Monthly Archives: January 2015

6 Steps to Manage Your Company’s Physical Climate Change Risks

President Obama has recently stated that climate change must become a high priority. He wants the US to be a world leader in addressing climate change, such as reducing greenhouse gas (GHG) emissions significantly. Many polls show that a solid majority of Americans support this movement. A growing number of companies, cognizant of this fact, have tasked their Environmental Groups to address climate change.

A number of articles in CCES have discussed the many financial benefits to a company that reduces its GHG emissions. That aside, another climate change issue that companies must address is the impact of the physical and financial effects of climate change on their business; in other words, to assess climate change risk. Nearly all businesses have assets, operations, and a supply chain vulnerable to the effects of climate change, not to mention its effects on markets. How does one develop the ways to assess the degree of and for developing strategies to minimize climate change risk?

This is not meant to be an exhaustive analysis of climate change risk. Software and other options exist to be more exact. This is meant to be a guide for those starting out. Here are 6 steps to effectively begin to assess and address your climate change risk.

1. Determine your current climate change risk factors. Develop an analysis of your company’s assets, operations, supply chain, and customers and which ones are most at risk to the likely adverse effects of climate change (i.e., extreme storms, rising sea levels, shortages of water or other natural resources, etc.). List these specific areas in writing, including their location, and determine which hazards are likely to increase in particular geographic areas. For example, if you have a manufacturing plant or a key supplier has one in, say Florida or the Caribbean, then you need to be concerned about the probability of a growing frequency of extreme storms. Begin by assessing risk qualitatively, but eventually attempt to quantify or at least rank the business areas of greatest adverse risk. Rankings should be made in business terms: such as risks that are existential, those that may affect worker lives, those that may cost your business market share or reputation, as well as those resulting in direct costs (asset damage).

2. Assess where you stand now. Part of this ranking of your key areas of climate change risk is to determine if impacts are already occurring or may come soon. For each critical risk area identified, research recent and historic events to determine if the impacts are already occurring. For example, research the historical extreme weather events of a potentially vulnerable plant over the last 50 to 100 years (if data is available) to determine whether extreme weather events are already occurring more frequently.

3. Now look forward to assess future risk of climate change impacts. Assess those assets, operations, etc. identified for potential climate change risk for projected changes caused by climate change in the future. How far into the future is up to your firm. For example, computer models exist to predict temperature rise in many areas of the world caused by climate change and can be used to predict future yields of necessary supplies provided by agriculture. Projections have been estimated for sea level rise. Determine if your assets or supply chain may be even more vulnerable in the future to flooding or damage if sea level rises by the amount projected.

4. Go back, re-rank and plan for your riskiest vulnerabilities. Given the historical and potential future adverse impacts of climate change that have been determined, now re-rank these at-risk assets, operations, supply chain, etc. using your criteria above (existential, reputational, asset damage). Estimate which of these are of potentially greatest risk to loss or damage in the future.

5. Determine reasonable steps to effectively reduce risk. There are likely multiple options that can be implemented to reduce your risk. Each may reduce risk differently or by a different amount and each has a cost (although there may be side benefits, too). Remember, it is essentially impossible to reduce risk to zero (“Mother Nature”). And of course, you will be limited by budgetary factors. Therefore, determine what level of risk may be acceptable to your company. For example, what are the costs involved and risk reduced of building a sea wall to protect an asset in a coastal, hurricane zone? What may the costs be to “raise” that facility or its key assets a number of feet to avoid flooding? What may the costs be to relocate some of its operations to a different facility in a much lower risk zone? What may the costs be to shut down the plant altogether and move all operations elsewhere? This information and good what-if scenarios will enable your company to better direct resources for more effective risk reduction.

6. Climate change risk should be a part of your total business risk determination. One thing that is certain is that as businesses and the Earth change, climate change risk will also change. As a company changes its customer base, supply chains, acquires other companies or sheds products, this will affect their climate change risk. Of course, the science of climate change and knowledge of risk will change, too. Therefore, this risk analysis should not be “stored away.” This must be re-examined and re-calculated every few years or if the company undergoes major changes. Climate change risk should be part of overall corporate business risk assessments.

