All in the mind

Environmental initiatives give warehouse bosses improved corporate social responsbility, potential health & safety benefits, and significant cost-savings. What’s more, many can be bought through interest-free loans. So why do many still resist ‘green’ technologies? Keith Wyatt from energy- efficient light specialists Somar International – and UKWA’s Honorary Advisor on Environmental Matters – considers the mindset barriers to embracing eco-initiatives

If anything good can come out of a recession it’s that, as profit margins are squeezed, companies should hasten their efforts to identify in-house energy efficiency savings.

It may be sophisticated monitoring equipment; a modern, economical boiler; variable speed motors; pipe work insulation; or an advanced lighting system. Whatever the technology, with electricity and gas prices continuing their relentless ascent, forward-thinking companies are reporting five- or even six-figure savings on their annual bills.

And, of course, employing such energy-saving plant or machinery means owners reduce their carbon emissions liability, enhance their corporate reputation, and gain a competitive advantage with customers who seek suppliers that acknowledge their environmental responsibilities.

However, despite these clear benefits, many businesses are still sceptical about ‘green’ technologies. So why are all too few energy and environmental projects being implemented?

Budget Constraints

Understandably in the current economic climate, budget constraints are one of the perceived barriers preventing an energy efficiency drive – and many industry professionals seem convinced that going green comes at a high price.

A large scale equipment overhaul can cost a few hundred thousand pounds, but eco-friendly products that deliver impressive efficiency gains can be bought for just a few thousand pounds.

Finance Directors will ask the question: “Do we want to spend the money?” They are likely to view the introduction of energy-saving technology as a new capital outlay. In reality, however, the money is already being spent through excessive energy consumption – it’s simply a case of redirecting this profligate spend and using it to invest in something that can aid cost control.

The resulting reduction in electricity costs also means the payback on such projects can be less than a year and, paradoxically, companies can make an instant net profit from buying technology with proven green credentials.

That’s because interest-free loans are available via the Carbon Trust – and the monthly repayments tend to be less than the amount saved in reduced energy consumption! Loans of up to £200,000 are available to UK SME’s* wishing to replace or upgrade existing equipment with efficient alternatives, with around £35 million having been handed out so far in this financial year.

Another financial incentive comes in the form of an Enhanced Capital Allowance (ECA) tax break of 28 per cent against the purchase and installation of products that feature on The Carbon Trust's Energy Technology List.

And although credit may now be harder to obtain, companies who approach lenders with investment plans that ultimately boost profits are often pleasantly surprised by their bank manager’s decision.

Risk-Averse Culture

Although energy efficiency is becoming a boardroom issue, projects are very rarely overseen by a company director.

The environment and energy consumption is just one of many topics competing for industry’s time, resources and leadership. With MD’s embroiled in what’s viewed as core business concerns (though quite why saving up to 80% on electricity bills doesn’t warrant “core concern” status is puzzling) energy and utilities issues tend to be delegated down the chain.

Actually identifying someone for whom ‘energy efficiency’ comprises part of their job description isn’t always easy. So the job of reviewing current energy usage and assessing technology presented by new suppliers might fall to a Senior Engineer or Technician, a Warehouse Manager, Plant Manager or even the procurement department.

What do all these employees have in common? They don’t pay the bills!

And in today’s corporate culture, where change equals risk, it’s much easier for individuals to maintain the status quo rather than push company owners to act. After all, no Facilities Manager is going to be fired for not employing pioneering technology. They may also fear the question: “If what you’re telling me is true, why have we been operating inefficiently for so long?”

Chances are they also don’t have decisive, cross-departmental influence. In this instance, the biggest challenge is getting senior managers to rank their proposals high enough on the commercial agenda to warrant capital expenditure and to win over the operational personnel whose working environment they wish to improve.

However, somebody within the organisation must be forward-thinking, and bold, enough to insist on change. Because whilst many bosses talk about energy saving as they feel it’s the ‘right’ thing to have on the agenda, a large number are blinkered to the real value of such a programme and, therefore, don’t consider it a critical item.

The real risk businesses face is not addressing energy wastage because continued haemorrhaging of finances is likely to jeopardise their long-term success, or even survival.

Too Good to be True

Sometimes new energy-saving technology can be a victim of its own success.

For example, on presenting forecasts to a Plant Manager, detailing how they could save between 60 and 80 per cent on their annual lighting bill, I can almost hear them thinking “yeh, right…pull the other one”!

This cynicism is in part due to previous mis-selling of so-called energy-saving solutions. For instance, I know of factories sold low-energy fluorescent fittings as an alternative to power-sapping traditional bulbs…only to find the increased number needed at heights above five metres to match existing light levels has negated any electricity savings. And in some cases actually increased costs!

Fingers have been burned in the past; it’s up to manufacturers of proven technology to reassure clients through quantifiable demonstrations and trials, not unsubstantiated sales spin.

Smooth transition…not seismic shift

Another common misconception is that adopting eco-friendly initiatives results in a seismic shift in work practices.

Many steps to reduce carbon emissions – things like using public transport or only buying home grown produce – involve major lifestyle changes. Similarly, plant managers often fear introducing energy-efficient systems will compromise their procedures, increase their workload or require extra effort to maintain.

However, the opposite is true. Such systems slot seamlessly into the workplace, demand less maintenance, can improve health and safety (modern low-energy lights improve visibility and are flicker-free), and generally improve the work environment.

Tackling ‘Tokenism’

Companies are also wary of being accused of environmental ‘tokenism’ – a charge levied at organisations quick to champion their green efforts but which, in reality, aren’t making a major contribution towards ecological improvement.

Undoubtedly, there will be some firms who unjustly claim to be ‘green’ purely because they see it as a business tool.

But smaller operations that adopt energy-saving technology are, collectively with likeminded businesses, making giant strides to trim UK Plc’s carbon footprint even though individually their efforts may appear negligible.

For example, every conventional metal halide lamp – the type typically used in factories and warehouses – running continually is responsible for the same amount of carbon dioxide emissions as driving a family saloon car 14,000km!

And if every factory and warehouse in the country switched to energy-efficient alternatives, then the UK’s Kyoto agreement target would be satisfied overnight. That’s some token gesture…

Safe investment

Electricity is one of the biggest overheads absorbed by most companies – and it will continue to be whether or not government acts to force energy bosses to reduce prices.

Many businesses have experienced a doubling of their energy costs after coming off contractual fixed tariffs and, looking further into the future, we can expect supply shortages to drive prices up significantly.

The solution is simply to use less. The key, however, is to use less and maintain the operational status quo.

Saving energy may not be as glamorous as increasing sales when it comes to providing sustainable profits, but it’s a much safer investment in today’s volatile marketplace.

*The Carbon Trust’s definition of an SME is any firm with less than 250 full time equivalent employees; less than £35m turnover and/or less than £30m in assets; and which has no controlling interest of more than 25 per cent by a non-SME (i.e. not part of a larger organisation).

For details on the Carbon Trust’s interest-free loan scheme visit www.carbontrust.co.uk/energy/takingaction/loans or Enhanced Capital Allowances (ECA) go to www.carbontrust.co.uk/energy/takingaction/eca

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