The Energy for Change

03 Sep 2007Archived News Energetics in the News

PUBLISHED: FMA Online - by Melanie Drummond - Tony Cooper, Managing Director, Energetics Pty Ltd is asked about the company's evolution and the inevitable part energy will play in the future of the built environment.

 

Progressive companies are fast catching on to the principle that reducing the energy emissions of your assets not only offers financial benefits gained through cost savings, but also reduces risks associated with the changing demands of ‘greener’ tenants, carbon trading and mandatory reporting.

FMA Online: Could you please give us some background on Energetics?
TC: Energetics was founded some 23 years ago by Jon Jutsen, initially providing technical advice into the industrial sector around energy efficiency. Since then we have grown to provide broader advice around end-to-end solutions for integrated energy, greenhouse and sustainability management. We’re a private company, and we are probably the pre-eminent provider of that type of advice to companies listed in the top two hundred of the Australian Stock Exchange.

The company’s innovative products and service excellence achieve substantial cost reductions, improved efficiencies, financial benefits, new market opportunities and significantly enhance corporate reputation for organisations across a broad range of sectors.

We don’t tend to operate in the small to medium or residential mass markets, but having said that we do get into those segments through work with government at federal, state and local level, developing business programs around energy, water and waste. Governmental program and policy work makes up about 20- 25 percent of our revenue and the balance is made up from industrial and commercial segment based customers. Our headquarters are in North Sydney and we have offices in Melbourne, Brisbane, Canberra and Perth.

FMA Online: When Energetics started out 23 years ago, were people aware of climate change as an issue?
TC: I joined Energetics 10 years ago and when I first joined, this business’s work stream came through walking the streets of Sydney, Melbourne and Brisbane knocking on doors to talk to people on the financial benefits of energy efficiency, and only in a broader sense the environmental impacts of using resources.

Initially the focus was on business benefits in undertaking efficiency measures which would have a demonstrable effect on the bottom line. That’s changed considerably as most of our business comes direct to us or by referral. This has predominantly come about after the shift in public opinion last year following the release of the Al Gore movie - An Inconvenient Truth.

I can also think back to the 1st of November last year when the headline on the front page of The Age read ‘PM defiant on climate change’ and then two weeks later on the front of the Financial Review, read ‘PM pushes global climate pact’. We recognised then that the general public – the Mums and Dads, had switched on to the issues surrounding climate change and the government was somewhat behind the game in terms of the impact of the issue as a political agenda item.

FMA Online: What are some of the common issues that your clients come to you with?
TC: At a senior level within organisations which are just starting out, they’re keen to understand what the risks or the benefits are and the road or the journey they need to travel to catch up to their competitors. A lot of work on baselines is done – information exchange around their relative positions in relation to their competition or performance.

FMA Online: Can you tell us about the consultation process Energetics goes through with its clients?
TC: We tend to run structured diagnostic sessions by facilitating a broad cross section of management or business leaders across a group or area. It’s important to do that because the problems we’re now trying to grapple with don’t just affect the operational area of a business, they affect marketing, legal/risk and finance areas. Energetics spent a considerable amount of money a number of years ago developing diagnostic techniques and tools to help facilitate better engagement processes and to breakdown and simplify what can be quite complex and unfamiliar subject areas into plain English to help people to deal with all sides of the puzzle in a structured way. We have a number of products and services that we and others use to facilitate those sorts of processes.

FMA Online: Could you please elaborate on the solutions Energetics offers its clients?
TC: We started out as a professional services firm offering consultancy advice in the areas of energy efficiency, energy procurement which was independent, impartial and trustworthy founded on the pillars of innovation and service excellence and that’s still our mantra. In the company’s evolution we have sought new ways to look at engaging with our clients, and addressing why the reports we’ve written have not always seen call to action.

Our business now has two arms – consultancy and a technology solutions arm. We commercialised some of the intellectual property we developed through having to overcome that inertia of having people who’d received the reports not knowing how to interpret the findings or facts and facilitate their progression upwards within client organisations.

A lot of companies don’t understand how and where they use their energy and in what sort of quantities or volumes. With the help of Federal R&D funding, we developed quite an extensive, environmental and energy database which goes by the name of EnTERPRIZE.EM®. That particular application fills the need for people to have good accurate information at their fingertips on their energy practices.

