Our Business and Brands

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1 Our Business and Brands Advancing Sustainability in Green Buildings: Priorities & Provocations W. Scott Tew, Executive Director Center for Energy Efficiency and Sustainability $14+ billion diversified industrial company ~60,000 employees worldwide More than 80 manufacturing facilities worldwide Operate in every major geographic region Strategic brands are #1 or #2 in their markets Dow Jones Sustainability World and North America Index A Portfolio of Market-Leading Residential, Commercial and Industrial Brands Green Building Congress Green Buildings Priorities and A Provocation Energy Efficiency is a Big Agenda Item Today s Global Environment World energy consumption projected to grow 60% by 2030 Urbanization Drive for Competitiveness Regulatory Compliance Source: Energy Information Administration An unprecedented energy and operating environment globally 3 4

2 Energy Efficiency is a Critical Global Topic Increasing Urbanization BRICs will contribute twice as much to global growth as the G3 in the next decade (% global growth) India Urban Population, millions Corporate Sustainability Actions Taken Over the Past 12 Months % of respondents who say companies have taken these actions Source: MGI Report on Urbanization India China Russia India Brazil BRICs G3 5 Source: Equity research 6 Five years from now, will energy efficiency initiatives be more or less important to your company s business strategy? Efficiency becoming more important 77% think it s going to become more important over the next five years Only 19% think it s going to become less important 84% of us think energy efficiency is strategically important 49% say action on energy efficiency has saved their company money in the last three years 7 8

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4 Financial attractiveness of building efficiency technologies All energy efficiency investments are positive NPV investments Corporate Sustainability Actions Taken Over the Past 12 Months Reducing Product s Environmental Footprint % of respondents who say companies have taken these actions Companies are at early stage of defining green Improving Energy Efficiency Reducing product s environmental footprint Although energy efficiency and operations focus is popular, differentiation and revenue growth can be achieved by leveraging sustainability in the product and innovation process. 15 Green Claims are prolific Company actions vary but most have green product portfolio focusing on 1-2 dimensions Most companies environmental product claims are either vague or related to external standards Government regulations are growing Actions to assess cradle-to-grave impacts yield new insights and break away practices (e.g., LCA) Customers win with solutions that are influenced through sustainable practices 16

5 Stakeholders Driving Sustainability Stakeholders who CEOs believe will have the greatest impact on the way they manage societal expectations Consumers Employees Governments Communities Regulators Media Investment Community Suppliers NGOs Boards Organized Labor Other Survey of 766 worldwide CEOs, including 50 in-depth interviews 17 UN Global Compact and Accenture study, A New Era of Sustainability, June Effective Policy Accelerates Solutions Building owners are driven by their financial interests Financial investments lead to environmental benefits Technology exists to create higher performance TODAY Industry will invest when enabling environments and acceptable market/demand exist Must align approach to support local / regional interests Complementary policy measures work (mandates, incentives, awareness building) Human Factors For a long time, people thought it was all about technology But what we re learning is that, really, it s all about people. Gwen Ruta, director & VP for corporate partnerships, Environmental Defense Fund Many of the opportunities are the just do it projects that pay back within a quarter Gretchen Hancock, project manager for corporate environmental program, General Electric No equipment will be introduced if it increases our carbon footprint A. S. Puri, Tata Motors Today s best efficiency strategies build an energy management organization that crosses [functional] lines - Pew Centre on Global Climate Change 19 20

6 Accelerate Local Successes Hotel Le Meridien, Bangalore, India Challenges: Reduce Spend on Energy Control Service Costs Reduce Noise level in Plant Room Fast Track Project Schedule + Punctuality Hotel must minimize downtime Solution: Tracer Summit TM Building Management System Trane High efficiency Helical Rotary Chillers Environmentally Responsible Refrigerant Maintenance Contract for peace of mind Eddy Current tube testing for enhanced reliability Single source responsibility for the Chiller plant Green Building Innovations Lead the Way RMZ Millenia project Description: With a built-up area of 2.2 million square feet spread across 22 acres, RMZ Millenia is a perfect setting for IT and ITES businesses. Solutions Rain water harvesting Eco-friendly products and equipment used Tracer Summit Building Automation System Variable Air Volume terminals Project Completion on time and on budget 30% improvement in chiller plant energy efficiency (6-8% additional energy savings achieved by the Tracer Summit Control system) Service cost reduction of 30% & Noise level reduction of about 40% It is the largest USGBC LEED Gold-certified building in India. Consumes 10 % less energy than conventional office buildings Reverse Innovation Global Challenges Innovation first developed in & for local economies Defined: Global companies and suppliers must be sensitive to local market innovation needs Emerging economies and rising middle class require new price-performance curve Fundamental driver of reverse innovation is the income gap Examples: Tata Motors Nano: development forces multi-nationals to innovate a different solution to capture India market share GE MAC 800: A new portal ECG machine innovated first for rural markets, now mainstream Nokia : learning how customers in India and Africa use technology includes new features such as speakers to share music and video XO laptop netbook inspired built for kids in developing world Nestle: Took dried noodles popular meal for rural Pakistan and reverse innovated into a budget health food in Australia and New Zealand. 23 A Provocation Question: Will India buildings industry develop as we have witnessed in Europe and in the US? Answer: No. 1. Anticipated pace of urbanization is unprecedented 2. New innovations and developed from past learnings 3. Cost impacts of fossil fuels as catalyst for greener buildings 4. Investments account for longer-term sustainable decision making Raw material and resource availability Complementary building standards and regulatory structures Consumer/tenant income levels & associated trade-offs Adoption of home conveniences and technologies Trust in green claims 24

7 Summary 1. Desire by business to be more energy efficient is increasing. Most believe EE will be a more important part of their future strategy. 2. Energy efficiency challenges are as much about managing people (behavior change and expertise) as technology 3. Differentiation and growth can be achieved by incorporating sustainable practices into the innovation pipeline 4. Complimentary policy measures can accelerate change 5. Achieve business growth through reverse innovation to address local, unique building market demands 25