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Airlines have saved energy by changing flight routes and modifying wings for better fuel use. Plane image from www.shutterstock.com

Companies could improve their profits by 2-10% each year by saving energy. That’s just one of the findings of ClimateWorks Australia’s Energy Productivity Index, a world-first attempt to assess companies' energy performance and help investors make better decisions.

Investors are increasingly engaging with companies to address the risks associated with climate change. Extreme weather events, carbon-intensive assets and greenhouse gas emissions are becoming part of a routine risk assessment on the impact of a company’s profitability.

While a company’s energy use can have a significant impact on its bottom line and environmental credentials, energy productivity and efficiency have traditionally been difficult for investors to assess. This is mainly due to a lack of tools to measure and assess energy use and poor levels of disclosure by companies.

My colleagues and I have developed a guide to help investors figure out how potential investments are performing. We assessed 70 companies across six industrial sectors: airlines, automobiles, paper, steel, chemicals and construction.

Saving energy …

Many industrial companies spend a huge part of their operating expenditure on energy – typically more than 15%.

Energy productivity generally refers to the amount of revenue per unit of energy, so improving energy productivity can greatly improve a business’s investment value.

We found that more than 70% of the companies analysed have significant room for improvement in their energy use. Even more startling is the wide variation between companies in the same sector.

In some sectors, the leaders are achieving energy productivity levels up to five times the levels of poorer performers.

For example, in the automobile sector, Toyota produces eight times more vehicles per gigajoule of energy used than the least productive company, Daimler.

… making money

We also found that improving energy efficiency (by using less energy) could significantly boost a company’s profit. Of all the sectors analysed, airline companies reported the largest savings.

United Continental reported annual savings of US$343 million in 2014. This was achieved through initiatives that reduce fuel use, such as improved flight planning, replacing old planes, washing engines and installing winglets.

And despite operating in an energy-intensive sector, steel company Arcelor Mittal achieved almost US$200 million in energy savings in 2014.

The analysis also shows that one-third of the companies analysed could boost their profit margins by more than 5% a year if they matched the performance of leaders in their sector.

Even accounting for upfront capital costs needed to achieve best practice, energy efficiency can still increase profits by 2-10% each year. Most energy initiatives could be paid off in less than three years.

Even a 2% improvement in profits for companies in the automobile sector would be equal to about US$100 million. To achieve an equivalent increase in profits from revenue growth, a company would need to sell an extra 90,000 cars each year.

Ranking companies

Several factors affect a company’s energy performance. We looked at three:

• Resilience to energy costs measured through how much a company spends on energy and its profitability. A company that spends less on energy and has greater profitability is more resilient to changes in energy prices.

• Energy productivity measured by a company’s current ability to generate revenue or increase its production per unit of energy used.

• Energy efficiency measured by a company’s efforts in identifying and implementing energy savings. We included the extra financial gain of a company matching the energy efficiency of leading performers.

While we were able to rank many companies, we found that many others are not disclosing sufficient data on energy use to be assessed. Of 181 companies that reported in the six sectors analysed, 73 had incomplete or insufficient data for benchmarking. Much improvement is needed on data availability and data quality.

The global goal

While improving energy performance may be great for the bottom line, there’s another big reason energy use is so important. According to the International Energy Agency, energy-efficiency gains could achieve about 40% of the emissions reductions required by 2050 to limit global warming to less than 2℃.

Engaging with companies in their portfolios to improve their energy productivity is a measurable and profitable way to reduce emissions and avoid dangerous climate change.

Improving energy productivity has benefits not just for those investors and companies directly involved, but for all of us.

Wei Sue does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Giant animals will light up Sydney’s Taronga zoo as part of the Vivid festival. The festival centerpiece features 10 animal lanterns representing the endangered species the zoo is committing to helping, as part of its centenary celebrations. The animal sculptures will include a Sumatran tiger, Asian elephant, sun bear and a platypus, which will go on display as part of the annual lights festival, starting Friday

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Dosing farm animals with antibiotics increases greenhouse gas emissions from cow dung, research suggests.

ANTIBIOTIC USE: Cows that have been fed antibiotics produce more methane than those that haven't according to a new study that suggests antibiotic usage may have more far-reaching consequences for the environment than anticipated.

Stunning photos of Yellowstone beauty spots in 1871 and today

Exposure to vehicular and industrial emissions heightens risk during pregnancy, researchers say

Exposure to air pollution may increase the risk of stillbirth, new research suggests.

