Planting Down Roofs

  
In the course of your day how often do you look up at the skyline? Food, water, and shelter are the three elements of basic survival, and yet we do not spend much time thinking about shelter. Unless we are without it, it’s broken, or we are on an architecture tour, we tend to ignore the rooftops that populate our lives. With a few notable exceptions, like the movement from thatch to tiles to prevent fire hazards in 1212, based on an edict by King John of England, the evolution of roof technology isn’t that exciting. Things are changing however, and it’s time to start looking up, and thinking green.

A green roof (i.e., vegetated roof or roof garden) is a roof with vegetation planted over a waterproofing membrane. In Europe, green roofs are already abundant, yet their popularity is just beginning to grow  in the United States — particularly in crowded urban settings and cities. In Washington D.C., universities, advocacy groups, Federal Agencies, and condominiums are installing green roofs. Chicago has built one for its city hall, Philadelphia has installed them on schools, and Los Angeles on restaurants. They offer many substantial environmental and economic benefits, including:

• Reduction in a building’s energy, heating and cooling costs
• Minimization of storm water runoff,  city sewer fees, and the urban heat island effect
• Filtration of pollutants and heavy metals from rain water and from ambient air, including CO₂
• Extension of the life of a building’s roof
• LEED credits

What do green roofs mean in relationship to Deloitte?  Recommending that our clients consider installing green roofs on buildings is one example of the many ways we can help our clients achieve their sustainability objectives.  Helping our clients reach their greening goals is one objective I keep in mind while developing and defining the Energy & Natural Resource Management service offerings, as part of the Sustainability & Climate Change IMO. I’m not suggesting that we literally get our hands dirty and plant gardens on top of our client’s roofs, but we should be talking to our clients about how to take advantage of the benefits. And while it may seem backwards, starting at the top, by greening their roof, may be a great foundation for the rest of their sustainability efforts.

 
Greg Aliff
U.S. Energy & Resources Leader
Deloitte LLP

Why IT really matters in executing sustainability programs

I wonder if any company has a really good handle on the wide range of policies, procedures, and processes, along with the many individual projects and programs, which relate to sustainability strategies, goals, and metrics. I’ve been asked if I could identify such a company. I’m still looking.

Do companies have good information regarding the results of their sustainability initiatives? Can they report with confidence measures of tangible and intangible benefits? Do they know if they have taken full advantage of tax incentives and rebates available to offset the costs of our sustainability initiatives? What’s been the actual ROI of abatement and mitigation investments? Do buildings with more natural light really improve productivity and morale, and lead to fewer employee sick days? Are there real impacts on productivity, recruiting or employee retention from sustainability programs?

In my experience, it is difficult to pull all the pieces of the sustainability puzzle together. Ask your executives. Ask your board members. Getting consistent, reliable information about sustainability investments, costs, and results is hard. I think it’s hard, in part, because sustainability initiatives are approached separately, sometimes being tacked on top of the business rather than embedding them into the business. The result is well-intentioned but disjointed efforts performed inside functional or geographic silos with hundreds – or even thousands – of isolated activities. This reality is why I am devoting my time, talent, and energy to “IT for Sustainability.” My focus is on frameworks and enabling technologies to help manage sustainability data and to improve the quality of information used to plan, manage, and report on sustainability programs. I believe there are significant impacts for information technology priorities, projects, and plans at least over the next several years.

Every company has to invest resources in sustainability related initiatives – whether or not they actually use the term “sustainability” or fully embrace the concepts of sustainability. This is just a fact of life in the current environment. So, why not do it in a way that creates more value and better manages risk? Decisions about what investments to make, and judgments about whether projects and programs are delivering the desired results, require reliable information. Monitoring of performance and enforcement of policies will require timely and accurate information. An information-driven approach to sustainability can give even the most complex organizations the power of discipline and the benefits of efficiency.

Making sustainability a central tenet in strategy and operations, rather than something bolted on top of existing business processes, will require new capabilities. No one seems to argue with this point. But when it comes to the question about the role of IT in managing sustainability, there is still much confusion and a lack of clarity. Some are rushing to buy new software tools. But few yet have well-thought out strategies and plans for managing sustainability data, or a roadmap for information technology changes to support sustainability. Even companies where sustainability is a strategic priority can fall into this trap. Some companies have invested in new carbon management software, for example, without first creating a holistic sustainability strategy for the enterprise.

I believe that when IT and business leaders take a moment to think things through, address the underlying needs, and together develop strategies and plans, they will seek integrated technology platforms for planning, monitoring, reporting, controls, risk monitoring, and performance management related to sustainability. Why? For starters, they won’t want a variety of new software tools deployed in different parts of the business. And who wouldn’t want a consistent measurement framework throughout the organization?

So how do we get the right conversations started about information technology and sustainability? IT departments have been involved in sustainability for years through “Green IT” initiatives that reduce energy consumption through data center and infrastructure optimization. This has been important and valuable work, producing tangible benefits. I believe it is time to focus on the broader role of IT in helping to execute sustainability strategies and achieve sustainability goals. To help expand the scope of the discussion, we need a new term that goes beyond IT’s energy saving efforts and encompasses IT’s support of sustainability programs, processes and performance throughout the enterprise. I suggest we use the phrase “IT for Sustainability” or ITFS to refer to this broader role. The use of “ITFS” here at Deloitte is inclusive, running the spectrum from our work on green IT to our assistance in automating sustainability reporting, from development of sustainability performance intelligence to more advanced enterprise sustainability analytics.

