P16100_strategybrief

Energy Strategy
for the C-Suite:
From Cost Center to
Competitive Advantage
An Introduction to the Unified Approach
to Energy Transformation
Tim Healy, Chairman and CEO, EnerNOC
George Favaloro, Managing Director, PwC
Andrew Winston, Winston Eco-Strategies
Any trademarks included are trademarks of their respective owners and are not affiliated
with, nor endorsed by, PricewaterhouseCoopers LLP, its subsidiaries or affiliates.

2
Executive Summary
The Overarching Story: Why a Unified Energy Strategy Is a Must-Have
For Value Creation Today
Energy has become a core strategic issue for businesses in nearly every sector,
but few executives realize its impact on their organization’s overall performance.
Increasingly strict government regulations and the evolving nature of expectations
among customers, investors, and the workforce are putting more pressure on
how enterprises handle both energy use and carbon emissions. At the same time,
emerging technologies and easy access to clean energy are giving businesses
more options for strategically sourcing their energy than ever before.
The smartest organizations understand the value of energy and manage it proactive-
ly across the enterprise. Those holding onto an outdated view of energy are falling
behind their peers in profitability, brand value, and talent acquisition and retention.
The Big Gap: Why Businesses Aren’t Capitalizing on Energy
as a Strategic Advantage
Most executives lack the necessary resources to develop and execute
on an energy strategy that creates value. Those resources are:
1. Access to in-depth information about how energy affects the business
at every level
2. Centralized ownership and accountability to manage energy as every
other major operational line item is managed
3. An understanding of the organization’s energy strategy maturity and how
it compares to peers
4. A clear view of how to capitalize on opportunities to improve performance
and profit in the short, medium, and long terms
Until now, executives have lacked a well-defined roadmap for building an energy
strategy that positions their organizations to thrive in the face of rapid change.
That’s why even enterprises with relatively mature energy strategies often find
themselves managing energy reactively, responding to short-term trends rather
than creating long-term business value. The Unified Approach to Energy
Transformation remedies this gap.

3
Introduction
For businesses seeking growth and competitive advantage, treating energy as
a low-level issue—just a line-item expense for middle managers to deal with—can
be a costly mistake. Companies lacking a sophisticated energy strategy with senior
executive engagement will miss opportunities to drive innovation. They will also
leave themselves dangerously exposed to everything from profit-damaging price
volatility to mismanaging carbon emissions in the face of increasing pressure from
society to tackle climate change.
Historically, elevating energy management to a senior-level imperative has seem
ed unnecessary, offering cost savings that appeared too small to matter. But ener-
gy is now a bigger issue than companies realize. Total energy spend is commonly
a top-five corporate expense category, and the way the business world is thinking
about energy is changing dramatically. A company’s approach to energy and car-
bon emissions now directly impacts its cost structure, its risk profile and resilience,
and its brand value with customers, employees, and communities.
Carbon regulations at federal, regional, and local levels are proliferating rapidly.
Demands for more transparency about all aspects of business, including a com-
pany’s impact on the environment and broader society, will continue to rise. More
specifically, customers, employees, and communities are asking more questions
about how a business sources and uses energy and how much carbon it emits.
Together, these powerful trends produce a volatile mix of pressure
on businesses to do better.
It’s time to look at energy through a whole new strategic lens. Once the domain
of facility and operations managers, energy now merits engagement and direction
at the C-suite level. A focus on energy can be a vehicle for positive change and
innovation. This paper lays out the changing landscape for business, illuminates
the value that’s at stake, and provides a set of emerging leading practices that
will raise your energy and business performance to a new level.

4
A Changing Landscape
Several societal megatrends coupled with the transformation of the
energy industry have raised the profile and importance of energy,
making it an executive imperative.
Evolution of
Energy Markets
New Emerging
Energy Technologies
■ The growth of big data and
analytics, cloud computing, and
digitization and connectedness
of physical assets (e.g., Internet
of Things)
■ Rising expectations for trans
parency from corporations—
including investor interest in
non-financial information
■ Rising pressure from govern
ments and society to reduce
carbon emissions and to
demonstrate resilience
■ Emergence of sustainability-
minded millennials as the largest
consumer and employee cohort
■ Renewables becoming cheaper and
easier to integrate on and off-site
■ Growth in distributed and self
generation and the emergence
of smart grid, energy intelligence
platforms, and energy storage
■ Structural changes in baseload
power mix, and increased volatility
due to emerging dominance of
natural gas and pressures on coal
■ Increasing customer choice and
flexibility in energy procurement
and use
■ Rapid evolution and increasing
complexity of tariffs, incentives,
and financing
Technological
Breakthroughs
Radical
Transparency
Climate
Change
Demographic
Shifts
MEGATRENDS
CHALLENGES AND OPPORTUNITIES
ENERGY-SPECIFIC TRENDSBROAD BUSINESS TRENDS

