By Drew Troyer, CRE, CMRP
Principal, T.A. Cook, Editor
For the uninitiated, "ESG" is the acronym for Environmental, Social, and Governance performance. Headlines and associated press releases and articles often focus on ESG performance these days. Some seem to represent thinly veiled warnings for businesses and their executives to make ESG a priority ASAP. As an example, consider the calls to achieve "zero carbon” by some specified
date.
Indeed, in the Netherlands, the Hague issued a legal edict requiring Royal Dutch Shell to reduce its carbon footprint by 45%, by 2030. Then there is the Exxon Mobil situation: Based on the nomination of the New York-based activist investment firm Engine No. 1, and with
support of large institutional investors, Exxon Mobil has been required to convert one-fourth of its governing board of directors to ESG-oriented members.
BlackRock, the world’s largest institutional investor with US$10 trillion in managed funds, drove that Exxon Mobil board flip. Moreover, it has noted that commitment to and performance in delivering ESG value is non-negotiable if a company wishes to be included in BlackRock's
portfolio.
Larry Fink, BlackRock’s outspoken CEO (who doesn't mince words) has made it clear that companies must “decarbonize or die.” As he put it, ESG performance will determine if a company is a “unicorn, a phoenix or a dodo bird.” Unless an enterprise wants to go the way of the buggy
whip, Fink's advice regarding ESG performance should be taken seriously.
If you're thinking this sounds like C-suite stuff discussed only in walnut offices, you're incorrect. Decarbonizing is very much about energy. Manufacturing, process, and other equipment-asset-intensive industries are responsible for about one-third of all energy consumed in the
world.
The U.S. Department of Energy (USDOE, energy.gov) has estimated that by implementing existing best-practice energy-management practices, we can reduce industrial-energy consumption by nearly 25%. Thus, by, simply running our plants better, we can reduce the world’s carbon
emissions by 7% to 8%. That’s huge.
The USDOE further suggests that, with investment in technology, we can reduce the industrial-energy budget by half. The bottom line is we don’t have to wait on zero or near-zero carbon sources of energy to have an impact. As asset managers, we can dramatically affect carbon
emissions and associated climate change impacts by making sensible decisions and taking reasonable steps to improve the energy efficiency of our physical equipment assets.
What does this look like on the plant floor?
As I have recommended in the past, first target parasitic mechanical frictional losses. According to tribologists, targeting and managing common sources of vibration and assuring proper lubrication of rotating, reciprocating, and hydraulic machines, we can reduce energy
consumption by about 7.5%.
Also, take aim at piping, connectors and valves in compressed- and pressurized-fluid systems to reduce churning losses from turbulent flow. Then eliminate leaks and fugitive emissions in those systems. (It’s not uncommon for compressed-air systems to have extremely wasteful
leakage rates of 20% to 30%.) And don't forget to specify energy-efficient electric motors, variable speed/frequency drives (VSDs/VFDs) and create low-resistance electrical pathways to reduce electrical-heating losses.
These tactics, though, are just a start. There are many more opportunities.
Luckily, you don’t have to make this journey alone. I frequently provide tips and insights on improving energy efficiency and sustainability in my columns and articles for The RAM Review.
My colleague and fellow editor Howard Penrose, Ph.D., often focuses on these subjects as well (with emphasis on electrical systems). In fact, most of our editorial team has written on topics related to sustainable manufacturing and ESG performance from time to time.
