Meet the Change Makers: AEG Turns Up the Volume on Sustainability
You may not know AEG Worldwide, but odds are good that you’ve spent an evening in one of the company’s many venues, rooting for the home team or lip-syncing a favorite song. AEG operates and often owns some of the world’s largest stadiums, concert halls, and other entertainment sites, including L.A.’s Staples Center and the new Barclays Center in Brooklyn, where the Nets will soon relocate. The company’s portfolio also includes London’s O2 Arena, a hub for the 2012 Olympic Games. Off the field, there’s no bigger player in sports than AEG -- which made the company a natural target for environmental advocates seeking a high-profile partner in efforts to "green" pro sports.
Worldwide, the sports and entertainment industry’s environmental impact is huge. Yet it has historically been made up mostly of small-scale players -- each running just a handful of venues -- so the shift toward environmentally friendly practices has happened more slowly than in other sectors, which could be influenced by just one or two big companies going green. Back in 2007, AEG’s footprint included just seven venues. Since then, backed by billionaire-owner Philip Anschutz, CEO Tim Leiweke has rapidly expanded the scale and diversity of the company’s activities. Today AEG manages and/or services more than 110 venues on five continents and owns a share of 10 pro teams that play in its arenas, including the NBA’s fabled Lakers. And the company ranks as the second-largest event promoter in the United States., backing events such as the massive Coachella music festival.
Given AEG’s size, its global sustainability director, Jennifer Regan, has unprecedented influence over the greening of the sports and entertainment industry. Regan joined the company fresh out of college in 2007 and has risen to become its senior-most executive focused on green issues. Her team started out looking at energy use at a small number of the company’s sites but has steadily expanded its focus to include more venues and more complex measures of consumption. In 2010, AEG published the industry’s first sustainability report and debuted a green strategy known as AEG 1Earth. An update is due by year-end. OnEarth contributor Adam Aston recently caught up with Regan following her visit to the White House for a ceremony celebrating the greening of professional sports.
Twenty-six is young to be leading the green efforts at a major company. How did you get there?
I had the perfect mix of entertainment and environmental background, but the decision to really dedicate myself to corporate sustainability took shape before my junior year. I spent that summer in Senegal at the National University Cheikh Anta Diop where I studied sustainable development. On the last day of class, I had one of those life-changing moments. The professor stood me up in front of hundreds of local students and said:
You’re here because you want to learn how to do sustainable development. But what you need to recognize is there is no such thing. The only regions around the world being developed sustainably are places where wealthy nations are extracting natural resources. If you care about reducing environmental damage, start by changing business practices back home.
That message made me question what the heck I was doing in Senegal. I realized that I had much greater opportunity to affect change back home by addressing unsustainable business practices. I returned to the U.S. and redirected my studies toward issues around corporate sustainability.
Your timing turned out to be very good to join AEG’s emerging sustainability efforts. How did you make your way there?
I started looking for a corporate sustainability position after graduation. I expected I’d have to start in a position outside of sustainability and then weave those values into my role. Given my background in theater and production, I was looking at AEG for event management jobs and hoped to bring sustainability into the AEG culture.
At the time my mother was AEG’s vice president of information technology. She was helping me consider entry-level opportunities. Out of the blue, her supervisor mentioned that the CEO, Tim Leiweke, had asked for help to understand how to "make AEG green." My mom suggested to her boss that he and I speak so that I might give him some pointers regarding first steps.
How much did you have to sell the idea?
The thinking on these areas was already taking shape. Executives were increasingly hearing from AEG’s partners -- artists, promoters, athletes, sponsors, governing bodies, and civic groups -- that the company needed to find better ways to address the environment. I gave a very aggressive speech on the difference between greenwashing and being truly sustainable, and provided a list of links on sustainability practices. Then I went on to travel. I wasn’t thinking that what just happened was kind of a job interview.
About ten days later, I got an email from AEG saying, "We could really use your support," and asking if I’d be interested in a two-month engagement to help coordinate a management committee to map out the start of a formal sustainability program for AEG. I was so excited that I cancelled my trip and headed straight back to L.A.
So this was the beginning of AEG’s major push into sustainability?
Yes. In two months, we put together a 120-page report that included ten pages of detailed tasks for each major division of AEG. We presented the report to AEG’s chairman, Philip Anschutz, and to Leiweke. They reviewed it and said, "This is exactly the right direction for the company."
