QUANTITATIVE RESEARCH OF CEOS/SENIOR LEVEL EXECUTIVES PARTICIPATING IN THE ENERGY EFFICIENCY OPPORTUNITIES PROGRAM

Date: Author:

July 2010 Simon Webb Sarah Cruickshank Ian Higgins

EXECUTIVE SUMMARY
Key audiences The key audiences when it comes to energy efficiency for C-Level executives that participated in the survey are typically internal audiences and specifically the leaders of the functional areas in the company with carriage of energy efficiency: the sustainability and operations managers and the chief financial officer.

Drivers of energy efficiency Financial imperatives are the biggest drivers of decisions about energy efficiency. It is important therefore that while there is broad acceptance of the case for energy efficiency from an ethical point of view there is also strong acceptance of the case for energy efficiency from a purely profit-driven business point of view. Furthermore most executives reject the notion that energy efficiency is primarily a compliance issue. The energy efficiency performance of a companys suppliers does not appear to be a strong driver in the selection of a supplier among businesses interviewed.

Profile of energy efficiency issues wit hin businesses Energy features high on the agenda for C-Level executives: most could nominate their annual energy spend (some with greater confidence than others) and that average spend is considerable - $46.5m a year. Almost three-quarters of the C-level executives who participated in the research discussed energy efficiency at least once a month in their business. Since they began participating in the Energy Efficiency Opportunities Program 68% of executives said that their awareness of their business energy use has increased. New capital infrastructure is the most important investment focus for executives over the next 12 months. This leaves energy efficiency to compete for funding against other priorities like new product development, research and development and investing in new markets. Furthermore it is clear that energy efficiency projects struggle for capital, even against projects with similar internal rate of return as many C-level executives do not see investment in energy efficiency as an investment with strategic benefits, as one CEO put it: Energy Efficiency is hygiene, not a strategic issue, not a distinct point of difference with others There is a general perception among executives that investments in energy efficiency also suffer from long payback periods.

Promot ing energy efficiency issues wit hin businesses Promoting Most executives did not want to have someone put the case to them for energy efficiency. The sort of arguments that would need to be put to e executives xecutives need to include relevant, real-world, world, sector sector-specific specific examples of energy efficiency projects that have reaped substantial benefits to business. There was strong support among participants for a competiti competitive ve awards scheme that rewarded businesses for their performance in energy efficiency with three-quarters quarters of executives in favour of such a scheme. A range of forums and venues for putting the case receive support from executives and it will be important to match need with opportunity. The quantitative ntitative results suggest that 61% of business leaders believe that an industry association that covers their sector would be the best forum to talk to them about improving energy efficiency in their business. The qualitative results tempered this outcome outcome. . When we drilled down and asked a number of executives about this, it seems they are more likely to send their relevant staff to these gatherings, but not necessarily to turn up to them themselves.

Other issues Half of the C-level level executives who particip participated ated in the study supported increase disclosure of energy efficiency measure measures and few opposed the idea. However there was a clear sense of frustration among executives at the duplication in reporting and compliance requirements that they faced from overlap overlapping ping federal government and state/territory programs in relation to energy efficiency. This frustration was not specifically focused on the Energy Efficiency Opportunities program. level executives that participated in the survey say that if govern government ment wants to The C-level influence their internal investment decisions to achieve higher levels of spending on energy efficiency then they expect financial incentives or other signals or influences such as a carbon price, or regulation, to bring it about.

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TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................... 2

Drivers of energy efficiency ............................................................... 2 Profile of energy efficiency issues within businesses .......................... 2 Promoting energy efficiency issues within businesses........................ 3 Other issues ....................................................................................... 3

METHODOLOGY AND SAMPLE.......................................... 5

1.1 1.2 Methodology ............................................................................ 5 Sample...................................................................................... 6 Communications about energy efficiency ............................... 10 Keeping audiences informed................................................... 11 Who do you pay attention to? ................................................ 13 Drivers of energy efficiency .................................................... 15 Values underpinning energy efficiency ................................... 16 Importance of suppliers energy efficiency performance ........ 18 Frequency of energy efficiency discussions ............................. 20 Business expenditure priorities ............................................... 21 Awareness of energy expenditure .......................................... 23 Annual energy expenditure..................................................... 24 Increased awareness of energy efficiency ............................... 25

