Global asset sustainability — the key to a greener organisation

In business, one of the keys to successful environmental management is the collection of pertinent data and the processing of that data to determine program success and the direction of efforts required to expand success and remedy areas of weakness. One of the critical programs that can help organisations address this is an asset management application.

The opportunity presented by asset management is fairly simple:

• If you can reduce greenhouse gas (primarily CO₂) via reducing energy consumption, and
• If you can reduce energy consumption via asset management, then
• You can reduce greenhouse gas (primarily CO₂) via asset management and mitigate global warming.

The history of green initiatives

The emergence of green initiatives in recent times is often looked upon as a new revolution freshly begun with the turn of the 21st century. Nothing could be further from the truth. Environmental awareness and the accompanying economic impact have, in fact, been around for years.

US President Theodore Roosevelt was a 'conservationist'. At the turn of the 20th century, he initiated the National Parks system to preserve pristine areas of natural beauty for future generations. The 1973 oil embargo set forth another kind of conservationism — economic conservation: The sharp rise in the prices of petroleum products forced consumers to conserve resources because of the cost of such commodities. In addition, resulting governmental mandates dictated that automobile manufacturers implement better fuel efficiency for their vehicle offerings. And the desire to get the most out of petroleum purchases led to the rise of automobile companies such as Toyota, Nissan (then Datsun) and a little-known company more famous for motorcycles than cars: Honda.

Each of these examples reflects conservation initiatives, which at the time, were seen as having a negative impact on business. Roosevelt's conservationism withheld large portions of old-growth forests from harvesting, thus increasing the cost of timber. He met with vocal opposition, yet stuck to his guns — often alone and unsupported. Historically, efforts to conserve resources and protect the environment have been viewed as anti-business and anti-consumer. 'Tree-hugger' was the common axiom used for persons thought to be irrationally focused upon their estimation of 'nature' to the detriment of working people.

Current initiatives and commitment to a greener planet

Earth-friendly direction

Recent times have seen a tremendous shift in thinking when it comes to environmental issues. The emergence of the economies of China and India has sparked worldwide competition for oil. Western consumers are shifting to an environmentally aware position: dolphin-free tuna, organically grown produce, a move toward hybrid cars and ethanol-based fuel, fluorescent over incandescent light bulbs, solar panels and windmills — consumers are 'voting with their wallets' in favour of products and activities that are conservation-oriented and environmentally friendly.

More significant than these individual instances of conservation awareness are the actions of political and economic leaders:

• In December 1997, the Kyoto Protocol to the United Nations Framework Convention on Climate Change was drafted, representing an effort of the international community to significantly reduce the production of greenhouse gases.
• In his recent book, Where Have All the Leaders Gone?, Lee Iacocca urged US auto manufacturers to develop vehicles with zero emissions, fuelled by non-petroleum-based resources.
• In June 2007, the Chinese government vowed to reduce its pollution level as it continues its economic development.
• In the US in 2006, the California State Legislature dictated a 25% cut in the state's greenhouse gas emissions by 2020 from 2006 levels which, when factoring in the current growth in energy consumption, equates to a 46.5% reduction in greenhouse gases. The legislation went further by mandating that by the year 2050 greenhouse gas levels would be cut to 80% below 1990 levels.

Earth-friendly activities are no longer on the fringe; they are mainstream and growing rapidly.

Good business sense

Businesses are run to make a profit. How does the for-profit origin of the business mentality coexist with the growing wave of environmentally oriented consumer preferences and demands?

Some of the most successful businesses — those with foresight, imagination, leadership and policies that are 'in touch' with their customers — have eagerly adopted earth-friendly practices.

Today's business leaders have made a real and substantial commitment to those practices (green initiatives). Such commitment of time and resources is motivated by several factors, not the least of which is the enhancement of earning capacity.

The most successful forward-looking businesses are embracing the economic benefits of environmental responsibility. They are finding that good stewardship of the planet is not necessarily detrimental to the bottom line. On the contrary, many companies have found substantial profitability in such stewardship.

The message is clear. Profit awaits the environmentally conscious, publicly responsible business. Conservation has become big business. Companies throughout the business spectrum are picking up on environmental issues and are responding with initiatives that promote conservation, reduce greenhouse gas emissions, and foster continuing ecological awareness in their business practices as well as in their customers.

The science behind greenhouse gas Greenhouse gases absorb energy from the sun and reradiate that energy in the form of heat into the atmosphere. This heat, added to the warmth of the sun absorbed by the earth directly, determines the general temperature of the planet. The main sources of carbon emissions are power generation plants (fuelled by coal, oil or gas) and from transportation (chiefly automobiles). The numbers are staggering. Recall the California initiative to reduce emissions by 25% by 2020. This goal means reducing California's carbon emissions by 174 thousand tonnes per year — and that's just California!

The role of asset management in curbing greenhouse gas emissions

Corporate social responsibility (CSR), as applied by AMR Research, is made up of four factors: marketplace, environment, community and workplace.

