EY: How CEOs are Pushing Energy Transition Priorities

The latest data from one of the world’s largest and best-regarded consultancies details how the highest ranking executives across the globe are pushing decarbonisation and energy transition agendas further up their priorities lists.

EY’s survey is the result of 1,200 global executives and 300 institutional investors to shed light on priorities in boardrooms worldwide.

One of the key takeaway findings is how the number of CEOs targeting net zero efforts has risen year-on-year.

Recognising the importance of government support and incentives in driving this transition, the consensus of EY’s findings is that incentives are more effective than penalties in encouraging companies to move towards net zero emissions targets.

How CEOs balance immediate profits and future sustainability aspirations

EY’s findings showcase that CEOs are “feeling more hopeful about their immediate prospects and the actions they need to take now to create capital for investment in future growth”.

Here are some key takeaways from the report.

Andrea Guerzoni is EY’s Global Vice Chair for Strategy and Transactions.

He says that the disparity between short-term financial returns at the expense of achieving sustainability targets more swiftly may be “shortsighted”.

“Although it’s reassuring to see that CEOs remain positive about their business outlook with many remaining committed to accelerating or delivering on their decarbonisation targets, the fact that nearly one in four CEOs are moving sustainability down their business agenda is disappointing for those who look to companies to set the tone of this topic,” he says.

“Achieving sustainability targets can be challenging, particularly in a difficult, cost-focused market, but the thrust toward a sustainable future is not just a financial and business imperative but a shared commitment across the corporate world.”

What does this mean for the energy landscape?

One of the three main focus areas of the report centres on the shifting focus to ESG for a net-zero future.

The report suggests, that although CEOs remain committed to decarbonising their businesses to reach net zero, numerous challenges are presented to those in top jobs who are working to accelerate the energy transition.

EY recognises the importance of collaboration and proactive strategies in driving sustainability and growth, particularly off the back of climate extremes seen in 2023.

Of those surveyed, more than half say reaching net zero is a higher priority now than it was 12 months ago. As emphasised by Andrea above however, a quarter have deprioritised sustainability, with factors driving this move including short-term financial or economic headwinds.

From its research, EY concluded that there’s no doubt surrounding CEOs’ recognition of how subsidies and tax relief benefit their ability to invest in green technologies. These include the EU Green Deal and the US Inflation Reduction Act, with other nations like China and India escalating investment and raising renewables targets in response. As a result, development and acceleration toward the energy transition benefits, too.

It also found that increased policy support for renewables is creates a unique opportunity for the renewables industry worldwide. This stimulates demand and accelerates the drive for global decarbonisation.

*******************

Make sure you check out the latest edition of Energy Digital Magazine and also sign up to our global conference series - Sustainability LIVE 2024.

*******************

Energy Digital is a BizClik brand.