“Don’t measure anything unless the data helps you make a better decision or change your actions.” – Seth Godin
Funding Sustainability Programs: Utility 101
Good sustainability work is like any other work. It all starts and ends with meaningful wins. This is a bigger challenge than it seems.
The first thing you should do in any organization is to look through the utility bills (electricity, natural gas, water, sewer, waste, recycling, and maybe a few others). Just the status of these bills will tell you a lot.
- Are the bills orderly?
- Are they paid in full?
- How often are they switching vendors?
- Have they been analyzed? Any spreadsheets, charts, graphs? Have these numbers been tied to sales, growth, revenues, or profits?
- Any correlation or causation with the health of the organization?
- At a both a logical and an emotional level, where is this organization at?
- What questions do these bills bring up for you?
I see utility bills like organizational hygiene. If you’re having trouble brushing your teeth, keeping up on laundry, or pulling yourself together, it’s a pretty good indication that you’re struggling…
Why?
Utilities are an operating expense, and everyone understands the basics. Utility bills also have dollar figures attached, which is important. People speak in dollars. They don’t speak in kilowatt-hours, dekatherms, CO2 equivalents, or even gallons. Speak in dollars whenever possible, and use the units as a byline. For example, “we saved $1,000 by reducing our electricity usage by 10,000 kWh (10%).”
Most importantly, this is where you can start to identify your financial opportunities. There are two types of sustainability programs:
- Passion Funded (insecure)
- Sustainably Funded (secure)
I know there is a lot of emotion attached to the word “sustainable.” In this case, do you know where your next dollar comes from? If you don’t, your program is funded by passion. Don’t get me wrong; passion funding can be amazing. You can get a lot done with the money, clout, and political juice of a passion program, and you should capitalize on this. If your program has any hope of surviving, you need sustainable funding.
Utility bills are one of the best places to secure and expand your sustainability program funding.
This is a critical point, so I’m going to double-down. Many organizations see utilities simply as the cost of doing business. “We’ve got to keep the lights on” isn’t just a trite saying; it is an entire mindset. It’s just like you’re finances at home. You have a general sense of how much each bill is. Some bills tend to be the same (garbage), some bills increase or decrease seasonally (water, natural gas, and electricity), and you probably budget based on your general sense. You’d be surprised how many organizations operate exactly like this. They budget $100,000 for utilities, throw on % growth or inflation and readjust annually. If you can reduce these costs, you’ve found yourself a sustainable budget. It is much, much easier securing existing funding than asking for new funding.
How?
At a minimum, you should assess or review an organization’s total costs and total usage. It’s helpful to break out costs to include tax, demand/service charges, and any other fees you might be paying. I have helped organizations save hundreds of thousands of dollars in billing errors alone with this first step.
I use Excel ($). Numbers (free) is okay, and Google Sheets (free) is getting better and better. It is really easy to start shopping for fancy tools and I’d recommend holding off. You’ll know exactly when you’re maxing out the capabilities of one of these programs and you’ll make a better business case for an upgrade at this point. Struggling? Start with YouTube and Google searches, there is a ton of great (free!) material out there.
Not working for an organization? Try it with your utility bills; sustainability always starts at home.
Now what?
Apply the 80/20 Rule, otherwise known as the Pareto Principle. The 80/20 Rule states that 80% of outcomes are created by 20% of causes. For example, 80% of my costs are electricity; electricity is one of five (20%) utilities I pay. Look at your data. What are your biggest costs? What are the highest impact things you can do to address those costs? Does your utility offer incentives/rebates for any of these issues?
Applying the 80/20 Rule doesn’t give you the solution automatically, but it gets you looking in the right places. I worked with an organization where <1% of their total expenses are waste/recycling services, and the first thing they want to fix is office recycling. When we dug into their numbers, 56% of their energy spend is electricity, and the next segment is fleet fuel (22%). Translating this into dollars, we’re talking about $1,300,000 in electricity, $528,000 in fuel, and <$24,000 in waste/recycling. If your goal is to pay for yourself in savings, and it should be, you start with the biggest slice of the pie. The 80/20 Rule keeps you focused.
There are some ways to add more texture to your data, and we’ll get into those in future posts.
Sustainable Program Funding
Okay. So you’ve got your data, you’ve identified a problem, and you’re about to implement a solution. We will focus less on solutions here and more on how you secure sustainable funding for your sustainability program.
Let’s assume this solution is straightforward… let’s say the solution is a $10,000 piece of equipment, you’ve contacted your utility, and they’re providing a $5,000 rebate. The solution will save your organization $30,000 per year ($2,500/month). You’ve got a project with a 2-month return on investment (ROI), awesome! Your client/boss should be pleased with you! This is when and where you make your ask. You should have a concrete proposal that includes giving some money back to the organization and some money for future sustainability projects.
You need at least two things to be successful: #1 a way to measure this project’s success and #2 a list of future projects/programs you will use this funding for along with their value to the organization.
#1 should be addressed through either your utility bills or metering (which should be included in the project cost). Organizations are approached daily with “cost-saving opportunities,” and I’d bet most of these “savings” are either never verified or realized. This is where you prove your value and build trust.
#2 is where the real magic happens. It would be best to have a crystal clear plan for how these funds will be deployed and how the organization benefits in dollars and other intangibles. This is money your employer was already planning on spending; leverage it!
This is your sustainable funding, this is how you fund a program, and this is how you grow a program.
