The latest insights from the We Mean Business coalition

Efficiency first: A decarbonization powerhouse hiding in plain sight

When thinking about the energy transition, headline solutions often include solar panels, wind farms, and electric vehicles. Yet one of the most powerful – and underappreciated – drivers of energy security and economic competitiveness is energy efficiency. Often called the “first fuel” by the International Energy Agency (IEA), energy efficiency reduces demand, cuts costs, strengthens resilience, and supports job creation and public health – as well as cutting emissions. 

In 2022 alone, energy efficiency measures saved households and businesses in IEA member countries US $680 billion– 15% of the total energy bill that year.  Companies in Climate Group’s energy efficiency initiative, EP100, have collectively saved $1.7 USD billion since implementing energy efficiency measures, whilst reducing their emissions by more than the annual emissions of Brazil in 2023.   

Read on to learn how businesses and policymakers can gain quick wins through energy efficiency – and visit our Business Action Checklists if you are a company looking for practical steps or the EP100 campaign to learn more about joining a group of companies and read its 2025 Annual Report.

In June 2025, the IEA released a landmark report outlining the multiple benefits of energy efficiency, paired with a practical policy toolkit featuring 10 strategic principles designed to help governments rapidly scale energy-saving action. We look below at each of these 10 principles in detail– and outline how businesses, especially in our network, and policymakers are already driving action in these areas that can be scaled to accelerate the transition from fossil fuels to clean energy solutions.

1. Prioritize cross-cutting energy efficiency action for its economic, social and environmental benefits

Cross-cutting benefits are perhaps best illustrated with a simple example: retrofitting a building with better insulation reduces the size of heat pump needed and lowers energy consumption. Scaled across a city or region, this helps moderate electricity demand growth, reduce the need for new generation and grid infrastructure, and ultimately cut capital investment—strengthening energy security while also supporting climate goals.   

Of course, even this simple example requires multiple policy levers to ensure costs and wider benefits are effectively distributed. 

Energy efficiency works best when policy pulls multiple levers at once: regulation, clear consumer information, and financial incentives. The EU’s long-standing Energy Label is a gold-standard example. Revised in 2021 to provide a more intuitive A–G grading system, the label is now recognized by 93% of EU consumers, with three-quarters actively using it when purchasing appliances. 

These labels have a direct financial impact. By 2030, energy labelling and ecodesign rules are projected to save EU households on average between €473 and €736 annually. Schemes like France’s Energy Saving Certificates, Germany’s KfW efficiency loans, and the UK & Ireland’s Enhanced Capital Allowances further incentivize uptake. Companies like Electrolux Group are responding, in 2024 the appliance manufacturer’s most resource-efficient products accounted for 24% of total units sold and 33% of gross profit. Some of the Group’s latest washing machines in Europe exceed the top A energy label by up to 60%.

2. Act to unlock efficiency’s job creation potential

Energy efficiency is a boon for job creation. By 2024, nearly 10 million people globally were employed in energy efficiency-related roles, a figure that stands to grow by another 5 million by 2030 in a net zero pathway. In the U.S., investment from the Inflation Reduction Act (IRA) catalyzed 142,000 new clean energy jobs in 2023 alone, with construction-related employment in energy outpacing the broader economy. The energy efficiency sector supported almost 2.3 million jobs in 2023, adding nearly 75,000 positions from the year before – the most of any sector.

States like Idaho, Texas, and New Mexico led the charge, proving that smart policy can unlock regional opportunity. Manufacturers like Trane Technologies are seizing this momentum, electrifying major commercial buildings like New York’s 55 Water Street while expanding employment in retrofitting and Heating, Ventilation, and Air Conditioning (HVAC) innovation.

3. Create greater demand for energy efficiency solutions

Government-led retrofitting can drive enormous demand. China’s National Energy Efficient Retrofit Programme, which began as a pilot in 2008, laid the groundwork for today’s large-scale Clean Winter Heating Plan. By targeting pre-2000 buildings in northern heating zones, China has not only cut emissions but significantly improved urban living conditions.

Increased public demand creates opportunities for companies like Signify, a global lighting leader, to transform cities, such as Huanggang in Central China, by rolling out LED solutions that slash energy use while improving public safety and aesthetics.

4. Focus on finance in the wider context of scaling up action 

Financing remains a major barrier to scaling energy efficiency, but innovative public-private models like the UK’s newly launched National Wealth Fund (NWF) established by the Labour government in October 2024, reduces risk for borrowers and unlocks private funding.  

The flagship partnership with NatWest Group delivers £400 million worth of long-term and unsecured loans to housing associations to retrofit social housing. With 28% of homes in England and Wales rated EPC D or worse, and 10% below the Decent Homes Standard, the need is urgent. This blended funding model allows housing companies to prioritize upgrades in insulation, low-carbon heating, renewables, and water efficiency, while supporting social equity and local green job creation. 

5. Leverage digital innovation to enhance system-wide efficiency

Smart and interconnected digital systems, previously known as the Internet of Things, (IoT) are revolutionizing energy management. A 2024 study found that machine learning integrated IoT platforms tested in Ireland and Greece reduced building energy use by up to 86% during peak hours, with savings of up to 60% overall. 

Smart technology isn’t just for new buildings. Legacy HVAC systems, water heaters, and commercial facilities can all benefit. . These integrated systems can also benefit energy-intensive buildings.  One example is Carrier’s QuantumLeap suite which integrates advanced chillers, liquid-to-chip cooling, AI-powered controls, and predictive monitoring to optimize thermal management in data centers. This integrated system is up to 30% more efficient than previous-generation cooling systems, with real-time adaptive controls that align cooling with actual demand. 

