EDF and AT&T: Aligning to Address Environmental Challenges

Abstract

Environmental Defense Fund’s (EDF) Corporate Partnerships Program is a small team focused on driving transformative environmental solutions by working with some of the world’s biggest brands. The success of the corporate relationships lies in the ability to identify innovative solutions to the ways businesses operate that have positive impact on both the environment and bottom line.  AT&T has a strong interest in innovating in the area of water consumption.  Together AT&T and EDF developed a toolkit for cutting water use from cooling towers. While the direct work with AT&T has been a success, the wider, long-term environmental benefits depend on the uptake of the tools across key water-stressed regions.   The challenge ahead involves a solid outreach strategy which drives usage of the toolkit and continued engagement after the active relationship is over.

Timeline on the EDF/AT&T Project

  • Fall 2010 to Winter 2012- Scoping phase of the project.
  • Winter to Spring 2012- Reaching agreement
  • Summer to Fall 2012- Conducting pilot projects
  • 2013 through 2014 – Replication phase – scaling project findings within AT&T and beyond

Background on Environmental Defense Fund (EDF)

EDF formed in the 1960’s as a small conservation group taking on the pesticide DDT in the courts and gained a nationwide ban in 1972. Since then, EDF has continuously found innovative ways to solve the largest environmental problems. Guided by science and economics, EDF’s mission is to preserve the natural systems on which all life depends.

EDF is a unique environmental organization in that they find pragmatic solutions to serious environmental problems. Their motto is “finding the ways that work” – one of those ways includes partnering with corporations to develop market-based solutions to environmental problems. EDF’s Corporate Partnerships team has 25 years of success working with the world’s biggest brands: McDonalds, Caterpillar, FedEx, Walmart, KKR, Starbucks and more.

Background on AT&T

AT&T is one of the world’s largest communication companies, serving millions of customers with their wireless network, IP-based television service, Wi-Fi network, VPN and VoIP.  AT&T’s services range from revolutionary smartphones to next-generation TV services and sophisticated solutions for multi-national businesses.

AT&T’s mission is to connect people with their world, everywhere they live and work, and do it better than anyone else. AT&T is recognized as one of the leading worldwide providers of IP-based communications services to businesses.

AT&T’s environmental challenge: “How do we connect a world of seven billion without inhibiting our natural environment’s ability to support us? It is a daunting, exciting and critical challenge, and we are working hard toward meeting it every day.” AT&T has pushed more than 14,000 energy efficiency projects forward and has saved more than $151 million annualized since 2010. (See AT&T’s 2012 Sustainability Report.)

EDF and AT&T – Exploring the Relationship

In the spring of 2011, Brendan FitzSimon’s colleague Greg Andeck reached out to him about taking on the management of a potential project with AT&T. Greg had conversations with AT&T in 2010 about working together, but it was going to be up to Brendan to evaluate whether a project with AT&T met with Environmental Defense Fund’s criteria.

In 2010, AT&T started to take a closer look at its water use. Working with the Vanderbilt Owen Business School, AT&T measured its water footprint for the first time. It was 3.4 billion gallons, and 120 of AT&T’s buildings accounted for 50% of that water use. AT&T identified cooling towers as a key driver of that water consumption, using more than a billion gallons of water per year at those 120 sites. AT&T wanted to collaborate with a credible organization to help them develop a plan and program to improve their water cooling tower efficiency, so they reached out to Environmental Defense Fund.

AT&T had previously worked with EDF on a program called Climate Corps, which embeds graduate students in companies over the summer to identify energy efficiency projects and build the business case for those projects—one of the major barriers for getting efficiency projects implemented. EDF Climate Corps’ successful track record of identifying win-win projects that are good for the environment and good for business helped build AT&T’s trust and comfort in working with EDF.

Scoping the Corporate Relationship

EDF does not have the resources to take on every potential project, so EDF is very selective and strategic about entering into formal relationships. EDF conducts a rigorous assessment during the scoping phase to evaluate potential projects. Among the key questions Brendan had to answer during the scoping phase:

1. How to address the issue? – How would the project work? As good as an idea may sound in theory, in many cases there are physical, technical and practical challenges that must be overcome. Also in many cases, it’s simply not possible to gather information on emerging innovations and technologies, so we need to use the best assumptions we can.

