RILA Conference

Facility Energy Use

The business case to use natural resources more efficiently while reducing dependence on nonrenewable materials is increasingly clear. For retailers, reducing direct environmental impacts like energy, water, waste, and land use provide opportunities to streamline business operations and save costs.

Developing strategic and operational plans to address the environmental footprint of retail involves understanding impacts, prioritizing responses, tracking progress, and identifying innovative ways to improve retail’s operational footprint. Most important—and most immediately tangible—are the facility operations that organizations control directly and can influence the most, including reducing energy and water consumption, minimizing greenhouse gas (GHG) emissions, and increasing recycling rates to reduce waste.

Through the process of measurement, assessment, strategy implementation, and reporting, retailers are building a foundation that will support continuous improvement in sustainability efforts. These efforts translate into superior operational performance and business and community leadership and provide opportunities to show how the retail business model and sustainable practices intertwine.

On-site renewable energy is a long-term investment that hedges energy costs, saves money, reduces emissions, and provides reputational benefits. Rooftop solar energy systems and microturbines are among the most common approaches. Multiple retailers are on the EPA’s list of top 20 on-site generators of renewable energy: Walmart’s California and Texas facilities place fourth and generate more than 36 million kWh; Kohl’s generates more than 20 million kWh; Safeway generates just less than 10 million kWh; and Macy’s California and Hawaii stores generate more than 5 million kWh (6). Fuel cells are also becoming more common at larger facilities; however, on-site generation is neither financially viable nor technically feasible in all locations.

At the same time that energy consumption per square foot of retail space drops, progressively higher percentages of the energy that is used will be generated from low carbon sources. Investment in renewables, both by retailers and other sectors, will drive prices down, furthering the pace of renewable energy adaption. Doing so will ensure cost effective, reliable energy that is grid independent. In some cases, retail spaces may even serve as a net energy producer and feed clean energy into the local grid. But until the price of renewable energy generation has achieved parity with grid electricity, retailers will continue to invest most significantly in renewable energy in areas with strong financing and incentive programs.

Purchasing renewable energy credits offsets GHG emissions and helps retailers progress toward their GHG goals. Programs such as the EPA’s Green Power Partnership are resources for organizations to find alternative energy producers, promote collaboration, and expedite implementation. The EPA’s top 20 retail partners use a total of 3.9 billion kWh of green power annually.

A LOOK INTO THE FUTURE

As retailers continue to make significant progress toward carbon neutrality and recognize the business benefits beyond just financial savings, others will follow suit with carbon neutrality commitments. Strategic and comprehensive energy and carbon reduction initiatives, like submetering, efficiency retrofits, and renewable energy generation, will become increasingly common.

THE ROLE OF RETAIL DEVELOPERS

In leased spaces, retail tenants can encounter barriers to eco-efficiency because of inflexibility in lease contracts or lack of organizational alignment. For example, a retailer located in a shopping center may want to retrofit lighting systems, but there is little incentive to do so if it shares an energy bill with the rest of the tenants in the complex. To achieve retail’s energy reduction goals, therefore, landlords and retail tenants must collaborate.

To address this issue, in June 2011, RILA, the International Council of Shopping Centers, and Paladino & Co. brought landlords and retailers together for a roundtable on achieving sustainability goals. Those goals include:

Increase measurement and visibility on both sides of the relationship.
Develop continuous eco-improvement strategies that are financially beneficial.
Add value to the shopping experience and both industries’ shareholders.

Toolkits are being developed to address those goals.

Do you have questions or comments? We welcome your feedback.

STUDY: HOW GAP SET ITS CLIMATE IMPACT REDUCTION GOAL

Setting an energy or climate goal helps gain buy-in throughout the organization, communicate long-term intentions, and build public accountability. While Gap originally set a goal to reduce the GHG emissions of its store operations by 11 percent between 2003 and 2008, the company was able to reduce emissions by 20 percent in that time.

In 2011, Gap announced a second goal to build on its achievements: a further reduction in absolute GHG emissions by 20 percent from 2008 levels by 2015. To set the goal, Gap performed detailed GHG accounting for its stores, distribution centers, headquarters, and product transportation. That data was supplemented with Gap’s growth and global expansion plans to forecast the company’s business-as-usual energy consumption.

Concurrently, energy reduction pilot projects provided data to find even more opportunities. In one pilot, a voluntary program identified stores with high energy use and worked with managers to focus on energy conservation. In another, Gap is currently testing LED and CDMI technology in its pilot stores to evaluate the right efficient lighting solution going forward.

The sustainability team, in conjunction with Gap’s real estate and strategy teams, used these analyses to set long-term goals that are ambitious yet achievable, and to allocate resources for the highest impact.