Carbon Trust paper shows UK businesses are not recognising the business case for investing in energy-efficient practices and how it can impact their bottom lines in the long run.
The Business of Energy Efficiency paper is the result of Carbon Trust analysis of more than 1,000 energy-efficiency investments carried out between 2006 and 2009. In-depth interviews were also carried out with leading businesses on barriers to energy efficiency investment. The trust also carried out an online survey of finance directors and senior finance managers at 100 UK companies that spend at least stg£1m per annum on energy.
Based on the results, the Carbon Trust estimates that finance directors at large businesses in the UK are undervaluing the financial returns from investments in energy efficiency by more than half.
It says this undervaluation is one factor leading big businesses to waste at least £1.6bn every year on energy they could easily save through measures, such as upgrades to heating and lighting, energy-saving policies and staff training.
Energy-efficiency projects deliver an average return on investment of 48pc, but most finance directors estimate the average return to be less than 20pc, says the trust.
It says investments in energy efficiency pay back within three years, on average.
“The business case for energy efficiency is clear and compelling. Few other investments get anywhere near that rate of return," explains Hugh Jones, managing director of Carbon Trust Advisory.
“Yet our data suggests big businesses are leaving around half the investment opportunities on the table and continuing to waste billions of pounds on unnecessary energy use every year.”
However, the Carbon Trust points to companies that are capitalising on energy efficiency.
For instance, B&Q is involving staff and customers in its energy agenda by launching a new e-learning module called One Planet Living.
B&Q has 12pc in its CO2 emissions from electricity and 7pc in emissions from gas. It also has an eco champion in each of its stores. B&Q has an eco adviser in each store to help customers identify ways they can lower their carbon footprints in their own homes. The company is aiming to reduce its carbon emissions by 90pc by 2023.
Ladbrokes has invested stg£2m to install new light fitting controllers across its betting shops. It expects to save more than stg£800,000 per year through this initiative. Shop managers are also given energy-saving targets.
Heinz has saved more than 13pc of its annual energy costs in its main UK factory over the past two years. In alliance with the Carbon Trust it realised that the company was expending a large amount of energy was needed to heat cold water to rehydrate dried beans and create the steam that cooks the beans in their cans. Heinz now captures and recycles the waste heat from these processes.
Toyota is aiming to reduce energy usage in its retail network by at least 15pc by extending a pilot scheme that has already led to a reduction of 20pc in energy usage across 16 of its Toyota and Lexus centres in the UK.
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