In last year’s KPMG CEO Outlook, more than 70 percent of CEOs reported being held personally responsible for adopting environmentally and socially responsible policies and practices. Nowhere is this truer than in the energy sector, which is under immense consumer and stakeholder pressure to change core business portfolios. Customers today are much more sensitive to aspects beyond energy prices, given the umbilical link between energy and climate change.
Consumers are also willing to play their part. According to the latest KPMG Me, my life, my wallet report on customer behavior, 59 percent actively monitor their energy usage to reduce consumption. This increases to 82 percent when those that do so occasionally are added, and 26 percent actively invest in renewable energy for their homes, such as heat pumps and solar panels. For this, they are also willing to pay for a reasonable cost increment.
Globally, 49 percent of consumers care that their energy is green rather than just cheap. A large proportion of corporates surveyed are procuring green energy, and that number is expanding rapidly. Forty-three percent choose to use green energy as their primary source. This rises to 70 percent when those who do so on occasionally are added.
This is excellent progress and holds out hope for the planet since consumer sentiments ultimately shape corporate behavior and government policies. Corporates would do well to stay on course and, where possible, accelerate their sustainability journeys. The feelings would, of course, be tested at a time when energy prices have shot through the roof because of post-COVID economic recovery and are now severely compounded by the Ukraine crisis. There are also inevitable differences between regions, intent/attitudes, and actual behavior. However, younger consumers are genuinely committed to climate and broader societal causes.
I have witnessed this societal consciousness develop and take deep roots in my various leadership roles, including as CEO of growing businesses. We live in times when the knowledge pyramid is at times inverted, with the youth holding deep knowledge of the current trends, especially around digital technologies and, more recently, ESG. They are vocal about the change they seek and will shun organizations as consumers and employees if they do not see ESG responsive conduct.
Energy sector organizations face competition for people, exacerbated the situation in some parts of the world by the great resignation accompanying the pandemic. Younger employees are more likely to want fulfilling experiences that give them opportunities to grow in a socially relevant way. The energy industry will need to evolve to meet these expectations of consumers and employees.
It will be a tightrope walk for organizations. ESG responsiveness in terms of environmentally conscious product portfolios, processes that are sensitive to social concerns and governance standards that are acceptable for today’s and tomorrow’s customers. This will require profound transformation that will cut across the whole organization’s operations. Intent alone is not good enough; it will need to be enabled through structures, technology and people practices that could be in significant variance to the present. However, that is a journey that must be traveled with focus and speed to survive and thrive.