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: 57

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.  Home Energy Pros is sponsored by the Better Buildings Residential Network.

Latest Activity

Profile IconBenney Dornevil, Mike Norvell Sr and Jen Loomis joined Home Energy Pros
1 hour ago
Joanie Minor posted a status
"Home Performance Institute now offers OSHA 10 and Confined Space Classes. Call 203-536-2151 to register."
2 hours ago
Joanie Minor posted a photo
2 hours ago
John Kaye posted a blog post

FREE Home Efficiency & Safety Assessments in the Los Angeles County area.

Since last June I have been qualifying homeowners in the Los Angeles County for the Home Upgrade…See More
7 hours ago
Eric Kjelshus replied to Rod Fox's discussion Does calcification affect electric water heater aquastat temperature sensor performance?
"Those 240 Volt aquastats shut off and then on kinda quick back on.  The older the tank the…"
12 hours ago
Rod Fox replied to Rod Fox's discussion Does calcification affect electric water heater aquastat temperature sensor performance?
"Well I'd love to tell you folks I found an answer, but I did not... I went to my…"
21 hours ago
Rod Fox replied to Kevin Eigel's discussion What is the best energy auditing software?
"I've been trying to answer this question for many years and have not yet found an answer.…"
21 hours ago
Jerry Lawrence posted events
21 hours ago

© 2015   Created by Lawrence Berkeley National Laboratory.

Badges  |  Report an Issue  |  Terms of Service