AUDIENCES WITH INFLUENCE ......................................... 10

2.1 2.2 2.3

ENERGY EFFICIENCY: DRIVERS & VALUES........................ 15

3.1 3.2 3.3

BUSINESS REALITIES ....................................................... 20

4.1 4.2 4.3 4.4 4.5

PROMOTING ENERGY EFFICIENCY .................................. 27

5.1 5.2 5.3 5.4 5.5 Interest in having case put for energy efficiency ..................... 27 Preferred forum for energy efficiency ..................................... 27 Preferred reporting metrics .................................................... 28 Increased company disclosure of energy efficiency measures. 30 Competitive awards for energy efficiency ............................... 31

QUALITATIVE RESULTS ................................................... 32

6.1 6.2 Overview ................................................................................ 32 Key Issues ............................................................................... 32

1
1.1

METHODOLOGY AND SAMP SAMPLE

Methodology

Information was gathered through a quantit quantitative ative research using both telephone and online interviews among C-Level Level executives from organisations participating in the Department of Resources, Energy and Tourisms Energy Efficiency Opportunities (EEO) Program. The sample for the survey was defined by a participants senior and executive decision-making making responsibility not only in relation to energy expenditure but other key areas of the organisations business. The in interview terview targets were typically chief executive officers, chief financial o officers, managing directors and executive xecutive directors. Sustainability managers anagers and others with a limited remit within the organisation focused on sustainability and related issues were not included within the sample. In total 80 interviews were conducted 22 by phone and 58 online between 22 June and 15 July 2010. Phone interviews were primarily conducted by experience experienced qualitative interviewers Sarah Cruickshank and Ian Higgins. All EEO program members were sent a letter from th the Secretary of the Department asking for their cooperation in the research project. High value targets were identified from among the companies that participated in the EEO program based on a range of factors including energy use, industry sector and organ organisation isation size. The organisations selected provided a cross-section section of each of these dimensions. This target list covered over 60 of the 220 companies participating in the EEO program at the time. . These targets were subsequently contacted by phone and aske asked d to participate in the survey. Of the total 80 interviews approximately half were drawn from the target list and half responded to an emailed invitation to participate in the survey. level participation in the survey, the online survey directed To ensure appropriate C-level participants to: Please complete this questionnaire if you are a senior executive within your organisation with decision decision-making making responsibilities within your organisation in relation to energy. For the purposes of this research we are not interviewing sustainability managers, or operations managers. The questionnaire typically took between 20 and 30 minutes to complete although in some cases phone interviews lasted considerably longer due to the respondents eagerness to discuss the issues at some length. The questionnaire comprised both closed and open open-ended ended questions to elicit both complete and candid opinions on a range of matters related to energy efficiency attitudes held by C-Level Level executives and the behaviours they displayed within their businesses.

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1.2 1.2.1

Sample Sample Profile Interview Method

Telephone 27.5%

Online 72.5%
1.2.2
40% 35% 30% 26% 25% 20% 15% 12% 10% 5% 0% Manufacturing Mining Transport and Storage Services Agriculture, Forestry and Fishing Other 11% 10.5%

Sample profile industry sector

38.0%

3%

1.2.3
25%
21%

Sample profile industry sector (detail)

20%
16%

15%
12.5%

10%
7%

9%

5%

5%

4%

4% 2% 2%

0%
Metals Coal Mining Oil & Gas Food & beverage beverageChemicals Cement, ceramics and building Ports products Manufacturing Road Rail Air

Transport and Storage

1.2.4
60%

Sample profile workforce

51% 50%

40%

30%

20%

18% 12%

10% 1% 0% 0-100 FTE

8%

9%

101-250 FTE

251-500 FTE

501-1,000 FTE

1,001-1,500 FTE

1,500+ FTE

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1.2.5
40%

Sample profile annual turnover

35.5%

35% 30% 25% 20% 16% 15% 10% 5% 0% Up to $100M $101M - $500M $501M - $1B $1B - $50B Prefer not to say 9% 10.5% 29%

1.2.6

Sample profile Jo b title

The job titles of those interviewed over the phone included: 9 Chief Executive Officers 2 Managing Directors 3 Chief Financial Officers 2 Executive Directors (no further information) 5 Executive Directors with responsibility for key functional units we cannot however reveal a specific job title as this would provide sufficient information to allow identification of the participants whose confidentiality we agreed to protect; 1 person whose job title we cannot reveal as this would provide sufficient information to allow identification of the participants whose confidentiality we agreed to protect.

5%

14%

32%

50%

CFO

CEO/MD

Executive Director - functional unit

Other

NB: this breakdown is based on the responses from the phone interviews, online interviewees were not required to submit their job title but a review of the responses leads OgilvyEarth to believe t that hat the breakdown for the entire sample would be similar. It should be noted that there were overall no statistically significant differences between the responses of those participants that conducted the survey online and those that conducted the survey in a phone interview which indicates that the sample in both cases were similar and held similar points of view in relation to energy efficiency in their organisation.

