Implement and monitor environmentally

sustainable work practices

LO1: Investigate current practices in relation to
resource
Climate change and sustainability

Before we get started, we need to understand the key issues involved in

climate change and sustainability.
“Sustainability is achieved when we understand the economic,
environmental and social consequences of our actions and make
deliberate choices that allow all people to lead healthy, productive and
enjoyable lives.” (Five Es, Unlimited Sustainable Development Solutions
http://www.eeeee.net).
People are creating emissions called greenhouse gases (GHGs) faster than
the earth can absorb them and most scientists believe this exacerbates
climate change.
Climate change is the natural and human amplified long term (decades to
centuries) alteration in global weather patterns, particularly increases in
average temperature and storm activity.
Consumers, employees and governments, investors and other stakeholders
are placing increasing pressure on organizations to operate more
sustainably and responsibly. Increasingly investment fund managers
demand responsible environmental and social governance. It is expected
that a director or senior executive manage these issues and report
regularly directly to the board. The Dow Jones Sustainability Index (DJSI)
rates companies on long term economic, environmental and social criteria
and influences the investment decisions of asset managers in 15 countries.
Around the world governments are working towards a greener, more
sustainable and loveable future. They offer incentive schemes and
introduce regulations to reduce the effects of both climate change and
overuse of the planet’s key resources.
Sustainability, like risk management has become a key strategic issue for
organizations. Organizations are turning sustainability into lucrative
opportunities rather than expensive burdens. They can operate more
sustainably and more profitably and with considerably These organizations
use their sustainability initiatives to enhance their brand value, corporate
image and employer branding.

Green trains
In 2006, when clients began asking for information on Eurostar’s carbon
emissions, the Cross-Channel rail company commissioned an independent
study. The study revealed that journeys between London, Brussels and
Paris produced one tenth the CO₂ emissions of equivalent flights. They
seized the opportunity – travelling by train wasn’t only good for business
but good for the environment.
Eurostar introduced its Tread Lightly program in April 2007. The program
offered ‘carbon neutral’ journeys at no extra cost. Purchasing carbon
credits via an offset provider and targeting a further 25% reduction on CO₂
emissions per traveler by 2012. A 10-point plan was also launched by
Eurostar to reduce its wider environmental impact for example: sourcing
on board food locally and stepping up waste recycling at depots.
Eurostar was correct in its assessment of the opportunities sustainable
operations offer - eighteen per cent more passengers were attracted in the
first half of 2008 compared with the previous year.

Carbon crisis Climate change and sustainability

The Ecological Footprint (EF) measures how sustainable people’s lifestyles
are as individuals, as a country and as a world. This is done by comparing
human demand with the earth’s ability to recover from the damage
humans do and to reproduce the resources people use up.
An ecological footprint estimates how many planet earths it would take to
support a person, a country or humanity as a whole. The higher the
number of the footprint, the less sustainable the lifestyle.
The Living Planet Report, 2006 reports that humanity’s demand on the
planet has tripled since 1961 and exceeds the world’s ability to regenerate
by about 30%.
This ecological overshoot means that it now takes more than 15 months
for the earth to regenerate what people use in a single year.
The biggest component by far and the fastest growing of the global
ecological footprint at 48% is Carbon Dioxide (CO₂). Released by the use of
fossil fuels and measured by the Carbon Footprint (CF), the amount of
carbon dioxide in the atmosphere has increased more than 40% in the last
200 years. Between 1961 and 2005 it increased eleven-fold.
The reliance by humankind on fossil fuels for energy continues to grow.
The largest contributor to the CF is energy generation.

Greenhouse gases and the greenhouse effect

The earth has an energy budget. Energy comes in through sunlight and
goes out by radiating back into space. A number of gases in the
atmosphere trap the heat radiated from the earth towards space, these
are known as greenhouse gases. This is referred to as the greenhouse
effect. When it operates naturally, energy debits and credits remain in
balance thus keeping the planet warm and habitable.
Water Vapor accounts for between 80% and 90% of the earth’s natural
greenhouse effect. The human caused portion of the greenhouse effect
can be attributed to the burning of fossil fuels. Scientists believe that when
too much CO₂ and other greenhouse gases enter the atmosphere they trap
even more heat and this has contributed to global warming.
The ozone hole which has expanded over the Southern Ocean is the
second effect creating unnaturally high greenhouse gases in the
atmosphere. Whilst chlorofluorocarbons (CFCs), the cause of 80% of the
ozone destruction are being phased out, they remain in the atmosphere
for up to 120 years.
Greenhouse Gas (GHG) emissions are set to be increasingly scrutinized,
regulated and priced. Carbon emissions are not just a social responsibility
matter but also a legal, operational, risk management and strategic issue.
Europe already imposes greenhouse gas limits and Australia is set to follow
shortly with the proposed Emissions Trading Scheme (ETS).
Australia has the highest per capita greenhouse emissions in the
developed world, about 26 tons per Australian annually. Australia’s high
output can be attributed mainly to two factors:
The high use of fossil fuels for electricity generation; perhaps not
reasonable in a windswept and sunny climate.

