In an industry that is in charge of billions of dollars of assets, it’s crazy think that the current approaches to asset management are so far behind the curve.

For utilities, which manage facilities, pipes, lines, valves, meters, and many other physical assets, the need to adopt technology to prepare for the financial future couldn’t be greater.

Currently, asset management strategies are largely based on two approaches:

1. Inventory your assets- understand what they are, where they are, how old they are, and any other basic data. Put that into a software system (GIS, CityWorks, Lucity) so they can be visualized and managed.
2. Manage your assets (repair, replace, etc) based on their age– look at a typical or assumed end of useful life curve to figure out what to repair or replace. In other words, assume that an underground pipe is 50 years old and should be replaced in 10 years, because they last about 60 years total.

What’s the problem with this approach? It facilitates throwing massive amounts of money out the window! If an asset is replaced before it’s end of useful life, or isn’t replaced before a major failure, it will cost your organization money that could be prevented with strategic asset management approaches.

So what is the winning strategy? Managing your assets based on their condition, risk, and cost. What does that entail?

Condition– In other words, understanding the true condition of an asset before deciding how to repair or replace. Forget just relying on age- understand the condition (good or bad) of it before making a decision. Do this by looking at the age, the composition, the conditions surrounding it, and any other factors that could extend or shorten it’s like. Great example is an old car- do you need to replace an old car in great condition, just because it’s old?

Risk- Assets fail, so make sure to manage the highest risk assets. Which assets are critical to a system? Which assets would cause great financial impact to an organization if there was a failure? Prioritizing asset management based on the highest risk assets will ensure major risk reductions and optimization of repairing and replacing the right assets.

Cost– What are the costs to replace, reduce risk, and to optimize decisions? Organizations need to be able to quantify this for planning and day to day purposes. Speak the language that all of world speaks- money!

Using these principles for asset management will help organizations make smarter decisions, reduce risk, and save money.

In the sustainability space, I am sure many of you have heard quite a bit of chatter about Life Cycle Assessment, also known as the practice of modeling a product’s environmental impacts across it’s entire life span.

This practice is important for a number of reasons- reducing environmental impacts, trimming down the size of your Scope 3 carbon portfolio, etc. However, at the end of the day, it all comes down to product marketing.

Corporations are catching on to this highly technical, highly advanced practice because when conducted correctly, LCA’s are the basis for EPD’s- also known as Environmental Product Declarations. I won’t go into a ton of detail (please contact me if you have additional questions), but EPD’s allow you to make environmental marketing claims about your product compared to another.

If an EPD of a smartphone was created, reviewed, and accepted by a verification body, it could allow Apple to say that their iPhone is more green that a certain Android phone, and visa versa.

Along with the branding, nutritional facts, labeling, and (especially) pricing, sustainability metrics will be another way for a consumer to choose between products. And EPD’s, supported by Life Cycle Assessment, and Life Cycle Assessment software tools and data, will be the catalyst for these sustainability metrics. But as I described above, practicing LCA with the correct approach can be challenging.

Additionally, making marketing claims against a competitor can be risky for any brand. Claims needs to have substantial evidence and be validated with extensive data and research. Nobody likes a lawsuit!

This is why having reliable, accurate, and updated data is absolutely crucial when conducting LCA studies with the objective of making a marketing claim.

And in terms of LCA data- the data that powers these studies- there is a lot of questionable data!

While I won’t identify the ones to think you should avoid, here are the scientifically backed LCA databases one should consider:

• EcoInvent
• US LCI
• GaBi Databases (Disclosure: I work for PE INTERNATIONAL, the providers of this data)
• ELCD

Have questions? Feel free to contact me!

Please keep in my mind that these opinions are strictly my own!

Jobseekers often ask me about the key skills one needs to obtain to be successful in corporate sustainability. Throughout the years I have learned a lot about the various tricks of the trade, and I believe there are three skill sets every sustainability professional should know:

1. Understand highly technical practices such as Life Cycle Assessment from the product side, as well as the methods for quantifying corporate sustainability indicators from the operational side. Organizations can’t measure actual progress without quantitative practices such as these, and they are often overlooked and seen as overly difficult (especially within sustainability).

2. Additionally, learn the various software solutions available for sustainability management. Tools make quantifications of impacts automated and much easier to manage. Having a basic understanding of how these systems work is going to help immensely when a client or supervisor wants to implement one of these systems at your organization.

3. Understand how to design and implement higher level corporate sustainability initiatives, such as stakeholder engagements, sustainability strategy development, and sustainability management systems. These skills are immensely important for any candidate as:

• A stakeholder assessment identifies what sustainability aspects are important to an organization, and whom it is important to (internal and external stakeholders)
• A strategy incorporates the identified sustainability aspects into their vision and develops it into a blueprint for the organization to follow for sustainability success
• A sustainability management system is the engine that continually drives the organization toward achieving their sustainability goals and reducing risk

To me, number 3 has been the most important. It has allowed me to provide my clients with unified, cohesive solutions that have increased brand recognition, decreased cost, increased sales, and reduced risk for their organization.

You’ll notice that there aren’t any certifications, accreditation’s, or other professional sustainability “labels” mentioned above; while I think they can somewhat beneficial, they come and go and if everyone has them, how does that differentiate you? To me, it doesn’t, and the facets I have listed above can apply to more than just sustainability.

Think about how you can apply all three of these facets to your job to help your organization succeed.

Love it? Hate it? Let me know!

Today I read a great article on the Harvard Business Review about making sustainability profitable. The article highlights a study by the World Economic Forum that investigated international companies considered to be sustainability “champions” in the developing world. Some highlights from the article:

• Companies implementing sustainability practices have “above average” growth rates and profit margins
• Sustainability efforts have been the most successful in resource constrained economies
• Efforts that involve more sustainable operations can require more long term investment- but those investments have payed for themselves many times over

Business benefits like these are often overlooked when sustainability initiatives are taken into consideration. When speaking with clients that are skeptical of the business value, or that need help selling the value proposition to top management, I try to emphasize the common business benefits related to sustainability (along with some estimated dollar amounts where applicable):

• Reduced material costs- Less energy costs. Less water use. Less waste disposal costs. Less is more these days, and it is hard to deny that reducing the inputs into your product and operational systems will keep more dollars in your pocket. Easy argument to make because these are realized costs for every company.
  
• Reduced risk– Managing risk can prevent compliance issues and fines. It can also stop supply chain shortages that would prevent a company from producing more of their products. This is often overlooked because it is preventative, but it is an important consideration- and a consideration most sustainability champions have already taken care of.
• Enhanced branding- Being considered “green” is just one facet of growing a strong brand. Kraft, 3M, Toyota, Siemens, Johnson & Johnson, Honda, Volkswagen, Cisco, and HP are just a few of the high performing companies within the Fortune 500 that have deep and successful sustainability programs that have bolstered their images as top international companies. Harder to put a actual dollar amount on- unless the company is being acquired or purchased!
• Top line revenue growth- Phillips just reported that roughly half of their revenues in 2012 were attributable to green products. $15 billion in revenue is an incredibly easy argument to make, and if companies aren’t utilizing Life Cycle Assessment, green product design standards, EPD’s or other systems that improve the environmental performance of their products, they will continue to sell less of their products to high performing competitors as consumer demand for more sustainable products increases.

These are just the business values- there are other reasons, like “doing the right thing,” or the whole preserving-the-environment-for-future-generations idea (crazy, right?!). But when we are talking about business, the reality is that we need to speak in the language of money.

These opinions are my own. Love it? Hate it? Let me know!