sustainability strategy image showing the infinity circle for connection of people, planet and profits

Developing a Sustainability Strategy for Your Small Business

A sustainability strategy for your small business can help you attract new employees and new clients, as well as contribute to a greener environment. And becoming a green business can have a big impact on your bottom line. Here’s how to develop a sustainability strategy for your business.

What is Sustainability?

Sustainability means meeting our own needs in a way that doesn’t compromise the ability of future generations to meet their own needs.

So that means sustainability is not just about the environment. In fact, there are three pillars of sustainability: Environment, Society and Economics. A sustainability strategy for your business involves operating in a way that has a positive impact on your bottom line, your community and the environment.

A sustainability strategy for your business involves the economic, environmental and societal impacts. Circle graph shows the overlap.

Why Should Sustainability Matter for Your Small Business?

Maybe you’ve looked at ways to be more sustainable at your small business.

You want to be an eco-friendly company. You make sure to turn off the lights at the end of the day. There are recycling bins in the lunch room. And you’ve had an Earth Day event each year. Those are good steps. But these are short term actions that don’t make a lasting impact or a lasting impression.

A sustainability strategy means you are walking the walk, not just talking the talk about being a green business.

And when sustainability becomes part of your corporate culture? It can make a real difference to your company’s triple bottom line of people, profits and planet.

According to Forbes magazine, Generation Z (born between1997 and 2012) and Millennials born 1981 to 1996) are more likely to make purchasing decisions based on their values and principals.

That’s important for your small business. Because Gen Z makes up 40% of consumers in the US, and Millennials comprise another 22% of consumers in the US. But it’s not enough to slap a green label on your business. These consumers want to do business with companies that are authentically committed to doing the right thing.

That’s the bigger picture. Now let’s dive in to how to address one of the three pillars of sustainability: environmental impact.

How Does Energy Efficiency Fit into Sustainability?

To develop a sustainability strategy, we first have to understand how energy usage fits in to sustainability.

When you use electricity, natural gas and water at your facility, you are using finite resources. And your usage impacts the world around you.

Your electricity may be generated from a mix of sources, such as coal, natural gas, nuclear, biofuels, hydroelectric, wind and solar. Fuels that are carbon based, such as coal and natural gas, emit greenhouse gas that contributes to climate change. The same is true of the natural gas you burn to heat your building. And, as droughts in the Western U.S. have demonstrated, water is a limited resource as well.

An energy efficiency program that looks at your consumption of electricity, gas and water is at the core of your sustainability. Even little changes can make a big different in your energy usage and sustainability. Here’s an example:

That 2-burner Bunn coffee maker in the break room? It’s a 1,575 Watt device. Run that from 6am to 6pm, Monday through Friday? And it’s 378 kWh on your monthly electricity bill.

Source: What is a Kilowatt Hour and What Can it Power?

Six Steps to Developing a Sustainability Strategy for Your Small Business

Consider energy efficiency and sustainability with a holistic approach. Sustainability will provide a better work environment for your employees, and you’ll have savings that can improve your profitability.

The ideal? That your energy efficiency project can be 100% paid for with cost reductions in water and energy. Here are the six steps to implementing energy efficiency and sustainability for your small business.

Step 1: Benchmark Your Current Usage

The first step to developing an environmental sustainability strategy for your business is benchmarking.

That allows you to set a baseline for your current energy and water consumption. It also helps to identify areas where you can improve vs. comparable buildings.

In the US and Canada, EnergyStar.gov’s Portfolio Manager tool is the standard for energy benchmarking. It contains energy data on over 25% of all buildings in the U.S. You’ll be able to enter your current usage data and information on your operations. Then you can compare your operations to similar ones to see where your company is underperforming.

Step 2: Conduct an Energy Audit

Once you know where you stand versus comparable buildings, your next step is an energy audit.

The energy audit includes inspections of lighting, air conditioning, heating and ventilation equipment, controls, refrigeration, air compressors, water consuming equipment. It includes anything that uses energy, from the coffee pot to the lights in your elevator.

