CEOs Pushing Back Net Zero Targets Due to Costs - Aggreko
Ninety-five per cent of European CEOs are adjusting their timelines for energy transition in reaction to challenging market conditions.
And half of those CEOs have delayed their net-zero targets.
That’s according to a new report by Glasgow-based energy solution specialist Aggreko, which has compiled insights on strategies CEOs are adopting for energy transition.
Aggreko surveyed 400 business leaders across Europe, highlighting how CEOs are recalculating their sustainability goals due to challenging market volatility.
Achieving a balance
An overwhelming 87% of these leaders are moving towards decentralised energy solutions, which typically consist of on-site power generation systems or energy storage units, to achieve a balance between environmental objectives and financial gains.
Robert Wells, Aggreko's President in Europe, explained the rationale behind the study: “With appetite for decentralisation and alternative power agreements on the rise, we have launched our report to help leaders understand the market and how it is evolving.”
The research canvassed views from executives across the UK, Germany, France, and Italy, primarily from energy-intensive sectors, highlighting the balance executives must maintain between environmental promises and business obligations.
Stringent regulations such as the Deforestation Regulation and the Corporate Sustainability Due Diligence Directive have put pressure on companies to mitigate environmental impacts.
Despite this, only 12% of CEOs prioritise rapid decarbonisation, while the majority favour cost reductions and gaining competitive advantages.
Continued investment
Investment in green technologies continues, albeit at a cautious pace. Eighty per cent of corporate leaders project an uptick in investment towards energy transitions up to 2025, albeit marginal ones.
This cautious investment climate underscores the complex balance necessitated by today’s economic conditions.
Aggreko’s research further reveals a growing trend towards decentralised energy systems, with 54% of businesses planning expansions here, driven by concerns over grid stability and a preference for greater energy independence.
Supply chain vulnerabilities
Supply chain vulnerabilities continue to be a significant concern among CEOs, with nearly half identifying them as a vital risk to their transition plans.
About 21% consider supply chain vulnerabilities their most significant risk, underlining the intense challenges in implementing sustainable practices, particularly in managing Scope 3 emissions, which are indirect emissions from activities not owned or controlled by the reporting organisation but occur across its value chain.
Conservative methods
Despite newer, flexible alternatives such as power purchase agreements and energy-as-a-service models, 46% of companies still resort to traditional energy procurement methods. This conservatism persists even as businesses face the dual pressures of cost reduction and environmental compliance.
Data too is emerging as an integral part of companies' energy strategies: 16% of CEOs believe that data is the most critical factor influencing their energy decisions, signifying a shift towards more analytical approaches to energy management.
Finely balanced
Above all, Aggreko’s report illustrates the finely tuned balancing act European industries must contend with coupling environmental commitments with commercial realities in such a challenging economic climate.
Wells however remains optimistic that solutions such as Aggreko can help organisations be more cost-effective when it comes to energy supply.
"Particularly when capital is at a premium, supporting customers with controlling costs and energy supply will remain a key part of ensuring a smooth energy transition.”
Make sure you check out the latest edition of Business Chief and also sign up to our global conference series - Sustainability LIVE 2024
Business Chief is a BizClik brand
Continued investment
Investment in green technologies continues, albeit at a cautious pace. Eighty per cent of corporate leaders project an uptick in investment towards energy transitions up to 2025, albeit marginal ones.
This cautious investment climate underscores the complex balance necessitated by today’s economic conditions.
Aggreko’s research further reveals a growing trend towards decentralised energy systems, with 54% of businesses planning expansions here, driven by concerns over grid stability and a preference for greater energy independence.
Supply chain vulnerabilities
Supply chain vulnerabilities continue to be a significant concern among CEOs, with nearly half identifying them as a vital risk to their transition plans.
About 21% consider supply chain vulnerabilities their most significant risk, underlining the intense challenges in implementing sustainable practices, particularly in managing Scope 3 emissions, which are indirect emissions from activities not owned or controlled by the reporting organisation but occur across its value chain.
Conservative methods
Despite newer, flexible alternatives such as power purchase agreements and energy-as-a-service models, 46% of companies still resort to traditional energy procurement methods. This conservatism persists even as businesses face the dual pressures of cost reduction and environmental compliance.
Data too is emerging as an integral part of companies' energy strategies: 16% of CEOs believe that data is the most critical factor influencing their energy decisions, signifying a shift towards more analytical approaches to energy management.
Finely balanced
Above all, Aggreko’s report illustrates the finely tuned balancing act European industries must contend with coupling environmental commitments with commercial realities in such a challenging economic climate.
Wells however remains optimistic that solutions such as Aggreko can help organisations be more cost-effective when it comes to energy supply.
"Particularly when capital is at a premium, supporting customers with controlling costs and energy supply will remain a key part of ensuring a smooth energy transition.”
Make sure you check out the latest edition of Business Chief and also sign up to our global conference series - Sustainability LIVE 2024
Business Chief is a BizClik brand