5
Broad macroeconomic forces are reshaping the world and dramatically changing
the business landscape in the process. Through extensive research with its clients,
PwC has identified key megatrends that are changing the foundation of how
businesses think and operate—and putting energy strategy front and center as
a key business value driver.1
■ New technological breakthroughs are turning science fiction into reality at
the fastest pace in recorded human history; to think that the way we buy and
use energy won’t be transformed by these breakthroughs is shortsighted and
potentially harmful to your business. In energy, the growth of big data analytics,
cloud computing, and connected devices (the so-called Internet of Things) has
driven unprecedented visibility into and control of the performance and inter-
action of systems. Whereas the full extent of energy data was once limited to
the monthly utility bill, today real-time monitoring of data and powerful predic-
tive capabilities add intelligence to our energy infrastructure and make it more
responsive to changing conditions.
■ We have entered an era of radical transparency, when consumers demand
unprecedented levels of information about companies—and anyone with
a social media following has the ability to build up or tear down a brand.
Corporations face demands for more transparency, enabled by technology
and driven in part by concerns about the environmental and social impacts
of their products and services. In particular, there’s been a spike in investor
demand for more information on how companies are responding to and
managing the “material” risks presented by the megatrends.2
Energy is now
viewed as a material business driver, and investors are not satisfied by press
releases and sustainability reports—they want details on carbon and energy
management strategies, with progress backed up by credible data.
■ Demographic and attitude shifts: Millennials are rapidly emerging as
the largest consumer and employee cohort—they will make up 50% of the
global workforce by 2020. Relative to the generations that came before
them, millennials are demanding higher levels of corporate accountability
and a commitment to a more sustainable future. A 2015 Morgan Stanley
study shows that they are two to three times more likely to want to buy from
and work at companies that share their values and manage environmental
and social issues well.3
1
PwC, “Five Global Megatrends”, http://www.pwc.com/gx/en/issues/megatrends.html, viewed
May 25, 2016
2
PwC, “Sustainability goes mainstream: Insights into investor views”, http://www.pwc.com/us/
en/governance-insights-center/publications/sustainability-goes-mainstream-investor-views.
html, viewed May 25, 2016
3
Morgan Stanley Institute for Sustainable Investing, “Sustainability Through the Eye of the
Investor”, http://www.morganstanley.com/ms-articles/sustainability-in-the-eye-of-the-investor/,
viewed May 25, 2016

6
■ Climate change: The pressure from governments, customers, and citizens
to reduce carbon emissions continues to rise. The December 2015 United
Nations climate conference in Paris led to a global agreement adopted by 195
countries, including the US. Following the Paris Agreement, which was hailed
as a potential turning point in global efforts to control carbon emissions, more
than 100 leading companies committed to aggressive, “science-based” carbon
reductions.4
Regardless of individual views on the relevance and importance
of addressing climate change, it is now a business imperative to proactively
respond to growing stakeholder concerns, customer demands, and govern-
mental regulations.
In conjunction with these four broad megatrends, two energy-specific megatrends
are impacting how businesses should approach their energy strategy:
■ New and emerging energy technologies: In the past decade, technology has
changed almost every aspect of energy production and consumption—most
notably renewable energy, distributed and self-generation, smart grid, energy
intelligence software, and energy storage.
Renewable energy technologies are becoming cheaper and easier to
integrate, both on- and off-site. With existing incentives, renewables can
immediately save companies money in many states today. Led by solar and
wind, renewable energy deployments represented more than 50% of new
generating capacity added in the US for eight consecutive quarters as of Q4
2015.5
Renewable procurement has grown exponentially in recent years, and
a growing list of global leaders such as Unilever, Intel, Johnson Johnson,
Nike, and Nestle have publicly promised to reach 100% renewable energy
within specific timeframes.6
In addition to the rise of renewables, we are seeing growth in distributed and
self-generation, the emergence of energy intelligence software platforms, and
wider deployments of smart grid and energy storage enabling cost optimization,
“demand shaping,” and increased levels of resilience.
4
The Science Based Targets Initiative, “Companies Commit to Set Ambitious Science-
Based Emissions Reduction Targets, Surpassing Goal”, http://sciencebasedtargets.
org/2015/12/08/114-companies-commit-to-set-ambitious-science-based-emissions-reduction-
targets-surpassing-goal/, viewed May 25, 2016
5
US Federal Energy Regulatory Commission, “Office of Energy Projects Energy Infrastructure
Update For December 2015”, http://www.ferc.gov/legal/staff-reports/2015/dec-infrastructure.
pdf, viewed May 25, 2016
6
RE100, “58 RE100 companies have made a commitment to go '100% renewable”,
http://there100.org/companies.html, viewed May 25, 2016