Without the right approach to information technology, companies will not be able access the relevant, accurate, and timely information they need to make informed decisions about their sustainability strategies. And as rising energy costs, evolving regulations, and increasing stakeholder expectations make sustainability measures even more important, organizations will need new and better information management capabilities to execute and monitor their sustainability strategies, programs, and projects. IT for Sustainability should organizations to measure, monitor, and report on their sustainability performance, allowing them to truly understand the impacts on financial and operational performance.

Lee Dittmar
Principal, Deloitte consulting LLP

Three Myths About Green Sourcing of Indirect Materials

As business leaders try to understand how to “green” their supply chain, sourcing professionals are being asked to show how they’re contributing to the company’s overall sustainability goals. Much of the focus in “green sourcing” has been related to direct materials, those items used in the products or services being sold to a company’s customers. What’s often overlooked is the large potential in indirect spend categories that are consumed internally in the operations of the business.

Since most indirect spend categories are invisible to customers, and typically smaller than direct spend categories, executives tend not to pay as much attention to them. As a result, opportunities in indirect spend are not as clearly understood. To capitalize on the potential of “greening” your company’s indirect spend categories, let’s explode a few myths.

Myth No. 1: Greening indirect spend categories means buying more expensive items.

Actually, greening indirect spend categories can save you money.

Since many indirect spend categories are overhead or SG&A (selling, general, and administrative) costs, the benefits of greening these categories seem dubious because unlike direct materials, the potential increased cost of “greener” inputs can’t be translated into a premium price for the final product, with the associated marketing and PR benefits. However, in many indirect spend categories, large savings potential exists once the sourcing team is able to quantify all costs associated with a particular category, beyond just initial purchase price.

For example, equipment categories like HVAC, refrigeration, and food preparation equipment all consume a lot of power. In some cases, the total electricity costs over the average life of the equipment exceed the purchase price of the equipment itself! In addition to electricity, durability and end-of-life retirement, costs can vary substantially among manufacturers. 

So don’t assume “greener” products cost more than their traditional equivalents just because their purchase prices are higher. With a little analysis, the higher cost of energy-efficient equipment can be justified. In a recent project where I looked at a company’s spend on refrigeration equipment, I found that for every extra dollar they spent on the most energy efficient equipment, they actually saved three dollars over the life of the equipment. 

Myth No. 2:  Product specifications offer the most greening benefits.

On the contrary, performance specs offer the greatest benefits for uncovering sourcing opportunities.

In many indirect spend categories, category specifications often are tied into a particular manufacturer or brand offering. They’re designed to help the product’s users understand the particular nuances of that manufacturer’s product and exploit its efficiencies.

While this might be helpful to the user, it’s important that the sourcing organization develop performance-based specs for all categories with green potential. This is perhaps the only way that the sourcing organization can consistently cut costs and improve sustainability in categories that are sourced repeatedly. Many technologies that reduce energy or water consumption, such as LED lighting or metering, have performance differences from manufacturer to manufacturer, just like any other product.

If the spec for a particular category is tied to a manufacturer’s offering, you won’t be able to capitalize on improvements from competing offerings if those products aren’t “in-scope” in the category spec. It can often be as simple as specifying that LED lighting is required, rather than Brand X LED lighting, in an RFP or other sourcing document. This allows participants to propose all market offerings, including those that are better than the industry standard. 

Myth No. 3:  Greening indirect spend categories follows the same process as traditional strategic indirect sourcing.

Not exactly. It’s actually more work to green indirect spend categories. But the payoff can also be bigger.

Green sourcing has some qualities that distinguish it from traditional sourcing. The main differences are in quantifying the opportunity and current spend, vendor development, and final analysis and implementation. 

In order to characterize and quantify the sourcing opportunity for a given category in a green sourcing process, you’ll need to assess all costs and engage a broader group of stakeholders than you ordinarily would. The sourcing team will need to talk to such groups as engineering, design, sales, finance, and perhaps others to build a broad view of what “greening” opportunities exist in a given category, in addition to the team’s own independent market research.

Likewise, vendor development will take a broader approach. In addition to the traditional industry leaders, you’ll need to look at (as appropriate) global and local vendors who have focused on building efficient and “green” products.

Finally, analysis procedures and payback periods in green sourcing are typically longer than in traditional sourcing. In many cases, you might need analytical models and spreadsheet or data base organizational tools, and other software programs in order to capture the full benefit of the sourcing process. Also, you’ll need to understand the potential benefits in terms of total cost of ownership, which might have a longer payback period than normal. This is especially true with equipment categories, as noted above. 

I believe that when sourcing teams focus on the realities of green indirect sourcing and the large benefits it can deliver, they can achieve breakthrough results for themselves and for their businesses.

Jayanth Iyengar is a Business Analyst in Deloitte Consulting LLP’s Strategy & Operations practice.