2. Environmental Benefit Analysis – Will the project yield significant environmental benefits?

  •  How significant will the environmental results be at the end of the relationship? At the end of the project (after replication)?
  •  How significant are the project results in relation to the problem (e.g., total US greenhouse gas emissions), how big is the solution?

 

3. Is there a Business Case? – is the business benefit great enough to drive corporate adoption? For every project, we will want to ask, “What is the compelling business case for a company to undertake this action?” While some companies will undertake environmental initiatives because it is the right thing to do, we know many more will do so if environmental gains align with bottom line gains. The value proposition for companies includes:

  • Reduced Costs (energy, labor, etc.)
  • Increased Revenue (new lines of business, new customers)
  • Reduced Risk (price swings, regulatory, liability, publicity)
  • PR Benefit (earned media, customer perception)
  • Attracting Investors

 

4. How do we scale the practice to transform the way of doing business? – will the project be a one-off exercise, or industry transforming in nature? To assess this we need to know how our project will benefit the environment and the industry.
a. Environmental Analysis
i. How significant will the environmental results be at the end of the relationship? At the end of the project (after replication)?
ii. How significant are the project results in relation to the problem (e.g., total US greenhouse gas emissions), how big is the solution?

b. Industry Analysis – We need to know the structure of the target industry to determine the potential for replicating the results of an initial relationship. Depending on the complexity of an industry, it is sometimes difficult to determine exactly who would benefit the most from our innovative projects. In addition, we believe that industries consisting of a few, large players will be easier to transform than an industry with hundreds of small players. The homebuilding industry, for example, is very regionally focused with the largest builder only accounting for 3% of all home sales. Attempts to use this homebuilder to drive down the price of green home materials would be less successful than in an environment where one major player holds a larger market share (think Wal-Mart).

Key data points that are useful for measuring the expected environmental impact of a project include:

  • Makeup of industry (# companies, fragmented vs. consolidated?)
  • Leading companies (by sales, size, location, customers/suppliers, etc.)
  • Decision drivers
  • Environmental history of industry and any notable companies (leaders/laggards)
  • Current industry regulatory framework
  • Existing NGO campaigns, if any
  • Potential of industry to innovate

Some additional considerations:

  • EDF also aims to align corporate relationships with our environmental goals in EDF’s 5-year strategic plan.
  • Does the project fit with EDF’s area of expertise/or can we acquire the expertise we need?
  • EDF does not accept any funds from our corporate participants, that way EDF maintains its independence and credibility and is free to share recommendations broadly with others. So another consideration is making sure we have sufficient resources (staff, funds for consultants, etc.) to execute strongly on the project.

Working with AT&T

Through the rest of 2011, Brendan worked with AT&T to answer these key questions and to scope out how the relationship would operate and what resources would be needed. Brendan’s preliminary analysis showed:

  • The project was technically feasible. The literature and data available indicated that there were opportunities for companies like AT&T to improve cooling tower efficiency—although Brendan recognized that it would be necessary to identify an expert with greater cooling tower expertise for the project to succeed.
  • There was the potential for significant environmental benefits by improving cooling tower efficiency—which is typically among the biggest consumers of water in buildings—with even greater cooling tower water consumption by data centers because of the need to cool servers and other equipment.
  • Business case- this was going to be a challenge because water is typically cheap, especially compared to energy costs.
  • Industry Scalability and Replication—Initially Brendan and the team focused on the Information and Communications Technology (ICT) sector as the key industry. One reason why this was attractive is because data centers were growing dramatically as our demand for information increased. Brendan and the team recognized, however, that the opportunity to improve cooling tower efficiency went far beyond the ICT sector to a range of buildings and industries that use water cooling towers. Indeed, among AT&T’s top 120 water using buildings, only roughly a third of those buildings were data centers. AT&T’s other top water consuming buildings included large, multi-story office buildings.

How did Brendan manage the challenge of a weak business case and thinking about a strategy to scale the project findings?

Rethinking the business case. While water efficiency projects typically have a weaker business case than energy efficiency projects, there are opportunities to build a more robust business case by identifying opportunities that save water AND energy. The team realized that by reducing the cooling load on buildings by taking advantage of free air cooling, it would save energy because the chiller doesn’t have to be run. And, this also saves water because when the chiller isn’t running, the cooling towers don’t have to run either. So the project with AT&T evolved to encompass Free Air Cooling Projects in addition to projects that directly improved cooling tower efficiency.