Each of these factors exerts pressures on business decisions. Responsible businesses must balance these factors in such a way that financial responsibilities to the marketplace and stakeholders merge with obligations to promote the welfare of the community, the environment and the workplace.

Thus, CSR represents a business contribution to sustainable development goals. Corporate social responsibility is about how business takes account of its economic, social and environmental influences in the way it operates — maximising the benefits and minimising the downsides. This equates to the voluntary actions that business can take, over and above compliance with minimum legal requirements, to address both its own competitive interests and the interests of the wider society. Critical factors that a business can control in an environmentally responsible way include waste management, infrastructure management (buildings, facilities and their energy efficiency), emissions management and asset management.

Asset management? Unfortunately, asset management is often forgotten as a key contributor to energy use. Assets are purchased and expected to perform satisfactorily until their estimated end-of-life. However, assets represent a significant portion of a business's operating expense, impacting environmental as well as financial performance.

Since careful management of assets will affect a company's overall environmental efficiency, it is important to integrate energy management into a company's enterprise asset management (EAM) program — both to support CSR goals and to continue improvements in the company's overall financial performance. The best and most well-rounded EAM programs include:

• Maintenance program management: factoring asset operating performance (energy consumption) into maintenance strategy and activities;
• Event management: alerting of an existing asset condition or trend outside of optimum operating parameters for evaluation or remediation;
• Planning: assessing existing asset configuration (design basis) and performance (energy consumption) for optimisation.

This means carefully monitoring assets' energy usage, implementing a comprehensive preventive maintenance program that takes into consideration energy usage, and factoring energy consumption into any plans that include asset acquisition, allocation or replacement.

Note the emphasis on monitoring and preventive maintenance. Energy efficiency cannot be estimated without having accurate data as a basis for that estimation. And preventive maintenance, as has been proven over decades of operation, is the single greatest contributor to asset useful life and optimum equipment productivity.

Efficient assets, then, minimise energy use and improve productivity. A business can be both environmentally responsible and economically competitive.

Recommendations for a green-centric asset management application

Implementing and sustaining a quality CSR-oriented asset management program requires the ability to gather, store and process large quantities of information related to energy consumption, asset condition, asset productivity and the like. Executing such a program manually would be an impossible task — because of the volume of data to be gathered and processed.

Green investment projections

Forward-looking companies are investing in software applications that greatly simplify and streamline the information aspects of environmentally responsible asset management. The following chart from AMR Research (2007) illustrates that the relative portion of a company's IT budget will shift more and more toward CSR operations:

With so much of a business's precious IT budget oriented toward CSR goals, and with so much riding on the success of environmentally responsible operations, a business must be very careful in selecting software applications. There are many excellent applications on the market. Very few of them offer features that are genuinely oriented toward CSR opportunities.

Features that promote green

The following features are recommended to support green CSR goals with respect to environmental sustainability and optimum energy conservation. Many of the following features also improve a business's position with respect to overall asset management. The two goals are mutually supportive.

Additional features may be added, but at minimum, the following are essential:

• Provide the ability to track commodity (electric, water, gas) consumption and rate details associated at the meter level with value roll-up within the organisational asset hierarchy.
• Provide the ability to track electric sub-meter interval data, via integration with an enterprise energy management (EEM) application, at the operational asset or system level.
• Provide existing and pre-existing asset performance monitoring and measurement via key performance indicators (KPIs) that can be displayed on a dashboard configuration page.
• Provide asset condition monitoring through alert set-ups. Unacceptable asset condition should be easily observable.
• Provide a comprehensive preventive maintenance program that can be triggered by set dates, by metered usage, or by selected time intervals.
• Provide a thorough inspection capability that allows users to enter inspection results as subjective values (good, poor, fail) or as quantitative values.
• Provide comprehensive data gathering capability for asset performance and maintenance history.
• Provide library of preformatted reports covering best-practice business processes — including reporting on energy usage and comparison.
• Support WAGES (water, air, gas, electricity, steam) usage logging and reporting.

It is critical for businesses to select a software application that gathers all disparate facility asset information — HVAC units, chillers, boilers, lighting and anything else that consumes energy — into one place and provides operations staff with the critical knowledge of how and when to maintain, replace or alter those assets based upon how much energy they consume, not what date it is on the calendar. The net effect is that total energy spend can be reduced while increasing the performance and uptime of assets.

End game

Is the urgency to curb greenhouse gas emissions a fad or at a critical turning point in our history? As businesses and governments begin taking action to reduce greenhouse gases, what type of approach makes the best financial sense for your business? Only your company can decide. As your business continues to respond to consumers and regulatory agencies who demand a more environmentally conscious approach, it makes good business sense to include asset management as part of your CSR and green strategy.

Any green strategy must rely on the wise collection of pertinent data and the processing of that data to determine program success and the direction of efforts required to expand success and remedy areas of weakness. A comprehensive, green-oriented asset performance management solution will enable you to achieve compliance, efficiency and consumer appeal.

*James Brackenrig is Vice-President and Managing Director, APAC region for Infor Global Solutions.