7
■ Evolution of energy markets: Important changes in how we buy and sell
energy are enabling and helping the growth of new technologies. We observe
three major shifts in energy markets.
Increasing customer choice and flexibility in energy procurement means that
corporations are no longer limited to buying power from the local regulated
utility. With deregulation comes the choice of whom to buy from and opens
opportunities to negotiate with energy providers, even pitting them to bid
against each other through auctions for your business. Even in regulated
markets, demand response, storage, and on-site generation (whether through
cogeneration, backup generators, or renewables) give customers flexibility for
when (e.g., not during peak usage times) and how much to buy from the grid.
Structural changes in the baseload power mix are taking place. Over the past
decade, we have seen a gradual shift of baseload power generation from coal
to natural gas—driven first by low gas prices and increasingly by climate change
concerns. In fact, natural gas, which historically was primarily used for “peaker
plants,” exceeded coal as the primary source for US electricity generation for
the first time ever in April 2015.7
At the same time, there are growing concerns
about increased volatility and the impact on business continuity due to the
emerging and rapid integration of intermittent generation from renewables.
New and more complex tariffs, incentives, and financing structures are emerg-
ing. Time-based pricing and more complex tariff structures provide compa-
nies with opportunities to reduce costs by managing when and how they use
energy. In fact, the number of utilities offering customers dynamic pricing has
more than tripled in the past five years.8
Utilities and regulators are providing
incentives, such as rebates, low-rate financing, and tax credits, to encourage
companies to become more energy efficient and to invest in renewable ener-
gy. An explosion of on- and off-balance sheet financing mechanisms has made
more options available to buyers of energy efficiency products and renewable
energy, including property assessed clean energy (PACE), power purchase
agreements (PPAs), lease agreements, and performance contracts.
7
U.S. Energy Information Administration, http://www.eia.gov/todayinenergy/detail.
cfm?id=22312 Electricity from natural gas surpasses coal for first time, but just for one
month” http://www.eia.gov/todayinenergy/detail.cfm?id=22312, viewed May 25, 2016
8
EnerNOC Analysis with data from US Energy Information Administration Form 861
indicates that in the last 5 years, there has been a 227% growth in the number of the
number of utilities offering customers dynamic pricing.

8
The Implications: Challenges, Opportunities,
and Value at Stake
The six megatrends lead to some key implications for how companies manage
energy. We believe companies will be more successful if they develop energy
strategies that address these challenges and opportunities:
■ Manage energy in a more coordinated and strategic way across
the organization.
■ Use energy data to manage and improve business performance. The falling
costs of measurement and analytical tools and the proliferation of data mean
that companies can measure and gain insights on their energy use patterns
in a much more granular and powerful way than ever before.
■ Adopt new energy technologies and take advantage of market changes.
■ Embrace the reality of increased transparency. All stakeholders—investors,
employees, and customers—are simply demanding more information on
material performance drivers and everyday operations.
Meeting these challenges and opportunities will help companies capture many
business benefits—from immediate cost savings to more difficult-to-measure but
fundamental changes. These include:
Direct
Financial Value
Profitability
Productivity of Assets
Indirect
Business Value
Risk Mitigation
Reporting
Responsiveness
Talent Acquisition
and Retention
Brand Reinforcement
Longer-Term
Enterprise Value
Resilience
Innovation
Environmental
and Social Impact
A photovoltaic (PV) solar renew-
able energy project at Starwood
Hotels Resorts exemplifies
how smart energy strategy can
extend across both short and
long term value drivers. In 2014,
the company announced a
partnership with NRG Energy
to integrate solar into its prop-
erties. This included a 2,000 PV
solar panel project at one
of The Luxury Collection's flag-
ship properties, The Phoenician
Resort in Scottsdale, Arizona.
Not only were the solar panels
financed through a power pur-
chase agreement (PPA) which
required no capital outlay, but
they also offered an opportunity
to further Starwood’s sustain-
ability efforts through the use
of renewable energy. This
project is one example of how
Starwood has embedded its
energy strategy into the overall
business strategy while continu-
ing to provide a luxury guest ex-
perience. By providing shading,
the solar installation created an
additional outdoor event space
which is a coveted amenity
especially during the hot desert
summer months. By thinking
about its energy strategy in this
integrated fashion, Starwood
has created a new revenue-
generating asset, driving direct,
indirect, and longer-term
business value.
■ Higher profitability and insights that lead to higher asset productivity,
generating immediate, direct financial value;
■ Benefits that are harder to measure but no less real, such as brand building,
employee engagement and attraction of talent, reduced risk (commodity price
risk, discontinuity risk, brand risk), and more efficient and effective compliance
and reporting; and
■ In the longer term, driving innovation, building organizational resilience (in
operations, the supply chain, and even the business model), and improving
environmental and social performance.

