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The Path to Net Zero: Financing Solutions to Meet Environmental Challenges
Among business leaders across the United States, there’s a growing realization that focusing on environmental, social and governance (ESG) issues is not only the right thing to do for the planet, but a smart way to boost the company’s bottom line.
By embracing ESG as part of their overall business strategy, companies can demonstrate their commitment to corporate responsibility while furthering their own interests. Some studies show that publicly traded companies that make ESG a priority outperform those that do not.
“Major companies are making ESG an integral component of their business practices going forward,” said Carl Boccuti, Senior Vice President at TD Equipment Finance. “Private equity firms are taking a close look at ESG metrics before investing in companies, and customers are choosing to purchase products from companies that are taking steps toward sustainability, transparency and efficiency.”
The power to make positive change
One of the most visible ways that corporations can demonstrate their ESG commitment is by upgrading the infrastructure of buildings for better energy conservation. According to the Department of Energy Better Buildings Initiative, the commercial and industrial sectors account for over 50% of annual energy usage. To show that they’re doing their part to address the problem, many corporations are making bold plans to achieve net-zero carbon emissions.
“Companies are looking at their existing buildings and seeing just how much energy is being wasted,” said Boccuti. “By adopting green energy solutions in these structures, they can show environmental leadership while reducing energy costs.”
Many components of commercial and industrial buildings are ripe for energy upgrades, including lighting, water fixtures, HVAC equipment, furnaces and compressed air systems. New technologies are also playing a role, including sophisticated digital control systems that help optimize building performance by adapting to fluctuating occupancy levels.
Solar energy can also help make a dent in a company’s carbon footprint. That’s why solar-powered warehouses and distribution centers are becoming increasingly common in the United States. “Installing solar panels on the rooftops of buildings can help companies offset or totally replace what they take from the energy grid,” Boccuti said.
To achieve their goals, corporations are working closely with local utility companies and Energy Service Companies (ESCOs) to perform audits of their existing facilities and then help plan and implement the building upgrades.
Making the project cash flow neutral
Of course, ambitious energy-conserving projects can require large capital investments. The good news is customized financing solutions can make ESG projects cash flow neutral or even positive.
“TD can build financing that’s a win-win for the company and the environment,” said Jeremy Smith, Vice President and Regional Manager at TD Equipment Finance. “In many cases, the costs to upgrade the facilities are completely offset by the savings.”
In addition, ESCOs may even guarantee a certain amount of energy savings over a defined time period, and will cover the difference if those savings aren’t realized.
“Tax deductions and discounts at the federal, state and local level are often available for energy-saving projects that meet certain criteria,” Smith said. “And continued low interest rates are another big incentive to do it now.”
Finding a lender that leads by example
The right lender can be integral to the success of an energy-saving upgrade. Securing financing from a bank with ESG financing expertise and knowledge of the environmental landscape can provide real advantages over the life of the loan.
“TD was the first major North American-based financial institution to become carbon neutral, and we’ve financed more than $700 million in energy-savings projects,” Boccuti said. “We’ve also underwritten over $11.5 billion in green bonds. We’re proud to play a role in helping corporations reach their goals while improving the environment.”
As more corporations concentrate on ESG issues and make sustained efforts to conserve energy, they can light the way to a brighter future for everyone.
TD Equipment Financing offers specialized financing options to support green energy projects. For more information, reach out to Carl Boccuti (Carl.Boccuti@td.com).
All credit facilities are subject to credit review and approval. Before accepting any credit facility you are advised to consult with your accountant, tax and legal experts.