Transportation; more reasonable in a large and open country.

About 70% of Australia’s GHG emissions are CO₂, one of the most
4damaging greenhouse gases.
Sustainability reporting
In 2007, Australia launched a voluntary Greenhouse Gas Reporting System
to begin measuring emissions output in preparation for the launch of a
Carbon Pollution Reduction Scheme (CPRS).
The National Greenhouse and Energy Reporting System (NGERS), a
mandatory scheme, commenced in July 2008.
Increasingly consumers, employees, investors and other stakeholders
expect organizations to report on their sustainability. They view reporting
as a measure of trustworthiness and good governance. Reporting signals
the organization’s seriousness about environmental responsibility and
indicates its ability to track and manage its ecological footprint. This in turn
correlates with good general management and superior market
performance.
An organization’s lack of attention to environmental concerns is likely to
have serious cost and risk implications placing them at a strategic
disadvantage. It is assumed that organizations that do not report have high
emissions. They are considered exposed to forthcoming emission charges,
increasing energy costs and other risks that could undermine their ability
to operate successfully.
To begin reporting for your organization, collect and report information on
greenhouse gas emissions. Detail your plans for improving energy
efficiency and your targets for reducing emissions. Investigate the factors
that affect the sustainability of your organization. These will vary for
different industries and individual organizations. When you have identified
the factors important to your organization’s sustainability, you can work
out how to measure them.
Used by more than 1600 organizations worldwide and developed at the
Amsterdam Global Conference on Sustainability and Transparency in 2010,
the Global Reporting Initiative (GRI) is the most widely used sustainability
framework of reporting principles, guidelines and standard disclosures on
environmental, social and economic performance. Known as G3 Guidelines,
they help organizations make relevant disclosures on their economic,
environmental and social performance. The G3 Guidelines can be
downloaded from the GRI website www.globalreporting.org
Regulations
The federal government’s climate change policy is underpinned by two key
mechanisms:
1. National Greenhouse and Energy Reporting Act, 2007 (NGER Act)
http://www.climatechange.gov.au/reporting
2. The Australian Government’s Climate Change Plan – Clean Energy Future
http://www.cleanenergyfuture.gov.au/

The NGER Act establishes a mandatory reporting system for corporate

greenhouse gas emissions and energy consumption and production that
exceed specified thresholds. The Act requires organizations to register and
report if they emit greenhouse gases, produce energy or consume energy
at or above specified annual thresholds. The Act carries penalties of up to
$220,000 for failure to register and additional penalties for late reports.
Two types of constitutional corporations that should register in the first
year:
Those with a facility that emitted more than 25 kilotons (25,000 tons) of
GHG’s or produced or consumed 100 terajoules or more energy

Those where the corporate group as a whole emitted more than 125
kilotons of GHG’s or produced or consumed more than 500 terajoules of
energy

The Clean Energy Future (CEF)

Economic experts around the world recognize that putting a price on
carbon is the most effective and cheapest way to cut pollution. Under the
CEF around 500 big polluters in Australia will be required to pay for their
pollution. These businesses will need to buy and surrender to the
Government a permit for every tone of pollution they produce. The
proposed initial price for these permits will be $23 per ton and will only
have CPI rises for the first three years of operation. The price will then be
determined by the market and there will a floor price and a ceiling price
that companies must work within with the buying and selling of permits.
This has been done as an incentive to big business to reduce pollution and
to allow businesses a three-year surety of price so changes can be made to
the way they produce their goods. This legislation became operational on
July 1st 2012.
Related Acts
The Environment Protection and Biodiversity Conservation Act, 1999:
This Act provides primarily for the protection of the environment,
particularly those aspects that are matters of national significance. It also
promotes biodiversity and ecologically sustainable development and the
conservation and sustainable use of natural resources.
http://www.environment.gov.au/epbc
The Energy Efficiency Opportunities Act, 2006: This Act encourages more
efficient use of energy by large energy users. Registered corporations must
submit a plan every five-year explaining how they plan to assess the
opportunities for improving energy efficiency during the next five-year
period.
http://www.ret.gov.au/ENERGY/EFFICIENCY/EEO/Pages/default.aspx
Queensland legislation, Clean Energy Act, 2008: The main object of this act
is to improve efficiency and management of the use of energy and the
conservation of energy in relation to particular businesses and other
activities.