Defining replication beyond AT&T. The environmental benefits of water reductions vary depending on the region. In regions that are under water stress, the environmental benefits of water reductions are greater. Instead of thinking about replication via industry which had been the typical approach CPP has taken, Brendan and the team started thinking about the replication via geography.

These considerations impacted the agreement with AT&T—which was signed by EDF and AT&T in the spring 2012—and the project design.

Project Goals – The project aimed to develop operational improvements and best practices to drive water, electricity, chemical and cost efficiencies across the cooling process, focused on cooling tower efficiency and the use of economizers, where available.  It was initiated through a pilot phase designed to identify and test best practices and operational improvements.  If successful, the pilot phase would facilitate the following initiatives:

  • Implement identified improvements/best practices pilot phase at targeted AT&T top water-using facilities based on business case evaluations.
  • Implement improvements/best practices across other AT&T facilities with water cooling towers with a focus on facilities in water-stressed areas.
  • Communicate results publicly and help promote the findings to trade associations, industry decision makers and others, especially in water-stressed regions.

When EDF works with companies like AT&T to develop tools and resources, as part of our agreement, we require that these be “open source” and shared with other companies. EDF looks to develop environmental practices that can be shared as broadly as possible to change industry sectors. So we typically ask that they help promote the tools and resources we develop as broadly as possible.

Piloting the Project

After we inked the agreement, we started planning the pilot phase of the project. We set up pilots around the country in the summer and fall of 2012 to test three approaches to reduce the amount of water that the AT&T’s cooling towers used:

  1. Technology Evaluation: Identify and track the performance of water treatment technologies, such as water softeners, that reduce water use in cooling towers and analyze the possibilities of rolling them out to more sites.
  2. Operational Improvements: Use best practices to engage our facility managers and service providers to increase the number of times we can reuse the water in the cooling tower and thus reduce the amount of water discharged to the sewer.
  3. Maximize the opportunity for free air cooling: Identify sites where free air cooling – bringing cooler outside air in – can be used to reduce the need for mechanical cooling. Since conventional cooling methods can be energy and water intensive, reducing the load on those systems can drive significant savings.

We engaged an independent cooling tower consultant, Bill Harfst to conduct on-site assessments of the cooling tower systems at our pilot sites. As part of the assessment, Bill took a water sample and ran a test to evaluate how efficiently the chemical treatment program was operating.

One of our hypotheses going into the pilots was that many sites were not operating an optimized chemical water treatment program, which would mean that more water—and chemicals used to treat that water—were being used. However, as it turned out, all of AT&T’s operational pilot sites that relied on using chemicals to treat the water were operating fairly efficiently based on Bill Harfst’s evaluation.

Instead, we turned our attention to more promising opportunities. The pilots showed that the best opportunities for AT&T’s sites to improve cooling tower efficiency were to use technology approaches to the treat water and to take advantage of Free Air Cooling opportunities.

Based on the pilot results, AT&T committed to:

  • 150 million gallons of annualized water savings by the end of 2015—the equivalent of 50 million toilet flushes/year.
  • 400 million kWh in annualized electricity savings from free-air cooling projects by the end of 2015—the equivalent electricity use of over 35,000 U.S. households/year.

Replicating for extended environmental benefit

The key challenge now facing Brendan and AT&T is how to leverage project lessons and tools to achieve water and energy reductions beyond AT&T.

AT&T and EDF are now working to broadly disseminate the full suite of water efficiency tools and resources developed during the pilot project to other companies and organizations.

Some core strategies currently being deployed include:

  • AT&T encouraging its suppliers to reduce their water use
  • An EDF/AT&T regional outreach plan in key water-stressed cities to promote the adoption of the water efficiency toolkit. Among our top five target cities are: Dallas, Denver, Houston, Los Angeles, and Phoenix. Regional outreach will consist of:
    • Identifying key stake holders to engage, including those who own or manage a large number of office buildings (e.g., property management companies), water utilities, municipalities and other NGOs with an interest in reducing water use
    • Utilizing traditional media and social media tactics to reach target audiences, including senior executives, facility managers, sustainability officers, and others who can influence building operations