9
Take a Unified Approach to Energy Transformation
To respond to these trends effectively, succeed in a changing energy marketplace,
and capture the most business value, executives need to look beyond the more
traditional energy management best practice frameworks. Focused on facility-level
optimization and the plan-do-check-act management cycle, existing frameworks
do provide valuable guidance for companies establishing fundamental practices
in energy management. However, they are not sufficient for companies seeking
to develop a comprehensive energy strategy that will position them to respond
nimbly to the evolving marketplace and megatrends.
For each of the strategic principles, we have identified the emerging leading
practices that can collectively serve as a guiding framework for advanced energy
strategy development and execution.
Manage energy in a more
coordinated and strategic
way across the organization.
Use energy data to manage and
improve business performance.
Adopt new energy
technologies and take
advantage of market changes.
Embrace the reality
of increased transparency.
PROMOTE your efforts and
celebrate success.
ELEVATE business performance
using energy intelligence.
INTEGRATE energy management
into the fabric of your company.
CAPITALIZE on new technologies
and market choices.
Strategic PrinciplesChallenges and Opportunities
“Leading companies involved
with ENERGY STAR are find-
ing they are better positioned
to address new expectations
around transparency, climate
and sustainability management,
CSR, and rapidly changing
energy markets because they
established strong energy
programs,” notes Walt Tunnes-
sen, National Program Manager
for Industry at the US EPA’s
ENERGY STAR program. “Unfor-
tunately we still see too many
business sectors and compa-
nies lacking the fundamental
energy management practices
and strategies needed for navi-
gating changing market, regula-
tory, and social conditions. Not
only are these organizations
spending too much on energy,
they may be putting themselves
at a competitive disadvantage.
Fortunately, it’s easier than ever
to establish better energy man-
agement practices. It just has to
be made a priority.”
The solution? Apply a set of unified strategic principles and emerging leading
practices that will transform how you manage energy:

1010
INTEGRATE Energy Management into the Fabric of Your Company
As with other initiatives intended to produce significant business value,
a more strategic focus on managing energy needs to start from the top of the
organization and be embedded throughout. The first step is to develop a clear
vision, strategy, and governance approach for energy. The strategy should be
led by the C-suite, with a structure that creates accountability from the top and
enables global collaboration and alignment among internal energy stakeholders,
including operations, finance, purchasing, and sustainability.
Organization-wide goals—ideally science-based, time-bound, and public—will
solidify the vision and help drive strategy and accountability. Companies are increas-
ingly setting public carbon reduction goals based on an objective calculation of their
fair contribution to an overall goal of reducing global greenhouse gas emissions to
limit global warming to a “safe level” (commonly understood as below 2 degrees
Celsius). Achieving these goals typically requires a combination of using less energy
(conservation and efficiency) and decarbonizing the energy you do use (primarily
through sourcing renewables).
A critical element of the internal coordination is to connect the supply side (pro-
curement) and demand side (use) of energy. You can do this programmatically by
evaluating and linking energy usage across operations with an understanding of
supply options (e.g., combined heat and power, renewables) and pricing structures
that drive energy costs (e.g., peak demand charges).
It is also important to ensure that energy is incorporated into your risk management,
resilience, and capital strategies. As Hurricane Sandy showed, even in places with a
reliable electric grid, companies should have proactive mitigation and contingency
plans for power outages, which can have serious financial and customer relationship
consequences. Leading companies systematically identify critical loads and engineer
backup and recovery solutions to maximize resiliency and avoid costly outages.
Renewable energy and storage technologies offer new opportunities for companies
to manage operational and supply chain disruption risks.
Emerging Practices 
1 Develop a global
energy strategy,
with C-suite and cross-
functional accountability,
to enable high-quality
decision making
2 Set ambitious, compre
hensive, time-bound,
science-based goals
3 Connect consumption
activities and procure-
ment strategy to manage
total energy cost
4 Incorporate energy
into your risk manage-
ment, resilience, and
capital strategy
5 Use energy as a keystone
metric (a primary business
success indicator that
aligns your organization)

