools for Opportunity Identification

Identifying a companys biggest opportunities for cost and carbon reductions begins with collecting data on consumption,
cost, and emissions. The cost and cleanliness of the local energy will determine the attractiveness of the opportunity.

Model Inputs:
Global Consumption Data (12-month Rolling)
Electricity
(kWh)

Natural Gas
(mmBTU)

Fleet: Gasoline
(gal)

Region 1

50,000,000

5,000,000

Region 2

10,000,000

1,000,000

500,000

Region 3

25,000,000

Region 4

40,000,000

2,000,000

Region 5

30,000,000

10,000,000

155,000,000

18,000,000

Total

Air Travel
(miles)

Cost Reduction

50%

10,000,000

Carbon Reduction

50%

6,000,000

25,000,000

3,000,000

15,000

5,000,000

4,500,000

300,000

15,000,000

90,000

8,000,000

6,405,000

55,000,000

Average Cost per Energy Unit

Electricity
(kWh)

Natural Gas
(??)

Fuel: Gasoline
(??)

$ 0.05

Region 2

$ 0.23

Region 3

$ 0.17

Top 10 Opportunities

Region 4

$ 0.10

Region 2 Diesel Fleet

Region 5

$ 0.15

Region 1 Travel

1.000

Region 2

0.400

Region 3

Desired Payback

years

Energy Reduction

20%

target

Carbon Reduction

10%

target

Air Travel
(??)

Cost
Ranking

Carbon
Ranking

Extended
Ranking

Cost
Savings ($)

Carbon
Reduction

Energy
Reduction

Units

7.76

5.11

15.86

1,881,022

3,308

1,237,515

11.00

1.29

12.29

2,666,104

542

4,300,168

miles

3.72

7.17

10.88

901,345

3,004

6,008,965

kWh

Average
per Energy Unit
Region 5Cost
Electricity
1.12 (??) 8.08

9.19

270,911

3,386

3,386,383

kWh

Fuel:
8.18 Diesel 0.96Air Travel
9.14
(??)
(??)
2.61
5.10
7.71

1,983,384

403

3,199,007

miles

633,307

2,139

897,875

gal
gal

Region 3 Electricity

Region 1

Fuel: Diesel
(??)

Performance Goals

Model OUTputs:

Region 1

Electricity
(kWh)

Objective Weighting

Fleet: Diesel
(gal)

Natural
Gas2 Fuel:
Region
TravelGasoline
(??)
(??)
Region 1 Gas Fleet

gal

Region 4 Gas Fleet

3.97

3.00

7.58

963,396

1,510

633,515

0.600

Region 5 Natural Gas

1.32

5.56

6.87

319,547

2,328

1,066,156

mmBTU

Region 4

0.700

Region 5 Travel

5.03

0.59

5.62

1,218,714

248

1,965,568

miles

Region 5

0.500

Region 3 Natural Gas

0.95

4.01

4.96

230,885

1,581

759,516

11,068,517

18,639

mmBTU

(continued on next page)

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21

Figure 13. Tools for Opportunity Identification (continued)

PROJECT PORTFOLIO:

Integrated Objectives

Project
Site

Project
Description

ABC

Financial Projections

Ranking

Total
Investment ($)

Annual
Savings ($)

GHG
Reduction

Payback

Cost
Ranking

Carbon
Ranking

Project 1

1,254,000

228,400

2,000.0

5.5

366,247

637

13.1

40.9

54.0

XYZ

Project 2

250,000

250.0

XYZ

Project 3

250,000

250.0

1,720,936

14.3

5.1

19.4

1,720,936

14.3

5.1

19.4

ABC

Project 4

250,000

250.0

1,720,936

XYZ

Project 5

480,000

160,000

416.0

3.0

621,399

14.3

5.1

19.4

1,154

9.2

8.5

17.7

XYZ

Project 6

150,000

75,000

300.0

2.0

366,281

ABC

Project 7

115,000

38,333

300.0

3.0

148,877

500

4.3

6.1

10.4

383

2.2

6.1

8.3

XYZ

Project 8

393,000

130,200

38.0

3.0

503,263

XYZ

Project 9

112,800

50,700

225.1

2.2

236,206

10,342

7.5

0.8

8.2

501

2.9

4.6

7.5

NPV ($)

GHG
Value ($)

