The Energy team had an open position, but rather than adding another engineer to the Energy Team, they hired a Business Unit Financial Analyst who was devoted to the Energy Team. The analyst had the ability to translate technical engineering information into financial terminology and convey the financial impact of energy efficiency to the Finance team. Having an embedded Finance associate on the Energy Team created a teamwork approach with full transparency and understanding of efficiency project details.

The process changes that made this solution a success were:

• Although the Business Unit Financial Analyst reported directly to the Finance Department, they were physically seated with the Energy team. This organization allowed the Analyst to have constant face-to-face contact with the members of the Energy team, to establish relationships and absorb the mission and methods of the team. As part of their role, the Business Unit Financial Analyst wrote all the Capital Expense Requests and completed all of the project analysis, budgeting and forecasting. The Analyst learned the “lingo” and communication styles of both the Energy team and the Finance department and is able to effectively communicate the benefits of Energy projects in financial terms.
• Embedding a financial-minded associate within the Energy team gave energy efficiency projects a more direct avenue to the CFO and decreased the approval time for energy efficiency projects

To further strengthen the Energy team’s relationship with the Finance department, the Financial Analyst utilizes a statistical analysis tool, APT’s Test & Learn™, to identify, evaluate and select portfolio-wide opportunities. This tool allows the Finance Department to select sites for projects that can be applied to a more extensive scope of the store fleet based on geographical locations and building footprints. The tool includes the rebates from local utilities that are tied to energy efficiency projects. This additional input lowers the cost of energy-efficient capital projects by identifying additional incentives. The potential of receiving rebates becomes a factor when calculating the return on investment (ROI.) Using the Finance department to measure profitability and verify project savings provides validation to the Energy department’s recommended projects while maximizing the ROI.

Another impact of the closer tie between the Energy team and the Finance department was the creation of the annual emerging technologies budget. This budget allows the Energy team to pilot 2-3 new programs for 10-20 stores per year. This allows Kohl’s to test and analyze new technologies on a small scale prior to a large company roll-out. After two years of having a Financial Analyst embedded in the Energy team, the team was able to make the argument for an annual dedicated budget for demonstration of new technologies.

Financial Impact: Kohl’s estimates savings of around $50 million due to energy use reduction between 2006 and 2010.

Dedicated Budget: Due to the success of this partnership, the Finance team provides the Energy team with a “new technology” budget that allows the team to test and learn about the most current technologies available.

Replication: By first testing and learning about energy efficiency projects in a controlled set of locations, the Finance department can test and validate results and provide the momentum and financial savings history to roll out the project at additional locations. Integrating Finance Associates within the energy department to assist in prioritizing projects and investments has been implemented in departments throughout Kohl’s. Today, Kohl’s has more than 700 ENERGY STAR labeled stores.