For example, when determining whether to buy a company, its climate change risk should be assessed. Does that company have many assets or suppliers in vulnerable areas? Do they use coal, for example, to produce power for its operations? Might your company need to spend a large quantity of resources to address the risks it is taking on or comply with potential future climate change or energy regulations? A robust climate change risk assessment may affect your offer price. I managed a project where a company wanted us to assess the climate change risk of one it was considering to acquire that operated a number of coal-fired power plants. Their greatest concern was what might its future costs be due to potential future climate change or environmental rules that would require expensive controls on emissions? These costs, we showed, could be quite significant, and were presented to the client. Understanding the need to spend many of millions of additional dollars per year in the future, they reduced their bid price. They lost the bid, but afterwards contacted our firm and thanked us. Given the huge potential future cost and risk, this was the best “loss” of a bid they ever had.

CCES can help your firm assess climate change risk and determine and implement common-sense strategies to reduce the risks and get other financial benefits at the same time. Contact us at or at 914-584-6720.

Energy Efficiency It’s For Business, Not Being Cool

Energy efficiency is being recognized in many quarters as more than just a “feel good”, environmentally-beneficial business activity, but as a positive financial investment goal itself. After all, what is an investment; any kind of an investment? It is spending money so that you get that money back and a lot more. Investing in energy efficiency is an effective way of making money invested in saved costs and other financial benefits.

How do we define a good investment? Making the most money within a risk – reward paradigm. If you are risk averse, you invest money in T-bills are similar instruments. You make a great yield, but it is understood that the US government is behind the investment, and at worst, you are unlikely to lose the money you invested. Or if you wish to entertain risk, there are many investments that could pay a high yield, but there is a risk that business conditions will change, you don’t make that yield, and, in fact, you could lose all or some of the principal; a high risk.

Smartly investing money in energy efficiency projects is the best of all worlds. The risk is low. The technologies are known; if implemented correctly, they will work in lowering your energy use. And if a particular technology fails, the vendor should replace or repair it. They are simple; a lower wattage light bulb uses less electricity than a higher one. Period. And if designed right, provide you with the same (or better) light.

And the savings are potentially great. LED lights in many cases produce the same light using less than half the electricity of many current conventional lamps. In addition, these new technologies often last longer than those replaced, saving the user much in O&M risks, costs and improving worker flexibility (reassign workers to other tasks and fewer trips up the ladder to replace lights). I recently performed an evaluation of a large light replacement project. The client’s investment would conservatively (overestimating costs and underestimating savings) have a rate of return of 14%/year for at least 7 years. And the likely rate would be higher, with no risk (the lights work). What investment on Wall St. results in such a return?! Really! Tell me one. Many other strategies – if planned well for your particular building – will result in similar yields and benefits.

Some say: “This is great, but where do I get the upfront capital to buy the technologies I need to be more energy efficient?” Given the high rate of return and low risk, many financial institutions would be happy to lend money at low interest knowing their risk of default is low. Several government agencies have set up low-interest loan programs geared to cost savings, enabling companies to have only positive cash flow in these projects. Principal / interest are paid back only when energy cost savings are achieved.

The organization The American Council for an Energy Efficient Economy ( has compiled many financial studies and case studies on energy efficiency upgrades. See the following graph comparing the risk-reward of a typical energy upgrade with that for other monetary investments. If the graph does not appear, then note that typical energy efficiency projects have a risk index of about 5% (comparable to US T bills), yet a typical rate of return of over 20% (comparable to small company stocks).



See how energy efficiency projects – again, if designed and implemented professionally – has a low risk index, yet high annual rate of return.

CCES can perform an energy evaluation and manage the implementation of energy efficiency projects you select for your buildings and operations to maximize your financial benefits. Contact us today at 914-584-6720 or at

Short Primer on Effective Energy Upgrades For You Part 4: Variable Speed Fans and HVAC

Here is another simple, effective energy upgrade that will not only save you significant energy costs (if done right), but will also result in other benefits. As discussed last month, one of your biggest users of energy is cooling. Moving heat from a relatively cool place, such as an office or a data center, to a hotter place (the outside) goes against the norms of physics, and, therefore, requires energy. A study from Lawrence Berkeley National Laboratory ( found that upgrading fans and adding fan speed controls significantly reduces a facility’s electrical energy usage and reduces average and peak electric demand. In this day and age of many utilities around the country encouraging users to reduce their peak electricity demand, any way to do this will result in major cost savings. Many utilities now require large users to pay for peak demand, as well as usage, making reducing demand on weekdays during the 2 to 6 pm period a major cost savings.

