Navigant Research Blog

Technology and Buildings – A Solid Foundation for Sustainability

— June 6, 2017

The idea of corporate sustainability risks becoming a business paradox—a symbol of commitments without funding or substance that, in themselves, become unsustainable. However, political uncertainty, understanding of climate risk, and shareholder demands are redefining corporate sustainability strategies. Technology innovation has set the groundwork for a transformation of sustainability strategy, and intelligent buildings are a perfect starting point.

#1: Business Response to Political Uncertainty and Climate Risk Awareness

In early May, a full page ad campaign in The New York Times, The Wall Street Journal, and the New York Post made a call to President Donald Trump to commit to the Paris Agreement. The signatories, 24 companies with a market cap of over $3.2 trillion, proclaimed that US leadership on climate change would strengthen the country’s economic competitiveness, create jobs, and reduce business risks. Uncertainty is bad for business, and a unified approach to study, combat, and adapt to climate change is an imperative for the economy.

#2: Shareholder Demands

Ceres convenes institutional investors for climate change education and advocacy. Climate change risk disclosure is a major focus area, and the group tracks shareholder resolutions that demand portfolio resilience analysis. Ceres cites the resolutions filed at 15 major fossil fuel companies as one line of evidence that shareholders demand climate change preparedness and investment in mitigation. Along the same lines as #1, shareholders see uncertainty as bad for their investments, and with more unity, major investors are demanding action and planning on climate change.

Start with Intelligent Buildings

On May 4, I moderated Energy Efficiency in Buildings – Technology Helping to Set New Benchmarks, a webinar for Realcomm. The roundtable discussion and results of real-time polling support the argument that technology can provide measurable improvements on sustainability and tie to climate change commitments.

A question to the audience highlighted the confusing state of branding and opinions around sustainability. The audience was asked, “Would you rather your company be considered ‘green’ or ‘efficient’ by your customer base?” The results were striking: 80% chose “efficient,” while only 20% chose “green.” This result underscores the challenges companies have faced with sustainability initiatives that failed to rely on technology or reflected measurements in time rather than ongoing improvements.

John Seaton, director at RealFoundations, helped illustrate how technology can deliver bottom-line benefits and change the face of sustainability. In two case studies, RealFoundations identified significant energy and associated cost savings with data analytics in 4-star ($20,000 energy savings) and 5-star ($10,000) NABERS Energy (the Australian equivalent to LEED) scored buildings. This evidence sets the stage for how technology can amplify the benefits of sustainability commitments.

There is power in aligning technology and sustainability. An intelligent building is defined by a data infrastructure for ongoing monitoring and operational changes. Once a commercial building has the IT backbone for capturing detailed data on a continuous basis, there is a platform for systemic change that can deliver sustainability benefits while supporting the bottom line. The dataset is the input and the output is a near endless array of business metrics—utility cost savings, equipment maintenance reports, occupant satisfaction, or carbon emissions reductions. The real benefit is that as a tool for sustainability, an intelligent building delivers quantifiable energy, resource, and traditional sustainability metrics. It also delivers business improvements that keep executive decision makers committed and budgets lined up.

 

The Growing Importance of Recycling Spent Advanced Battery Materials

— April 27, 2017

Advanced batteries across all applications are proliferating the market in unfathomable numbers. Navigant Research expects advanced batteries to reach a cumulative 24.2 GW in new capacity globally by 2020—for stationary energy storage alone. As these assets have lifespans ranging from 4 to 20 years depending on the technology, the issue of what to do with these batteries when they reach the end of their usable lives is an important question that technology manufacturers, system owners, and customers must be able to answer. Second-use options are viable in some sectors, but recycling spent batteries will be a major market in the coming years. Manufacturers and governments around the world are recognizing the importance of recycling and how it translates to long-term sustainability goals.

Benefits of Recycling Batteries

Lead-acid batteries have been utilized in the market for several decades, but advances in more sophisticated technologies like lithium ion (Li-ion) and flow batteries have encroached on lead-acid market share. The spent lead-acid assets are retired and recycled in large amounts on a daily basis. An example of this is China’s announcement of doubling its lead recycling target to 2.5 million tons by 2020. China arrived at this target because the average lead-acid battery life is 4 years; batteries made in and around 2015-2016 will be available for recycling by 2020. Lead-acid battery recycling efforts are also ramping up in the United States. California lead battery manufacturers and consumers have to pay a $1 fee for each battery they make or buy following the implementation of the Lead-Acid Battery Recycling Act (AB2513). Among other recommendations, several California government officials requested adding an additional $15-$20 to each lead battery sold to help process it after its usable life.