Any energy professional you work with will use energy audit standards and guidelines developed by the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE). You’ll need this level of professional audit to back up some of your financing options, which we’ll discuss below.

Here are some options for your commercial energy audit.

  • DIY Business Energy Audit. With a DIY business energy audit, you’ll collect information on your current facility.
  • ASHRAE Level 1 Audit. This is a walk-through audit of your commercial building. It involves interviewing operations staff, reviewing utility bills and a basic review. With this audit, you’ll identify low-cost efficiency options and your low-hanging fruit for energy efficiency.
  • ASHRAE Level 2 Audit. Once you’ve conducted a walk-through audit either with an ASHRAE level 1 or DIY audit, you may want a more detailed Level 2 Audit. This includes energy calculations and a full financial analysis of energy efficiency measures. This will include analysis of energy bills, including any interval time of use data your company has access to through your utility smart meter.

Step 3: Identify Areas of Improvement

Work with a mechanical engineering firm, engineering or consulting firm to review the results of your energy audit. You’ll identify not only what needs to be replaced, but what kind of energy savings you can expect.

Here are some other items you’ll want to consider:

  • As part of your energy audit, you’ll want to take a close look at your electricity bill to check your rates. Many states (including Texas, Ohio, Connecticut, Pennsylvania, Illinois and New York) are deregulated for electricity, allowing you to shop for the lowest business electricity rate.
  • When you review your bill, pay close attention to your demand charges. Managing your usage on “peak demand days” when the grid is at its highest usage will cut your electricity bills. It also reduces your environmental impact.
  • Don’t forget to involve your employees in energy savings for your business. You could find the HVAC isn’t cooling uniformly, leading to some employees using desk fans while others use space heaters.

Areas of energy efficiency improvement for your commercial building may include:

  • Building Envelope – the separation of the interior and exterior of a building, which helps you facilitate climate control and protect the indoor environment 
  • Building Automation and Controls Systems
  • Water and Wastewater Reduction
  • HVAC
  • Lighting
  • White Roof Installation – which can reflects 60-85% of the sun’s heat

Keep this tip in mind too:

If you combine lighting measures, building controls and HVAC improvements, you’ll usually have a better ROI than doing one system at a time. A deep retrofit gives more results than just changing out the lights.

Gavin Dillingham, Director of Clean Energy Policy at Houston Advanced Research Center

Step 4: Financing your Sustainability Improvements

Once you’ve identified your areas of focus, start researching ways to finance your sustainability program. Check into these options before you start scoping equipment purchases to get the best return on your program.

  • First, contact your local utility company for rebates and incentives. For example, in Texas, Centerpoint Energy’s Standard Offer Program provides incentives to new or existing facilities that are upgrading for energy efficiency. AEP Ohio offers a Commercial Energy Efficiency Rebate Program. In fact, most utilities offer these free programs to meet state requirements for conservation.
  • Second, talk to your tax accountant about federal energy efficiency deductions. Your state may also offer incentives for energy efficiency, such as the Advanced Energy and Efficiency Program in Ohio.
  • Third, find out about your state’s Property Assessed Clean Energy (PACE) program. PACE financing gives qualifying companies access to a lower cost of capital for energy efficiency upgrades.

Texas businesses that want to develop a sustainability strategy have access to an array of tools from the Houston Advanced Research Center (HARC), a non-profit that studies energy consumption and sustainability. HARC has worked with Keeping PACE in Texas to create the Texas Clean Energy Hub. Within the site, you’ll find tools to help you implement best energy practices, estimate costs and build a business case for financing. Here are just some of the tools available online:

Sustainability toolkit for Texas businesses.

“When you combine incentives, rebates, and PACE financing, you end up with a project with a good payback,” says Gavin Dillingham, Director of Clean Energy Policy for HARC. “Instead of capital outlays, you’re paying for the project out of your savings in operating costs.”

An additional tool, the Energy Star Cash Flow Financing calculator, can help you estimate how much new equipment you can finance through your anticipated operating cost savings.

Step 4. Implement Energy Efficiency Measures

You’ve lined up your financing, selected a vendor to manage the installation and selected your new systems. Now it’s time to implement these energy efficiency measures.