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2
2.1

AUDIENCES WITH INFLUENCE

Communications about energy efficiency

C-Level executives are most likely to speak to their business operations managers when it comes to energy efficiency (73%) followed by their sustainability manager (62%) and then their employees (49%). Executives are least likely to consult external financial analysts (4%), other CEOs (5%) or their customers (20%). Q: Which of these people do you speak to most often about energy efficiency?
80%
73%

70%
63%

60% 50% 40% 30% 20% 10% 0%

Your Your operations mgr sustainability mgr Your employees Your CFO Your Board Government Your customers Other CEOs External financial analyst

49%

35% 27% 23% 20%

5%

4%

2.1.1 Variations by business size Executives in businesses with more than 1,500 employees are notably more likely to consult their business sustainability manager (76% cf. 49%) and their employees (58% cf. 40.5%) than executives from businesses with fewer than 1,500 employees.

Table 2.1 Which of these people would you speak to most often about energy efficiency? Your business operations manager Your business sustainability manager Employees of your business Your business CFO A member of your business Board Government Your business customers/consumers Other CEOs An external financial analyst who reports on your business 73% 63% 49% 35% 27% 23% 20% 5% 4%

2.2

Keeping audiences informed

The overwhelming majority of executives that participated in this survey agree that it is important to keep their operations manager (97%), board (94%), employees (94%), CFO (91%) and sustainability manager (87%) informed of their business initiatives in relation to energy efficiency. Over four in five also believed it was important to keep some external audiences informed namely their customers (84%) and government (83%). Most however were less interested in keeping external financial analysts (41%) and other CEOs informed.

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Q: Do you agree or disagree that it is important to keep the following audiences informed about your business initiatives to improve energy efficiency?
70% 62% 60% 50% 40% 30% 20% 10% 0%
Your sustainability mgr Your mgr Your Board Employees Your CFO Your customers Government An external financial analyst Other CEOs

59% 53% 41% 55% 54% 55%

59%

38% 25%

38%

37% 29% 24%

34%

18% 7% 1%

Agree

Strongly agree

Table 2.2 It is important to keep [this] audience informed about business' energy efficiency initiatives Your business sustainability manager Your business operations manager A member of your business Board Employees of your business Your business CFO Your business customers/consumers Government An external financial analyst who reports on your business Other CEOs Agree 25% 38% 53% 55% 54% 55% 59% 34% 18% Strongly agree 62% 59% 41% 38% 37% 29% 24% 7% 1%

2.3

Who do yo you u pay attention att ent ion to?

C-Level Level executives who participated in the study are most likely to identify their business operations manager (58%) and their sustainability manager (54%) as among the two most important people they pay attention to when taking decisions about the energy performance of their business. They are least likely to p pay ay attention to government (5%), external financial analysts reporting on their business (3%) or other CEOs (1%). Q: Whose views do you pay most attention to when it comes to taking decisions about the energy efficiency performance for your business?
40% 36% 35% 32% 30% 26% 25%

20%

18% 16%

18%

15% 11% 10% 5% 5% 4% 3% 3% 3% 1% 0% Your Your operations mgr sustainability mgr Your CFO Your Board Your customers Employees Government An external representatives financial analyst Other CEOs 9% 8% 8%

Pays most attention

Pays second most attention

2.3.1 Variations Variatio ns by importance impo rtance of energy efficiency investment: Business that see investing in energy efficiency as extremely important over the next 12 months are more likely to pay attention to their customers when taking decisions about their business energy y efficiency performance than those who see it as less important (32% cf. 5%). Business that see investing in energy efficiency as a low priority over the next 12 months are more likely to pay attention to their sustainability manager (60% cf. 45%) and their ir operations manager (65% cf. 45%) than those who see investing in energy efficiency as extremely important.

