Global energy crisis: why businesses should transition to renewable energy
The 26th Conference of the Parties (COP26) has captured our attention in the latest news cycle. It drew attention to renewable energy, especially with the establishment of the new Global Energy Alliance for People and Planet (GEAPP.) The focus on this event has brought the importance of curbing emissions and adopting renewable energy to the forefront.
Meanwhile, more consumers vote with their wallets and buy from brands with a sustainability and corporate social responsibility (CSR) focus as businesses realise that they must become more cost-efficient while they address customers' priorities and concerns.
As a result, organisations have become more conscious of their environmental footprints and that of their partners and suppliers. In fact, 91% of business leaders agree how they respond to events with social impacts will affect their brand reputation.
Concurrently, demand and prices for oil and natural gas have soared, increasing the cost of production and fulfilment significantly. This price hike happened not long after the oil price dropped to negative during the pandemic. Such extreme fluctuations illustrate the volatility of fuel costs, which makes accurate forecasting close to impossible.
Additionally, the surging prices of natural gas and coal are poised to shutter factories and drive up power bills, further impacting the stability of the global supply chain. This shift will create a domino effect that affects every business activity in the global economy, leading to shortages and inflation.
Many corporations now recognise the interdependence of these moving parts and how their survival will hinge upon updating their business processes to address the global energy crisis. They're stepping up their games, with 77% of business leaders considering the post-COVID business recovery process an opportunity to adapt to the low-carbon economy of the future.
The benefits of transitioning to renewable energy
Here are the advantages for businesses to switch to renewable energy:
- Lower energy bills and increase profitability: harvesting renewable energy like solar and wind can reduce your energy bill and increase long-term profits.
- Increase predictability: since your business operations are no longer subject to fluctuating oil and gas prices, you can better forecast your expenses.
- Reduce dependency on imported fuels: using renewable energy frees your business from unpredictable global geopolitical issues that can impact the supply chain.
- Improve brand image: going green can give you a public relations boost and position your business favourably in the eyes of prospects and customers.
- Gain a competitive advantage: customers want to be associated with environmentally responsible brands, so switching to renewable energy can help you attract more business.
- Attract investors: many investors seek out companies with a sustainability and CSR focus as they recognise that these businesses will come out ahead in the long run.
- Ensure business continuity: your operation will less likely be disrupted by an electricity outage, which has become more frequent as the electric grid is strained.
- Establish industry leadership: switching to green energy now will position you ahead of your competition and differentiate your brand in the market.
- Create an additional income stream: if you install solar panels or wind turbines, you can sell the surplus back to the grid for a profit.
How to transition to renewable energy
Switching to green energy sources may seem daunting, but you don't have to eat the elephant all at once. Just making incremental changes to your business processes, infrastructure, and operations can add up to a substantial impact.
For example, you can switch to an electric fleet for part or all of your logistics and transportation needs. You can also work with vendors and suppliers that use renewable energy sources in their business operations or production processes. It has become more affordable to purchase and install solar panels, making it a no-brainer for many businesses.
While solar panels and wind turbines are the most common source of renewable energy, there are other options you can consider:
- Solar thermal energy: uses sunlight to heat the water in a hot water tank.
- Biomass systems: generates heat by burning or fermenting organic materials (e.g., straw and wood pellets.)
- Anaerobic digestion: generates heat by burning the methane from the breakdown of organic materials (e.g., plant and animal wastes.)
- Geothermal and ground source heat pumps: uses heat generated from the ground to provide heating and cooling.
- Combined heat and power: uses a special system to capture the energy produced by electrically powered machinery, appliances, etc., to heat water.
- Hydroelectric power: generates electricity by having water flow through a turbine or water wheel.
You can follow this three-step roadmap to reroute your business strategy towards sustainability and the eventual de-carbonisation:
- Establish your baseline
- Target a sustainable business model
- Monitor and report to realise a sustainable vision
Our Sustainability and Corporate Social Responsibility (CSR) advisory services can help you transition toward a sustainable future as you balance brand value with revenue generation. Learn more and get in touch to see how our experienced sustainability professionals can help you thrive in a greener future.