Mr. Anschutz made it clear to us that energy was his number-one priority. After labor, energy is AEG’s highest cost, and energy prices were near all-time highs. So it offered quick and potentially big savings. He also wanted us to focus on venues we owned and operated. They asked me to stay on as a contractor to begin implementation. About a year later, after the program had a couple of strong wins, they offered me a full-time position as sustainability manager.
What were your biggest obstacles rolling out this program?
AEG’s biggest challenge -- and biggest opportunity -- is our scale and diverse business model. We have so many different business segments: facilities, concerts, sports, live entertainment, and others. Our venues range from intimate clubs that seat as few as 500 to large stadia and entire "entertainment districts" able to hold up to 115,000. Each of these venues is a different age, with different geographical and climate challenges, varying energy grids, and different municipal infrastructures.
So our first priority was to better understand what was already in place and develop a measurement and reporting program that could identify energy-savings opportunities and monitor their progress across a diverse range of venues.
When you looked at energy use, what did you find?
Initially, we did a few energy audits and site audits at a cross section of venues to identify energy projects that might translate across the portfolio. We quickly realized that there were opportunities around utility bill management and energy procurement.
Two years later, in 2010, we partnered with Summit Energy [of Louisville, Ky.] to develop a global energy strategy for AEG. They helped us identify cost-saving opportunities through rate adjustment and billing accuracy, as well as opportunities to procure energy in open market. They provided software to track and analyze electricity, water, and natural gas use as an extension of their invoicing, bill payment, and carbon accounting services.
You set some ambitious goals. How’s it going?
Until we publish an update to our sustainability report later this year, I can’t be too specific about company-wide achievements. But, we are making major progress toward our targets for 2020, compared with 2007, in the area of energy, waste, and responsible sourcing. These goals include cutting greenhouse gas (GHG) emissions by 20 percent and achieving 75 percent waste diversion at ten focus venues and events.
Also, where we have direct control over purchasing, we’re aiming to spend half of our budget on what we call "high-impact" goods -- those that have the greatest direct impact on human health and the environment -- including more efficient lighting, greener janitorial products, high-performance cooling and heating systems, and recycled paper products.
What are some specific examples of AEG’s resource savings?
Right out of the gate, we identified opportunities for high-returns. In 2008, for instance, we installed solar panels at both the Staples Center and Nokia Theater in L.A., saving an average of $55,000 annually. The same year, we retrofitted about 500 urinals to be waterless at all of our Southern California venues. They are saving us more than 20 million gallons of water and some $70,000 in direct water costs each year.
A rule of thumb in sustainability is to eliminate waste first, then substitute green alternatives. How are you approaching this?
We think our staff’s ability to manage buildings more efficiently through small day-to-day tweaks is where we’re really going to make progress. For example, in 2010, through staff training and constant vigilance, we reduced their electricity usage by 30 percent and natural gas consumption by more than half at Citizens Business Bank Arena in Ontario, Calif.
Much of this challenge amounts to motivating staff to change long-standing habits. How do you do it?
The first step is to get them to understand the materials within their facility and their importance.
Take my battery bucket challenge. I’ve had a lot of operations managers tell me, "Sure we collect disposable batteries in our office but there are just not that many." And I’d say, "I’m going to issue you a challenge. Put a battery bucket in three places where you don’t think there are batteries. Send out an email letting staff know about the new collection points. And let’s bet on how long it will take for that bucket to fill up." They’ll say, "Oh, it’ll take a year." It takes one, maybe two weeks, so I’ve won every time.
The second step is to work with them to help identify sustainable solutions.
How do you tackle those who are most resistant to change?
When it comes to sustainability, I think of my colleagues as fitting into three major categories.
There’s one group making decisions because they want to be recognized but also because the decision is in line with their values. Those are the one who are most supportive and easy to work with.
And then there are those focused strictly on success as defined by their job description and who do not necessarily value sustainability personally. These types aren’t necessarily embracing sustainability, but if it’s expected of them, they will get the job done.
Lastly, there’s the complete naysayer: the individual who disagrees with the philosophy of sustainability and doesn’t think human action adversely impacts the environment. They are only able to see results or conclusions that support their belief that the environment doesn’t need our stewardship. Even when we can prove that they’re going to save money, they’ll sometimes still find ways to say no. That’s where the high-level support has been so important: since the owner and CEO said make it so, this attitude simply is no longer acceptable.