As the journey to net zero by 2050 picks up pace across the globe, the energy transition will require all organisations to change the way they do business.
Energy companies are at the forefront of this transformation, having to tackle an unprecedented repositioning in the way they operate. This requires them to address significant industry and cultural change, alongside a huge shift in the skills required from their workforces, all while managing evolving regulatory requirements.
This is what KPMG’s Women in Energy forum came together to discuss recently, with Sarah Milton-Hunt, Chief Information and Digital Officer, National Grid. As women working at the forefront of change in the sector, Sarah, alongside fellow panellists Clare Maio and Wafa Jafri of KPMG, shared insights on how businesses are preparing for the challenges and opportunities that lie ahead.
Defining the pace of change
Sarah Milton-Hunt highlighted that most of the UK’s national energy infrastructure has barely changed in around 70 years, yet the plan is to add as much new infrastructure in the next six years as has been previously completed in the past 30. Achieving this goes way beyond using digital tools to do the same things more quickly. We need to leverage the potential of digital to fundamentally shift and reimagine the way things are done, she said. This might include more agile decision-making or rethinking the operating model.
Wafa Jafri Partner, Energy Deal Advisory at KPMG in UK, explained how in the M&A space, more companies are exploring joint venture arrangements to help them transform their business, which in turn bring their own challenges. Not least cultural factors. Energy and natural resources is a very safety-driven, risk-aware industry. Yet transformation comes with significant risks and companies need to accept they need to begin the journey without fully understanding the destination.
Sarah agreed, “you need to focus on the first thing you need to change, and get it right, rather than worrying about everything that needs to change, which can lead to analysis paralysis.”
Setting the direction
Achieving transformation also means managing competing internal and external pressure, including cost, net zero, market and macroeconomic pressures. Defining the business’s ‘north star’ – it’s overarching guiding objective – can help to balance and prioritise these pressures. It is also important to communicate the vision clearly and consistently, and build it into the overall business strategy, so people can see where the business is going and buy into that journey.
“Some of the companies struggling with the transition are too focused on shorter term net zero targets. Whereas businesses that embed their ‘north star’ into their commercial strategy are better placed to succeed. They see it holistically as part of the business’s evolution, rather than a set of targets,” explained Wafa. This can help to avoid a situation where ambitious net zero targets are announced, only to be rolled back as the business struggles to align them with its commercial realities.
Ensuring diversity of thought
Given the scale of these challenges, all panel members highlighted the need for organisations to be open to new ideas and to ensure diversity of thought in how they develop, implement and manage their transformation strategies. Not only in terms of gender or race, but also age, experience, background, specialisms, etc. Bringing in diverse opinions and approaches can strengthen the strategy and ensure it feels relevant across the business.
“The greater the balance that we have in diversity, the better we are able to achieve the innovative thinking needed to deliver a successful transformation,” said Sarah.
Impact of external pressures
Sarah also raised the issue of the energy ‘trilemma’ that all energy companies face – the three overlapping priorities of security of supply, affordability and net zero; factors that are closely linked to external macroeconomic issues at both a national and global scale, which also have a huge impact on the investment landscape.
Supply chain is another critical element of this. Businesses need to take a partnership approach to address supply chain risks and manage the enormous pressures the transformation will place on every link in the value chain.
“It’s about building an ecosystem of partners to realise the desired outcome, rather than thinking that any one organisation can manage the whole thing on their own,” said Sarah.
Transformation in action
Our panellists agreed there is no single ‘right’ way to approach the energy transition. Different organisations are having success through many different approaches. What often sets them apart, said Wafa, is that they stay ‘true’ to who they are as an organisation and do not move too far (or too fast) from their core beliefs.
“Organisations that are true to their ability to win in a particular part of the transition are the ones that tend to succeed,” she said. Or they recognise they don’t have the ability to win and devise a strategy to rectify that, maybe through M&A or capital investment.
Clare Maio, Global Lead Partner, Energy & Natural Resources, KPMG in the UK, picked up on the investment point and wondered how businesses can be encouraged to invest in areas that, in the short term, are seen as higher risk, such as hydrogen or carbon capture and storage, but are likely to play an important role in the longer-term energy transition.
Wafa talked about the responsibility of governments to create the right policy frameworks to encourage investment in these areas. She also discussed the responsibility of the private sector, particularly larger companies like big tech giants, to spread their investment across a wide range of technologies in order to build out the value chain and reduce the investment risks for small players.
“The good news is, there is a whole wall of capital available to invest in the transition as long as it is an investable proposition. And we are seeing countries across the globe try to create the policy architecture to attract that capital,” said Wafa.
Attracting the right people with the right skills
For people who are purpose-driven and who want to make a difference, the energy industry is a very exciting industry to be working in. But companies need to put the effort into attracting the different skills and diverse mindsets to make this happen.
“There's a lot we need to do as an industry to get people on board. Although there are purpose-driven individuals who see the attraction, the industry also has a bit of a reputation as not being agile, of not investing, or not being diverse. We need to change that,” said Wafa.
Sarah believes the industry is more diverse than it has ever been, but it is from a very low base and much more needs to be done. The skills and competencies needed by today’s energy industry are different to those needed even 10 years ago. And they will be different again in 10 years’ time.
“To use an ice hockey analogy, we need to skate to where the puck is going to be, not to where it is at the moment, because by the time we get these it will have moved,” she said.
Challenges facing women in the energy industry
Clare suggested that resilience and optimism were two of the key qualities that women need to develop to succeed in energy. Sarah agreed, citing her own experiences and how being resilient and confident have helped her develop her career while staying true to herself, rather than bending to suit other people’s perceptions or priorities.
You need to be stay curious and be prepared to ask questions and challenge established thinking.
“I’m not going to pretend I can have a technical conversation about electrical engineering, but I can ask good questions that might change the assumptions and find a better solution by challenging the accepted way of thinking,” she said.
Wafa recalled a question a more junior colleague asked her, about often being the only woman in the room. “I realised that I’d stopped noticing. But we can’t let that happen. We can’t allow ourselves to stop noticing. We need to notice so we can keep moving forward and making sure change happens. There is still lots to be done, but things are on the right track,” she said.
This goes to the very heart of why KPMG established the Women in Energy forum: to connect women operating successfully at all levels within the industry, to encourage more female engagement in the sector, and to show the industry itself the value that diverse perspectives can bring.
Join us at our next Women in Energy event to help us continue on this journey.
To find out more, and to watch the full conversation on-demand, please visit our Women in Energy hub.
