Chris Bowden, MD, Squeaky
12 minute read
Confusion, misinformation, unrealistic expectations and a lack of knowledge amongst FTSE 250 businesses could hamper net zero efforts
We recently surveyed 250 sustainability and energy managers from FTSE 250*, or equivalent sized companies, and who spend £1 million or more on energy, to find out whether they were equipped with all the information they needed to be on course to reach net zero. The results were, to say the least, worrying. They demonstrated that, at best, sustainability and energy professionals lack the basic knowledge to journey towards net zero and, at worst, that many businesses may well be ‘paying lip service’ to their clean energy commitments and are subsequently at risk from greenwashing. The blog below lays out some of these concerning findings in more detail.
Misinformation and masking.
It appears from our research that Britain’s biggest businesses are in danger of failing to meet net zero pledges because they lack the basic knowledge and commitment needed to procure clean energy; both of which are, of course, critical tactics to meet net zero. When questioned, more than one-in-four (26%) of sustainability and energy managers admitted that they are not committed to powering their business with clean energy. This is more than expected given the size of these firms and what’s at stake.
And whilst 74% of respondents said that their company is committed to procuring clean energy, the weight of evidence from our study suggested that many of these professionals are unaware of the true makeup of their fuel mix. For instance, when we asked what these professionals rely on to ensure their supplier is providing them with the energy that they say they are, 40% of respondents said they merely rely on their supplier to tell them, and only 14% actually look at the fuel mix disclosure (FMD) of the supplier. Only 15% said they check how many Renewable Energy Guarantees of Origin (REGOs) their energy supplier has retired on the Ofgem website. It seems that so many of the firms we questioned were merely taking their energy supplier’s word on their energy make up, rather than doing their own due diligence. This is a concern as we are witnessing energy suppliers frequently promoting their renewable tariffs under eco-friendly banners, when in reality they are sourcing their fuel from ‘dirty’ sources. In recent years for instance, there has been a sharp rise in energy suppliers purchasing REGOs and European Guarantees of Origin (European GOs) to effectively ‘offset’ their fossil fuel generation. Bluntly, suppliers are masking fossil fuels behind cheap renewable energy certificates and energy professionals at some of the biggest companies in the UK seem to be unaware of this.
Confusion and a lack of knowledge.
There was a great deal of confusion amongst our respondents too. When faced with a list of fuel sources and asked which they thought were clean, 20% of our respondents said coal, a third (33%) said the same for biomass, and nearly a fifth (18%) said gas is clean. There also appears to be confusion amongst these energy professionals about the impact of biomass energy given that 44% said that biomass energy creates less Co2 compared to burning coal.
Sustainability and energy professionals out of their depth.
The findings of our study do however help to provide an answer as to why there are such low levels of knowledge amongst the professionals questioned, especially given the fact that more than a quarter (27%) admitted that they feel out of their depth in their role. When asked what they would change about their role, a third said they were transferred from another department within the business (such as HR or finance) and are required to learn this role on the job, 34% said they would like more formal sustainability training, and over a quarter (29%) said they are fully trained in sustainability, but procuring electricity is new to them. So, you can see where this disconnect is coming from.
Pushing the clean agenda.
Nearly all of our respondents (93%) said that the practice of procuring clean energy is important to their C-suite team and 74% of respondents said their company is committed to procuring clean energy. And likewise, 86% agree that the current C-suite Executive team is pushing the environmental agenda forward. However, when asked how they would describe the strategy that is in place to reach the renewable energy target set by the company, a third (33%) of the respondents admitted that the strategy is unclear.
Unrealistic expectations from the top.
It seems that there are some unrealistic expectations being held by the senior team too which could also hinder progress and cause confusion. 80% of the sustainability and energy managers that we surveyed agreed that their C-suite has unrealistic expectations regarding sustainability targets. And nearly a quarter (73%) of those who agree, admit they are concerned about the reputational risk for the business of failing to meet these targets.
Confusion over responsibilities.
When asked how they would describe their level of responsibility in implementing the company’s environmental goal, 37% of the respondents to our survey said they don’t think they have enough responsibility and believe it should increase. On the contrary, over a fifth believe they have too much responsibility in implementing their company’s environmental goal and their level of responsibility needs to decrease.
There is also quite a mixed opinion about who has the overall responsibility for delivering the environmental agenda too. For instance, 34% of the respondents think that the CEO has overall responsibility and 33% believe responsibility sits with the Board. A quarter (25%) of sustainability and energy managers believe that the responsibility sits with them and their team to deliver on the environmental agenda.
Creating a poisoned chalice for future leaders.
The C-suite clearly has an appetite to procure clean energy and commit to environmental goals, but what’s less obvious is how these goals will be achieved and who should take responsibility for them. Certainly, those who set unrealistic goals, or have unrealistic expectations, will only create a poisoned chalice for their business, and indeed, the future leaders of that business.
Sustainability and energy professionals are clearly concerned about the reputational risk of falling short of their net zero targets. The UK has reached a critical point on its road to net zero and in order to aid progression we need commitment and action from the nation’s biggest businesses. Collaboration is key to this, both within the business itself between the board and those who responded to our survey, and in the wider marketplace as well. Only then can we create a cleaner business and a greener world.
*Research methodology: Survey of 250 UK sustainability and energy managers in FTSE250 or equivalent size companies, that spend £1 million + on energy, between 1-11 November, 2021. Research conducted by OnePoll.