Energy efficiency economics: Beyond 101

At first blush, the economics of energy efficiency seem straightforward.

A business installs lighting controls or some other improvement. The business then sees its energy costs drop. From the savings, the business repays the investment over weeks, months or years, and then turns a profit on the asset.

While that equation holds true, analysts increasingly value the worth of energy efficiency in other more complex ways as well. The energy efficiency industry, for example, is creating new jobs. Energy efficiency also improves US energy intensity, the amount of energy it takes to support each dollar of economic activity.

And now a report by PwC links a business’ sustainability story with its success undertaking an initial public offering (IPO) before the US Securities and Exchange Commission (SEC).

“It literally can pay to ask: if the company files its registration statement with the SEC tomorrow, what sustainability and corporate responsibility story would it tell to prospective shareholders?” says ‘Factoring Sustainability into IPO Planning: Disclosure trends reveal a changing landscape,’ by PwC Transaction Services.

The report looked at 120 IPO-related filings before the SEC from 2010 and early 2011 across eight industries sectors. PwC found that companies are increasingly addressing energy efficiency and other sustainability issues as part of a larger corporate accountability trend.  

In fact, over 84% of IPO filings had some level of disclosure related to sustainability – and not just because they were required to do so by regulators. About 68% of sustainability disclosures came about for other reasons, such as in discussions about weather-related risk or to showcase corporate accomplishment.  A full one-third of companies in the consumer sector reported either energy efficiency or emissions reductions programs. 

Moreover, the report found public companies, in general, now focus more dollars on sustainability efforts. Roughly $1 of $8 under professional management in the U.S. today involves a strategy of socially responsible investing. In addition, such investments are trending upward. While the universe of professionally managed assets rose only 1% during 2007-2010, assets related to sustainable and socially responsible investing grew 13%.

The report says that companies can increase value when going public by capitalizing on sustainability efforts. PwC recommends that before undertaking an IPO companies develop a clear understanding of how their sustainability story positions them against competition and enhances their appeal to investors. Companies also should consider how sustainability programs can increase revenue and decrease expenses for their goods and services.

This advice comes at a time when IPOs appear to be on the rise after losing steam following the 2008 collapse in financial markets.  While there has been some recent volatility, a “robust pipeline” of companies remains in the process of going public as of third quarter 2011, according to a separate PwC report. And as they do so, their energy efficiency becomes an increasingly important part of the economic story they present to the investment world.

Views: 63

Comment

You need to be a member of Home Energy Pros to add comments!

Join Home Energy Pros

Videos

  • Add Videos
  • View All

Twitter

Latest Activity

Rosie Smith replied to edward knight's discussion Minneapolis duct blaster for sale in the group Energy Auditing Equipment for Sale, Trade or to Purchase
"Hi Edward...is this equipment still available?? Thanks, Rosie Smith Fresno,…"
22 hours ago
Rosie Smith joined allen p tanner's group
Thumbnail

Energy Auditing Equipment for Sale, Trade or to Purchase

Discuss the pros and cons of the equipment you are interested in prior to purchase. Post equipment…See More
22 hours ago
Jim Gunshinan liked Tom White's discussion Home Energy Reader Survey
yesterday
Tom White posted a discussion

Home Energy Reader Survey

Home Energy wants to serve you better.  Please …See More
Monday
George Matthews's event was featured

Proof is Possible Tour by the Home Performance Workshop at Truitt and White Lumber Conference Room

October 7, 2016 from 9am to 1pm
Building Energy Performance Testing is sponsoring the Proof is Possible Tour to come to the San…See More
Monday
Profile IconAshley Noreuil, Fred Smith and Peter Moncada joined Home Energy Pros
Monday
George Matthews commented on George Matthews's event Proof is Possible Tour by the Home Performance Workshop
"Here is the flyer for the Advanced Techniques and Tools in Home Performance Friday October 7th at…"
Sunday
George Matthews posted an event

Proof is Possible Tour by the Home Performance Workshop at Truitt and White Lumber Conference Room

October 7, 2016 from 9am to 1pm
Building Energy Performance Testing is sponsoring the Proof is Possible Tour to come to the San…See More
Sunday

© 2016   Created by Lawrence Berkeley National Laboratory.   Powered by

Badges  |  Report an Issue  |  Terms of Service