ESG Reporting and Energy Efficiency: The Key Drivers for Sustainability Business Growth
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Energy efficiency in business is becoming an indispensable element of modern management strategies, where lower operating costs and sustainable development go hand in hand. With increasing regulations concerning greenhouse gas emissions and carbon footprints, companies must focus on improving energy efficiency, directly impacting compliance with ESG (Environmental, Social responsibility, Governance) reporting requirements. This article will explore the close connection between energy efficiency, carbon footprint, and ESG reporting.
What is energy efficiency?
Energy efficiency is a key indicator that measures how effectively energy is used to achieve desired outcomes. It is the ratio of energy used to achieve a specific result, such as lighting, heating, or cooling, to the amount of power delivered to the system.
High energy efficiency means that a larger portion of energy is converted into useful work or services, with less being wasted. This is a critical element in managing energy resources, as it allows the same results to be achieved with less energy consumption, bringing not only economic but also environmental benefits.
Actions that improve energy efficiency can include both the modernization of existing systems and the implementation of new technologies. Examples include better building insulation, more efficient heating and cooling systems, or the use of LED lighting instead of traditional bulbs.
Investments in energy-saving technologies reduce primary energy consumption, contributing to lower greenhouse gas emissions and reduced operating costs. In the long term, increasing energy efficiency becomes one of the key elements of sustainability goals, enabling economies to achieve greater energy independence, environmental protection, and economic growth.
What is the goal of energy efficiency efforts?
The European Parliament’s page on energy efficiency states:
Energy efficiency efforts aim to ensure sustainable energy supply, reduce greenhouse gas emissions, enhance supply security, lower energy import expenses, and support Europe’s competitiveness. In 2023, co-legislators decided to reduce the EU’s final energy consumption by at least 11.7% by 2030 compared to 2020 projections.
This statement addresses several key goals:
Sustainable energy supply – Energy efficiency aims to optimize energy consumption to reduce the strain on natural resources and strive for their sustainable use, especially important given limited energy resources.
Reducing greenhouse gas emissions – By consuming less energy, greenhouse gas emissions such as carbon dioxide (CO₂), a major factor in climate change, are reduced.
Increasing supply security – Reducing dependence on external energy suppliers, including imported energy resources, improves the energy independence of EU countries and enhances the stability of the entire region.
Lowering energy import expenses – Less demand for energy leads to lower import costs, positively impacting the EU’s trade balance and economic stability.
Supporting Europe’s competitiveness – Energy efficiency reduces operational costs for businesses and consumers, allowing European companies to compete better in international markets and encouraging innovation and modern technologies.
The commitment to reduce final energy consumption by 11.7% by 2030 compared to 2020 projections sets a concrete energy-saving target as part of the EU’s climate and energy strategy. Achieving this goal requires broad actions at both national and European levels, such as improving energy efficiency in buildings, industry, and transportation, and using modern technologies and renewable energy sources.
Legal aspects of energy efficiency
Energy efficiency is a key element of the EU’s Europe 2020 sustainability strategy and a resource-efficient economy. By ratifying the Energy Charter Treaty in 2000, Poland committed to implementing energy efficiency policies.
EU directives on energy efficiency include:
Directive 2005/32/EC, which sets out general principles for introducing eco-design requirements for energy-using products (covering items like boilers, water heaters, household appliances, motors, and more).
Directive 2006/32/EC, regulates the efficient use of energy by end-users and promotes energy services (defining goals, support mechanisms, and incentives).
Poland’s 2016 Energy Efficiency Act establishes the legal framework for actions aimed at improving the energy efficiency of the economy, including through support systems, efficiency certificates, and energy audits. Public entities are required to implement energy efficiency improvement measures.
What is ESG reporting and why is it important?
ESG reporting is the process of communicating a company’s performance in three key areas: environmental (E), social (S), and corporate governance (G). Increasingly, investors, customers, and business partners focus on these aspects, recognizing that organizations that care for the environment, have a responsible approach to employees, and follow ethical governance practices are more stable and trustworthy.
In the context of energy efficiency, ESG reporting particularly focuses on indicators related to energy consumption, greenhouse gas emissions, and carbon emissions. The tangible benefits of improving energy efficiency not only reduce the negative environmental impact but also help companies meet increasingly stringent regulatory requirements.
