Energy Efficiency, GHG Emissions, Sourcing Renewables - August 17, 2020 - By Debra Chanil, Smart Energy Decisions
Sustainability Programs During COVID-19: There’s a will… but is there a way?
As the energy industry faces the continuing shock of the COVID-19 pandemic, it’s becoming clear that organizations want to hold firm to their sustainability strategies, even as budget uncertainty and competing priorities may get in the way.
Smart Energy Decisions, in partnership with BloombergNEF, fielded a survey among energy executives to measure the current impact of COVID-10 on a series of sustainability factors as well as what they anticipate the impact to be as we move through re-openings and economic recovery. The report, "Pulse Survey: COVID-19's Impact of Sustainability Programs," examines the results in detail
Not surprisingly, Budgets are the greatest concern (cited by 55% of respondents) and have experienced the most severe negative impact (according to 62%). “Along with the isolation from the pandemic lockdown came a significant drop in sales – and corresponding budget cuts,” said one respondent. Others noted that budgets were diverted away from the development of sustainability programs towards the more immediate needs of COVID-19 initiatives. One executive explained, “Responding to the pandemic has been expensive, and lost revenue has been significant, so budget constraint will affect all non-emergency operations for the foreseeable future.” Moving forward, the mood towards budgets is uncertain, which “brings a potential retreat in case something else happens.”
The news from respondents wasn’t all bad. Some businesses have thrived, particularly among manufacturing, grocery retail, and others considered to be essential services. Additionally, others noted that sustainability budgets could be considered a positive influence during the economic crunch associated with the pandemic. “Our sustainability goals are mainly focused on saving money.” Others explained that their publicly stated renewable energy and GHG reduction targets must be met, so the necessary budget will remain in place.
The Ambition of Sustainability Strategy among respondents remains strong, as 45% see no change in impact. Further, while 35% say the initial impact has been negative, only 16% believe it will stay that way. Almost half (47%) see improvement coming. Sustainability, said one respondent, “sets the tone of our corporate strategy for our future.” Another added, “We are living in times of social change and our sustainability strategy is a social concern of our company. We believe we can ride this wave of change to further push our environmental goals.” On the negative side, respondents cite competing priorities and distractions brought on by dealing with fallout from the pandemic.
While 30% of respondents cited a current negative impact in Supply Chain Engagement, 38% see improvement moving forward. Increased costs and supply chain interruption, particularly for overseas manufacturing, have been a concern. However, engagement with supply chain partners in collaboration on sustainability issues is expected to show progress as conditions improve.
Respondents showed concern with Executive Access in both literal and figurative forms. Physical distance, particularly at the beginning of the shut-down, was a barrier. “Having the ability to network in-person always helps with collaboration,” said a respondent. Even as lines of communication opened up and teams learned to work together at a distance, the attention of the C-suite, like budgets, was diverted to dealing with immediate COVID-related issues. One respondent noted, “Short term issues around COVID are getting much of the focus right now. I don't expect a major impact as far as our longer-term goals, but 2020 will be a year of distractions.”
The appetite for Decarbonization Activities, including the purchase of clean energy, carbon offsets, electric vehicles, etc., remains solid, though at least 30% of respondents cite both current and future negative impacts. Some respondents report putting new initiatives on hold and a shift in focus. According to BNEF’s latest Corporate Energy Market Outlook, companies signed contracts for 8.9 GW of renewables through July across the globe, though activity in the U.S. dropped significantly due to COVID-19.
Investor Perception posted the lowest negative impact of any factor measured in this study at less than 10% for current and future impact. Clearly, companies with strong sustainability strategies and goals are seen favorably by the investor community. Not incidentally, companies have continued to announce renewable energy and net zero targets, as well as emission reduction goals throughout the pandemic.
Likewise, the news is positive for Sustainable Financing. A recent report from Morningstar noted that sustainable funds rebounded strongly after the coronavirus pandemic market sell-off. Supported by the stock market recovery and growing investor interest in ESG issues, global inflows into sustainable funds were up 72% in the second quarter of 2020 to $71.1 billion (USD).
Overall, the pandemic is presenting a challenging framework for businesses to maintain and expand their sustainability programs. While energy-as-a-service and third-party financing programs – anything that allows projects to move forward without direct financing – will become more popular and practical as the industry moves forward, we look forward to more innovations from this most innovative of industries in order to overcome the impacts of the pandemic.
Download the complete "Pulse Survey: COVID-19's Impact of Sustainability Programs" here:
Debra Chanil, Research and Content Director for Smart Energy Decisions, has more than 25 years of experience in market research and content development. In her current role, she manages all SED content development and leads SED's exclusive energy industry research including the annual State of Corporate Renewable Energy Sourcing and State of Distributed Energy Resources. Prior to joining Smart Energy Decisions in 2017, Debra was Research Director of Retail & CPG insights for EnsembleIQ and Stagnito Business Information, where she conducted editorial, sales, and marketing research for a variety of B2B media brands covering the retail sector as well as for custom research projects. Debra was also Research Director for Nielsen Business Media and VNU/Bill Communications.
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