11
Using energy as a “keystone metric” (a focal measurement of organizational
success) to align your organization and change habits and behaviors can also
improve other key aspects of performance, such as quality and productivity.
9
Ibid, and Conway Management, “What’s your keystone metric?”, http://www.conwaymgmt.
com/pdfs/NL21-2-WhatsYourKeystoneMetric.pdf, viewed May 25, 2016
What is a keystone metric and how can it drive strategic change
across your business?
A keystone metric is a barometer of your organization’s overall perfor-
mance—a single metric that can drive broader success or failure in other
parts of the organization.
Charles Duhigg, author of The Power of Habit, recounts the story of Alcoa,
which saw profits hit a record high just one year after Paul O’Neill took over
as CEO in 1987 and instituted a company-wide focus on one metric—getting
to zero worker injuries. This entailed encouraging all employees to suggest
safety improvements, expecting managers to follow through on these sug-
gestions, and holding executives personally accountable for worker injuries
across the organization. By the time O’Neill retired in 2000, the company’s
net income and stock price had grown five-fold.9
At first blush, zero worker injuries may not seem to be a leading indicator
for growth and profit, but it ultimately drove accountability and operational
excellence at Alcoa. An energy metric can play the same role in many
organizations. Data centers, for example, view energy data as a sign of both
the efficiency of their internal operations and the availability of their online
services. When used as a keystone metric, a focus on energy doesn’t just
lead to operational efficiency—it’s a reflection of how well an organization
is able to adapt to a rapidly changing business environment.
The risk of business interruption
continues to rise in importance
for companies, along with
concerns over the potential
for weather-related events,
cyber-attack and terrorism,”
says John Stampfel, a Vice
President and General Manager
at Eaton, a global leader in
power management solutions.
“A sound energy strategy in
today’s operating environment
will not only continue to take
into account energy costs and
changing utility tariffs, it will
also consider the relationship
between critical operations
and backup power, renewable
generation, demand response,
and more recent technological
advances. Future investments
can then not only have an
impact on energy costs and
carbon emissions, but can also
improve the overall reliability
and resiliency of the business.”

1212
ELEVATE Business Performance Using Energy Intelligence
To fully benefit from the power of new energy intelligence capabilities that data
gathering and analysis tools offer, organizations need to engage with data at
both the macro and micro levels. At the enterprise level, energy data can enable
tracking against goals, benchmarking of performance across business units and
locations, allocation of energy budgets with accountability, and accurate, on-going
reporting on executive dashboards. Most importantly, advanced use of energy
data can make clear the relationship between energy and costs, productivity, and
other business measures. Energy-related key performance indicators (KPIs) can
highlight the materiality of energy to the overall business and enable energy cost
measurement in language that matters to stakeholders (e.g., cost of goods sold).
At a more granular level, continuous and real-time measurement and analysis of
the energy profile of an individual process (such as a production line) or piece of
equipment delivers an “energy signature” that reveals opportunities to drive pro-
ductivity and innovation. For example, it can enable companies to ensure equip-
ment is operating to specifications, avoid downtime by anticipating equipment
failures, and identify inefficiencies and opportunities for quality improvements
that yield benefits well beyond energy savings.
Leaders are expanding the scope of their energy activities by reaching beyond
their own “four walls” and engaging with suppliers and other business partners.
By sharing energy data and collaborating on leading energy practices, value
chain partners can collectively manage energy more effectively, become more
resilient, and capture resulting shared benefits.
Finally, as energy and carbon-related reporting requirements proliferate and
expectations for voluntary disclosure rise, having effective systems to track and
report performance is critical. Seek to develop a single system of record to man-
age and dynamically extract global sustainability reporting data that is accurate,
auditable, and credible. While a reporting infrastructure will connect to and benefit
from the data and analytics tools described above, the ability to track and respond
to reporting requirements at multiple levels (process, building, country subsidiary,
global enterprise) in an efficient manner is a distinct capability that can provide
significant labor savings and risk reduction.
6 Track energy data at
the enterprise level
leveraging new tools,
capabilities, and metrics
to tie to overall business
performance (COGS, etc.)
7 Use energy signature
data to ensure “in-spec”
operation, identify
opportunities to increase
productivity and drive
innovation beyond
energy related initiatives
8 Collaborate with and
engage your value chain
partners using energy
data and practices
9 Develop a reporting
infrastructure that
facilitates effective
reporting and proactive
compliance with
regulatory requirements

