NHS organisations are faced with the ambitious target of reaching net zero carbon by 2040. And the only way we’ll get there is to know where to best focus our efforts for maximum impact.
What's the challenge?
A major barrier holding us all back in a cash-strapped system is quantifying the impact of our green initiatives. Without clear metrics and guidance, it’s very difficult to achieve the right return on investment.
Knowing how to prioritise projects and where to allocate funding is key to achieving your Green Plan.
Here’s how you can prioritise sustainability projects and prove ROI.
1. Make the relevant calculations
There are calculations you can do to measure the total project cost against the estimated carbon impact. To achieve maximum ROI, invest in projects that deliver the greatest carbon reduction for the lowest cost (£/tCO2e).
A useful benchmark from the Public Sector Decarbonisation Scheme (PSDS), recommends prioritising projects costing less than £350 per tonne of carbon removed.
This framework provides a logical way to allocate capital towards projects that are cost-effective while reducing your carbon impact.
2. Value long-term strategies not just quick paybacks
Keep in mind that different projects have different timeframes for returning on investment. To achieve your long-term sustainability goals, you should consider cost and carbon savings across the whole life cycle of a project.
It’s easy to just focus on projects with a quick payback. For example, installing LEDs can reduce energy costs by 75%, returning on investment in less than a year.
While that’s a great investment, it’s also important to not disregard projects with longer paybacks. For example, installing solar panels might take more than 5 years to payback, but will last for over 20 years. Saving a lot more money than the initial investment over a longer-term period.
3. Consider other ROI factors
Try not to fall into the trap of only using carbon emissions and cost savings as metrics for calculating return on investment.
While reducing costs and cutting carbon is the main focus, there are other factors at play. Customer satisfaction and saving employee time are also great additional outcomes of a sustainability investment.
For example, after installing LED lighting, reactive maintenance calls to our helpdesk dropped from over 5000 a year to around 3000. This not only saved time for engineers and helpdesk colleagues but also improved our customer experience.
If outdated technology is causing inconvenience and high maintenance costs, include this in your evaluation for ROI.
4. Take external factors into account
The International Performance Measurement and Verification Protocol (IPMVP) provides a structured framework for quantifying and verifying the results of energy efficiency, demand management and renewable energy projects.
The goal is to assess the true impact of a project by normalising any external influences that could skew your results.
For example, changes in patient numbers and usage of a building will affect energy consumption and carbon emissions. So, if you’re calculating ROI on new LED technology, these factors could skew your results. Or if you’re comparing two different boiler systems, you’ll need to normalise the impact of any weather changes to accurately calculate efficiency.
Want to learn more?
Read chapter 5 of our guide to NHS estate funding to learn more about funding your Green Plan and proving ROI. Including information on timings to be aware of, key insights and case study examples.
*That’s what we learnt from our recent survey with finance and estates leaders (in partnership with the Health Service Journal (HSJ). Full report here.
