Sustainability Strategy Increasingly Important to the C Suite

Sustainability is seen as increasingly important to overall corporate strategy by company leaders according to a 2014 global survey done by McKinsey & Company: Sustainability’s Strategic Worth.  McKinsey & Co surveyed over 3,300 executives worldwide covering the full spectrum of industries, company sizes, and executive levels.  The survey revealed that 43% of executives say their companies’ primary motivation for pursuing sustainability is alignment with company goals, mission or values.  This is a significant change from the last survey in 2012 where cost cutting was identified as the primary motivation.

McKinsey #1

Though the top three reasons for addressing sustainability have stayed the same since the survey began in 2010 the order has changed.  One reason cited in the McKinsey & Co. report for alignment rising to the top is the increasing likelihood of CEOs to identify sustainability as a top priority.  Between 2012 and 2014 the number of CEOs identifying sustainability as the number one priority more than doubled.

Another explanation for the rise of alignment as a motivator may be that many companies have already pursued, or at least adopted, cost cutting programs and they are looking for the next opportunity to grow company value through sustainability.  This is consistent with another major finding of the survey:

executives see reputation management as having the highest value
creation potential over the next five years

Where cost cutting could reasonably be pursued through delegation to an operational or procurement function; value creation through reputation management requires a deeper integration with corporate mission, goals, marketing, branding, etc., hence the focus on alignment.

Driving home the potential of sustainability reputation management to create corporate value is the findings of a survey commissioned by Gibbs-rbb Strategic Communications and completed by Harris Poll in August of this year.  One of the key findings:

Americans are willing to spend an extra 31% per week on safe and
sustainably produced grocery food

The ability to consistently capture this premium from consumers requires active reputation management and enhancement as the poll also found that consumers are likely to switch from a trusted consumer brand if they learned the company was:

  • Involved in product recalls – 77%
  • Practices that harm animal welfare – 73%
  • Irresponsible labor practices – 72%

The full results of the survey including demographics breakdowns can be found in the Gibbs-rbb 2014 Conscious Consumer Study.

CNG as a Transportation Fuel

Red Truck Image - smallEven though the price of natural gas has rallied of late and the diesel prices have fallen there is still a significant spread between the two fuel prices that make a compelling economic case for Compressed Natural Gas (CNG) as a transportation fuel.  As of late April the spread between a gallon of diesel fuel and the CNG Diesel Gallon Equivalent (DGE) was around $2.75.  This per gallon price spread is large enough to achieve a quick payback on the premium for CNG engines and fueling stations when usage is high.  If $1.50/gallon of the savings goes to paying off the average $30,000 premium for a new CNG engine then a two year payback is achieved at 65,000 miles per year.

The momentum around CNG as a transportation fuel continues to grow in the U.S.  The Federal excise tax credit of $.50/gallon, effective through 2013, provides an incentive for the installation of new CNG stations.   Innovation is also helping to drive down the cost of CNG stations.  In October, 2012 GE and Peake Fuel Solutions introduced their CNG In A Box system.  CNG In A Box is a modular 8×20 foot container with all the components needed to dispense CNG other than the pump itself.  Financing for CNG In A Box is also available through GE.

CNG as a transportation fuel also has significant environmental advantages.  CNG can lower the transportation carbon footprint 20-30%.  Cleaner burning CNG also reduces air pollutant emissions such as particulate matter (PM) by 95%; carbon monoxide (CO) emissions 70-90%; and hydrocarbon (HC) emissions 50-75%.  This makes CNG vehicles particularly useful in urban and other environments where air pollution and smog are a concern.

To learn more about how to evaluate CNG as a transportation fuel check out the whitepaper: Opportunities and Risks related to CNG as a Transportation Fuel: A Fuel Manager’s Perspective by U.S. Energy’s Vice President of Strategic Initiatives, Casey Whelan.

Welcome to Trending Energy

Welcome to the kick-off of U.S. Energy’s blog: trending ENERGY.  A new vehicle to communicate with existing customers and the broader community interested in sustainability topics at the intersection of energy and the environment.  We are going to start the blog covering sustainability topics such as onsite renewable energy (e.g. solar), sustainability reporting, carbon footprints, CNG as a transportation fuel, and regulatory and policy issues.  Our goal is to keep you informed about important changes and developments in the rapidly changing sustainability landscape.

We’re excited to start the blog not only because it allows us to cover a broader array of topics in a timelier manner, but because it’s an opportunity to hear from you.  We encourage you to comment on a post you found interesting, drop us a note letting us know how we’re doing, or asking us to cover a specific topic.

 

Nicholas Franco
Director, Sustainability Services
U.S. Energy Services