Financing Energy Efficiency: Adidas Going Beyond Simple Payback

Ari Michelson, ERS, for Zondits. May 15, 2016. Image credit: sbl0323

Energy efficiency projects are usually easily justifiable in terms of their environmental impact and lifetime cost savings, but they often fall victim to companies’ blanket policies requiring that all capital projects meet aggressive simple payback targets. This simple payback criterion does not account for the lifetime impacts and savings resulting from the efficiency improvement.

Aided by their recent participation in the Environmental Defense Fund’s (EDF) Climate Corps program, Adidas has transitioned from analyzing their energy efficiency opportunities using simple payback to instead targeting average returns of 20% across all energy efficiency projects. This flexibility has enabled greater investment in energy efficiency, where the projects with the best returns offset projects with lower returns that may not have been funded under simple payback analysis. Read more about Adidas’s policy shift, and the work of the Retail Industry Leaders Association (RILA), to meet Department of Energy (DOE) targets of reducing energy use 20% by 2020 here.

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