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Global Climate Change: A
Social Issue that all
Responsible Investors Must
Address
A Case for Investment in Businesses Employing
Strategic Energy Management
Roger Ballentine
President
Green Strategies, Inc
1700 Connecticut Ave NW, #404
Washington, DC 20009
Green Strategies, Inc.
SUMMARY OF POINTS
1. Climate Change is the Premier
Environmental Issue of our Time
2. Fiduciaries Must Address this Issue – and
the SRI Community Can Lead
3. Investors can Assess Climate Impact –
and Value --by Analyzing a Company’s
Strategic Energy Management
Green Strategies, Inc.
Green Strategies, Inc.
The Problem of Climate Change
Green Strategies, Inc.
The Problem of Climate Change
• 7 of the 10 hottest years on record have
•
•
•
occurred since 1990
The 1990s was the hottest decade in the last
1000 years
Over the last century sea level rose 4”-8”
Over the next century, sea level is likely to rise
by two feet
Green Strategies, Inc.
The Problem of Climate Change
• Latest estimates are for average
temperature increase over the next
hundred years of 3 to 10 degrees
• Last ice age (when the Northeast was
under 3,000 feet of ice) was 5 to 9
degrees cooler than today
Green Strategies, Inc.
The Evolution of the Issue: from
Activists to the Board Room
• No longer a “fringe” environmental issue
• WEF called GCC the greatest challenge facing
•
business in the 21st century
Increasing regulations worldwide – Industrialized
world (sans U.S.) committed to Kyoto
(multinationals must respond)
Green Strategies, Inc.
Climate Change as a Fiduciary
Issue: the Drivers (CERES)
• The Science is No Longer in Doubt
• Political Consensus is Coming
• The Link between Environmental and Financial
•
•
Performance is more Clear
Shareholders are Taking Notice
Increasing Demand for Disclosure
Green Strategies, Inc.
Climate Change as a Fiduciary
Issue: Risk (an Issue for All
Investors)
• Risk from Impacts
• Risk from Mitigation Policies
• Risk of boycotts, ability to attract and retain high
•
quality workforce
Company’s Climate/Carbon exposure can
threaten shareholder value by as much as 15%
of Market Capitalization (Innovest)
Green Strategies, Inc.
Climate Change as an SRI Issue:
Negative Screens . . .
• Carbon Intensive Industries – (coal, e.g.)
• Retrograde Lobbying Associations (GCC,
e.g.)
Not Enough
Green Strategies, Inc.
Climate Change as an SRI Issue:
Sector Positives . . .
• Renewable energy
• Other “Clean” Energy
• Efficient or other Clean transportation
•
technologies
Other efficiency technologies
An important piece
Green Strategies, Inc.
Climate Change as an SRI Issue:
Indirect Positives . . .
• Voluntary Measures: Benchmarking; Participation
in progressive policy advocacy efforts; Voluntary
reporting initiatives
Important, but indirect and there is a potential
for greenwashing
Green Strategies, Inc.
Energy Management: Direct Climate
Impact and Fiduciary Implications
• Energy management and use is a direct indicator
of climate change impact
– Could be a positive or negative screen
• Energy management and use is an indicator of
value
– All fiduciaries could benefit from this info.
Green Strategies, Inc.
U.S. GHG Emissions by Sector
8%
5%1%
8%
Electricity
Generation
Transportation
33%
Industry
Agriculture
Residential
19%
Commercial
26%
Green Strategies, Inc.
U.S. Territories
Energy Efficiency is Key to Climate
Efficient use of energy reduces the need
for energy production, decreasing
greenhouse gas emissions from power
plants
Green Strategies, Inc.
Energy Efficiency is Key to Climate
(cont’d)
• The energy to run commercial buildings
produces 16% of U.S. carbon emissions
• If households in California replaced four
regular bulbs with CFLs, it would be the
equivalent of building 17 new medium
sized power plants
Green Strategies, Inc.
Energy Efficiency Adds to Value
• Increased productivity
• Reduced costs
• Decreased risk exposure
• Improved corporate image
Green Strategies, Inc.
Energy Efficiency Saves Money
• U.S. businesses waste $25 billion/year
because of inefficient buildings
• Investments in building EE can achieve a
35% to 50% reduction in energy
consumption, with a 20% to 35% ROI, not
counting productivity gains
Green Strategies, Inc.
Energy Efficiency Reduces Risk
• Energy prices are volatile
• New climate policies could penalize big energy
•
consumers
Electricity supply is volatile (e.g. California) and
market structure is uncertain
Green Strategies, Inc.
Conclusion: The SRI Community
Must – and can – put Climate
Change Front and Center
Green Strategies, Inc.