6. Lead by example in the public sector

Winner of TIME100 most influential company in 2024, U.S., firm Highland Electric Fleets is transforming school transport, operating over 600 electric buses across 30 states. Through partnerships with school districts, they help secure funding and rebates from the EPA’s Clean School Bus Program, install chargers, and train staff—focusing especially on low-income areas. Highland’s Vehicle-to-Grid (V2G) innovation even allows buses to reflow power back to the grid, proving that focusing on efficiency in the public sector can drive technological and systemic progress.

Battery-electric buses (BEBs) deliver substantial energy efficiency gains compared to conventional diesel models. A 2018 California Air Resources Board study found BEBs are on average 4.2 times more energy efficient than comparable diesel buses — meaning they use about 75% less energy per mile. 

7. Engage all parts of society

The success of energy efficiency measures hinges not only on technology, but on public participation and trust. Portuguese capital Lisbon’s involvement in the EU-funded Sharing Cities project demonstrates what’s possible when energy upgrades are delivered with communities, not just to them. The project led to the retrofitting of 11 municipal buildings and the energy renovation of 240 social housing apartments. These interventions delivered tangible results: average energy savings of 26% across the renovated homes and significant improvements in indoor thermal comfort. 

Evidence from Spain shows that retrofits can pay for themselves in as little as three years when you factor in public health savings from warmer, drier homes. Meanwhile, programs like Autodesk’s Build Change are taking this further, harnessing the power of Autodesk’s software to retrofit and fortify homes for two million people in the earthquake-prone city of Bogotá, Colombia.

8. Leverage behavioural insights for more effective policy

When it comes to energy efficiency, even small nudges can lead to big savings for consumers. Opower, now part of Oracle, pioneered utility bills that include social comparison data (“you used more than your neighbours”) and custom energy tips. This simple intervention reduced electricity use by 3.5% across 30 million homes, demonstrating the power of behavioural design. These findings show that consumers don’t need to be tech-savvy to cut consumption, they just need the right prompts.

9. Strengthen international collaboration

At the heart of international collaboration and multilateralism lies the principle of shared responsibility, and mutual self-interest, around issues that impact every nation, regardless of economic status or geopolitical influence. No single country can mitigate rising global temperatures alone.

At COP28, 197 nations and the EU pledged to double their energy efficiency improvements to over 4% per year by 2030, a crucial step toward halving emissions and shoring up global cooperation, although much progress is still needed here as the world reached just 1% in 2023 and 2024.

Meanwhile, regional initiatives like GEAR (Grid Efficiency and Resilience), which is supported by blended public-private funding, established by ICA, UNIDO, IEA, SEforALL, Carbon Trust, the Alliance for Rural Electrification (ARE), are continuing this collaborative approach, ensuring that African grids can deliver more power without more emissions. GEAR expects Africa’s energy demand to quadruple by 2040 and notes that as much as 2.3 TWh of electricity annually can be delivered to African households and businesses by increasing grid efficiency. 

10. Raise global energy efficiency ambition

Thousands of businesses are already forging a path from fossil to clean. But business cannot do it alone. We need world leaders to act with the urgency that the climate crisis demands. Countries like Germany, Japan, and Brazil have embedded efficiency in their national targets. The EU’s revised Energy Efficiency Directive mandates annual savings of 1.49% between 2024–2030. Meanwhile, Spain’s Climate Change Act and Japan’s 35% improvement goal are setting clear pathways for industry and infrastructure to follow. As countries publish their next NDC plans under the Paris Agreement by September 2025, they must ensure continued ambition on energy efficiency with sector-specific targets. Read the call to action from business for governments to set ambitious and investible NDCs with clear targets, policies and timelines that will help build a more resilient and prosperous future.  

For businesses, this sends a clear signal: energy efficiency is no longer optional. It’s central to climate credibility, competitiveness, and compliance.

Where business comes in 

There is a strong business case for energy efficiency- it gives significant return on investment by reducing operational costs. As European Commissioner for Energy and Housing Dan Jorgensen said in a recent speech, “For industry, every time one euro is spent on energy efficiency, it translates to four euro in savings on average, in a few years.” In this way, the IEA’s principles aren’t just for policymakers, energy efficiency should also be at the core of businesses’ efforts.  

Energy efficiency delivers emissions cuts, cost savings, and resilience at scale. In 2024 alone, EP100 companies achieved an 8% average annual improvement in energy productivity, outpacing the global average of just 1%. Impressively, 80% are on track to meet their goals ahead of schedule, proof that businesses can be first movers in the efficiency transition. 

For businesses wanting to take action on energy efficiency, we recommend checking out Climate Group’s EP100 or the Fossil to Clean Business Action Checklists, developed by We Mean Business Coalition and partners. The checklists identify practical steps that can be taken today across energy efficiency and buildings, electricity procurement, business travel and fleet management to start reducing reliance on fossil fuels.   

Whether through retrofitting, digital transformation, or stakeholder engagement, companies are showing that efficiency makes business sense. Energy efficiency isn’t just the “first fuel”—it’s an economic strategy hiding in plain sight. Providing an accessible, cost-effective, and immediate way to drive systemic climate action, deliver jobs and ensure energy security and competitiveness- to the benefit of governments, businesses and communities alike.