The Clean Energy Transition Begins With Corporate Culture – BRINK – Global Business Conversations and Insights

Environment

Climate change is the biggest risk we face, according to the 2021 World Economic Forum Global Risks Report. In recent high profile shareholder proposals and landmark court decisions on climate affairs, it is clear that the energy sector is an important stakeholder in climate change. Burning fossil fuels is responsible for about two-thirds of global greenhouse gas emissions. Brands are under pressure and the climate and activist investors are pushing energy companies to change.

The clean energy transition imposes immense risks on company valuations, but it also creates enormous opportunities for companies eager to act quickly.

Transformation will determine survival

And how organizations respond will be critical to their future. According to Mercer 2021 Global talent trends survey, despite the pandemic, 56% of companies in the energy sector are continuing their work on ESG at the same pace. An additional 22% accelerated their transition to ESG and a multi-stakeholder business approach.

Although companies have started to realize and feel the magnitude of the energy transition, many still underestimate the pace required to bring about the requested change. We believe that a key success factor will be how quickly these organizations transition from a traditional product-centric mindset to a customer-centric and solutions-centric culture.

To become more sustainable and customer-focused, companies will need to transform their entire operating system – culture, structures, procedures and people – at the same time. It is a complex undertaking, with little margin for error. And we believe that changes to the business model and corporate culture must also be done in a holistic way to be successful.

However, the industry has experience to draw on.

Companies will need to start developing new capabilities now and will need to be nimble and decisive to stay ahead of the pack.

We already did

We see this as the third major cultural transformation since the new millennium. The first was the cultural transformation of security and the second was the digital cultural transformation.

Culture is an amorphous concept, but its importance is becoming increasingly evident. According to Virginpulse’s latest Global Culture Survey, 65% of executives say culture is a more important driver of business performance than strategy or their choice of operating model. And 80% of employees ask to see a significant change in their corporate culture.

In addition to the pain it has caused, the pandemic has had positive impacts on the way many of us work. Three-quarters of energy companies said the lockdown allowed them to shift from central control of employees to more self-reliant work arrangements. One of the biggest questions during cultural transition is whether or not to make these changes permanent.

Make sustainability part of your values

Other post-pandemic strategies could include designing a corporate goal or values ​​that embed sustainability at its core. A dedicated exercise to involve all employees would allow a greater sense of ownership of this new culture. Redesigning incentive programs can be a powerful complement to these interventions.

Fostering the necessary skills will require new ways of managing both business performance and individual development. We are seeing a tendency to combine these two to replace traditional annual performance reviews, complemented by a new emphasis on compensation for skills rather than pure performance. Modern learning practices, like the nudge, will incorporate new skills into daily routines. To complement internal capacities, especially to transform the organization, flexible talent ecosystems are being developed that include temporary resources. All of this will require new ways of collaborating and networking, approaches that have already been developed and accelerated by the pandemic.

Cultural transformation will reach a tipping point. The same goes for the development of new capacities. Businesses will need to start now and will need to be nimble and decisive to stay ahead of the pack.

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