How Energy Regulations Actually Help Improve Organizations

By Yaniv Vardi

Regulations, whether mandated by governments or by industries, are often scoffed at and belittled as an annoyance that hinders progress and innovation and harms business.

For example, when the pharmaceutical industry passed the 21 CFR Part 11 regulation, requiring pharmaceutical firms to submit their records to regulatory bodies electronically, many felt that the regulations would hinder productivity. Instead, the landmark regulation sparked a technological innovation that  increased the production levels of manufacturers and also ensured safer finished products for end users.

The pharmaceutical industry benefited and their patients benefited as the result of the regulation.

When it comes to sustainable business practices, recent mandates and current regulations may also be viewed as stifling productivity, but they are actually here to disrupt our ways of thinking, acting and conducting business – for the better.

In the United Kingdom, for example, quoted companies are required to report greenhouse gas emissions as a part of their annual Directors’ Report. To these companies, Mandatory Carbon Reporting may at first seem like unnecessary paperwork that is expensive to manage and time-consuming to handle. But in fact, carbon reporting facilitates organizational changes that have positive effects on businesses in the U.K. and around the world.

Mandated reporting requires companies to ensure that they have visibility into their energy usage and carbon emissions in order to report their annual greenhouse gas (GHG) emissions in their directors’ reports. That visibility, in turn, results in a reduction of energy consumption and improvements to business efficiencies.

To the dieter, keeping a food diary encourages eating less; to the spender, an accounting registry promotes shopping less; to the energy-hogging business, emissions reporting mandates facilitate consuming less.

Good for the environment? Definitely, but also good for business!

When we consume less energy, we spend less on energy. By reporting and reducing our emissions, we may also qualify for rebates. Financially, it makes business sense. And when finances are involved, we tend to promote company-wide commitment and participation in the cause.  This creates a corporate culture of social responsibility and energy efficiency. It promotes behavioral change within our organizations that betters our employees, our companies and our planet.

Then, when our companies report on their energy and operational efficiencies, we create brand loyalty and goodwill among shareholders and customers.

For example, the 2012 Energy Efficiency Directive established a set of binding measures to help the EU reach its 20 percent energy efficiency target by 2020, requiring EU countries to use energy more efficiently at all stages of the energy chain from its production to its final consumption. According to EurActiv: “The directive is a game-changer for energy companies, which are now required to achieve 1.5 percent energy savings every year among their final clients. The EU law is also expected to trigger the largest revamp of Europe's existing building stock to date and set new standards for public procurement and energy audits.”

Again, good for business and good for end customers. Do regulations require a paradigm shift? Perhaps. But that shift has built-in proven results and profits.

Companies around the world are voluntarily participating in ISO 50001, the international standard for establishing, implementing, maintaining and improving an energy management system.

At 3M, for example, ISO 50001 implementation resulted in 30 percent lower energy intensity, increased awareness of energy performance, engagement of top management, and improved O&M practices.

London South Bank University, implementing the same standard, set a voluntary target of a 35 percent reduction in energy use by 2020.

In 2008, when the U.K.’s Camil Farr manufacturing plant certified as ISO 50001, it reduced energy costs from £500,000 to £300,000. The difference equates to over US$300,000.

These companies clearly have a distinct vision of the future. They understand that regulations in the realm of sustainability are good for business. The new standards have tangible benefits: They help us consume less energy, save more money, quantify our corporate social responsibility efforts, engage all levels of stakeholders, and create profitable companies with loyal customer bases.

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Yaniv Vardi is Chief Executive Officer at Panoramic Power, the leading provider of device level energy management solutions. Yaniv is a seasoned executive with close to two decades of leadership experience in the Enterprise Software Solution Industry. As CEO of Panoramic Power, he oversees the day-to-day operations of the company as well as provides vision, strategic direction and focused execution for the company.