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Table 2.3 Whose views do you pay most attention to when it comes to taking decisions about the energy efficiency performance about your business? Your business operations manager Your business sustainability manager Your business CFO A member of your business Board Your business customers/consumers Employees of your business Government representatives An external financial analyst who reports on your business Other CEOs Most attention 32% 36% 11% 5% 9% 4% 3% 0% 0% Second most attention 26% 18% 16% 18% 8% 8% 3% 3% 1% Total

58% 54% 26% 24% 17% 12% 5% 3% 1%

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3.1

ENERGY EFFICIENCY: D DRIVERS & VALUES

Drivers of energy efficiency

Financial and cost management is the single issue most likely to be identified by CC Level executives as playing a very important role in their business efforts to improve energy efficiency (68%). This is followed by the interest of their boards (61%), the policy agenda of government and regulators (state and federal) (53%) and brand reputation (51%). Business leaders were less interested in what other businesses like theirs were doing (20%), the media (16%) or the views of brokers and analysts that report on their businesses (9%). Q: How important a role do the following play in your business efforts to improve energy efficiency?
80% 70% 60% 53% 50% 40% 30% 20% 10% 0%
Financial/cost Board interest management The policy agenda of government and regulators (both state and federal) Brand reputation The views of Public your reporting employees requirements The wider community What other businesses like ours are doing The media The views of brokers and analysts who report on your business

68% 61% 51% 46% 41% 36%

20% 16% 9%

3.1.1 Variations Variatio ns by business busi ness size: Businesses with over 1,500 employees were more li likely to identify brand reputation (64% cf. 38%) and governments policy agendas (64% cf. 41%) than those with fewer than 1,500 employees.

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Conversely leaders of smaller businesses were more likely to identify board interest as very important to their efforts to improve energy efficiency, than larger businesses (70% cf. 51%) Table 3.1 A very important role Financial/cost management Board interest The policy agenda of government and regulators (both state and federal) Brand reputation The views of your employees Public reporting requirements The wider community What other businesses like ours are doing The media The views of brokers and analysts who report on your business 68% 61% 53% 51% 46% 41% 36% 20% 16% 9%

3.2

Values underpinning energy efficiency

The overwhelming majority of C-Level executives that participated in the study agree that energy efficiency is an ethically responsible business practice (92%) and more than three-quarters agree that it is both something that could give their business a competitive advantage and that it enhances their corporate image and brand reputation. A third (32%) agreed that energy efficiency is primarily a compliance issue while 51% disagree.

Q: Do you agree or disagree that energy efficiency

60% 50% 40% 30% 20% 10% 0% is an ethically responsible business practice is something that could enhances our corporate is primarily a compliance give my business a issue image and brand competitive advantage reputation Agree Strongly agree 7% 49% 43% 41% 37% 42% 35.5% 25%

3.2.1 Variations Variatio ns by importance impo rtance of energy efficiency investment: Executives from companies that place a high importance on investment in improving energy efficiency are more likely to agree that energy efficiency enhances their corporate image (95.5% cf. 65%) and is an opportunity for competitive advantage (95.5% cf. 50%) than those who place low importance on investing in energy efficiency. They are also less likely to agree that it is primarily a compliance issue (14% cf. 30%) 3.2.2 Variations Variatio ns by company size: Executives ives from companies that have more than 1,500 employees are more likely to agree that energy efficiency enhances their corporate image than those in smaller companies (90% cf. 65%). They are also more likely to disagree that it is primarily a compliance issue (61.5% cf. 40.5%).

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Table 3.2 Energy efficiency is an ethically responsible business practice is something that could give my business a competitive advantage enhances our corporate image and brand reputation is primarily a compliance issue Strongly disagree 1% Disagree 0% Neither 7% Agree 43% Strongly agree 49%

1%

1%

18%

41%

37%

1% 11%

0% 41%

21% 17%

42% 25%

35.5% 7%

3.3

Importance of suppliers energy efficiency performance

A majority of C-Level executives (54%) that participated in this study said that the energy efficiency performance of their suppliers while an important consideration is not the most important consideration they take into account when making a purchase decision and that there are others that are more important. Only 1% of executives say that it is the single most important consideration while 21% say that energy efficiency is not an important consideration at all when selecting a supplier. Q: When you make procurement decisions in your business, how important is a suppliers energy efficiency performance?
60% 50% 40% 30% 21% 20% 10% 1% 0% Not an important consideration One of many considerations but others are more important An important The single most consideration but others important consideration are equally important 54%

24%

3.3.1 Variations: None of the executives from companies that discuss energy efficiency on a weekly basis said that energy efficiency was not an important consideration when considering procurement decisions compared with 24% of those in companies that discuss energy efficiency less frequently. Executives in companies that see investing in energy efficiency as a low priority for the coming 12 months are more likely to say that the energy efficiency performance of a supplier is not an important consideration than those that see it as extremely important (40% cf. 4.5%). Table 3.3 When you make procurement decisions in your business how import important ant is a suppliers energy efficiency performance? The single most important consideration An important consideration but there are others of equal importance One of many considerations but there are others more importance Not an important consideration 1% 24% 54% 21%