How well positioned is your organization?

Take a moment to consider the following questions:
Have you analyzed your integrated value chain for sustainability?
Have you considered ways to exploit the opportunities sustainability may
offer?
Have you developed strategies, policies and programs to allow your
organization to operate more sustainably?
Have you identified the effects of climate change on your organization’s
operations?
Have you set sustainability targets and do you monitor them regularly?
Have you trained people in sustainable practices and made sustainability
considerations part of your organization’s decision making, planning,
project and reporting protocols?
Is a senior executive charged with guiding your organization to increased
sustainability?
Is sustainability integrated into your organization’s corporate social
responsibility policies?
Where are you now?
In order to achieve optimum resource efficiency, organization’s need to
calculate their current impact on the environment. As the saying goes, “If
you can’t measure it, you can’t manage it”. A good place to start is with
your ecological and carbon footprints.
It is important to identify the environmental measures that best apply to
your organization and then locate relevant data that can provide you with
meaningful information.
Ask yourself:
What areas of the organization’s business activities have an impact on the
environment?

Do the organization’s business activities have potential to harm any aspect

of the environment, including air, noise, water (storm water, ground
water, waste water), soil, flora, fauna and people?

Which of the organization’s current business activities have a positive

impact on or protect the environment?

Not only do you need to consider the impacts of the resources your
organization acquires in order to produce products or services, you also
need to consider the impact of the use of the product or service by the
customer. A light globe manufacturer, for example: needs to measure the
resources they used to make a light globe and the energy customers will
consume in using the light globe.
Measure and document current resource usage
You will need to carry out a resource usage assessment in order to
measure the resource usage. In addition to examining the use of all
resources consumed by your organization, you also need to investigate
waste generated by your organization. The results will assist you in
identifying ways resource efficiency can be improved and to develop an
action plan.
In addition to calculating the organization’s total resource consumption
and waste generation the resource usage assessment will also:
Calculate the resource usage and waste generation for each business
activity or area

Identify which business activities or areas use the majority of resources

Identify which business activities or areas create the most waste

Discover opportunities for resource efficiency improvement

Precisely calculate the cost of resources and wastes

Allow informed business decisions to be made

Reduce costs associated with resource consumption and waste generation

Facilitate communication about resource efficiency.

Data should be regularly updated once the initial assessment has been
carried out. You may consider analyzing the data on a monthly basis. Some
organizations break the data down further seeking to identify trends in a
day - greater usage in the morning in contrast to the afternoon or a week
to compare days. The analysis will assist in deciding where your efforts
should be focused when identifying resource efficiency solutions.
Once the data has been collected and analysis completed you can now
move onto identifying the actions that may reduce resource usage and
waste generation. This information can be documented in your resource
efficiency plan.
Purchasing strategies
The purchasing decisions your organization makes on goods, resources and
services will have an impact on the environment. To be environmentally
responsible organizations should seek to buy resources, goods and services
that have less impact on the environment than their alternatives.
For example: purchasing products that are made from recycled materials
or have minimal packaging.
The benefits of environmental purchasing are:
Decrease energy and water use

Increase resource efficiency

Decrease waste

Reduce pollution

Establish markets for environmentally friendly products and services

Place pressure on suppliers to produce products and services with lower

environmental impacts.