Stillbirths, classed as such if a baby is born dead after 24 weeks of pregnancy, occur in one in every 200 births. Around 11 babies are stillborn every day in the UK, with aproximately 3,600 cases a year.

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The dairy industry faces a number of welfare and environmental issues. Cow image from www.shutterstock.com

The Australian dairy farming industry is in a state of crisis. Cheap dairy products and fluctuations in both the domestic and global markets have taken a financial toll on farmers. Consumers have rallied to help struggling dairy producers.

But this is only half the problem. The true cost of dairy is also paid by dairy cows and the environment.

Welfare problems

Despite the idyllic image of outdoor farming, several industry practices negatively affect dairy cows. To meet production demands, dairy cows are subject to a continuous cycle of impregnation, induced calving and milking.

Tail-docking and horn removal are routinely performed without pain relief. Lameness is another major animal welfare problem, often the result of environmental pressures, such as tracks, herd size and handling. The average lifespan of a dairy cow is six to seven years, whereas generally cows can live for 20 to 25 years.

One of the most controversial issues is young “bobby” calves. A bobby calf is a newborn calf, less than 30 days old, who has been purposely separated from their mother. Immediately after separation, cow and calf call out and search for each other.

Most bobby calves are slaughtered within the first week of their life. Handling and transport pose added problems for young calves who have not developed herding behaviours, are vulnerable to stress, and are forced to go without their mother’s milk. Each year, 450,000 bobby calves are slaughtered.

Advocacy groups frequently uncover the routine abuse of bobby calves in Australian abattoirs and challenge the dairy industry to do something about it.

Yet aside from the wider ethical questions over the use and exploitation of animals, farmers are not legally doing anything wrong. This is because the treatment of animals operates in a legal context where animals are considered absolute property.

What’s more, farm animals are exempt from the provisions of anti-cruelty legislation. Codes of practice are practically useless, because they promote low welfare standards and are unenforceable.

The environmental impact

As well as systematic welfare problems, livestock farming is, both directly and indirectly, one of the most ecologically harmful human activities. The Australian livestock sector is worth A$17 billion and dairy cattle farming is a A$4.2 billion industry.

In Australia, livestock farming accounts for 10% to 16% of greenhouse gas emissions, with dairy farms contributing 19% of this, or 3% of total emissions. Methane emissions, from digestion and manure, and nitrous oxide from livestock are significant contributors. Globally, the livestock sector is responsible for more greenhouse gases than the world’s transport.

Livestock production accounts for 70% of all agricultural land, including the land used to grow crops to feed these animals. Animal agriculture is a key factor in land degradation, deforestation, water stress, pollution, and loss of biodiversity.

Livestock farming will also be affected by climate change, particularly changes in temperature and water. The quantity and quality of pasture and forage crops will also be affected. Diseases may increase due to fluctuating weather and climate.

Emissions can be reduced

Just as the energy sector is attempting to transition to low-carbon energy sources to tackle climate change, the agricultural sector needs to transition to an ethical and sustainable alternative.

From the current crisis, there are several opportunities for farmers to seize. Large transitions are possible in land use, production, output and profitability.

Places such as Gippsland in Victoria, which currently produces 19% of Australia’s dairy, have the opportunity for agricultural development based on apples and brassicas, such as broccoli, kale, cauliflower, cabbage, turnip and mustard. Some of these crops are already popular in the region. As a result of climate change and increasing temperatures, some areas will be more suitable than others.

While still in the stages of research, perennial grain crops – which store more carbon, maintain better soil and water quality, and manage nutrients better than annuals – have the potential to contribute to sustainable agriculture. New land uses could also include carbon plantings, biofuels and bioenergy crops. Investing into further research for alternatives to livestock farming is needed.

Some have argued that livestock emissions can be technically mitigated by modifying animal feed, better managing pastures, carbon sequestration and manure storage.

Welfare issues remain

But technical mitigation does not address the endemic animal welfare problems in the livestock industry.

Consumer demand is one of the most powerful strategies to combat animal welfare and environmental problems. Research shows that we must reduce food waste and losses in the supply chain and change our diets toward less resource-intensive diets, such as a plant-based diets. Doing so would cut emissions by two-thirds and save lives. It’s possible to eliminate animal suffering and reduce carbon emissions by reducing and replacing livestock production and consumption.

Alternatives to dairy milk include soy and almond milk. Soy milk is nutritionally comparable to dairy milk and has a significantly smaller environmental footprint.