FMA Online: How important is it for companies to have a transparent reporting process?
TC: Well one thing which has obviously prompted people to have a better understanding of their information management around energy and the environment is the great upswing in public reporting around sustainability and the recent introduction of new mandatory reporting regimes. Part of the evolution in the reporting or disclosure process is that people will eventually start checking facts and will expect audited results. If you’re looking at the business and evaluating it from a risk or ethical investment perspective, you will realise that if you don’t have that transparent reporting you may find clients/tenants reluctant to support a company that doesn’t have that certainty.

FMA Online: Does Energetics encourage corporate social responsibility?
TC: We’ve done a lot of work with large companies who want to improve their sustainability performance and publicly report in a more transparent way on their performance environmentally. Obviously energy represents a significant part of a business’s environmental footprint and early movers like Westpac and Investa Property Group have recognised that it actually makes good business sense to put the environment first.

Internally, we have also invested time and effort to construct our first sustainability report and to provide transparency inside our business to key stakeholders. The report also shows that we are walking the talk in the marketplace and that we firmly believe in sustainable and responsible practices. It will be released in the next couple of months

FMA Online: Could you elaborate further on the benefits of putting the environment at the top of the priority list?
TC: Financial benefits, market appeal, the benefit to position and enhance reputation, and increasingly - given the challenges around climate change - the ability to offset risk.
In most organisations now environmental efficiency is not just there because there’s the benefit of the bottom line, it’s there because there is now a real and perceived risk to both the organisation’s brand and the reputation associated with not dealing with the risk of climate change appropriately. It can also be part of a company’s policy for attracting and retaining talented staff.
Financially, the future impact of carbon into capital decisions to expand is also being factored in by forward thinking companies.

FMA Online: Are some companies launching into going green without doing the appropriate research and planning for implementation and operational management?
TC: When something’s new and something’s exciting everybody wants to get on the bandwagon. Unfortunately sometimes it’s like the dot.com revolution, people see it as a way to make a quick buck or a way to differentiate themselves from their competitors and some people intentionally or unintentionally cut corners or take risks where they shouldn’t.

If you look at the whole trend towards companies wanting to position themselves as being carbon neutral, and wanting to confirm or disclose that they’ve offset all their emissions associated with their business or their product or service, one of the pitfalls is that people don’t adequately describe, disclose or evaluate their true footprint of their business, service or product.

FMA Online: Do those companies run the risk of being accused of ‘greenwashing’?
TC: People want to get the tick of approval but some of them don’t understand that by trying to cut corners, they run the risk that when the curtain drops they might get caught out.

FMA Online: What concerns are clients coming to you with surrounding carbon trading?
TC: For our key accounts, we’re running a lot of in-house training on educating people about what carbon trading is all about and how it works and how it will impact their businesses.

By 2012, we will definitely have a national carbon emissions trading market, if not earlier, which means carbon emissions have become new financial instruments – they’re like dollar bills. The national trading scheme will not directly impact the large majority of owners and operators of commercial or industrial retail assets in Australia. However it will impact the price of energy for these facilities as end users.

As a result, people making decisions today on tomorrow’s capital investments should be factoring in the cost of carbon into the design, build and operation over the life-cycle of their assets. Companies are already realising that if they are introducing energy efficient technology now, then they should be accounting for the benefit of that cost reduction from the time that emissions trading commences.

In the short term, there are opportunities for facilities managers to create carbon credits for large energy efficiency projects (savings of 2,000 MWh per annum or more) in NSW and ACT under the Greenhouse Gas Abatement Scheme, or Australia-wide under the Greenhouse Friendly Program. Unfortunately these opportunities are limited to the short term as energy efficiency projects will not be eligible as offsets once a national emissions trading scheme commences.

FMA Online: Mandatory reporting seems to be another issue affecting big companies; can you explain the issues surrounding that further for us?
TC: There are two issues surrounding Mandatory reporting. For many years there have been voluntary reporting mechanisms for organisations that have chosen to position their business or their products in the market place – one example is the Dow Jones Sustainability Index. Companies disclose the information voluntarily and then it’s evaluated next to other businesses from around the world against a set of criteria.

What’s happened in Australia, which has created great demand for our services, is the passing of an act through Parliament last year called the Energy Efficiency Opportunity (EEO) Act.

The Act sites that organisations, companies or sites which use more than 0.5 petajoules of energy are required to publicly register and report their activity over a pre-determined time frame across 5 years. The Act was mandated and companies were identified, which captured about the top 250 energy-using sites or businesses in Australia. While a large number of mining companies are captured, within the top 250, around 20 to 30 percent of companies come from commercial segments; for example, people who have property as assets, buildings, industrial sites etc. We’re now working for some of those organisations that are caught up in that reporting process and most of them have just gone through the registration process.

