Energy, utilities & resources

Energy companies have the opportunity to play a lead role in a green economic recovery. Economic stimulus programs around the world provide support for renewable energy, low-carbon technologies and sustainability, but many also include incentives for fossil fuels and other ‘business-as-usual’ practices. At the same time, businesses are feeling increased pressure from investors, consumers and regulators to reduce emissions and meet changing expectations around environmental, social and corporate governance (ESG) behavior. These sometimes-conflicting demands could create risks for energy, utilities and resources companies, but could also create the potential for new business models and markets.

Sustainable investment funds are seeing record growth, with many billions aimed at reducing the cost of alternative energy technologies and decarbonising power generation and industrial processes. As renewables grow in importance, our energy mix will become greener but also more complex. This will create challenges around balancing levels of supply and demand. Manufacturing and other industries that depend heavily on carbon-based inputs will need to adopt alternative feedstocks or find ways to recycle carbon from existing materials. Similarly, any processes that produce CO2 as a byproduct or waste product will have to incorporate carbon capture, recycling and storage technologies.

Over the next few decades, many industries – and the energy sector in particular – will confront a scale of change not seen since the Industrial Revolution. As industries converge and new energy systems emerge, opportunities will open for new types of business clusters. Funding for such clusters is likely to grow dramatically, fueled by investors looking to direct their money to innovative ventures focused on sustainability. Companies can also expect to see a growing number of public-private collaborations that will explore alternatives to traditional market-based approaches and work to find sustainable energy solutions.

Successfully navigating to a new energy and industry landscape is a challenge that neither governments nor private-sector businesses can take on alone. Companies and the public sector will need to work together in new ways to manage the transition to a green, net-zero economy. This will require a willingness to innovate and to act boldly in developing long-term visions and policies. Industries and governments alike must be ready to explore different tools and mechanisms for driving change: from tax credits and subsidies to public-private investment partnerships and novel incentives to encourage behavioral change across markets. To build resilience and sustainability, businesses need to embrace other changes as well, adopting advanced digital technologies, new models of working, cross-industry collaboration and more.

Realigning any business for sustainable ESG goals won’t happen overnight: It’s a journey that will take years and will require a dynamic approach by companies. The sooner an organisation can begin that journey, the better prepared it will be to manage future risks and take advantage of emerging opportunities. In fact, delaying action on sustainability and net zero will create risks in the near term as consumer, investor and regulator expectations for responsible business keep rising. Establishing a successful ESG roadmap requires setting clear targets and goals, then creating strategies to achieve those through transformed business processes, capital investments, innovation programs and other incentive mechanisms. In other words, it means dramatically reshaping how organisations do business to meet ESG goals. PwC has the global expertise and experience to help with this.