The food and beverage industry has made significant progress in adopting energy efficiency practices. However, greater energy efficiency gains and a transition to clean energy sources are critical for companies to stay competitive and satisfy stakeholders while minimizing the effects of climate change. Worldwide, food production is responsible for one quarter of the world’s greenhouse gas emissions, with processing, transport, packaging and retail accounting for approximately 18% of food emissions.
This industry stands to be impacted the most by climate change, from fragile agriculture and water resources to more disrupted energy resources and regulations on waste. However, while complex, strategic energy and sustainability management is a source of value and growth for large global companies. In our Global Executive Survey Report released late last year, ENGIE Impact found that 75% of global executives believe that excellent sustainability execution provides a competitive advantage. Companies like Danone, Nestle, PepsiCo and General Mills have emerged as sustainability leaders, leveraging energy efficiency, circular solutions, brand strategy, and resilient value chains as drivers for increased revenue, decreased costs, and risk management.
While energy management is considered a key pillar of corporate food and beverage sustainability strategies, sustainable energy management faces many barriers—most neither financial nor technical. The greatest challenge is often in creating and cultivating a strong energy culture, one in which a shared purpose translates to a performance improvement and sustainability mindset. The key to obtaining sustained success is to move beyond project-by-project efforts and integrate energy management into all areas of the business. And to do that, every stakeholder – from the boardroom to the manufacturing floor – must have clarity in understanding why decisions are made and how and what they can contribute to the success of energy management and, in time, sustainability transformation.
The Journey from a Tactical to Transformative Approach to Energy Management
Historically, energy-intensive industries like food and beverage correlate energy management to various decentralized projects that help reduce local energy consumption and costs. According to 2019 CDP data, 48% of organizations have implemented five or more energy efficiency projects per year, which help them achieve their greenhouse gas emissions reduction goals and realize financial benefits through reduced energy consumption.
As they begin to recognize the sizable impact of energy management on greenhouse gas emissions levels and climate change, organizational leaders are pivoting to integrate energy management into their corporate culture. This journey from tactical to transformative approach requires careful consideration of not only business strategy and operations management, but of the connection between business context, outcomes, and culture—i.e., people, systems, processes, skills, and behaviors. This requires clear ownership at the top with leaders who model and shape the effort.
Large organizations tend to move through three stages as they refine their approach to creating and reinforcing an energy culture. As they progress, it is important for companies to reinforce a sustainability mindset in structure, conversation, and practice.
Stage 1: Tactical Energy Management
In this early stage of energy management, organizations create a business case around energy efficiency. Through analyzed consumption and spend data, teams uncover outliers and then build a plan for targeted energy efficiency solutions (e.g. high efficiency equipment or new lighting technology). Through pilot projects, organizations measure the energy and financial impact of efficiencies. If results are favorable, broader implementation of successful pilots may be pursued to improve ROI and performance across the portfolio. At this stage, it is also important to understand efficiency criteria for procuring energy-using equipment. Organizations may update specifications or best practices for replacing and installing equipment and create a cohesive communication plan to ensure stakeholder alignment going forward.
In the earliest stage of sourcing renewable energy, many companies are experiencing pressure from external or vocal internal stakeholders to “act now,” creating a mostly reactive environment. Large companies are making data-driven decisions to help identify where purchasing renewable energy will generate the best return and justify additional investment.
Stage 2: Strategic Energy Management
It’s important that leadership and employees align to advance energy management into the next stage, making it a part of the company’s strategy and culture. In this second stage, companies expand their energy efficiency efforts and begin to develop commitments and targets. Rather than “checking the boxes” to complete projects, leaders acknowledge that different teams and individuals within the organization offer unique perspectives. By encouraging employees to share in brainstorming sessions about new processes, technologies, or strategies for energy management, they feel empowered to own the ideas and actions that they can consistently implement. Through open communication and dialogue, employees can better understand how energy projects create savings, reduce emissions, and increase the overall financial and brand strength of the company.
One American worldwide manufacturer set a goal to reduce their global energy use 25% by 2025 from a 2016 baseline. With input from their employees, they also set an interim goal to reduce energy use at 20 manufacturing sites between 5% and 15% in 2021. The manufacturer hired ENGIE Impact to help benchmark the 20 manufacturing sites’ energy management status and conduct workshops for sites and local teams that would give them ownership of the goals. Participants learned to measure, collect, and analyze data; perform site assessments; identify projects and develop action plans; and build business cases for high-priority projects. Each site identified up to five projects that would achieve the 2021 energy reduction goals, and the centralized workshop approach allowed local teams to learn from the observation and experience of other sites.
On the procurement side, regular analysis of data and process can reveal opportunities for new supply contracts, rate optimization, or investment in renewable energy products. What companies choose to pursue depends on their goal: is it greater financial savings, reduced emissions, or both? Organizations that consider renewable energy throughout their portfolio help advance renewable energy markets by investing in complex renewable energy solutions. Today there are many options in the renewables market: PPAs, VPPAs, on-site generation, storage and more.
Stage 3: Transformative Energy Management
At the transformative stage, organizations are exploring ways to expand the breadth and depth of their impact, by transitioning from a focus on the organization’s assets to their value chain and other stakeholders. Companies are leveraging energy efficiency projects to address multiple business areas. For example, manufacturing companies may share how a product is more sustainable because it was made with less energy, improving the employee and customer experience.
Once organizations have well established energy management practices and are in pursuit of their commitments and targets, they are also well-positioned to take a closer look at additional ways to influence renewable energy markets across the globe and to create demand for a variety of renewable energy solutions that are aligned to how businesses make decisions. Transformative leaders in food and beverage carry learnings and culture from within the walls of their organization into their value chain, learning about the strategies of others, co-creating solutions, and providing best-in-class tools to help assist in them in tracking their journey.
As an integral stakeholder in facilitating conversations and helping other organizations pursue sustainable energy management, transformative companies are innovating and looking at ways to push boundaries. They make an impact by committing to renewable energy or greenhouse gas emissions goals that the market hasn’t seen. It takes time for markets to transform, but as more organizations set these types of goals, markets will mature more rapidly.
Pursue the Energy Management Actions that are Right for Your Organization
Energy and sustainability strategies are no longer “nice to have” for large food and beverage organizations – it is expected by employees, customers, investors, value chain partners and other stakeholders. In pursuit of sustainable energy management and subsequent commitments, it is important for leaders to create authentic, long-lasting connections between strategy, culture, and a transformative outcome. Actions which are genuine, in-line with the brand’s purpose and driven by executive leadership provide the clarity and connection needed for stakeholders to understand why decisions are made and where the organization is headed.
The process of creating and maintaining an authentic energy culture is a complex undertaking for any organization. Many food and beverage manufacturers have turned to third parties like ENGIE Impact to help with design and delivery, from strategy and implementation to management and reporting.
To learn more about what maturity stage your company is in and how to progress, download ENGIE Impact’s latest report, The Sustainable Resource Maturity Scale: From Tactical to Transformative, which includes chapters focused on growing energy efficiency and renewable energy success.