Selling Sustainability

Mel TheEngineer
Aug 9, 2017 · 5 min read

Selling Sustainability: ROI as a tool for success

Selling is a part of everyone’s work. Many of my engineering peers might cringe reading that. Some engineers can see sales as beneath them or, even worse, unnecessary. From my point of view, we all must master sales skills if we want to achieve our highest goals.

When you interview for a job, you are selling yourself. When you present to a client, you are selling your team’s ability to effectively solve the client’s problem. In these scenarios, your level of success is contingent on your ability to sell.

In some respects, creative “selling” can also influence your ability convince a company to invest in sustainability initiatives. Let me explain…

I want to dive into the industrial setting; in particular, water sustainability. In the industrial setting (whether we’re talking about a manufacturer, mining operation, or power utility), most every decision at the facility level is driven or influenced by budgetary constraints. Imagine you are a facility manager or perhaps part of the operations staff. Suppose you see a place where process wastewater (that is, water that was used in the facility operations and is now destined for the sewer) could be reused at another point in the facility, but perhaps it would require a minor treatment step first, such as filtration.

The facility has an annual budget that is already set and your project idea isn’t on the docket. Your project idea will require design, purchase of new equipment, and there will be some operation and maintenance costs associated with it after implementation. How would you convince upper management that capital expenditure is warranted for your idea?

Your primary driver for success in this setting of limited budget will be demonstrating a favorable (<2 years) return on investment (ROI). Simply stated, ROI means the amount of time it will take to recoup your investment based on the savings you will garner over time. As an equation, simple ROI looks like this:

Historically, industrial communities have had tunnel vision when it comes to water conservation and its associated ROI. Water is seen as cheap, especially relative to the other expenses at a plant. Furthermore, when industry has reviewed ROI for water conservation in the past, they have relied on looking at costs associated only with water acquisition (water utility billing), and disposal to the municipal sewer.

Back to your project idea — what would the ROI look like if only water acquisition and municipal wastewater treatment were considered? First we need to add up our water costs, then we can evaluate costs versus project expense and its associated savings to determine the ROI:

Now, we know that the capital expense for your project ideas is $30,000. We expect implementation of your project idea to save the facility 1 million gallons (MG) per year. So, if that water is not being purchased and used, that means it also isn’t going down the sewer, which is why we consider it in the savings. So, if we save 1 MG/year, we can calculate our cost savings:

If we plug those numbers into our simple ROI equation, here is what we get:

That’s 5.4 years (not considering inflation and other factors) for the company to recoup their investment. This ROI is not good enough for you to sell your conservation project idea. The target ROI for most industrial companies is less than 2 years. Can we shift the paradigm to look at this another way?

Yes!

We can reframe the ROI of our project by looking at the Total Cost of Water. This concept is something that I’ve worked on at Arcadis as part of a WE&RF research project (which I’ll provide more detail on at the end). We’ve found that the financial barrier is the biggest hurdle to overcome when implementing water conservation in the industrial setting. To capture the actual savings associated with a water savings project, though, we need to account for all the other places that water use incurs cost in a factory. Those “hidden” costs could be: incoming water treatment (energy, chemicals, labor, losses), chemicals added for other means (such as lubrication), energy for heating/cooling water, lost product, loss water, pumping, Labor associated with water system maintenance, offsite wastewater disposal, or onsite wastewater treatment.

In our example, let’s suppose there are only a few of these “hidden” costs to consider. At your facility, water is de-ionized with reverse osmosis, it’s heated, and there’s an onsite wastewater treatment plant (wastewater treated prior to being conveyed to the municipal sewer). If we recalculate our water cost and the associated ROI for your project idea, here is what it looks like now:

Your conservation idea now shows a ROI that is competitive enough to compete with other projects at the plant that require CapEx. Excellent!

This was a simple, hypothetical example to show how a shift in perspective can completely change our ability to succeed in implementing sustainable initiatives.

With creative thinking or a paradigm shift, we can successfully pitch sustainable initiatives, even in settings where it seems that budgetary limitations are impossible to overcome.

Next week, I will be joining talents from around the globe at UNLEASH to work on solutions for the Sustainable Development Goals (SDGs). Specifically, I will be focused on the water topic and I anticipate that with the power of collaboration, we will innovate potential solutions using the variety of perspectives being brought together from across the globe.


For the WE&RF project I mentioned earlier, we have worked with numerous partners (including Ford, PPG, GM, 3M, Duke Energy, Washoe County, West Basin Municipal Water District) to understand the common barriers to water conservation in industry, effective methods for overcoming these obstacles, and to develop a comprehensive understanding of the Total Cost of Water. Our findings were published by WE&RF, which you can access here. Today the Arcadis team is working with industrial partners on a continuation of this initiative to develop tools that help facility personnel identify water conservation opportunities, and calculate the true ROI based on the total expanded cost of water. This suite of tools will be publicly available for free; the anticipated release is late 2018.

Mel TheEngineer

Written by

UNLEASH Lab Talent | Podcaster | Engineer

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