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4
4.1

BUSINESS REALITIES
Frequency of energy efficiency discussio ns

Most of the businesses that participated in the study discuss energy efficiency with their C-Level executives once a month or more (72%): 10.5% discuss it at least daily, 22% discuss it at least once a week and 39.5% discuss it on a monthly basis. A further 22% discuss energy efficiency every couple of months and in only 5% of businesses do C-Level executives discuss energy efficiency once or twice a year. Q: How often do you have discussions in relation to the energy efficiency performance of your business?
45% 40% 35% 30% 25% 20% 15% 10.5% 10% 5% 5% 0% On a daily basis On a weekly basis On a monthly basis Every few months Once or twice a year 22% 22% 39.5%

4.1.1 Variations by impo rtance of energy efficiency i nvestment: Companies that see investment in energy efficiency as an extremely important investment priority are more likely to discuss energy efficiency at C-Level at least once a week than those that place little or no importance on investing in energy efficiency (45% cf. 30%).

Table 4.1 How often do you have discussions in relation to the energy efficiency performance of your business? On a daily basis On a weekly basis On a monthly basis Every few months Once or twice a year 10.5% 22% 39.5% 22% 5%

4.2

Business expendit expenditure ure priorit ies

Over the coming 12 months investment in new capital infrastructure is seen as extremely important to 64.5% of the C C-Level Level executives who participated in this study the highest result for all options tested. Just over a third of executives rate investing in new products as extremely important. Investing in research and development ranks joint third with investments in energy efficiency but fewer than half as many executives rate it as extremely important (both 29%). A similar proportion (28%) see investing in new markets as an extremely important area for e expenditure xpenditure in the next 12 months.

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Q: Thinking about your business expenditure priorities over the coming 12 months, how important are the following areas of expenditure?
70% 60% 50% 40% 30% 20% 10% 1% 0% Investing in new capital infrastructure Investing in new products Investing in R&D Investing in improving energy efficiency Investing in new markets 13% 8% 9% 5% 34% 29% 29% 28% 64.5%

Not at all important

Extremely important

4.2.1 Variations by impo rtance of investing in energy efficiency: Executives who see energy efficiency as an extremely important area for investment over the coming 12 months are also more likely to see investing in new products (45.5% cf. 30%) and investing in R & D (45.5% cf. 10%) as extremely important than businesses that see investing in energy efficiency as less important. 4.2.2 Variations by business size: Executives from companies with more than 1,500 employees are more likely to see investing in new products (49% cf. 19%) and investing in R & D (46% cf. 30%) as extremely important than executives in companies with fewer than 1,500 employees.

Table 4.2 Expenditure priorities over the coming 12 months Investing in new capital infrastructure Investing in new products Investing in R&D Investing in improving energy efficiency Investing in new markets Not at all important 1% 13% 8% 5% 9% Extremely important 64.5% 34% 29% 29% 28%

4.3

Awareness of energ y expenditure

Just over half of all C-Level Level executives interviewed for this study (51%) say they know exactly how much their business spends on energy each year, while 47% say they know roughly how much their business spends and only 1% (one executive) admitted that they did not know how much their business spent on energy each year.

Q: Are you aware of how much your business spends on energy each year? Yes I know roughly how much we spend on energy each year 47%

No 1% Yes I know exactly how much we spend on energy each year 51%

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4.3.1 Variations by frequency of energy efficiency discussions: Executives from companies that discuss energy efficiency on a daily basis are more likely to know exactly how much their business spends on energy than those who discuss it less often (87.5% cf. 47%). Conversely those that discuss energy efficiency less often than once a week are more likely to only know roughly how much their business spends on energy *51% cf. 12.5%) Table 4.3 Are you aware of how much your business spends on energy each year? Yes I know exactly how much we spend on energy each year Yes I know roughly how much we spend on energy each year No 51% 47% 1%

4.4

Annual energy expendit ure

Businesses that participated in the study spend on average just under $50m a year on energy ($46.5m), 11% spend less than $5m, 25% spend between $5m and $20m, 23% spend between $21m and $50m, 11% spend between $51m and $100m and 16% spend over $100m. One in six executives (15%) preferred not to disclose their business annual energy spend.

Q: How much does your company spend on energy each year?

