Sustainable SMEs: small steps for big success
Andrew Shortis, managing director of the newfound Minimise Group, explains how small and medium-sized enterprises (SMEs) can emulate big-brand sustainability ambitions.
Those with an SME or budget-restricted sustainability remit could be forgiven for thinking that, by comparison, their opportunities to deliver cost and carbon cuts through energy and water efficiencies will be less impactful, putting them at an operational and cost disadvantage. In truth, this is not always so.
Regardless of budget size, sustainability models require continuous interrogation and innovation, and this is where SMEs, with their more nimble approach, can make good progress. Instead of sticking to well-worn sustainability pathways, organisations have the opportunity to be more creative, putting in place alternative models to deliver the same – or better – efficiencies from a lower budget, with more flexible funding.
There are compelling financial reasons over and above market competitiveness to take these next steps. DECC’s recent SME study found that UK SMEs could collectively save between £1.26bn and £2.63bn a year. This equates to 18-25% of annual energy costs.
These savings relate only to energy efficiency, and could be significantly increased if the programme is extended to associated sustainability opportunities, building-in, for example, energy generation and storage to further reduce energy procurement costs.
However, the experience of those who have tried in the past to tackle this wider sustainability goal in one hit is often that it’s too big, too complex and too expensive to manage a project of this magnitude, particularly where several suppliers need to be co-ordinated and managed. This is a shame because opportunities, efficiencies and savings are being wasted. So, what can SMEs do differently? What represents a real opportunity? And what should be avoided?
Ahead of anything else, SME sustainability managers should look towards their own ‘big data’. To maximise opportunities, the project lead must know the numbers that sit behind the organisation’s current performance – and new, non-intrusive technology, when applied correctly, can give you this valuable information in a useful, usable, and real-time format.
For example, if you consider energy efficiency alone, simply knowing that you use ‘x’ kWh of energy a day/month/year and that this can be cut by ‘y%’ by installing LEDs is insufficient. A programme based on these base level calculations will deliver reductions, but won’t deliver anywhere near what could have been achieved.
Similarly, most businesses have a ‘feel’ for what’s causing them to be unsustainable. Whether behaviours, processes, vehicles or equipment, most can point a finger at a perceived inefficiency, certain that if it were replaced or refurbished an improvement would be achieved. Frequently, we see businesses developing sustainability plans on his premise, when early analysis would have evidenced that there were quicker, bigger and more fundamental savings to be achieved elsewhere.
An effective system will show you where your energy and water is being used, at what times, by who and by what equipment. It will identify areas of inefficiency and behavioural change requirements, ensuring that your funds are used to best effect to drive down consumption.
Technology which allows you to drill down to this level of data is now affordable and is the first step to unlocking board approval and third party funding. Project managers should look for supplier systems that offer stand-alone long-range WiFi data collection sensors operating on a unique frequency, to ensure that they don’t interfere with existing equipment. Quick and easy to install, they will provide essential benchmark data and, when used continuously, will identify future efficiencies and give detailed information on tracked savings.
An important factor when deciding on an energy monitoring system is the type of monitoring provided. More granular, constant metering ensures that all actions and processes are captured, giving more complete evidence to support better long-term efficiency decisions, resulting in greater end benefit. Of course, data is only valuable if it’s interpreted and used effectively so choosing a partner who can work with you in this area can be crucial.
Deploying a monitoring system based on this approach allows project managers to develop accurate baselines from aggregated utility data and compare this to live data from the granular wireless system. From this, efficiencies can be quantified, under and over consumption tracked, problems identified and resolved and saving calculated.
If you fall under the government’s Energy Savings Opportunity Scheme (ESOS), and you will if you have more than 250 employees or an annual turnover of more than €50m, then collecting data of the type listed above is essential. By 5 December this year, affected businesses will need to provide an energy audit to the Environment Agency, with fines threatened to those who don’t.
Deploying your big data, putting it into the correct ESOS compliant format, and avoiding fines surely has to be reason enough to start monitoring, benchmarking and auditing. From there, funding and change is the natural next step.
Many larger organisations who are having to comply with ESOS are seeing substantial efficiencies in unexpected areas.
The next step for SMEs is to take a fresh look at sustainability funding routes. Many might feel that they are locked out of the larger funding opportunities which appear to be geared for bigger organisations. New ‘pre-approved’ energy efficiency funding can be more accessible, and result in higher than anticipated funding awards.
Traditionally, funding for sustainability programmes is sought once the project brief has been agreed. The funder is asked to fit finance around a specification wish list, regardless of the investor panel’s experience of the technology and product combinations applied.
This approach can be time-consuming as each project needs to be assessed individually. And where innovative approaches are included, it can also represent a challenge for naturally conservative funders, who, in the main, like to support tried and tested technologies. This can result in an early change in the specification to secure funding, representing a compromise in outcomes and results before the programme is underway.
It is for this reason that Minimise has developed an alternative approach. Minimise Finance works with group companies and a panel of investors to develop technologies and processes that are pre-approved for funding.
In this way, when a Minimise solution is presented to a client, they can choose from the outset whether it’s a model that meets their objectives. If it does, the programme can be submitted to the Group’s panel of investors who, already happy with the technology recommendations, can set about reviewing the application for its credit risk. This significantly reduces decision times, allowing work to start quickly and without technology changes.
Furthermore, we have found that because Minimise Finance funders are confident with technology combinations, they’re often prepared to release significantly higher value funds, making it easier to tackle large-scale sustainability programmes in a single phase. This alone enables smaller organisations to be more ambitious and see larger and quicker cost and carbon cuts.
At this year’s Sustainability Live show, one of the subjects to be discussed is the problem of multi-technology and multi-partner incompatibility within both sustainable programmes and buildings.
Sustainability companies have traditionally promised much but have often focused on an individual area of operation. While this has delivered technology innovations, it’s clear that businesses are frustrated by the incompatible elements of some combined solutions and are in need of an alternative approach.
As with finance, we have again sought to address this by bringing our individual companies together as one Group. By offering complementary solutions that cover strategy, finance, compliance, design, technologies, installation and ongoing monitoring, we remove this frustration.
Importantly, this integrated approach addresses the issue of incompatibility between different suppliers and systems, which often derails sustainability programmes, resulting in reduced efficiencies, programme delays and disappointing ROI or increased payback periods. For SME’s it can also mean substantially reduced project management time, making the feasibility implementation much more realistic.
Andrew Shortis is Managing Director of Minimise Group which was launched in 2015 and creates and implements sustainability strategies that help organisations improve financial performance and meet corporate, environmental and legislative targets.