13
10
EnerNOC, “Get Visibilty, Improve Productivity and Reduce Cost of Goods Sold”,
https://www.enernoc.com/industries/businesses/manufacturing, viewed May 25, 2016
What is an energy signature and how does it impact productivity?
The energy signature is a moment-in-time view of the energy data from
an individual process, system, or component, which provides a view of its
current state and performance trends. Like an MRI or EKG, the energy sig-
nature serves as an important diagnostic tool to assess the process, system,
or component operating health (in other words, is it running efficiently/to
specification). Best-in-class companies monitor such energy signatures on a
regular basis and understand what they should look like under various load
and environmental conditions, to identify and even predict inefficiencies
and failures that are precursors to quality issues and downtime. Applying
advanced analytics to correlate the energy signature to other metrics drives
improved processes, workplace quality, and employee productivity, as well
as reduced maintenance costs.
Boston Properties, one of the largest owners, managers, and developers of Class
A office space in the United States, has been one of the earliest and most aggres-
sive adopters of energy intelligence software to elevate business performance.
James Whalen, Chief Information Officer, explains: “Real-time data and analytics
have enabled us to troubleshoot and correct inefficiencies in three broad areas.
The first is simply being alerted to the status of a malfunctioning piece of equip-
ment. Another is being able to effectively manage set points and make changes
when systems run outside of spec instead of waiting until the utility bill comes and
realizing money was wasted. The third is the ability to adapt quickly to changing
occupancy patterns in a building. Let’s say you have a tenant move out, and you
have downtime before a tenant moves in—that’s time that can be managed.
With a toolset that allows us to have real-time visibility into what’s going on,
we are able to make changes much more quickly.”
For high-tech manufacturer
Saint-Gobain Crystals,
energy intelligence has be-
come essential to accurately
determine production costs.
Their Ohio factory produces
30,000 distinct products,
all of which have different
energy demands. With
access to granular energy
data, they were able to
understand energy cost per
product line, understand true
COGS, adjust product prices
to be more competitive, and
gain a stronger foothold in
the market.10

1414
CAPITALIZE on New Technologies and Market Choices
Companies can also drive performance improvements by taking advantage of
the new options presented by advanced technologies and new financing mech-
anisms. Energy leaders continuously evaluate and use new and evolving energy
technologies to reduce their costs, carbon footprint, and grid dependency. They
also evaluate complex scenarios and adopt previously infeasible or unavailable
avenues for financing energy initiatives. Whether it’s buying a rooftop solar system
using property-assessed clean energy (PACE) financing, partnering with an energy
developer on a new off-site wind farm through a virtual Power Purchase Agree-
ment (PPA), or installing new storage and control technologies, the options are
more attractive than ever before.
Fortune 1000 spice manufacturer McCormick Co. has been an early mover
to innovative energy financing. Working with competitive energy company
Constellation to structure a mutually beneficial deal, McCormick’s largest
packaging plant avoided the significant capital expense of replacing dozens
of old, inefficient air conditioning units. Instead, the energy company paid
to build a brand new chiller plant to air condition McCormick’s facility, and in
exchange McCormick buys the cold air produced for a fixed monthly fee in a
long-term contract. “Not only did this model keep the project from eating up
our capital expense with a poor financial return,” Sustainable Manufacturing
Manager Jeff Blankman said, “we have a more energy efficient system and
can concentrate on packaging spices.”
Large corporate energy users have long engaged in policy discussions to influ-
ence energy market opportunities, but what’s new now is the scope of influence
and the range of potential outcomes that are up for debate. By helping to shape
the evolution of energy tariffs and regulations, and engaging on carbon pricing
issues and federal climate action, organizations can improve the odds that the
future energy marketplace takes into account their specific needs and points of
view. By staying closely engaged in the process, they can also anticipate and
respond nimbly to policy changes.
10 Evaluate and deploy
advanced energy
generation, storage,
and control technologies
where they can have
maximum impact
11 Use advanced
financing mechanisms
to expand your energy
project options
12 Engage in policy
discussions at all levels
to influence energy
market opportunities

