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What You Need to Know: Global Trends in Sustainability from Schneider Electric

cover, smallThis is the first in a series of articles taken from entries in the 2014 Insider Knowledge Report.

2013 was a dynamic and banner year for sustainability not only in the US but globally. Within our global sustainability practice at Schneider Electric, we have seen firsthand the practice of sustainability continue to gain traction in virtually all geographic markets and business segments. As sustainability continues to grow, one consistent trend we have seen is that different factors are driving this growth in different regions across the globe.

In the Americas, global multinationals are deploying sustainability initiatives to address business drivers rather than responding to regulatory pressures. Companies are accomplishing this by taking a close look at their supply chain and identifying risk and opportunities for improvement.

By contrast, in Europe the case for sustainable practices is mandatory due to governmental regulations to comply with standards such as the Energy Efficiency Directive, ISO 50001, and others. Failure to comply with these standards can result in increased taxation, which in turn can affect an organization’s bottom line. Compliance, on the other hand, can be rewarding for organizations and may include the increased incentives and funding. Due to Europe’s strong environmental legacy and its commitment to sustainability, it has created a level of awareness throughout the region that remains unmatched.

We’re also seeing an increased focus on sustainability across Asia-Pacific. Many new environmental policies continue to be developed and many of its countries are forming distinct carbon schemes and regulations. As regulations continue to be formed and the focus on environmental issues continues to gain momentum, Asia-Pacific has a great opportunity to become a leader and be on the forefront of sustainability innovation.

Moving beyond a region-specific view, a global trend that continued to gain stream in 2013 was the focus on renewables in both developed and emerging markets. Despite concerns that renewables are still not cost competitive to grid supply, we have seen a steady and growing interest in the development of unique and cutting-edge project structures. With the cost of renewable technologies decreasing, for example – a near 300% technology cost decrease for solar PV in the last four years – we are seeing end users evaluating their options and either investing in their own renewable infrastructure or purchasing renewable energy directly from known assets (i.e., direct to a solar, wind or biomass installation). With the increase in extreme weather, we are seeing a return to energy price volatility. Companies will need to manage the risk of this volatility to keep operating costs at a stable level and renewables are a critical consideration in managing energy procurement strategies.

Lastly, we have seen an expanded focus on retailer/producer responsibility in terms of sustainability. Retailers and brands are seeing the value sustainability brings to their business, and the brand loyalty it builds. More and more these entities are realizing that the assessment and improvement of environmental and social performance through their value chain will add value to their brand and consumer confidence. Self-governing associations such as the Sustainable Apparel Coalition are gaining influence, with more and more retailers using industry standards like the Higg Index to identify risks and benchmark their supply chain performance. This trend will continue as technology enables global sharing of sustainability data, and customers and governments increase the need for corporate transparency on sustainability issues.

John Hoekstra is director of sustainability services (Americas), Andy Dewis is director of sustainability services (EMEA), and John Pasternak is director of sustainability services (Asia-Pacific) for Schneider Electric.

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