30% 25% 25% 23%

20% 16% 15% 11% 10% 11% 15%

5%

0% Less than $5 $5 million million $20 million $21 million - $51 million - More than Prefer not to $50 million $100 million $100 million say

4.4.1

Variations:

Companies that oppose increased company disclosure of energy efficiency measures spend notably less on energy each year than those that support increased disclosure ($21.3m cf. $48.6m). Companies with more than 1,500 employees spend more on energy each year than companied with fewer employees ($51.8m cf. $40.7m). Table 4.4 How much does your company spend on energy each year? Less than $5 million $5 million - $20 million $21 million - $50 million $51 million - $100 million More than $100 million Prefer not to say Average energy spend 11% 25% 23% 11% 16% 15% $46.5m

4.5

Increased awareness of energy efficiency

68% of C-Level Level executives that participated in the study say that their awareness of energy use in their business increased since they began to participate in the Energy Efficiency Opportunities program. 29% said that they already kept a close eye on energy use in their business before the program, while only 3% said that they did not closely monitor energy use in their business.

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Q: Since your business started to participate in the Energy Efficiency Opportunities program with the Federal Government, has your awareness of your business energy use increased?

No I already kept a close eye on energy use in my business 29% No I dont closely monitor energy use in my business 3%

Yes 68%

4.5.1

Variations by impo rtance of investing in energy efficiency:

Executives in companies that have investment in energy efficiency as an extremely important priority for the coming 12 months are more likely to have already been keeping a close eye on energy use in their business than those who see investment in energy efficiency as less of a priority (54.5% cf. 25%). Conversely those businesses that see energy investment as less of a priority are more likely to say that they now pay more attention to energy use in their business since participating in the program (70% cf. 45.5%). Table 4.5 Since your business started to participate in the Energy Efficiency Opportunities program with the federal government has your awareness of your business energy use increased? Yes No I already kept a close eye on energy use in my business No I dont closely monitor energy use in my business 68% 29% 3%

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5.1

PROMOTING ENERGY EFF EFFICIENCY

Interest in having case put for energy efficiency

Three in ten c-level level executives (30%) expressed interest in having someone come to put the case for energy efficiency directly to them. Those that did not were typically able to identify someone more junior and in an operational capacity to be a primary contact. Executives explicitly ask for expert practical help from someone who specifically knows their sector in contrast to generalised information or advice sessions. Executives are open to having their hand held but only by someone wit with h genuine expertise in their sector. 5.2 Preferred forum fo rum for energy efficiency

Most C-Level Level executives want to talk about improving energy efficiency in their business through an industry association that covers their sector (61%). Just under half of executives s want to talk in a small group (47%) and a similar proportion would like to talk in a short face to face meeting with senior government officials (45%). Roughly a third would be interested in an event hosted by a third party like AICD or CEDA (34%), a small all event hosted by a CEO of a company in their sector (29%) or a larger meeting of CEOs in their sector (28%).

Q: What would be the best forum to talk to you about improving energy efficiency in your business?
70% 61% 60% 50% 40% 30% 20% 10% 0% Through an industry association that covers your sector In a small group A short face to An event A small event A larger face meeting hosted by a hosted by a meeting of with a senior third party CEO of a CEOs in your government organisation company in sector official like the AICD your sector or CEDA 47% 45% 34% 29% 28%

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5.2.1

Variations:

Executives from companies that discuss energy efficiency on a daily basis are less likely to be interested in attending a face to face meeting with a government official (13% cf. 49%) and more likely to be interested in attending an event hosted by a third party (50% cf. 33%). Executives from organisations that see investing in energy efficiency as extremely important are more likely to be interested in attending an event hosted by a third party organisation (59% cf. 35%) and a small event hosted by a CEO of a company in your sector (41% cf. 20%). Table 5.2 What would be the best forum to talk to you about improving energy efficiency in your business? Through an industry association that covers your sector In a small group A short face to face meeting with a senior government official An event hosted by a third party organisation like the AICD or CEDA A small event hosted by a CEO of a company in your sector A larger meeting of CEOs in your sector 5.3 Preferred repo rting metrics 61% 47% 45% 34% 29% 28%

A third of C-Level executives (33%) that participated in the study would prefer to report to the Energy Efficiency Opportunities program in tonnes of CO2e, 18% would prefer to report in dollars saved, and 9% in Joules saved. A further third however (37%) say that it makes no difference to their business what metric they report in and 3% didnt know what their business would prefer to report in.