Integrated
Ranking

XYZ

Project 10

500,000

125,000

4.0

360,468

n/a

7.2

7.2

ABC

Project 11

100,000

33,333

200.0

3.0

129,458

500

1.9

4.1

6.0

XYZ

Project 12

150,000

56,177

133.2

2.7

236,708

1,126

3.2

2.7

5.9

XYZ

Project 13

115,000

38,333

180.0

3.0

148,877

639

2.2

3.7

5.9

ABC

Project 14

40,000

30,000

200.0

1.3

166,512

209

1.7

4.1

5.8

XYZ

Project 15

135,850

31,730

145.0

4.3

82,571

937

1.8

3.0

4.8

3,565,650

1,747,207

4,887.3

2.5

8,471,675

1,208

Avoidance, Efficiency, Generation Grab the Low Hanging Fruit and then Make Fruit Salad

23
IBE Interview with Jeramy
Lemieux, Diversey, Inc,
May 2011

Like any good portfolio manager, Diversey had a mix of low-risk, low-cost investments, as well as more
expensive, longer-term investments. The company started with avoidance, looking for opportunities to
change behaviors that would lead to reduced energy use. A simple example is daylight cleaning. Instead of
cleaning at night and requiring lights, workers cleaned the buildings during the day. Next came efficiency,
projects focusing on driving waste out of the system. Finally the company looked at generation where it
made sense. Ultimately, Diversey took some of the savings from the avoidance and efficiency projects and
invested it in wind and combined heat and power fuel cells at its headquarters.23
Practice Assessment

http://blog.diversey.
com/news-and-events/
diversey%E2%80%99sunique-portfoliomanagement-approach-tosustainability/
24

Dedicating funds to support GHG goals shows commitment

and can be a very good investment
Leading companies go beyond looking at payback and ROI
when making investment decisions with dedicated funds.
They look at a number of factors, including environmental
impacts and, in Diverseys case, the integrated bottom line.
Looking at a mix of projects in which to invest a dedicated
fund in will ensure maximum impact for the dollar. Looking
at a portfolio of projects may allow a company to invest
in higher-profile, more visible generation projects that
have longer payback but also bring other benefits to the
organization and the planet.24

22

Institute for Building Efficiency

A great example of the integrated

bottom line is investment in energy
efficiency to address climate change.
Diversey uses a unique portfolio
management approach to deliver
significant reductions in greenhouse
gas emissions and an attractive
economic ROI. This approach leverages
existing capabilities, fosters growth
and increases shareholder value.
Dan Daggett Ph.D.
Manager of Corporate Sustainability
Diversey, Inc.

www.InstituteBE.com

Case study: Johnson Controls

Company Profiled
Johnson Controls, a diversified manufacturer and solutions provider in the automotive and building
industries, is based in Milwaukee, Wisconsin (U.S.). The company maintains operations in over 125
countries, and annual revenue in 2011 was $40 billion.
Situation
Johnson Controls joined the U.S. EPA Climate Leaders program in 2003 to help the company address
its greenhouse gas (GHG) emissions impact and create an accurate inventory of its emissions. In 2006,
Johnson Controls began participating and reporting to the Carbon Disclosure Project (CDP). In 2007,
Johnson Controls submitted the inventory of its U.S. GHG emissions to Climate Leaders and publicly
committed to reduce its GHG emissions per dollar of revenue by 30 percent from 2002 to 2012, for
both its U.S. and global operations. To meet these ongoing environmental targets, the company realized
that it needed robust yet simple processes to collect energy data, analyze energy information, and track
reduction projects around the globe.
Action
Johnson Controls began using energy and emissions management software that stored and analyzed utility
bill and other emissions-related data and tracked the environmental footprint for its global operations.
Once that was in place, the company applied a continuous improvement process to drive best business
practices and improve performance against six sustainability metrics.
Results
Johnson Controls met its 2002-2012 global GHG reduction target in 2008 after only six years. In 2008, the
company committed to reduce its global GHG intensity by another 30 percent by 2018 and developed a
Sustainability Scorecard that tracks GHG, energy, water and waste as well as two additional sustainability
metrics related to ISO-14001 compliance and design for sustainability process implementation.
Establishing Equivalence
Johnson Controls realized that to effectively improve the efficiency of its plants in three major divisions
around the globe, it needed to a way to compare products and processes in a scorecard. The Best Business
Practices (BBP) team developed an equivalent unit of production (EQU) for over 40 product lines so that
similar plants could evaluate themselves against each other. For example, assembly plants use the number
of component pieces to be assembled to normalize the calculations among different plants. The BBP team
also created a balanced scorecard across various metrics. More than 250 plant managers are responsible
for reporting and optimizing across the scorecard within similar plants for example, vehicle seating
assembly plants would be compared each month against other seating plants.
Target setting occurs within each product line the performance of the top-achieving plants is averaged to
create a benchmark. The average for all plants is then compared to the benchmark, and the improvement
targets for each product line are set. The BBP team develops strategies to help the plants achieve their
targets, while the on-site Continuous Improvement (CI) team implements the strategies and is ultimately
responsible for achieving the targets.

