Missing the target - what the energy crisis means for IT businesses' net zero ambitions
Adopting automation, digitisation and sustainable technologies are practical steps to take right now
Eighty-three per cent of IT business leaders say the energy crisis will impact their organisation’s ability to meet emissions reduction plans, according to research from Schneider Electric. Yet kicking the climate ‘can’ down the road won’t only impact broader efforts to address climate change – it doesn’t make business sense.
Forget 2050: we will know where we are in the fight against climate change by 2030. To stand a chance of meeting commitments to limit temperature rises to 1.5°C by mid-century, experts agree that we must halve global emissions in just seven years' time.
Yet the recent energy crisis, sparked by the post-pandemic economic rebound and the conflict in Ukraine, is hindering progress towards net zero goals. Record high prices for gas and electricity have had knock-on impacts on operations, pricing, profitability and more.
Immediate concerns outweigh long-term ambitions
This explains why business leaders have been focused on fighting what they see as more immediate challenges, such as economic pressures, supply chain delays, and skills shortages.
Our research shows that 83% of UK and Irish IT business leaders admit that the energy crisis will affect their business' ability to meet decarbonisation targets. Over one third of these (37%) now have more immediate business challenges than carbon net zero, while the same number (37%) say emission targets are no longer an issue for their stakeholders.
This is in stark contrast to boardroom ambitions on tackling climate change. The overwhelming majority (92%) of IT businesses in the UK and Ireland have goals in place to reduce carbon emissions in line with net zero targets or to meet other environmental commitments - and indeed, are more likely to have goals in place than any other sector we surveyed.
Nearly one in four IT business leaders (39%) see climate change as an increasing priority over the next three years, and only a small minority (14%) believe that national net zero commitments will be diluted in that time. Yet despite their best intentions, it appears that they are not fully committed to their decarbonisation goals - a worrying setback for both the climate and for business.
Did you know?
Despite the impact of the energy crisis on their emissions reduction ambitions, IT firms in the UK and Ireland remain more committed to net zero targets than other sectors:
- Firms in the IT sector are more likely than other sectors surveyed to have goals in place to reduce carbon emissions in line with net zero targets or to meet other environmental commitments (92% vs 88%)
- Organisations in the IT sector who expect the crisis to impact their net zero plans are less likely to have delayed investment plans as a result (44% vs 49%)
- IT businesses are also less likely to say their emissions reduction plans will be impacted because it is no longer an issue for stakeholders (37% vs 40%)
- Organisations in the IT sector are far less likely to cite a lack of control over the required investment in infrastructure as a reason why emissions targets will be impacted (24% vs 42%)
However, IT business leaders are more likely to cite the difficulty of taking practical action (33% vs 27%), and more immediate business challenges as reasons why carbon reduction plans will be impacted by the energy crisis (37% vs 34%)
A difficult balance to strike
These research findings highlight the fine balance that needs to be struck between addressing immediate threats while preparing for future ones. Although few in the boardroom will argue against addressing climate change, kicking the climate can down the road won't just impact broader efforts to address climate change - it doesn't make business sense.
As energy market volatility becomes the new norm, delaying decarbonisation goals will present organisations with new business risks associated with fluctuating energy prices and extreme climate events. Businesses that continue to address their carbon reduction ambitions, however, will see tangible benefits in terms of lower costs and greater efficiency.
Regaining lost ground
The good news is that practical steps can be taken now to get businesses back on track and reap the added benefits of embracing automation, digitisation, and sustainable technologies.
These benefits include reduced exposure to variable energy pricing, operational efficiencies through automation, electric vehicle cost savings in low emissions zones, phasing out dependence on finite fossil fuels and the futureproofing this creates, and the reputational benefits of being more sustainable.
When getting started, lower cost, ‘quick win' measures can deliver immediate benefits for businesses, helping leaders obtain crucial stakeholder buy-in for longer-term projects.
Indeed, once the wider benefits of being carbon neutral become clear to senior decision-makers, net zero will rise up boardroom agendas once more.
Start with a strategy
A good starting point is to create a strategy that aligns with your business plan, considers the entire lifecycle of power generation, and involves collaborators from across the business.
Achieving net zero is a whole company initiative. Involving key stakeholders - from leaders to operation managers - from the outset will ensure that your plan has a widespread impact and that accountability for its implementation lies with multiple functions.
Invest in a mix of solutions
There isn't a silver bullet for decarbonisation. It's likely that you will need to invest in a combination of technologies and processes that work together to manage energy use. Understanding this from the outset will enable you to assess vendor solutions critically and set stakeholder expectations on results.
Get external advice
You're an expert in running your business: invite net zero experts to analyse your current plans and results to help you identify areas for improvement, and develop a comprehensive plan underpinned by your business goals and operational efficiency. Sustainability partners can provide end-to-end digital solutions and services to help you determine which solutions you'll need - and getting started can be as simple as booking a remote energy assessment.
Decarbonisation isn't costly
The great news for business leaders today is that investing in decarbonisation technologies and solutions not only makes business sense - it also doesn't have to be expensive. The payoff can be significant for your operations, efficiency, resilience and competitiveness - and can often be measured in months rather than years. With careful forecasting and planning, you can invest in net zero initiatives that deliver a mix of immediate and long-term results.
For many leaders, procrastinating on their net zero commitments now will hinder future growth. In fact, decarbonisation is expected to deliver US$26trillion (£22 trillion) in economic benefits to the global economy through 2030. There's never been a better time to get back on track with net zero.
To see more insights from the research, including more practical tips from Schneider Electric experts, access the full report here [LINK].
About the research
The research was carried out online by Research Without Barriers (RWB) between 12th May 2023 and 7th June 2023. The sample comprised 1,504 energy decision-makers in the UK & Ireland in organisations with more than 50 employees.
David Williams is VP of transactional business, UK & Ireland at Schneider Electric
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