Warren Buffett: “When the tide goes out, you see who’s been swimming naked.”
I love this quote, not only is it such a funny visual, but I feel it relates to the sustainability industry in a handful of ways.
When someone asks, “Should I continue with my sustainability goals during a recession?”, I always come back to “How would you analyze your sustainability goals if there wasn’t a recession?”. In taking the time to look at the big picture and being true to the goals, that second part is important, often times, the decision becomes simple.
Being true to the goals, relates back to Warren Buffett’s quote. If the goals are hollow, this is the time where you’re left standing naked for the whole beach to see. We’ll come back to this idea.
1. Financial Affordability = Project Cost + ROI
We all wish we had all the money in the world, that’s why this is first. If there is no money to do a sustainability project, then of course find a different solution or wait until you do. This still isn’t the end all be all though, you don’t need hard cash to do a sustainability project. There are loans and other finance options that have tax, interest rate, and payback benefits because of their environmental purpose.
I am not a financial expert, and if you are looking to do a project I recommend working alongside a financial expert to make your decision if you have further questions. An Energy Engineer, like myself, is trained in determining accurate savings, costs, and payback or Return On Investment (ROI), which could be enough for some to make decision if they have a good understanding of what they can afford; however, an Energy Engineer is not trained in looking at your financial situation. The two should come together to find the best solution; to fulfill both sides of the equation. I see you looking down at the equations, don’t worry, there’s not much math here.
A Financial advisor will help you determine what you can afford today and over time if you are looking to take out a loan;
Financial Adviser Results = Financial Affordability
An Energy Engineer will help determine a project’s cost today, no matter what that includes (construction, consulting, shutting down to do construction, etc) and the ROI given the dollar savings over a designated period of time.
Energy Engineer Results = Project Cost + Return On Investment
Financially speaking, a project makes sense when the results of these two analysis are equal to each other.
Financial Adviser Results = Energy Engineer Results
Therefore,
Financial Affordability = Project Cost + Return On Investment
2. Profit, People, and Planet (ESG Investing)
ESG stands for Environmental, Social, and Governance. This type of reporting and investing looks at a companies goals and metrics in these areas. itty bit Better falls under the E. The S covers things like a business’s equity, inclusion, and community service involvements. The G looks at the integrity and lawfulness of a business, such as accounting practices, leadership selection, and accountability to shareholders. All of which fall under the triple bottom line: profit, people, and planet.
Happy shareholders, customers, and employees are what keep a business profitable. Today, the planet is a priority because we all want a clean home to live in.
This is where Mr. Buffet’s quote comes into play again. During a recession where prices increase and profit may decrease, shareholders, customers, and employees will begin to look more closely into the business in an effort to keep the ship afloat. This is often when hollow goals and dishonesty come to rise to reveal how a business has been running. Obviously, this then leads to distrust and loss in business.
3. Energy Savings
Not only is energy savings good for the planet but it’s good for your wallet as well! If you are looking for ways to pay for a sustainability project, Energy Conservation Measures are a great way to go about it.
Energy Savings Performance Contracting is a method in which the energy savings are used to help pay for the project, making it cost neutral.
Check out this blog that also talks about PACE and PPA, financial methods to purchasing renewables.
4. Maintenance and Operating Costs
Upgrading your 15+ year old equipment can be a great way to minimize Maintenance and Operating Costs. Each equipment type has its own expected Estimated Useful Life (EUL). When analyzing project savings, adding in M&O savings could benefit the project. The amount of M&O savings is dependent on several factors: how well the equipment was maintained, staff availability and experience, and percentage of operating costs to building operation.
5. Healthy Spaces = Healthy People
Improving the office space leads to healthy and happier employees. Improving light and sound quality helps employees stay alert and focused. Improving air quality helps reduce germs and bacteria, reducing sick days. All of which help to retain happier employees and save money.
5. Great for Marketing
Let’s not forget marketing! There are plenty of companies that are deceiving with their marketing…reference Warren Buffet’s quote once again; however, if you true to your sustainability goals and achievements why not show it off?! By letting everyone know what you are doing will gain more interest and support to further your efforts, thus completing the cycle and helping further your sustainability goals.
All in all, there isn’t much rocket science here to show that continuing with your sustainability goals could be more beneficial than detrimental to your building or business during a recession. I also want to come back to the question, “How would you analyze your sustainability goals if there wasn’t a recession?” Every point listed are great business practices and are independent of a recession, it’s all a matter of doing what’s good for your Profit, People, and Planet.
If you need any advice, feel free to reach out!
Are there any other benefits to continuing your Sustainability Goals during a recession?
Let me know in the comments below or hit me up on social media!