15
PROMOTE Your Efforts and Celebrate Success
In our current age of transparency, it’s critical that companies have solid backup
for any claims they make about their energy performance. With reliable, verifiable
data, they can communicate with all their stakeholders and get proper credit for
their efforts from customers, business partners, investors, and prospective and
current employees.
Talking about an energy program internally is critical for motivating employees
to actively contribute to the program’s goals. Engaged employees can more
effectively identify and pursue energy projects, including the many energy sav-
ings opportunities that rely on ground-level behavior change rather than capital
investments. Behavior change can be driven by promoting the use and sharing
of energy and ROI data, rewarding and incentivizing participation, and providing
energy education and training.
By engaging your employees, you can enable and motivate them to actively contrib-
ute to your energy program. Engaged employees can more effectively identify and
pursue energy projects, including the many energy savings opportunities that rely
on ground-level behavior change rather than capital investments. Behavior change
can be driven by promoting the use and sharing of energy and ROI data, rewarding
and incentivizing participation, and providing energy education and training.
“Successful energy transformation goals are only possible when front-line
employees are also committed to the process,” notes Joseph Pendergast,
North American Commodity Manager at Philips. But it’s a two-way street,
he reminds us: “Leadership can emphasize their commitment by providing
tools to understand internal energy use patterns, empowering employees
to act with new technologies, and ultimately aligning individual incentives
with corporate objectives.”
Companies should not overlook the intangible value, in terms of employee
satisfaction, talent attraction, and brand building, that can be gained from sharing
strong energy and carbon performance and commitments. If you don’t take credit
for your efforts, you will miss out on opportunities to enhance your reputation and
strengthen relationships with stakeholders. In the current age of transparency, it’s
important to share your story and connect it to your positive corporate values and
your commitment to responsible behavior. Be sure to communicate your energy
performance in your corporate and product-level messaging and marketing,
participate in relevant certifications and recognition programs (such as ENERGY
STAR and LEED), and use energy performance to engage with stakeholders.
13 Empower and motivate
your workforce to con
tribute to your energy
strategy and goals
14 Communicate energy
and carbon commitments
and accomplishments
and your positive values
as an organization to
drive intangible value
15 Point to your energy
and carbon successes
as an indicator of
superior management

16
Finally, don’t overlook opportunities to provide investors, business partners,
and other stakeholders with accurate information about how your energy strategy
addresses material issues, drives out costs, reduces risk, and otherwise improves
your corporate performance. Doing so is particularly important if energy and carbon
are “material” issues in your business. Investors, through initiatives such as the
Carbon Disclosure Project (CDP) and the Sustainability Accounting Standards Board
(SASB), are increasingly seeking more information from companies about how they
are managing material issues.
11
Morgan Stanley Research, “Branded Apparel and Footwear: North America Insight:
Sustainability Report: Raising NKE, HBI, and VFC Price Targets,” August 20, 2015.
12
Morningstar, “Morningstar Introduces Industry's First Sustainability Rating for 20,000 Funds
Globally, Giving Investors New Way to Evaluate Investments Based on Environmental,
Social, and Governance (ESG) Factors” https://www.morningstar.com/news/pr-news-wire/
PRNews_20160301CG33842/morningstar-introduces-industrys-first-sustainability-rating-
for-20000-funds-globally-giving-investors-new-way-to-evaluate-investments-based-on-e-
nvironmental-social-and-governance-esg-factors.html, viewed May 25, 2016
Wall Street Rewards Strong Sustainability Strategies
Having a well-thought-out sustainability strategy, including energy manage
ment, isn’t just about capturing the attention of employees and consumers.
Increasingly, investors are paying more attention and rewarding companies
with strong, well-communicated, data-verified programs and results. For ex-
ample, in an August 2015 apparel sector analyst report, Morgan Stanley low-
ered the cost of equity and raised its stock price target for three companies
(Nike, Hanesbrands, and VF) because it assessed them as having “better
and more effective sustainability strategies” than their peers.11
Additionally,
in March 2016, Morningstar, a leading independent investment research firm,
introduced a new rating that will enable investors around the world to evalu-
ate mutual funds and exchange-traded funds based on how well constituent
companies are managing their Environmental, Social, and Governance (ESG)
risks and opportunities.12
“Employees increasingly expect
their companies to be a force
for innovation and good in this
world. By responsibly sourcing
and using energy and making
strides to reduce environmental
impact, employees feel the
company shares their values
and is helping them be part of
the solution. When employees
feel that pride and connection
to positive impact, it increases
the company’s ability to
attract and retain their best
and brightest,” notes Susan
Hunt Stevens, founder and
CEO of WeSpire, an employee
engagement platform.

