August 2023 Volume 5

ENERGY

A Seat at the Table – What Every Forging Company’s Sustainability Manager Needs to Know About Procuring Green Energy By Nancy Gardner

We have observed a problem that is tripping up the sustainability initiatives of many forging companies: overlooking the vital role of energy procurement in meeting sustainability goals. Put more precisely, Sustainability Managers and Procurement Managers – or elevating this to their C-suite counterparts, Chief Sustainability Officers, and Chief Financial Officers – cannot and should not treat energy procurement and sustainability efforts separately. They are part of a continuum upon which your success depends. The solution to the problem is simple. Sustainability Managers belong at the energy procurement table because how and what energy your organization buys has a tremendous impact on your ability to execute your sustainability plans and bring them in on target. Three key points for all Sustainability Managers, Chief Sustainability Officers, and everyone in your forging company who cares about hitting their Corporate Social Responsibility (CSR) targets more quickly and efficiently: Begin Your CSR Reporting Process with All Your Energy Contract Data in Hand, Not Vice Versa We know this sounds basic, but because the sustainability side of the house is not often familiar with the energy-procurement side of the house, tragic mistakes are made – and they can be avoided! Gather energy contracts at the onset of planning your comprehensive sustainability strategy. This process will make it easier for you to find, and accurately report on, the energy data you need for setting your CSR baselines and monitoring them in perpetuity. Jumping on gathering energy contracts for all of your sites now will also help you, in concert with the aid of an experience energy advisor, identify cost-saving opportunities that can fund key sustainability initiatives and/or help you target energy purchases that will quickly A large holder of commercial properties built out a sustainability team to develop and implement a long-term sustainability plan. But that team did not manage, or even know about, the company’s energy procurement decisions. In fact, energy procurement was totally decentralized at the company, with each building manager advance your sustainability goals (more on this below). To put this all in context, let me share a story with you.

running their own process and making their own deals (a big problem when you own tens, hundreds, or thousands of buildings). Instead of working to gather this data up front, the sustainability team focused on other aspects of its CSR reporting. When it finally did get to pulling together the company’s current energy contracts, the process took an additional six months . Not only did the sustainability team have to dramatically revise its report based on the information it uncovered, but in all the time that had passed, energy prices had climbed dramatically. In essence, by finishing with energy contracts instead of starting with them, energy markets had moved up (remember, energy is a volatile commodity), and the company had lost a significant opportunity to buy renewable energy affordably – a lost opportunity and an expensive lesson, both in dollars and in time to fulfill sustainability goals. Know Your Options Forgers have many choices when it comes to buying renewable energy, each with their own merits, risks, and timelines. To help you make the best purchases for your company, here are the three that you need to understand: Renewable Energy Certificates (RECs) – RECs are a financial instrument that represent the green attributes of 1 MW of clean power. While many companies have long-term ESG goals of reaching zero-net-carbon operation, most do not understand that they can green part or all their operations quickly and easily by buying RECs now. You need to be your company’s expert on RECs and also on how to procure them (more on that below). Renewable-Asset-Backed Retail Contracts – This is an emerging product category led by retail energy suppliers. Much simpler than power purchase agreements (which we will address next), renewable-asset-backed retail contracts offer commercial, industrial, and institutional customers renewable energy from a specific project with the convenience of a normal monthly power bill. With the help of an energy procurement specialist like Transparent Energy, your next energy contract(s) could fall into this category, greening your operations for 1-5 years, and potentially longer as you renew contracts, or enter into new ones upon expiration.

FIA MAGAZINE | AUGUST 2023 10