1. NORTHWEST ENERGY EFFICIENCY ALLIANCE Strategic Energy Management a plank in your Sustainability Platform John Wallner, Sector Manager October 2012

2. Agenda 2 Review: What is Strategic Energy Management? What’s this about a Megatrend? Sustainability Transformation Maturity Models An Action item The journey

3. Management System Approach A management system is the framework of processes and procedures used to ensure that an organization can fulfill all tasks required to achieve its objectives. Modern Management Systems are based on Continuous Improvement.(PDCA) Management System Standards require external audit for registration. (ISO) 3

4. Strategic Energy Management WHAT IS STRATEGIC ENERGY MANAGEMENT A system of practices that creates reliable and persistent energy savings. ?

5. Strategic Energy Management A holistic energy management system that leverages the natural law of process management to: –understand, –control, and –improve energy use.

6. INDUSTRY REFINEMENT FOCUS ON QUALITY DEMINGENERGY Management Systems 1980s1950s1990s2000s

7. Strategic Energy Management Employee Awareness Capital Projects Technical Training Plant Assessments Performance Indicators Management Systems for Energy Strategic Energy Management Programs BenchmarkingAnalysisSoftware ControlsMetering System Standards ISO 50001 Energy Management Elements US DOE Superior Energy Performance NEEA’s CEI, Energy Star, IEI, HPEM

8. Q & A

9. “From Shop Floor to Top Floor: Best Business Practice in Energy Efficiency” 2010 STUDY: Pew Center for Climate Change SURVEYED EXECUTIVES STATED: Energy Management was a solution to their sustainability needs

10. Leading Motivators for Energy Management 1 2

11. Strategic Energy Management Aligns with the Primary Profit Motive Strategic Energy Management Has a Positive Connotation

12. EXECUTIVE SPONSORSHIP CONTAIN CARBON ISSUES CUT COSTS How? PRACTICAL FORWARD THINKING TURNING POTENTIAL LIABILITY INTO ASSETS

13. Q & A

14. Sustainability Megatrends

15. Key megatrend patterns Megatrends require businesses to adapt and innovate or be swept away “No one has to change, survival is optional” Deming Leaders take multistage transformative journey towards value creation

16. “In a transformation journey, the next steps will be to think about thinking.”

17. DO OLD THINGS IN NEW WAYS Bringing Transformation Theory into Practice 1 “Outperform competitors on regulatory compliance and environment-related cost and risk management.” © Harvard Business Review, 2010

18. McKinsey Global Survey 2011 Most executives are taking action on: –Reducing energy use 63% –Reducing waste in operations 61% Fewer are taking action on: –Committing R&D on sustainable products 31% –Managing impact throughout the value chain 28%

19. DO NEW THINGS IN NEW WAYS Bringing Transformation Theory into Practice Engage in widespread redesign of products, processes, and whole systems to optimize natural resource efficiencies and risk management across their value chains., 2 © Harvard Business Review, 2010

20. Sustainability Nears a Tipping Point MIT Sloan 2012 Leader companies: –85% CEO Commitment 50% more likely –3X more likely to have business case –2.5X more likely to have CSO –2X more likely to have reporting process –2X more likely to have linked KPIs

21. Sustainability Nears a Tipping Point MIT Sloan 2012 68% have increased executive attention 67% agree as competitive necessity 70% on permanent management agendas Many now see it as part of the next phase of development, it will be disruptive and structural more than incremental change

22. TRANSFORM CORE BUSINESS Bringing Transformation Theory into Practice Sustainability innovations become the source of new revenues and growth. 3 © Harvard Business Review, 2010

23. NEW BUSINESS MODEL CREATION & DIFFERENTIATION Bringing Transformation Theory into Practice “At the highest level, firms exploit the megatrend as a source of differentiation in business model, brand, employee engagement, and other intangibles, fundamentally repositioning the company and redefining its strategy for competitive advantage.” 4 © Harvard Business Review, 2010

24. NEW BUSINESS MODEL CREATION & DIFFERENTI- ATION TRANSFORM CORE BUSINESS DO NEW THINGS IN NEW WAYS DO OLD THINGS IN NEW WAYS Bringing Transformation Theory into Practice 1 234

25. PDCA Cycles of Learning

26. Business Sustainability Maturity Model Value ActivityAd Hoc Planned in Isolation Managed no integration Excellence at Corp Level High Perform Sustainable Strategy Partnerships Motivation Competencies Communication Technology Operations Cagnin, Loveridge, Butler

28. So what, you ask ? Are you planning to be leaders or followers with respect to your customer interactions on sustainability? Have you characterized your customers in their sustainability journeys? Have you the right energy management offerings in your portfolio to be able to accelerate their respective progress?

29. An exercise

30. The trap will always be to think that you have arrived.

31. The Journey Is the Reward Chairman Jobs

32. Q & A

33. Thank You! John Wallner jwallner@neea.org 503-688-5449