17
Charting a Course to Transform Your Business
The emerging practices are NOT intended to be a “certification program” or a
rigorous set of “must-dos.” Rather, the goal of the Unified Approach to Energy
Transformation is to help senior executives think about energy strategy in a rapidly
evolving business context. Can these emerging practices enable your organization
to achieve a competitive advantage? The answer depends on what you’re doing
today and where you want to be one, five, or ten years down the road. For starters,
can you answer the following questions?
■ How much do you spend on energy as an organization? What impact does
your energy spend have on your company’s key financial indicators, such
as cost of goods sold?
■ Who is the right person to ask about energy spend across your company?
What senior leader in your organization has insight into, and accountability
for, managing energy effectively?
■ In what aspects of your energy strategy are you leading or lagging
compared to your competitors? Where is there the most value at stake?
■ Is your energy strategy reactive and focused on costs, or proactive and
integrated with your business strategy? If the former, are you comfortable
with your current approach? Are you confident that you are allocating
sufficient resources towards energy issues?
The Unified Approach to Energy Transformation provides a framework to think
about these questions, determine what is right for your organization, and priorit
ize where improvements in energy strategy can have the greatest benefits. Not
all businesses think about energy in the same way: consumer brands often put
a premium on the incremental brand value that strong sustainability efforts can
provide, whereas manufacturing facilities may prioritize resilience. The Unified
Approach isn’t meant to be prescriptive, but rather enable a new way of thinking
about energy and business value creation.
Next step: To assess where your organization is on the maturity spectrum of these
emerging practices, please contact George Favaloro at george.favaloro@pwc.com
or Sarah McAuley at smcauley@enernoc.com.
An assessment of your organization
against the 15 emerging practices
(EP) outlined in this strategy brief can
be a helpful discussion-starter within
your organization, serving to align
key stakeholders from executives to
energy champions around the most
important areas of focus.
Your Organization
Peer Benchmark
EP1
EP2
EP3
EP4
EP5
EP6
EP7
EP8EP9
EP10
EP11
EP12
EP13
EP14
EP15

18
About the Authors
George Favaloro is a Managing Director in the Sustainable Business Solutions (SBS) practice at PwC where his clients include
leaders in manufacturing, consumer products, communication and information technology, as well as in the airline, chemicals,
and utilities industries. He is the Energy Transformation leader within SBS. George holds an MBA from Amos Tuck School at
Dartmouth College and a BA from Princeton University.
Tim Healy is the co-founder and CEO of EnerNOC, the world’s leading provider of energy intelligence software and demand
response solutions. Tim has an extensive background in energy, technology, and business. Prior to EnerNOC, Tim worked in
the Energy Technology Laboratory for Northern Power Systems, Inc., and held positions with Merrill Lynch, International Fuel
Cells (now UTC Fuel Cells), and the venture capital firm Commonwealth Capital Ventures. Tim currently sits on the Board of
Directors of the Advanced Energy Economy (AEE), the New England Clean Energy Council, Genability, Inc., and WeSpire, and
serves on TechNet’s Executive Committee. Tim graduated from Dartmouth College with a BA in Government and Economics,
and received an MBA from the Tuck School of Business at Dartmouth.
Andrew Winston is a globally recognized expert on how companies can navigate and profit from humanity’s biggest challenges.
His views on strategy have been sought after by many of the world’s leading companies, including HP, JJ, Kimberly-Clark,
PepsiCo, PwC, and Unilever. Andrew’s latest book, The Big Pivot, has been selected among the “Best Business Books of 2014”
by Strategy+Business magazine. His first book, Green to Gold, was the top-selling green business title of the last decade.
© 2016 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC
network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information
purposes only, and should not be used as a substitute for consultation with professional advisors.
P16100 © EnerNOC, Inc. All rights reserved. www.enernoc.com
This paper was drafted with the input and guidance of the Energy Management Advisory Council. Council members include:
Kirby Brendsel
Associate Director of Sustainability,
Starwood Hotels
Rob Day
Partner, Black Coral Capital
George Favaloro
Managing Director, PwC
Chris Happ
Co-founder/CEO, Goby
Susan Hunt Stevens
Founder/CEO, WeSpire
Greg Jason
Energy and Environmental
Director, Cargill
Jeffrey Keisler
Professor of Management
Information Systems,
UMass Boston
Bill Kelly
Vice President, Commercial
Americas, SunPower
John MacComber
Senior Lecturer, Finance,
Harvard Business School
Joseph Pendergast
North American Commodities
Manager, Philips
John Stampfel
Vice President and General
Manager – Electrical Engineering
Services Systems, Eaton
Walt Tunnessen
ENERGY STAR National Program
Manager for Industry, US EPA
James Whalen
SVP, Chief Information Officer,
Boston Properties
Andrew Winston
Thought leader/Consultant,
Winston Eco-Strategies

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