Question: How much will a sustainability project cost, and what’s my return on investment going to be?
Among the questions organizational leaders face when thinking about implementing a new initiative or making an investment, some of the most pressing are usually: How much is this going to cost, and what’s my return on investment going to be? While there are many ways to finance sustainability projects, programs, and initiatives, here are five that may be a good place to start.
1. No-Cost Initiatives
To the extent personnel are available or are motivated on their own to take on a sustainability project, organizations can implement simple behavioral-change and awareness-raising programs without spending any money. This could be an existing staff communicating the importance of remembering to turn off lights when going home, or it could be management directing facilities personnel to optimize programmable thermostat settings. Many times, these no-cost initiatives can lead to cost savings, which can be reinvested to fund future sustainability projects and programs at your organization.
2. Existing Operating Budgets
Using discretionary operating dollars to pay for small upgrades or for an outsourced sustainability program from Benecras can propel your cost-savings and resource reduction efforts to the next level. The beauty of sustainability projects is that, done the right way, they can be more than just feel-good; they can have a positive economic ROI with a shorter payback than you might think. So before nixing a sustainability project, remember to consider possible cost savings from even a small project.
3. Grants and Incentives
For certain projects, organizations (especially public-sector institutions) are often eligible for government grants and incentives that can help finance transformative sustainability-focused facility upgrades. (See: Database of State Incentives for Renewables & Efficiency)
4. Performance Contracting
For some projects like LED lighting upgrades, organizations can work with utility providers to pay off capital outlays over time using savings generated from the upgrade. After the upgrade is installed, the organization’s utility bill stays the same as it was historically until the savings pay down its cost. After that, the savings stay with the company in perpetuity. (See: "Easy Access to Energy Improvement Funds in the Public Sector")
For some organizations like for-profit companies, the savings from some upgrades are so stark and the ROI so high that, just like other capital investments, using revolving credit or notes to finance them is an appropriate option.