Environmental purchasing involves considering the impact of the product

at any stage of its manufacture, use or disposal. In other words,
throughout its life cycle. Organizations also need to consider where the
product has been sourced from. Products transported over long distances
result in higher carbon emissions. Refer back to our Green Train story on
Eurostar, one of their environmental initiatives was sourcing their on-
board food locally.
Many organizations have added a ‘Sustainability Clause’ into their supplier
contract. Organizations recognize that its own and its suppliers’
environmental performance are factors in their long-term success. In line
with the drive to become a more environmentally friendly organization,
you may have noticed initiatives implemented by your own workplace. For
example, the promoted use ’Green’ stationery supplies.
Element 2: Set targets for improvement
Set targets for improvement
Once you understand your current situation you are in a position to work
with relevant stakeholders to develop a sustainability policy and goals and
agree on priorities. You can then develop broad strategies and a range of
programs to reach them.
For your organization this may include:
Customers
Employees
Regulating bodies
Local City Council
Government
Local Community
Suppliers
Business Associations

Specialists outside the organization

The active engagement of stakeholders requires two way communication.
The setting of goals should be a collaborative process that ensures the
opinions and needs of the stakeholders are heard and responded to. The
gathered input from your stakeholders will be used as the foundation for
setting environmental priorities. Priority setting will allow your
organization to achieve greater environmental benefits for its money and
efforts.
Goals and targets
You know where you are. Where do you want to be?
Goalposts to aim for and a dashboard of specific measures of success or
Key Performance Indicators (KPIs), give the organisation and other
interested parties a way to track improvements and find further
opportunities to develop.
The input output outcome impact framework is a useful measuring system
whereby goals are set and progress measured in each of those four areas:
Inputs could be financial or technological or they could be initiatives such
as a ‘green office’ program or research and development of new green
products, services or systems

Outputs are what are produced or done with the inputs. They allow you to
see the immediate results of your inputs or how they have been used or
applied

Outcomes are short term results from the outputs

Impacts are the longer term results of your efforts.

Encourage your organisation to join an environmental industry association.

This will allow your organisation to access the latest developments in your
industry. Industry Association provides the opportunity for you to take part
in training programs and seminars directly concerned with environmental
business practices relevant to your industry.
Alternatively, your organisation may join a general environmental program
such as Greenhouse Challenge Plus which aims to encourage organisations
to incorporate greenhouse issues into their business decision making
process. Greenhouse Challenge Plus is managed by Department of
Environment, Water, Heritage and the Arts. It allows organisations to gain
access to advice from environmental experts and industry advisors and the
chance to network with and learn from other members. Members have
access to information and tools that have been developed to reduce
greenhouse gas emissions and save money.
Alternate solutions
An environmental management strategy’s objective is to make the
workplace effects safe and to eliminate environmental hazards or at the
very least reduce the risk to an acceptable level. Once the hazards have
been identified you need to evaluate alternate solutions.
We can use the same strategies when determining how to deal with
environmental issues in the workplace as we do for Workplace Health and
Safety (WH&S) issues. The first response should be to remove the impact
and then if this is not possible, then follow the hierarchy of controls. The
hierarchy of controls ranks control activities in which order they should be
considered for adoption.

The five levels in the hierarchy of control are:

1. Elimination – Using this control the source of the environmental impact
is removed.
2. Substitution – Where elimination is not possible substitution should be
used. For example: replacing a toxic substance with a less toxic or organic
one.
3. Engineering – Equipment, work processes, tasks, machinery and plant
can be redesigned to reduce or eliminate either worker risk or
environmental risk. For example: airborne pollutants may be controlled by
installing ventilation systems that filter pollutants from the air.
4. Administration – Administrative processes can be used to redesign and
adjust jobs around environmental considerations. For example: material
handling techniques that prevent generation of dust.
5. Personal Protective Equipment (PPE) – Protective equipment includes
protective suits, gloves, boots, face masks and respirators.
As with WH&S the environmental risk management will involve the
processes:
1. Identify the hazard
2. Assess the risk
3. Implement control measures
4. Monitor and review.

Proactive communication and consultation are key at each level to

encourage active employee participation in the environmental risk
management process.
Setting targets
Targets are signposts of where your organisation wants to go and what you
hope to achieve. Setting of short and long term goals will assist you to
measure your progress when implementing resource efficiency strategies.
More and more organizations are using KPIs to set goals. KPIs are values
that can be measured objectively such as tones of paper saved per year or
litres of water used.
When setting targets you should follow the SMART criteria. That is, targets
should be:
SPECIFIC - Specific targets have more chance of being achieved than
general or vague goals. They focus efforts and clearly define what is
expected.
MEASURABLE - One of the fundamental purposes of a goal is to measure
success. Measurable goals can be compared to actual results; they help
people to stay on track and focused.
AGREED – Employees are less likely to commit to goals they have no input
into. By having input staff have ownership of the targets and will
endeavour to achieve them.
OR
ACTION – Clearly defined steps required to achieve your goal.
RELEVANT – Goals need to be relevant, they should complement the
needs, culture and goals of the organisation. For Mater, a corporate
objective is to seek to minimise the impact on the environment in the
delivery of its services.
TIMELY - Well conceived goals will include a timeframe. Without a set
timeframe there is no sense of urgency to take action.

