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: 54

Comment

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

Join Home Energy Pros

Home Energy Pros

Home Energy Pros was founded by the developers of Home Energy Saver Pro (sponsored by the U.S. Department of Energy,) and brought to you in partnership with Home Energy magazine.

Latest Activity

Bryan Pringle replied to Bryan Pringle's discussion Dense packed cellulose in basement?
"I am getting a lot of "bad idea" push back on this.  I fully understand that…"
5 hours ago
Greg Mitchell commented on Larry Ralph Jr's blog post Top 7 Worst Crawl Space Repairs
"Spray Foam should be used in crawlspaces.   To learn about closed cell foam in crawlspaces…"
5 hours ago
Jerry Lawrence posted events
yesterday
Morgan M Audetat replied to Bryan Pringle's discussion Dense packed cellulose in basement?
"Right you are. You have to ask: what will the cellulose contribute.  Here in Minneapolis we…"
yesterday
Morgan M Audetat replied to Tony Hicks's discussion Slab-on-grade Insulation
"All slabs float. We have been installing radiant floors on various slab constructions since the…"
yesterday
Tony Hicks replied to Tony Hicks's discussion Slab-on-grade Insulation
"2" XPS foam. I'd love an R-20. Having foam thick enough to get an R-20 would be…"
yesterday
Morgan M Audetat replied to Larry Schaffert's discussion How to correctly insulate exterior wall in a 1900 house?
"Sorry, I did missed the "siding nailed directly to the framing", my grandfather would…"
yesterday
Morgan M Audetat replied to Larry Schaffert's discussion How to correctly insulate exterior wall in a 1900 house?
"My own farm house is sided with 1/2" t&g pine boards and vinyl. We foamed then from the…"
yesterday

© 2015   Created by Lawrence Berkeley National Laboratory.

Badges  |  Report an Issue  |  Terms of Service