As global business leaders gather at the World Economic Forum Annual Meeting in Davos this week to discuss energy and environmental challenges, Schneider Electric has released a new study revealing that while most organizations feel prepared for a decentralized, decarbonized and digitized future, gaps remain between intention and action.
The study attributes this false sense of security to companies’ continued use of conventional approaches to energy management and climate action. This is further complicated by limited coordination between procurement, operations and sustainability departments, as well as inefficient data collection and sharing.
Eighty-five percent of the almost 240 large corporations ($100 million in revenue or more) surveyed said their company is taking action over the next three years to keep its carbon-reduction plans competitive with industry leaders. But the projects that have been initiated or are in development skew heavily toward energy, water and waste conservation. Outside of renewables, few of the organizations represented are implementing more advanced strategies and technologies to manage energy and emissions.
The study found that only 30 percent of survey participants have implemented or are actively planning to use energy storage, microgrids or combined heat and power. Additionally, just 23 percent have demand response strategies in place or plan to implement them in the near future.
“We are in the middle of a massive disruption in the way energy is consumed and produced,” said Jean-Pascal Tricoire, Chairman and CEO at Schneider Electric. “The near-universal focus on conservation is a positive. However, being a savvy consumer is only a part of what’s needed to survive and thrive. Companies need to prepare to be an active energy participant, putting the pieces in place to produce energy and interact with the grid, utilities, peers and other new entrants. Those that fail to act now will be left behind.”
Internal alignment — or a lack thereof — may be a primary barrier to progress. Sixty-one percent of respondents said their organization’s energy and sustainability decisions are not well coordinated across relevant teams and departments, particularly true for consumer goods and industrial businesses. In addition, the same number of respondents said lack of collaboration is a challenge.
Data management was cited as another obstacle for integrated energy and carbon management, with 45 percent of respondents stating that organizational data is highly decentralized, handled at local or regional levels. And of the people who identified “insufficient tools or metrics for data sharing and project evaluation” as a challenge for working across departments, 65 percent manage data at the local, regional or national — not global — level.
Though obstacles exist, the research points to progress in several areas as well. More than 50 percent of companies represented have initiated renewable energy projects or plan to do so within the next two years, with healthcare (64 percent) and consumer goods (58 percent) leading the way. The C-suite and corporate functions have a high degree of involvement in these and other sustainability-focused programs. Seventy-four percent said C-suite members review or approve renewables and sustainability initiatives, for instance, indicating this work is seen as a strategic priority.
And while ROI is the obvious benchmark for energy and sustainability initiatives, companies are starting to take a longer, more comprehensive view of investments. For example, more than half of the respondents said environmental impact is factored into the evaluation process. Organizational risk (39 percent) is another important consideration.