Q: Would your company prefer to report to the Energy Efficiency Opportunities program in tones of CO2 emissions, Joules of energy saved or in dollars saved through reduced energy expenditure?
40% 35% 30% 25% 20% 15% 10% 5% 0% CO2e avoided J saved $ saved It makes no difference to us Don't know 9% 3% 18% 33% 37%

5.3.1

Variations:

Most executives in companies that discuss energy efficiency daily would strongly prefer to report in CO2e: 62.5% compared with 29% in companies that discuss it less frequently. Executives in companies ompanies that see investing in energy efficiency as extremely important over the next 12 months are much more likely to want to report in CO2e (45.5% cf. 25%) than those that see that investment as less important and who instead are more likely to say that it makes no difference to their business what metric is chosen (45% cf. 27%). Table 5.3 Would your company prefer to report to the Energy Efficiency Opportunities program in tonnes of CO2 emissions, Joules of energy saved or in dollars saved through reduced energy expenditure? CO2e avoided $ saved J saved It makes no difference to us Don't know 33% 18% 9% 37% 3%

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5.4

Increased company disclosure of energy efficiency measures

Just under half of the C-Level executives that participated in this study (49%) support increased company disclosure of energy efficiency measures 41% support it and 8% strongly support it. 18% of executives oppose increased disclosure 12% oppose and 7% strongly oppose while 7% cant say whether they oppose it or not. Q: Do you support or oppose increased company disclosure of energy efficiency measures?
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Strongly oppose Oppose Neither support nor oppose Support Strongly support Can't say 7% 12% 8% 7% 26% 41%

5.4.1

Variations by frequency of energy efficiency discussions:

Executives that discuss energy efficiency on a daily basis are much more likely to oppose increased disclosure than those that discuss energy efficiency less frequently (62.5% cf. 13%). Table 5.4 Do you support or oppose increased company disclosure of energy efficiency measures? Strongly oppose Oppose Neither support nor oppose Support Strongly support Can't say 7% 12% 26% 41% 8% 7%

5.5

Compet Competit itive ive awards for energy efficiency

Three quarters of C-Level Level executives that participated in the survey (75%) would support a competitive awards scheme that rewarded performance in energy efficiency in the business community. Q: Would you be in favour of a competitive awards scheme that rewarded performance in energy efficiency in the business community?

No 25%

Yes 75%
5.5.1 Variations:

Executives in companies that discuss energ energy y efficiency on a daily basis are less likely to support an awards scheme than those that discuss energy efficiency less frequently (62% cf. 77%) Executives in companies that do not support increased company disclosure of energy efficiency measures are less s likely to support an awards scheme than those that do support increased disclosure (64% cf. 92%). Table 5.5 Would you be in favour of a competitive awards scheme that rewarded performance in energy efficiency in the business community? Yes No 75% 25%

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6
6.1

QUALITATIVE RESULTS
Overview

While the comments of CEOs and senior executives contacted varied, and varied by sector, a number of broad conclusions can be drawn from the qualitative part of the survey: It is clear that Energy Efficiency projects struggle for capital, even against projects with similar internal rate of return, and for logical reasons. Energy Efficiency also suffers from a perception prejudice of long pay- back periods. If government wants to influence companies internal investment decisions to achieve higher levels of spending on energy efficiency then companies expect financial incentives or other signals or influences such as a carbon price, or regulation, to bring it about. On non-financial help, CEOs and senior level executives want direct, expert, practical help for their company from someone who specifically knows their sector. Key Issues Why isnt energy efficiency a higher prio rity.

6.2 6.2.1

The survey asked respondents about their key expenditure priorities for the coming 12 months to see how investing in energy efficiency rated against investing in new products, research and development, new markets and new capital infrastructure. In a follow-up open-ended question, we made a point in our phone interviews, to drill down into reasons why energy efficiency wasnt a higher priority. Several comments stood out: Energy Efficiency is hygiene, not a strategic issue, not a distinct point of difference with others, said one CEO. Another, from the mining sector, said: Energy Efficiency has to stack up against all competing capital investment needs. Energy Efficiency is viewed like other projects requiring a rate of return on investment. Some energy projects are not time critical like crumbling infrastructure. Issues like reputation, ethical responsibility are factors to consider, but are not necessarily drivers. A CEO in the Electricity, Gas and Water sector, said that energy efficiency wasnt rated as highly as other investment decisions because all economic gains are made in the normal course of business and (Energy Efficiency projects) generally dont offer transformational opportunities for the business.