Policy initiatives also need to address these issues. The Food and Agriculture Organization’s Livestock’s Long Shadow report recommends a policy approach that correctly prices natural resources to reflect the full environmental costs and to end damaging subsidies. In the interim, higher taxes on meat and other livestock products will be necessary to improve public health and combat climate change.

Denmark, for instance, is considering proposals raise the tax on meat, after its ethics council concluded that “climate change is an ethical problem”.

Governments everywhere need to have a transitional plan for livestock producers and workers – one that helps to cultivate the ethical and sustainable agricultural endeavours of the future.

Gonzalo N Villanueva does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

South Australia and the Australian Capital Territory take the green podium for their efforts and policies pushing renewable energy targets

New South Wales is the worst Australian state at driving renewable energy, and South Australia and the ACT lead the pack, a report produced by the Climate Council has found.

The results came just weeks after South Australia closed its last coal power station, and the ACT announced a target to source 100% of its energy from renewable sources by 2020.

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Drone footage shot by Khmer Times shows mass pollution in the Cambodian Phnom Penh waterways, with the canal system blocked by rubbish ranging from plastic to sewage. The canals and waterways in Phnom Penh are some of the most polluted in the region, leading environmental activists to call on the government to immediately take action

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The world's biggest publicly traded oil company faces a critical AGM under pressure from a broad coalition of shareholders on climate change.

Park ranger and beekeepers help remove thousands of bees after queen was thought trapped in back of a car in Haverfordwest

Thousands of bees left a town buzzing after swarming on to the boot of a car.

The insects are believed to have swarmed on to the back of a silver Mitsubishi Outlander after their queen got stuck in its boot.

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Two more satellites in the Galileo network are launched to orbit, putting the EU's version of GPS on course to start services at the end of the year.

Programme in partnership with World Land Trust will create corridors of natural habitat to prevent threatened species from being cut off from each other

A programme to regenerate thousands of acres of forest and link habitats in wildlife-rich parts of the world has been launched.

The “bio-bridges” scheme, which creates corridors of natural habitat to prevent threatened wildlife populations being cut off from each other, is being run by the Body Shop in partnership with the World Land Trust.

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Industry welcomes decision in Kirby Misperton but campaigners vow to fight council’s approval

Anti-fracking campaigners have accused North Yorkshire council of declaring war on people’s rights to clean air and water after it approved the first operation to frack for shale gas in five years.

Campaigners opposed to the development outside Kirby Misperton – a village in Ryedale near the North York Moors national park – launched a “people’s declaration” in an attempt to stop the process going ahead. There have also been calls for a judicial review from Friends of the Earth and Frack Free Ryedale, which led the campaign against the application by Third Energy.

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On the road and lab test discrepancies undermining efforts to curb toxic air levels as UN environment assembly admits global response is not up to scratch

The growing gulf between laboratory tests and real world air pollution from cars is hampering efforts to cut the toxic air that kills millions of people a year worldwide, a leading expert has warned.

The UN admitted on Tuesday that the global response to air pollution is not up to scratch, after it was revealed last week by the World Health Organisation (WHO) that harmful airborne particulates had risen by 8% in cities around the world.

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European scientists are working on techniques that would allow them to routinely monitor the health of corals worldwide from orbit.

Energy minister tells MPs that no time limit has been set for EDF to make a final investment decision on the much-delayed nuclear plant

The UK has set no deadline for the final go-ahead to the much-delayed Hinkley Point C nuclear plant, energy minister Andrea Leadsom told a committee of MPs on Tuesday.

The head of the company aiming to build the new reactors, French state-owned EDF, told the same hearing he could not give a date for the decision nor confirm that it would start generating electricity in 2025, as previously pledged.

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US biochemical engineer Frances Arnold takes the million-euro Millennium Technology Prize for pioneering 'directed evolution'.

Countries urged to outlaw possession of wildlife and timber illegally harvested or traded elsewhere

Governments around the world need to pass national laws outlawing the possession of wildlife and timber that has been illegally harvested or traded elsewhere, a new report by the UN’s Office on Drugs and Crime (UNODC) urges.

At present, unlisted but endangered flora and fauna can be legally sold in other nations, even if it was illicitly taken from the countries of origin, due to a lack of coverage in the Convention of International Trade in Endangered Species (Cites).

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Approval for fracking in North Yorkshire raises the prospect of the controversial technique being allowed at other sites and restarts an intense debate.