Li-ion batteries are a bit trickier to recycle. Available in items ranging from consumer electronics to EVs, extracting the most valuable materials inside—namely, lithium and cobalt—are important to consider when reprocessing these batteries. Compounded with forward-looking lithium availability and supply chain issues, securing lithium access will be important for the industry in the future. Li-ion battery recycling is in its early stages, and there are only a handful of these plants in existence today. With few Li-ion battery chemistries available, the lack of standardization plays a role in limiting the emergence of more recycling facilities and best recycling practices for these batteries. Today, recycled lithium can be up to 5 times the cost of newly mined resources; the cost differences have limited demand for lithium recycling to date, but future price increases and new regulations can change this.

Raw material prices for advanced batteries have sporadically changed this past decade and lithium prices alone have nearly tripled. Other factors like demand in competing sectors (e.g., pharmaceuticals, construction, etc.), geopolitical relationships, and environmental concerns will also play a role in the future of battery material supply chains. Recycling advanced batteries is likely to be one of the principal methods to combat against volatile raw material prices and resource availability.

New Revenue Streams

Battery OEMs should look to partner with raw material suppliers, users, and governments to gain a strong position in their respective supply chains and increase collaboration across different sectors. Considering alternatives (e.g., second life usage), the battery recycling industry has the potential to generate significant returns. Companies that position themselves to take advantage of retiring assets will be able to access new revenue streams on top of existing businesses.

 

Technology and Substance in Sustainability

— March 18, 2016

Springtime landscape over natural oilseed rape fieldSustainability has been a part of the corporate vernacular for decades. The concept has primarily been tied to corporate branding, but the priority, investments, and influence of the champions of sustainability has been limited—until now. Major moves by some of the world’s most influential businesses indicate that an important shift is underway. Sustainability is moving up the food chain as technology brings substance to targets, as future leaders demand real commitments, and as organizations acknowledge the real risks of inaction.

A recent GreenBiz article announced the “promotion” of sustainability at Microsoft. As the article highlights, the elevation in reporting only underscores the deepening commitment more corporations are making toward sustainability. As Rob Bernard, chief environmental strategist for Microsoft, explained, “It’s an acceleration, amplification and prioritization of sustainability within the company. It’s now a cross-company initiative that has a center of gravity in the president’s office.” Other tech giants and major corporations have similarly moved sustainability into the boardroom, indicating rising influence of the position.

Three Indicators of Change

Technology brings substance to sustainability. Let’s hone in on the metrics and actions that organizations are taking to meet their sustainability goals. LEED, ENERGY STAR, and the Carbon Disclosure Project (CDP) have helped businesses define their footprint and identify metrics for sustainability. However, there is momentum spurring something deeper. Technology is redefining energy use in buildings—a major contributor to most companies’ operational and environmental footprint. As we highlighted in a recent white paper, intelligent building technologies help customers meet the requirements of green labeling and provide ongoing insight into system improvements. Software can provide real-time data at the asset level that ensures efficiency improvements are maintained for meeting sustainability targets, but can also streamline operations and maintenance and deliver data for capital planning, thereby directly improving the bottom line.

Future leadership—the millennials—demand it. The makeup of the future workforce is a hot topic across industry as companies undergo long-term planning and implement strategies for recruitment and retention. We’ve hit the tipping point, and according to the Pew Research Center, millennials now make up the largest share of the U.S. workforce. This is important as these future leaders have different priorities and expectations. A recent survey by Sustainable Brands found that 60% of millennials are committed to increasing sustainability practices at their place of employment. This finding and others like it suggest that sustainability will only become more important from a corporate perspective as younger workers move up the ladder.

The threats are real. Take a look at sustainability reports for any major corporation and the topic often turns to climate change on page one. Despite the political wrangling in the United States, corporations are coming to terms with what climate change may mean for their business. They want clarity on regulation, they’re responding to shareholder demands, and they’re taking a stand in the public arena for climate change action. Recently, 17 top British executives signed a letter in the Independent acknowledging the value of standardization in expectations for climate risk disclosure in annual reporting. The message resonates in the United States as well, as the New York Times reported earlier this year. Major investors—including CalPERS (California Public Employees’ Retirement System), the Connecticut state investment fund, and Calvert Investments—made a public demand to the SEC (Securities and Exchange Commission) for the issuance of a rule to make climate change expectations concrete in public disclosure.

The evidence is clear: Sustainability is becoming a strategic imperative for major corporations. Technology can make sustainability goals attainable and economic, employees demand it, and shareholders are tying it to bottom line valuation.

 

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