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Building a Business Case for Sustainability Initiatives

Building a Business Case for Sustainability Initiatives

6/9/2017

Over the past decade, the focus on sustainability initiatives by colleges and universities nationwide has increased. However, making the business case for these projects still remains a challenge for most CFOs. With an increasing demand for higher education to play a significant role in building a sustainable society, making the case for these initiatives is more critical now than ever. While the topic is not new, sustainability is becoming increasingly more important, given the rate at which we are using resources globally.

  • 90% increase in global carbon emissions from fossil fuels since 19005.
  • 48% increase in consumption of marketed energy anticipated by 20406.
 
Much of the drain on resources comes from buildings alone, which account for 40% of energy use and 1/3 of the greenhouse gases in the country7. Higher education contributes significantly to these emissions, as colleges and universities collectively account for more than 5 billion square feet, $14 billion in operations and maintenance costs and spend $6-7 billion annually on energy/utility costs8
 
With aging buildings, rising costs and shrinking budgets have caused business officers to shift their focus toward implementing sustainable practices that run facilities more efficiently. 
 
However, due to the difficulty of measuring these initiatives, many business officers are still skeptical of the financial benefits of this focus. Despite the challenge, more and more schools are finding ways to build a strong business case for sustainability initiatives on campus.

  • 96% - Facility leaders that view energy efficiency as important to fulfilling their school’s mission3.
  • 71% - Schools planning to improve buildings in order to achieve sustainability goals3
  • 75% - CBO’s not convinced sustainability efforts have provided significant financial benefits1.


1. CONNECT TO INSTITUTIONAL MISSION 

At the heart of every school’s mission is to contribute to future generations—and to society as a whole—in a meaningful and impactful way. Environmental awareness thought-leader, Dr. Anthony D. Cortese, views sustainability as that contribution and believes it should be a core component in higher education’s mission. “We are about the maintenance, renewal and evolution of civilization. If we are the people that educate all of the professions in society, we have a deep responsibility to try to fulfill that mission.” Cortese isn’t alone in this perspective, as many influential organizations and leaders in higher education also see the significant role higher education can play in building a sustainable society. 91 percent of business officers state institutional mission as extremely or very important in deciding to strengthen or eliminate programs and initiatives1.


2. BENCHMARK AGAINST OTHER SCHOOLS 

In today’s competitive environment, it is critical to keep up with what other schools are doing. The awareness of where your college or university stands compared to other, similar institutions can be a great indicator for areas of opportunity or improvement. Benchmarking your school against others can serve as a starting point for your campus to make better informed decisions about how to run campus facilities more efficiently. Establishing baselines for your sustainability initiatives is the first step towards identifying opportunities for continuous improvement overtime. 86 percent of institutions participating in the AASHE’s STARS program say it has led to changes on their campus that will move it toward being more sustainable11.


3. ESTABLISH SHORT AND LONG-TERM GOALS

Since each institution is different, setting goals for your organization is critical when it comes to measuring sustainability initiatives. Working with organizations that provide resources to help schools start these conversations within their own communities is also helpful. Programs such as Second Nature’s Climate Leadership Commitment, provide a framework to develop a Climate Action Plan for your college or university. Commitments such as these encourage your campus to set goals for various types of emissions and track progress towards the goals that are specific to your own campus.

Results shared by Climate Leadership Commitment signatories (as compared to non-signatories)12:

  • 75% saved money with Climate Action Plan efforts
  • 47% achieved lower emissions from purchased energy
  • 27% reported less energy used per square foot


4. QUANTIFY THE BENEFITS

Despite the potential promise of energy-efficiency initiatives, many schools still struggle to quantify the results associated with sustainability projects on campus, often times viewing these efforts as an expense only. However, the potential cost savings, rate of return, and available incentives make these projects worth the upfront investment. Below are a few examples of the ways in which institutions have been able to quantify the benefits for their campuses.

  • $28M Cost Savings due to a 45% reduction in energy use at Appalachian State University13 
  • $14.5M Costs avoided through conservation measures at the University of Washington13
  • 10-20% NPV savings from Large Scale Renewable Energy solutions on a 15-25 year contract14
  • $1.9M in cost savings generated from the Waste Diversion Program at University of Washington13
  • 28% median annual ROI for established Green Revolving Funds (GRFs)15
  • 27-81% Average IRR on low carbon investments and process energy efficiency measures16



Source1: Jaschik, Scott, and Doug Leaderman, eds. “The 2016 Inside Higher Ed Survey of College and University Business Officers.” Gallup and Inside Higher Ed, 15 July 2016 
Source3: Schneider Electric and Alliance to Save Energy. “Survey of Higher Education Facilities Managers 2015.” Retrieved from https://www.slideshare.net/SchneiderElectric/survey-of-higher-education-facilities-managers-2015-51073645 
Source4: 2017 College Hopes & Worries Survey Report. (2017). The Princeton Review. Retrieved from https://www.princetonreview.com/college-rankings/college-hopes-worries

Source5: United States Environmental Protection Agency. (2017, April 13). Global Greenhouse Gas Emissions Data. Retrieved from https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data 
Source6: U.S. Energy Information Administration. EIA - Independent Statistics and Analysis. Retrieved from https://www.eia.gov/outlooks/ieo/world.php 
Source7: Environmental Defense Fund. (2015). Fueling Investment in Energy Efficiency. Investor Confidence Project. Retrieved from http://www.edf.org/sites/default/files/icpfactsheet07132015.pdf 
Source8: NACUBO. (2013). Sustainability Survey - Higher Education Impact. Retrieved from www.nacubo.org/Documents/BusinessPolicyAreas/SustainableSurveyweb(0).pdf
Source9: AASHE. (2017). A Guide for Applied Sustainability Learning Projects. Retrieved from http://www.aashe.org/guide-announcement/ 
Source10: Intentional Endowments Network. (2015). Intentionally Designed Endowment Primer. 4.0. Retrieved from http://www.intentionalendowments.org 
Source11: Why Participate in STARS? (n.d.). Retrieved July 21, 2017, from https://stars.aashe.org/pages/about/why-participate.html
Source12: Second Nature (2015). Network Snapshots. Retrieved from http://secondnature.org/our-impact/network-snapshots/ 
Source13: APPA/NACUBO (2017). Key Facilities Metrics Report. Retrieved from http://www.appa.org/research/nacubo.cfm 
Source14: Boscio, G. (2017, February 24). Large-Scale Renewables: The Next Chapter in Higher Education Sustainability Leadership. Retrieved from http://secondnature.org/wp-content/uploads/Second-Nature-CFR-White-Paper-on-Large-Scale-Renewable-Energy.pdf 
Source15: Indvik, J., Foley, R., & Orlowski, M. (2013, January). Green Revolving Funds. Retrieved from http://greenbillion.org/wp-content/uploads/2013/01/GRF_Implementation_Guide.pdf 
Source16: Cambridge Institute for Sustainability Leadership (2014, September). We Mean Business: The Climate has Changed. Retrieved from https://www.cisl.cam.ac.uk/publications/low-carbon-transformation-publications/we-mean-business-the-climate-has-changed

 

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