Don’t forget to communicate with employees regarding your new energy efficiency program. Your communication plan should include why you’re making changes, the improvements you expect and how this fits into the bigger picture of your sustainability commitment.

And of course, you should address the universal interest, “what’s in it for me.” Explain how these changes will improve the working environment for employees.

Step 5. Perform Continuous Evaluation of Energy Usage

Once you implement your energy efficiency measures, you’ll want to continue to measure the results.

You may need to tweak your building controls or work on your HVAC balancing to the get the results you want. Or maybe you’ll need to install smart plugs or smart power strips that can turn off all the monitors in your building at a certain time. Little changes can make the difference.

One building engineer we spoke with ran through a complete building retrofit, working with building controls, HVAC and wastewater reduction. But they didn’t stop there. For further reductions, they measured the electricity usage for their all-day coffee pots and made changes to the break rooms. And changing out the lighting in their elevators dropped their usage by another 1%.

Step 6. Revisit and Revise Your Sustainability Strategy

Your sustainability strategy should be part of an ongoing process. It’s not something to put in a binder and file away on the bookshelf.

You should monitor your progress each month. And when you’ve reached the benchmarks you established in step 1? Keep going. The more you can reduce your energy usage, the more economic, personnel and social benefits you’ll receive.

Do’s and Don’ts For Managing Energy Efficiency Projects

Don’t: Wait until something breaks down. If it’s an emergency replacement, you may pay more for equipment.

Do: Take a whole-building approach for maximum return on your investment.

Do: Talk to your utility company to find out about energy efficiency audits for businesses

Demand Response as Part of Sustainability

Demand Response or DR refers to voluntary reduction in electricity demand to help maintain grid reliability.

During peak usage times, your local grid operating system (such as ERCOT, MISO, PJM) may call for a reduction in usage. These voluntary reductions have the ability to flatten electricity usage during weather-related demand peaks. That keeps the grid system in balance to avoid possible blackouts or brownouts. DR also helps to keep less efficient generation assets from coming online.

When you participate in demand response, you may receive payment for your voluntary usage reductions.

Typically, demand response programs are targeted at large volume users such as:

  • Supermarkets
  • Manufacturing facilities
  • Warehouses
  • Universities
  • Hospitals (with backup power generation)
  • Commercial office buildings

Contact your retail electricity supplier or utility to find out about participating in DR.

Should My Business Include On-Site Solar in Our Sustainability Strategy?

As a developer or commercial building owner, you should also be looking at solar power and battery storage for your facility. That’s especially the case if you want to attract new tenants that value being in a net zero energy building ( a building that generates as much power on-site as it uses.)

On-site solar can generate some or all of your facility’s business needs. Solar plus storage can help you store power for a rainy day. Or you can use stored solar power to run your building when the grid is operating using carbon-based fuels. You could even sell excess power generation back to the grid via net metering or solar buyback. And, if you’re able to cut your energy usage with sustainability, plus generate all of your electricity needs with on-site solar? You could have a net zero energy building.

If you don’t have the space or capital investment needed for solar plus storage, here are other ways you can make your operations greener:

  • Choose a renewable energy business electricity plan. These are plans backed by Renewable Energy Certificates, which promotes investment in green energy like wind and solar.
  • Participate in a Community Solar program. You’ll purchase shares in a solar array in your area.
  • Lease land to a solar developer under a Power Purchase Agreement.

Sustainability Examples for Your Business Values

As you develop your sustainability strategy, give some thought to revamping your business mission statement. Sustainability can become part of your core business values. Here are sustainability examples of how to set a vision for your eco-friendly business:

  • People: Our employees are happy to come to work. We have a safe, positive work environment and pay fair wages, which makes it easy for us to hire employees.
  • Profits: We sell more products because consumers value our sustainable approach. Plus energy efficiency and water conservation measures help our bottom line.
  • Planet: We create products in a way to limit our negative impact on the environment around us, looking to the future.

Taking it a step further, your company could be one of the next Certified B Corporations, a new kind a business that balances purpose and profit.

However you decide to address sustainability in your business, you’ll be taking a step to help future generations.

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