Element 3: Implement performance

improvement strategies
The difference between animals and humans is that animals
change themselves for the environment, but humans change the
environment for themselves.
Ayn Rand
Implement performance improvement strategies
Green strategies
Organisations can decide how green they want to go on a financial basis; in
response to stakeholder demands, on a philosophical basis or a
combination of these rationales.
Short term, going ‘light green’ may be easy and cheap, but for
organisations that pollute more than minimally the costs of mere
compliance are likely to increase steeply. Organisations that are dependent
on the goodwill of their customers and repeat business may need to go to
‘medium green’ at a minimum to uphold their reputation as a socially
responsible organisation.
Many organisations understand the benefits of investing time and money
to go ‘darker green’. Cost savings, a significant competitive edge, market
leadership and improved corporate image can all add to the advantage of
making a smaller ecological footprint.
Some organisations go beyond operational effectiveness and choose the
‘dark green option’. They may for instance make strategic changes that
allow them to benefit from climate change and move further towards
sustainability.
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Identify programs
There is no magic formula to follow when developing sustainability
programs. Each organisation’s approach needs to blend with its overall
strategy. There are however, some general guidelines.
Organisations included in either NGER or Clean Energy future should
reduce their emissions as much as possible to reduce the amount of
pollution permits and carbon offsets or credits they need to purchase.
Identify a range of initiatives and innovations for developing sustainable
work practices from which to select the most suitable. Selecting suppliers
with low carbon footprints may be the next step. After that, you could
work with your organisation’s integrated value chain to look for ways to
mitigate climate related and sustainability costs and risks across the chain
to assure reliable and sustainable supplies.
The journey to sustainability is a long one for many organisations.
Identifying a range of eco efficient actions to take now at the beginning of
the journey will be of benefit. You may also begin to plan for longer term
eco effective measures.
Use problem solving and decision making processes when selecting the
options to implement your strategy. Choose the best options to meet your
criteria in terms of cost effectiveness, ongoing expenses, time frames, and
any social and economic impacts. Analyse any underlying capital expenses
and the cost of developing new methodologies, weighing them against the
escalating financial cost of purchasing pollution permits and carbon
offsets, in addition to the non financial costs such as market reputation.
Implementation plans
Once you have developed your policies, strategies and selected programs
to reduce your organisations’ footprint and increase its sustainability, it is
now time to develop implementation plans and promote them and the
expected outcomes to stakeholders.
Use the Plan Do Check Act (PDCA) cycle to ensure your plans achieve the
results intended and to find ways to make continuous improvements.
Ensure everyone involved in implementing the plans understand their
responsibilities. Consider developing an education program for employees
and customers on sustainability matters and informing your organisations’
external customers of what you are doing. A program like this can be an
excellent marketing tool and another way to increase consumer loyalty.
Many organisations post their environmental programs on their web pages
and detail the progress of the programs in the yearly reports.
Plan Do Check Act
Here is what you do for each stage of the Cycle:
Plan to improve your operations first by finding out what things are going
wrong (i.e. identify the problems faced) and come up with ideas for solving
these problems.
Do changes designed to solve the problems on a small or experimental
scale first. This minimises disruption to routine activity while testing
whether the changes will work or not.
Check whether the small scale or experimental changes are achieving the
desired result or not. Also, continuously check nominated key activities
(regardless of any experimentation going on) to ensure that you know
what the quality of the output is at all times to identify any new problems
when they crop up.
Act to implement changes on a larger scale if the experiment is successful.
This means making the changes a routine part of your activity. Also Act to
involve other persons (other departments, suppliers or customers)
affected by the changes and whose cooperation you need to implement
them on a larger scale or those who may simply benefit from what you
have learned (you may, of course, already have involved these people in
the ‘Do’ or trial stage).
Consult with stakeholders
Identify the stakeholders involved in or affected by your environmental
and resource efficiency management strategy. Consider each stakeholder’s
area of expertise. You may invite stakeholder representatives to
participate in developing strategies. One of the major cornerstones of
sustainable activities is flexibility and openness to new ideas.
Consultation with experts will provide scientific and analytical information.
Consultation with customers or patients, on the other hand, will provide
subjective opinions and ideas.
Consult and communicate with employees so that everyone is aware of the
changes occurring. Employees will support changes more readily if they are
involved in the planning and decision making processes. If not involved
they may resist the changes.
Organisations today are being asked to address an increasingly complex set
of environmental issues. It is in their best interest to get as much
specialised advice as they can. Stakeholders bring a wealth of knowledge
and expertise to solve environmental problems. Consultation with
stakeholders can be instrumental in formulating innovative solutions.
Forward thinking companies now want more meaningful partnerships with
their stakeholders based on a mutual exchange of information, ideas and
suggestions.
Involve your team members
You need to engage your team members if you want them to be proactive
in identifying areas for improved practices and resource efficiency. Team
members who are not engaged are unlikely to look for areas to improve
much less communicate their ideas. There are a number of strategies that
can be employed to encourage participation of team members:
Training – Develop your teams’ skills and knowledge. Educate team
members about resource efficiency and environmental practices. How can
staff be expected to make informed decisions or contribute ideas if they
have little or no understanding of the topic?
Acknowledge and appreciate team member efforts – Notice and respond
when staff contribute and do things well. Appreciation is a powerful
motivator.
Encourage communication – Talk to your co-workers and team members,
encourage them to communicate and share ideas.
Listen - By listening to employees’ ideas, concerns and opinions it shows
you care about them and respect their input.
Consult employees – To develop and involve your team, engage staff
through consultation. Consulting team members reinforces a sense of
togetherness and teamwork.
Create meaning – People need to understand the relevance of doing
something to truly ‘buy into it’.
Challenge employees – We are naturally curious and enjoy solving
problems. Allow staff to learn, problem solve and actively use their mind.
This in turn will develop their skills.
Empower employees - Motivate staff by giving them ownership over their
own work. Empowered staff feel they make a difference in the workplace
and are more likely to come forward with ideas.
Feedback – Provide constructive feedback to team members and ask for
their feedback in return.
Encourage collaboration – Have the team work collaboratively to identify
needs and generate ideas to resolve issues.
Team structure – Teams that are well organised and managed are
characterised by high morale and productivity. Structured teams provide a
supportive working environment.
Team meetings - Meeting regularly can develop team support. Encourage
everybody’s participation and provide a forum that respects an individual’s
perspective on the topic. Use to advantage team diversity to develop a
range of strategies and solutions.
Costing strategies
Businesses often fail to calculate the real financial benefits of resource
efficiency projects. This can result in projects being placed on hold, down
scaled or rejected on an economic basis. Organisations can inaccurately
estimate valuing the project’s financial benefits for two reasons:
1. Failure to identify full cost benefits

