Delivering net zero in an energy crisis

The context for companies thinking about climate and energy has changed almost beyond recognition since our last Exchange discussion on net zero a year ago.

After a decade of stable energy prices, consumers face extraordinary rises caused by a perfect storm of factors; a sharp increase in post-pandemic demand, the war in Ukraine and the collapse of 31 energy companies since 2021 (who were unable to operate within the margins below the Ofgem price cap applied to 11UK million households). After months of volatility and concern, it was revealed that energy costs for the average household in the UK will increase by £693 this year. A steep rise quickly followed as wholesale gas prices jumped to about 300% higher than we saw at the beginning of 2021.

And worse is yet to come. Inflation, staff shortages and a risk of recession in the UK and beyond. The invasion of Ukraine has already raised the cost of living, as a spike in natural gas and oil prices have pushed heating bills higher. Similarly, the cost of transportation is skyrocketing as fuel becomes more expensive.

And some, including the members of the ‘Net Zero Scrutiny Group’ in Parliament, continue to question the boldness of the national net zero ambition, projecting that it would leave people “colder and poorer”.

It’s a long way from COP26.

Shifting from pledges to purpose

The pandemic, the great resignation and the climate crisis have put social purpose and sustainability onto company agendas like never before. Only 7% of Fortune 500 CEOs believe their companies should “mainly focus on making profits and not be distracted by social goals”.

The same goes for 5.7 million small and medium-sized organisations across the UK that are creating ripples across their respective industries and play a vital part in strengthening the local networks. Organisations are doubling down on long-term value creation when customers, staff and shareholders need it the most.

Net zero has rapidly moved to the mainstream: in 2019, pledges covered just 16% of the global economy; by 2021, nearly 70% had committed to net zero by 2050.

At the same time, the adoption exposed what is known as the Purpose Gap: the disconnect between public perceptions of business and its potential for good, or between employees’ desire for meaning at work versus what they experience. Without a clear sense of purpose, a net zero pledge can often seem unattainable and abstract — especially in the face of the current pressing economic and social issues.

The challenge, of course, is finding concrete, realistic action to back up all those fine words. Global engineering consultancy Jacobs, Legal & General and commercial realtor Landsec are amongst those leading the way and acting on their ambitious pledges; building influencer programmes, internal clean-tech incubators and much more.

We’re asking those working on the ‘front line’ of climate action in their organisation; How are you bringing purposeful action to life in your organisations? What are the learnings from instilling a culture that strives for real impact beyond simple KPIs, and what are the pitfalls?

Eyes on the prize

Lets face it, the everyday news is pretty bleak. Reading the headlines, it would be easy to shift into crisis mode — following Elon Musk with his “super bad feeling” about the economy and 10% workforce cuts.

But we’ve been here before. We’re a generation of leaders who learned the lesson of the pandemic: that we can change our fundamentals, overnight. The Great Resignation demonstrated a newly found sense of awareness and demand for purposeful work both at home and in the office. Organisations that responded quickly are now championing flexible and outcome-oriented ways of working. Real transformation is possible, but a clear sense of mission is vital.

The challenge for the next few years will be maintaining our net zero ambitions while living within the current economic situation. Keeping an eye on the ultimate prize — an abundance of cheap or free energy universally — can fuel the collective efforts and help spot opportunities for a just and equitable transition.

As customers face a cost of living crisis, how do we understand their needs and provide greater value to them? How do we respond to the current economic situation, without disregarding preparation for the future; and how do we drive collaboration — both internally and externally — to deliver on our climate ambitions?

At Magnetic, we’ve been helping companies think about the long term: whether that’s the 2027 view or the 2050 view. In every organisation - from media to engineering to consumer goods - the future of energy is a critical factor. This article was written by Maria Zielinska. Get in touch to chat at Maria.Zielinska@wearemagnetic.com.

Register for free to join the conversation on the 9th Nov Exchange: What’s next for Net Zero.