How are businesses building the risk of energy security into future business planning?

“Plugging the Energy Gap” the December 2011 policy document from the London Assembly Environment Committee, indicates that delays or cancellations to energy development projects could result in energy demand outstripping supply by as early as 2015.  Without new projects coming on-line, demand will exceed supply by 2020.

Many old nuclear power stations are due to be decommissioned by 2020 (7.1 GW) and most coal-fuelled (carbon intensive) power stations (12 GW) are due to be shut down between 2012 and 2016.  A new nuclear power station takes 10 years to build, (excluding planning), so even if a project were started now, they wouldn’t make the 2020 deadline.

The anticipated investment required in infrastructure, to deliver low carbon electricity by energy companies is around £200bn – more than twice the investment made over the last decade.  If energy generators choose not to make investments, taxes such as the Carbon Price Floor (as a result of generating companies continuing to use carbon-intensive fuel) will still impact their bottom line. 

The implications for the consumer are clear, with increasing energy prices as investment costs are passed on, (one Guardian article suggests rises in domestic energy bills of between 23% and 52%), power outages or mains voltage reductions, particularly at peak times.

So what is it that organisations are doing to manage the future risk of energy security? 

Andrew Winston @GreenAdvantage highlights Walmart’s commitment to 100% renewable energy and how they use a longer term view on payback (i.e. helping the solar market get to scale, thereby lowering future costs).  Immediate benefits include the experience and knowledge gained by their managers of optimising new power sources alongside the immediate cost benefits.

However the Siemens’ Green League Report suggests that 70% of the 600 companies in their study view cost reduction as the primary reason to tackle energy management.  This would suggest that the implications of the impending energy gap are not on the radar of a large majority of organisations.  Does this represent a lack of knowledge or awareness and/or a lack of the long-term view taken by the likes of Walmart?

A recent UN-backed study by GlobeScan and SustainAbility supports the view that the critical barrier to businesses’ transition to Sustainabilty is Financial short-termism.  51% of corporate respondents cited a low awareness of the business imperative.

So whilst many B-to-C companies are driving initiatives to reduce their CO2 emissions; (and those within their supply chain); management of the business risk of future energy security does not appear to have an owner.   Where should this responsibility sit?  Pepsico and other leading organisations believe ownership for driving a sustainable business should sit in the Boardroom.  More on the role of leadership next time…

Whose Sustainability is it Anyway?

This is the blog of Gill Yourston, Exec Coach, Sales Eminence Training Programme Manager at IBM and relative newbie to the subject of Sustainability. 

Whilst my initial interest in Sustainability was generated by the business opportunities for data analytics and metering; my research, (and gentle prodding from colleagues), has shown me how relevant, simple and complex this subject is.  Simple, as our current use of resources is unsustainable and complex, because solutions will require fundamental changes in our individual behaviour and the ways we do business.

Why has it taken me so long to get interested?  I believe our behaviours are driven by our values and beliefs and without a supporting value or belief we are unlikely to exhibit the behaviour. 

I started recycling following a story in the Local Authority magazine about the implications of landfill and non-biodegradable waste.  I considered solar panels because of the financial incentives, (although my husband thought his logical pragmatist had lost it!)  The issues became relevant to me in the here and now. 

Through my blog I’ll be sharing some of the things I’ve learned from my reading around Sustainability and the questions that have come up for me.  I’d welcome your feedback and introduction to new information and resources. 

My intent will be to find practical responses, (where available), to some challenging questions, both for individuals and organisations alike.  I will include links to any papers, other blogs or sites I have visited in the course of my reading.  I also plan to share stories of where and how businesses and individuals are being, or will be impacted.  As part of these stories I hope to share the motivators for change.  

Some of the subject areas for future blogs include:

• Energy - what strategies are in place to address the UK energy gap? 
• Transport – what are the challenges/benefits of running a fleet on bio fuel? 
• Waste – what are the opportunities and challenges and how attractive are the incentives?
• Resources – Water, raw materials, what’s the issue?
• Business – how will businesses need to change/adapt and what does that mean for employees?

In the course of my reading on Sustainability, even my understanding of the term “bottom line” has broadened.  Reference is made to the Triple Bottom Line; or the 3Ps; of People, Profit and Planet, or alternatively Social, Environmental and Economic.

What I see is that what’s good for the Planet, can also present a real opportunity for business.  If businesses are to survive and adapt, in a complex world of finite resources and increasing legislation, incorporating Sustainability into business strategy is an imperative that is supported by a number of recent CEO studies.  There’s an opportunity for organisations to engage and influence their customers and employees ……and vice versa……

Thanks to all those who’ve helped me on the way.  You know who you are. I look forward to sharing with you in the weeks ahead…..

(The postings in this blog are my own and don't necessarily represent IBM's positions, strategies or opinions).