When calculating the value of a resource efficiency project, organisations

must consider all the benefits and not just the obvious direct reductions in
cost. Remember, some benefits may not be immediately obvious. For
example: ABC company is considering upgrading its lighting to more energy
efficient bulbs throughout the Administration office. The obvious cost
benefit is the reduced use of electricity however the less obvious benefits
may include:
New bulbs have a longer life and will save ABC money as they will purchase
less bulbs each year

ABC will also save costs associated with ordering, purchasing, replacing and
installing light globes as they will have a longer life span

Energy efficient lighting emits more light, therefore reducing the number
of lights needed.

2. Failure to identify full costs

Organisations often base their purchasing decisions solely on the basis of

the initial purchase cost of the equipment. This fails to factor in additional
costs that may have been incurred. For example: installation costs, ongoing
operating costs, cost of training staff to use the new equipment and costs
of any downtime that may occur due to installation. When choosing
between a number of options organisations may discover that cheaper
upfront equipment may cost more in the long term.
Payback period
Organisations can calculate the benefits of a new environmental asset by
calculating the payback period using the following formula:
Payback period (years) = Initial investment $/ Net annual savings per year
For example: ABC company upgrading their lighting in the administration
building. The cost to purchase and install the new light globes is $28,000.
This will save around $8,000 per year in electricity costs.
An additional saving of $1,800 per year is attributed to the lower rate of
bulb replacement as this will save purchase and installation costs.
Payback period (years) = $28,000/ $9,800 = 2.86
Payback period = 2.86 years