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23

Figure 14. Continuous Improvement

Product Line
Process

Metric

Overhead Systems
Assembly

MTD
Actual

YTD
Actual

LY
YTD
Actual

YTD
Budget

YTD
JUN
Forecast

Rank
YTD

BIC YTD
Plan
Description

MTD
Actual

YTD
Actual

LY
YTD
FX Adj
Actual

YTD
FX Adj
Budget

YTD
FX Adj
Forecast

Rank
YTD

BIC YTD
Plan
Description

Machine Utilization
Capacity Utilization

Product Line: Plant Level AE

Metric

Safety

Quality
Human
Resources
Misc
Customer
Satisfaction
Productivity
Cost

Financial

Lost Time Rate

Safety Status
Total (OSHA) Recordable
Case Rate (TRC)
First Aid Case Rate
Internal Rejects (PPM)
Absenteeism Percentage
Annualized Employee Turnover
Production Days
On-Time Delivery
Customer Concerns (PPM)
Customer Returns (PPM)
Truckload Utilization
Annualized Continuous
Improvement Savings per Head
Reinvestment Rate
Raw Material Inv DOH ex
In-Transit
WIP Inventory DOH
Finished Good DOH
In-Transit DOH

Setting the Energy Benchmark

Johnson Controls decided that energy should be included as a metric in the plant scorecard and that EQUs
should be used to benchmark similar plants against each other. Two teams were formed with members from
Energy, Manufacturing and Continuous Improvement to visit a representative set of plants and measure the
energy used for each of the major processes required for product manufacturing. The team also created an
energy allocation tool for plants that produced multiple product lines (Figure 1) and a searchable database
of energy reduction projects maintained by the CI team.
The energy intensity metric, along with metrics for water and waste, are rolled up into a plant-level
Sustainability Scorecard and then aggregated further into an Enterprise Sustainability Scorecard that
includes total GHG emissions. With this plant-level information, the companys BBP team recognizes the
top performers across the global plants for their energy reduction efforts at a benchmarking event. At the
event, teams discuss strategies for energy reduction that could be implemented across the portfolio. For
example, in 2011, the top energy strategies included setting standards for compressed air performance
and enhancing the Johnson Controls Energy Hunt program.

24

Institute for Building Efficiency

www.InstituteBE.com

Figure 15. Partial sample of plant scorecard

Small Foam
kWh/min

Process step

Equipment

1.246

Molding

BUN Carousel (38 carriers)

0.732

Molding

PIP Carousel (32 carriers)

0.483

Molding

Racetrack (36 carriers)

0.006

Molding

HR conveyor/curing

All lines
scheduled
minutes

kWh/min

Total kWh

% of total

23500

1.246

29,273

100%

0.732

23500

0.483

0.006

136

Practice Assessment
Johnson Controls key differentiator in energy management is the relationship of energy
improvement with BBP and Continuous Improvement. This approach matches well with organizations
that are focusing on incremental improvement and have developed a culture around continuous
improvement.
Including energy, water and waste in plants performance metrics highlights the importance
of sustainability at Johnson Controls. Plant managers are given clear direction that their job
responsibilities include improving resource efficiency.

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Institute for Building Efficiency

25

The Institute for Building Efficiency is an initiative

of Johnson Controls providing information and
analysis of technologies, policies, and practices
for efficient, high performance buildings and smart
energy systems around the world. The Institute
leverages the companys 125 years of global
experience providing energy efficient solutions for
buildings to support and complement the efforts of
nonprofit organizations and industry associations.
The Institute focuses on practical solutions that are
innovative, cost-effective and scalable.
If you are interested in contacting the authors, or
engaging with the Institute for Building Efficiency,
please email us at: InstituteforBE@jci.com.

2012 Johnson Controls, Inc. 444 North Capitol St., NW Suite 729, Washington DC 20001 Printed in USA
www.johnsoncontrols.com