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.