How to effectively prepare for ESG reporting? Read in [this] article.
Carbon footprint and its significance for energy efficiency
The carbon footprint is the total amount of greenhouse gas emissions expressed in carbon dioxide equivalents (CO₂e), associated with a company’s operations. It is one of the most important indicators used in ESG reporting, as it reflects how a company impacts climate change.
Improving energy efficiency has a direct impact on reducing a company’s CO2 emissions. For example, by reducing electricity consumption, a company can lower emissions related to energy production (especially from fossil fuels). Investments in more efficient energy management systems and process automation can significantly contribute to emission reductions, allowing the company to achieve a smaller environmental impact and fight global warming.
Example:
Company A, operating in the manufacturing sector, conducted an energy audit that identified a 15% reduction in energy consumption through lighting upgrades and HVAC system optimization. As a result, the company reduced its annual CO₂e emissions by 1,000 tons, not only lowering operational costs but also improving its ESG reporting performance and reputation among investors.
The importance of ESRS in sustainable business growth
Legal regulations and ESG reporting on energy efficiency
Environmental protection and greenhouse gas emission reduction regulations, such as the European “Fit for 55” package, require companies to take steps to reduce their environmental impact. In the European Union, these government regulations aim to cut CO₂ emissions by 55% by 2030 compared to 1990 levels, necessitating the implementation of energy efficiency improvement strategies in businesses.
One key requirement for large companies is conducting mandatory energy audits, which help identify areas where the company can improve energy efficiency and reduce energy consumption. The results of energy audits often form the basis for companies in the context of ESG reporting, where they must demonstrate progress in reducing greenhouse gas emissions and optimizing energy consumption.
What are the benefits of energy efficiency?
- Reducing greenhouse gas emissions and carbon footprint: Improving energy efficiency directly impacts reducing greenhouse gas emissions, a key indicator in ESG reporting. A smaller CO2e emissions makes a company more attractive to investors looking for sustainable investments with minimal environmental footprint.
- Meeting regulatory requirements: Compliance with legal requirements on greenhouse gas emissions and energy consumption, both nationally and internationally, is becoming mandatory. Companies that fail to implement appropriate energy efficiency measures may face financial penalties and lose credibility with regulators and investors.
- Enhancing the company’s image: In an era of growing environmental responsibility, companies that communicate their actions with greater transparency toward sustainability efforts and carbon footprint reduction gain favor from consumers, business partners, and investors. Energy efficiency directly affects the perception of the company as a responsible and modern market player.
- Increased attractiveness to investors: Investors are increasingly seeking companies that focus on sustainable development and energy efficiency. Companies that effectively report their progress in these areas attract capital that rewards responsible investments. This is particularly important in the context of the growing role of ESG-compliant investment funds.
Technologies supporting energy efficiency
Companies looking to improve their energy efficiency and meet ESG reporting requirements increasingly turn to new technologies and process automation. The Internet of Things (IoT), energy management systems, and data analytics are integral to modern management strategies. IoT enables real-time energy consumption monitoring, allowing for quick responses to potential energy losses and process optimization.
Data from energy management systems is a key element in ESG reporting, as it allows companies to demonstrate progress in improving energy efficiency and reducing greenhouse gas emissions. Examples include smart meters that provide accurate information on energy consumption, enabling better resource management and operational optimization.
Conclusions
Sustainability and energy efficiency are key drivers for business growth in today’s market, as companies strive to align their operations with sustainable development goals and reduce their environmental impact. Improved energy efficiency not only helps businesses lower their energy consumption and carbon emissions but also enhances operational efficiency, leading to reduced energy costs and a smaller environmental footprint.
As fossil fuels give way to renewable energy sources in electricity generation, businesses adopting sustainable practices can meet both regulatory requirements and their own sustainability goals, positively impacting long-term economic growth. The International Energy Agency highlights that greater efficiency in energy use is critical for achieving sustainability targets, addressing climate change, and ensuring a stable energy supply for the future.
Summary
Energy efficiency in business is a key element not only in terms of lower operational costs but also from the perspective of sustainable development and meeting ESG reporting requirements.
If you want to improve energy efficiency while working on your company’s non-financial report, consult with Plan Be Eco. Working with many experts, you can optimize your activities. Together, we will create a strategy that ensures measurable benefits and contributes to achieving the sustainability goals of your business.
