Boost savings and sustainability through energy efficiency

Energy efficiency—using less energy to perform the same task—allows small businesses to operate more sustainably and reduce energy costs. There are simple ways to start and a range of projects to explore based on your business needs and resources.

Why is energy efficiency important?

Energy use presents a cost to the environment, accounting for more than three quarters of total global greenhouse gas (GHG) emissions.¹ Building operations alone account for 39-50% of global emissions.² It is also a major cost to companies, ranking among the top three expenses for about a third of small businesses.³ The goal of energy efficiency is to bring both these environmental and business costs down through projects like improving building insulation and installing smart sensors that reduce the amount of energy used in everyday operations. The result:

• Reduced environmental impact. While small business owners may not think their emissions footprints matter, the collective impact of even our simplest actions can make a difference.
• Reduced operating costs. Small businesses that invest strategically in energy efficiency projects can cut utility costs anywhere from 10% to 30%.⁴ In fact, small businesses can usually save as much money and prevent as much carbon pollution, per square foot, as bigger companies.

Further, investing in energy efficiency represents a tangible example of your business’ commitment to sustainability that could have reputational benefits, such as helping reach the increasing number of “conscious consumers” who seek out companies that align to their values. In fact, 84% of global consumers consider sustainability important when choosing a brand to support. It could also be important for recruiting potential employees, as 69% of people say they are more likely to accept a job with an organization they consider environmentally sustainable.⁵

By taking steps to become more energy efficient, businesses can reduce costs, improve their reputation, grow their customer base and be more competitive in the hiring landscape.

What steps can you take as a business owner?

Nearly every office building has opportunities to improve energy performance. These can range from operational and maintenance practices to equipment upgrades to structural improvements for buildings, like improved insulation.

The first step is engaging your utility or another provider to conduct an energy audit. This process can help you better understand your energy use and identify inefficiencies and strategies for improvement. Utilities often offer free or inexpensive audits and/or equipment rebates. Some state energy offices also offer energy audits, as do private energy service companies.⁶

In addition to completing your audit and identifying specific action items, there are simple ways to use less energy:

• Turn off lights and nonessential electronics at the end of every workday.
• Consider a smart thermostat that can be programmed to automatically adjust heating and cooling when your office space is unoccupied. Motion sensors and timers have a similar effect for lighting.
• Replace incandescent lightbulbs with LEDs, which use up to 90% less energy and last 25 times longer.⁷
• Upgrade appliances to ENERGY STAR models, which use 10-50% less energy than standard models.⁸
• Use window shades to block sunlight in the summer, reducing the need for air conditioning, and plant trees to provide shade. Keep window shades up in the winter to allow sunlight to help warm the space.
• Explore weatherization opportunities, such as storm windows and doors, better insulation and better caulking around doors and windows to prevent leaks and help HVAC systems run more efficiently.

What if I lease my space?

Even if you lease, there are still ways to address energy use, and many of the projects listed above are still applicable. Consider also installing a sub-meter to determine how much energy your lighting, computers and other equipment use. You can also engage your landlord on projects that will make the building more efficient overall. Building owners are often receptive to ideas that make the building more attractive for both new lessees and to keep current tenants.

Are energy efficiency projects expensive?

Remember, the initial upfront investment in these projects will pay off over time by lowering your utility bills. There are also tax incentives and other government supports for implementing efficiency projects. Under the Inflation Reduction Act, for example, small businesses can receive tax credits up to $5 per square foot to support energy efficiency improvements. Some states also offer energy efficiency incentives – look for your state here.

Other resources

The ENERGY STAR® website features many helpful guides and program information for business owners. Also check out the National Renewable Energy Laboratory’s “how to” guide for maximizing energy savings for small businesses, the Department of Energy’s Advanced Energy Retrofit Guide, and the Database of State Incentives for Renewables & Efficiency for a state-by-state list of incentives and tax credits for installing renewable or efficiency equipment and products. Lastly, make sure you reach out to your utility. Many utilities provide resources for businesses looking to reduce their energy consumption and costs, such as:

• Constellation
• DTE Energy
• Duke Energy
• PG&E

¹ International Energy Agency, “Greenhouse Gas Emissions from Energy Data Explorer,” August 2, 2023.

² Time Magazine, “How Small Businesses Can Have a Big Impact in the Climate Fight,” October 13, 2022.

³ House Committee on Small Business, “Energy.”

⁴ ENERGY STAR®, “Small Businesses: An Overview of Energy Use and Energy Efficiency Opportunities.”

⁵ IBM Institute for Business Value, “Research Brief: Sustainability at a turning point,” May 2021.

⁶ National Association of State Energy Officials, “NASEO State and Territory Energy Offices.”

⁷ U.S. Department of Energy, “Lighting Choices to Save You Money.”

⁸ ENERGY STAR®, “Energy Savings Tips for Small Businesses: Offices – Owners and Tenants.”