It is also worth noting that some companies in the Manufacturing sector appear to be currently doing it tough. One said: Financial survival urvival is our highest priority right now. So again, if government wishes to increase the uptake of energy efficiency in the sector, it would appear it needs to reinforce the need for financial incentives or other signals. 6.2.2 Incentives Incenti ves woul wo uld d lift corporate focus on energy efficiency

While company CEOs and other C C-Level Level executives suggested all manner of incentives to lift Energy Efficiency as a priority, there was no silver bullet, even within sectors. Interviewees were asked: What assistance or incentives would help ensure your business made energy efficiency a top level priority in the coming 12 months? Across sectors, many business leaders felt that only marginal improvements could be made unless there was major investment in new capital items and new te technology, chnology, and for that they would need government financial help. Suggestions for financial incentives included; rebates, innovation funding, grants, cheap loans, offsets, increased depreciation allowances and feed feed-in in tariffs. Other suggestions included putting tting a price on carbon, a consolidated and consistent reporting framework, government procurement preferences for energy efficient service providers, employee education and training, assistance for investigating/identifying energy efficiency opportunities opportunities, , and legislation, regulation. Companies in a number of sectors wanted help to identify energy efficiency opportunities in their businesses. One in the manufacturing sector suggested dollar for dollar funding to help the company do so. Others in the manufacturing acturing sector sought softer help, for example to have a benchmark by which they could rate their progress: It would be great if the Government could provide some kind of measure of performance in each industry sector. It is hard to know if all our eff efforts [are] good or behind where it should be. Sharing of ideas about what works in other plants or overseas, and assistance with employee actions, would be a great help, said one. Some recognised that electricity and energy price rises will make energy efficiency ficiency more compelling, others asked for tailored information, case studies, information sharing, public recognition. Several CEOs also mentioned the need for certainty, consistency in government policy and measures. 6.2.3 Streamlining Streamli ning reporting

When asked if there was anything more the government could do to help companies pursue energy efficiency opportunities a strong theme in the responses related to duplication and the complexity and burden of reporting both Federally with NGERS and with State schemes.

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While this was not a specific criticism of the Department or of the EEO Program, two leaders in the manufacturing sector and another in transport, who did not wish to be identified, suggested the need for the streamlining or simplifying of reporting. By several, this was strongly felt: For example, two CEOs agreed to be identified on this issue, while asking for confidentiality on the rest of the survey. One was so keen to have his point registered that he asked at the outset of the survey whether there were any open-ended questions in it so that he could make his point about duplication. A dairy industry CEO said: I get confused by all the regulatory bodies, State and Federal and at the Federal level. It is not clear who is the single point of contact, this causes huge inefficiencies. The need for streamlining, he said was because a lot of energy is going on duplication, for example, with the same thing being measured in different ways. The simpler it is, the more traction youll get. While a few CEOs said there was no need for government involvement in their businesses, these negatives need to be balanced by the quantitative finding that a solid 68% of respondents said participation in the EEO program had increased their awareness of their energy use. In a wry way, one the of CEOs we interviewed put it this way: Youd like to say wed get there anyway, but a regulatory program does bring (energy efficiency) to the fore. 6.2.4 The need for expert help

The clearest message of all, across all sectors, is business leaders call for expert help from someone who knows their sector. In response to the question Who would you want to see come and put the case for energy efficiency and what would be the most useful type of information presented?, 14 of 23 responses on this from CEOs and business leaders we contacted, said an expert on energy efficiency in their sector. From manufacturing: Energy Efficiency is still a new area. If we want to build it into our company, where do we start? For us it is a corporate culture issue, so I want to see people who can articulate simply, with knowledge, on this major issue, and Someone who really understands our industry sector and the way we use energy. Another CEO in the sector said: Dont care who comes as long as its free and they have real case studies and experiences to share and push us to best practice and cost savings. From transport: Someone with case study experience relevant to our sector-transport and haulage: Could be Government but whoever it is they need to have the experience relevant to our industry. Another said: Wed be very happy to hear from government, but wed like the people to have greater technical expertise, particularly ideas on practical application of capital expenditure. Wed also be interested to hear from other companies in similar sectors.

From Mining: The most useful information for me would be material that is relevant to the industry we work in. 6.2.5 CEO engagement fora

The quantitative results suggest that 61% of business leaders believe that an industry association that covers their sector would be the best forum to talk to them about improving energy efficiency in their business. The qualitative results tempered this outcome. When we drilled down and asked a number of CEOs about this, it seems they are more likely to send their relevant staff to these gatherings, but not necessarily to turn up to them themselves. As one CEO said: I hesitate about going places where I Im m meant to be the single expert. My role is to push priorities priorities- it wont work unless all my team is engaged. It is interesting to note from the quantitative results that 47% of the C C-Level Level executives said their preferred forum would be In a small group. . Given the strong call for expert advice noted above, we suggest that CEOs are most likely to participate in individual specially arranged meetings of their executive team with an energy expert who has solid information and recommendations relevant to their sector and company.

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