The Act also has significant penalties – companies can be fined for not registering. The difference between a mandatory reporting regime as opposed to the voluntary reporting schemes in place (Carbon Disclosure Project as one example) is that the process around the EEO Act provides a level playing field for all companies. With voluntary reporting, the analysts that looked at the information had no way to glean whether figures were being reported comparatively – you can’t be sure whether companies have included everything needed to ascertain a true reading of their energy outputs. Now the Act ensures there is a baseline and companies have to report on 80 percent of their energy activities.

It may cause some serious concern for people who have proclaimed their energy achievements without providing accurate data to the public.

FMA Online: How important are Facility Managers to ensuring a company is operating effectively?
TC: Historically, before the emergence of things such as five star buildings, some developers spent a good deal of money, time and effort building premium A-Grade buildings that offered the best technology available at the time of their evolution.

However, history tells us that people had spent the money putting in the bells and whistles and then failed to invest in the training of the people operating or controlling those facilities. That’s really been a life-long story – if every building in Australia was commissioned and managed appropriately to a set criteria and a standard, then Energetics could pack up and go home and I could sleep safely knowing my kids were growing up in a beautiful planet.

Unfortunately people haven’t valued those things in the past and it’s only now that we’re seeing benefits to establishing tools like ABGR or NABERS. Companies are now adopting the processes around rating, constructing and operating buildings to ensure that they achieve their desired outcomes.

FMA Online: How does maintenance and management of systems feature in your consultancy process?
TC: Maintenance and operation of assets is a key area of our consultancy. When we go in and look at a business or a building it’s not just looking at a way to replace old technologies - a lot of the savings and recommendations which we give are to let people know that they’re not operating systems appropriately. Sometimes it can be as simple as discovering that someone has overridden the controls.

FMA Online: Do you think some companies should be spending more time investing in training of their facilities managers?
TC: Anybody who is controlling assets, who is not investing in training and developing of staff in the operations of those assets, is really not doing the best thing for their business or for the environment. I’m a very strong supporter of the development and training of people in the FM industry, but that’s an investment which those businesses need to make and need to value. At a time of change in contract tenure where an owner might change from one FM provider to another, too often there is not enough time given in the mobilization of those new FM contracts to enable the incoming parties to be sufficiently trained in what they’re being asked to manage and control.

FMA Online: Do you think some companies are cutting cost in those areas without factoring in the long-term effects of those decisions?
TC: I’m sure they are.

FMA Online: What benefits can be gained from having an ABGR assessor go through your building?
TC: After having an ABGR assessor go through their building, a client can then understand and benchmark the performance of the asset. By doing an ABGR or level 1, 2 or 3 audits you’re going to get information back on the performance quality of the asset and where it can be improved. You might have a property that has all the bells and whistles but nobody has bothered to turn them on. It might just be a case of flicking the switch and saving a whole lot of energy.

Sometimes there’s a fear among asset owners that if they get an ABGR rating then news might get out and their building could be considered sub-standard or sub-optimal. You don’t have to say what your ABGR rating is, but there’s a groundswell of change which is happening and as time moves on and leases come up for renewal, tenants will want to know if it’s a green building, what the ABGR rating is and what is being done to improve the performance of the asset.

FMA Online: So you’re saying honesty is the best policy?
TC: Yes, definitely. I think it’s small minded for companies to not acknowledge where they’re at environmentally. Those are the people who won’t be in business tomorrow. Quite simply, they will be left behind and their buildings won’t be rented. If they’ve got a short-term investment horizon and they just want to live off today’s greed, then all those things will come home to roost eventually. In a couple of year’s time, tenants will start leaving their buildings and the landlords won’t be able to find new tenants.

FMA Online: What do you foresee happening to companies who don’t make a move to ‘green’ their buildings?
Progressive companies will move faster, that’s the nature of the world, there are the movers and shakers and those that follow, and then those that have to be dragged along kicking and yelling. I honestly believe we’re in the midst of an environmental revolution and given the consequences of climate change it will have a greater impact than dot.com or technology has had on the world. This is such a leveler, it doesn’t matter if you’re rich or poor everybody is going to be affected by this. It’s everybody’s responsibility.

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