Projects financed to date through the greenENERGY Fund include everything from an exterior LED lighting retrofit in a distribution center, to more efficient HVAC units in large showrooms, to wireless intelligent LEDs in a large distribution center. The upgrades take place in leased and owned spaces, including retail stores, data and distribution centers, and corporate offices.
Doug Noonan, vice president of corporate real estate for adidas Group, says, “The greenENERGY Fund has nicely accelerated the pace of investments in energy efficiency in our owned operations. It has also helped to normalize this idea that energy-efficiency investments can be great business investments.”
Developing Your Own Model
The adidas Group’s success with its internal capital fund marks one creative solution to a problem many companies face. Although the group tailored the fund to suit its specific business needs, this type of internal financing mechanism for energy-efficiency and renewable-energy projects is replicable outside of the adidas Group.
The Arlington, Va.-based Retail Industry Leaders Association’s (RILA’s) Retail Energy Management Program recently featured the adidas Group’s approach to funding in one of its implementation models developed through a partnership with the U.S. Department of Energy, Washington, D.C.
The model, which highlights innovative, proven energy solutions from market leaders in the retail sector, serves as a resource for other companies looking to implement similar funding mechanisms to grow their energy programs. In addition to offering additional background on the adidas Group’s unique approach to energy financing, how its fund is structured and how the group measures success, RILA’s Implementation Model presents key takeaways for others looking to establish an energy fund within their own companies.
According to the model, companies considering creating a dedicated energy fund should follow a few keys to ensure its success internally. First, take advantage of the financial analysis tools and metrics already in use across the company and express energy and cost savings in terms that others across the business will understand. That way, finance executives and others can more easily measure value as it relates across business operations. As Noonan alludes, aligning energy-efficiency goals with business goals is crucial to advancing projects.
Similarly, it’s important to advertise successful projects across the company— to not only receive additional buy-in for projects internally, but to showcase the value of the investments to other potential sites for implementation. Allowing stores to retain a portion of the savings is the best way to enforce that message, particularly by showing a clear line to increased profitability by reducing operational expense.
Lastly, be prepared to complete rigorous monitoring and verification protocol. Transparency regarding project performance is key and the long-term success of those projects and the fund as a whole depends on being able to accurately measure savings and IRR.
Learn More
The Arlington, Va.-based Retail Industry Leaders Association (RILA) is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad. Visit RILA’s website.
To learn more about Herzogenaurach, Germany-based adidas Group’s unique approach to energy financing, how its fund is structured and how the group measures success, view RILA’s implementation model. The model also presents key takeaways for others looking to establish an energy fund within their own companies.