The study focused on the cooling of a data center, which often needs cooling performed 24/7. What ways can energy efficiency be improved? The facility used for this initiative was a 135,000 square foot data center in El Segundo, Calif. The project focused on replacing constant speed scroll fans with electronically commutated motor (ECM) variable speed fans of a more efficient design and deploying an energy management system to control fan speeds and air handler output.

Deployment of the control’s software system resulted in a 66% drop in cooling energy usage, freeing stranded capacity while simultaneously expanding reserve cooling capacity. Varying the fan speed based on actual space needs in time and utilizing software to control it fairly accurately is a large energy saver compared to old style fans set at the same speed at all times.

In addition, the software saved the facility 2.9 million kWh annually and provided a pictorial view of the heat profile in the room, identifying and addressing “warm spots”. Not only is this a significant energy saver (identifying “warm spots” and addressing them), but it leads to better worker comfort and productivity.

Potentially overcooling a data center or other location to reduce cooling during the peak period in the summertime by adjusting fan speed (but still utilizing cooling if needed) can save a facility much costs.

CCES has the experts to help you evaluate new technologies and approaches to maximize savings not only in energy usage, but in peak demand shaving, as well, to maximize your financial gains. Contact us today at 914-584-6720 or

8 Ways to Protect Your Operations From Severe Weather Impacts

Well, we made it through another hurricane season without one damaging a major US populated area, the 2nd consecutive such season. Superstorm Sandy is becoming a distant memory for some. But, severe weather impacts are still a threat to your business all year round. This is the time to implement common-sense strategies to safeguard your property from the physical and financial effects of severe weather. Here are 8 easy-to-implement ideas that will have direct financial benefits for you.

1. Create a Severe Storm Culture. Don’t think your building or business is immune from the devastating effects of a severe storm. Even if it is not a headline-making hurricane, blizzard, or earthquake, severe weather literally impacts property in all 50 states. Don’t assume a severe storm will not come; be prepared for the worst case.

2. Damage is Beyond the Physical. A large number of businesses fail to re-open after severe weather events. Many, of course, sustained physical damage to the building or to its inventory. But many also went out of business because of a profound loss of computer data (sales lists, business data, codes, etc.). Realize that it is important to not just secure physical property, but your business systems, too.

3. Therefore, Identify Vulnerable Business Entities. What items are critical to your business that may be compromised by severe weather? First, should be your people, followed by buildings, computer systems, heavy equipment, inventory, etc.

4. Anticipate Worst-Case Scenarios. Actually record in writing potential worst case scenarios based on your location, such as hurricanes, tornadoes, floods, blizzards, earthquakes, thunderstorms, etc. Record all severe incidents of the last 25 years.

5. Go back and Identify Vulnerable Business Entities. For each potential severe weather type, which areas are most vulnerable and how bad may losses be? Look at people, property, inventory, computer systems, equipment, etc. Estimate potential losses and the time and cost for full business recovery for each scenario.

6. What Reasonable Protections Can You Install? Of course, budgets are limiting. You can’t do everything. And besides, there is no such thing as zero risk against the fury of Mother Nature. But what effective, affordable measures can you install – both physical and cultural – to reduce risk of loss? From physical safeguards to your buildings (i.e., construct escape paths, send water away from buildings and paths, raise critical equipment above basement/ground floor) to conducting drills.

7. Back Up Data. As discussed earlier, your data very much defines your business. Make sure you have back up to all of your data in a secure location, such as the ”cloud” or secure location safe from floods, fire, etc.

8. Create Living Emergency Response / Business Continuity Plans. Put all of this in writing: plans to determine how you will respond to severe weather to protect your people, assets, and data plus procedures to bring your business back up again as soon as possible after a disaster. Make sure these documents are reviewed and updated regularly and the right leaders are aware of what needs to be done.

CCES has the experts to help your business and buildings develop a disaster preparedness program to help minimize impacts of severe weather and to enable you to bounce back. Contact us today at 914-584-6720 or at