Automation specialist ABB’s latest Energy Insights survey found 92 per cent of business leaders see fluctuating energy costs and instability posing a threat to their profitability and business competitiveness. In addition, four out of five are concerned about the security of energy supply, with more than half highlighting the potential impact on their decarbonisation goals.
ABB surveyed 2300 CEO, managing director and manager decision-makers in large and small businesses in sectors including manufacturing, IT & communications, retail, construction, education, engineering, healthcare, transport & logistics, finance, and food & beverage. It was conducted between 12 December 2022, and 6 January 2023, by 3Gem Global Market Research & Insights. Respondents were drawn from Australia, Brazil, China, Germany, India, Italy, Sweden, UAE, UK and USA.
Respondents said energy costs and insecurity were having a significant impact on the workforce, causing decreased investment in employees.
Restricting business investment and growth
The key impacts on businesses due to rising energy costs in the last year included lower profit margins (34 per cent) and cuts to spending in some areas (34 per cent), leading to a shift away from investment in R&D and other business growth initiatives.
ABB found that more than a third (38 per cent) have or plan to reduce technology investment, while a third (33 per cent) expect to cut spending on infrastructure and 31 percent foresee a decline in marketing spend.
Impact on employees
Respondents said they had reduced investment in their workforce in the last 12 months because of increased energy costs and the need to implement mitigation measures. They expect it to continue for three to five years if energy issues persist, ABB said.
Three of the top five business areas highlighted for budget reductions are related to the workforce: 42 per cent will spend less on recruitment; 38 per cent will decrease spending on salaries, overtime and bonuses; and 37 per cent will reduce investment in staff training and development.
Delaying decarbonisation
More than half (58 per cent) of those surveyed said the cost of energy could delay achieving their sustainability and carbon reduction targets by anywhere from one to five years.
While reducing energy costs is the top priority for 61 per cent of companies, ABB found only 40 per cent currently have reducing carbon emissions within their overall business priorities.
Energy security
Eighty-three per cent of business leaders expressed concern about the security of their company’s energy supply. Over a third (36 per cent) are worried about further rises in energy costs, 31 per cent are concerned by power cuts and blackouts, and a quarter by energy rationing.
In response, 34 per cent had already increased investment specifically focusing on improving their energy efficiency and 40 per cent are looking to install on-site renewable energy generation to become less dependent on the grid.
Taking action
ABB said a third of respondents were put off by the perceived cost of implementing energy efficiency measures, and almost half (49 per cent) said they didn’t have the know-how or resources to proceed.
“Much of the technology that can help businesses – large or small – to optimise their energy management and reduce costs, is already widely available and at a reasonable cost,” ABB said.
ABB Electrification president Morten Wierod said: “Businesses say they need to insulate themselves from energy prices and insecurity and are re-evaluating current and future spending plans. Taking action to mitigate this is a clear priority, but this doesn’t have to be a catalyst for potential workforce or environmental impacts.
“Investing in smart and sustainable on-site renewables and energy efficiency technology means businesses can simultaneously cut costs and reduce their emissions. With the right approach, it is possible for industry to achieve cost savings without sacrificing competitiveness, workforces or the journey to decarbonisation.”
The company cited a project at a telecoms HQ in Hanoi, Vietnam, where installing smart building technology reduced energy costs by 20 per cent, and how retrofitting hardware and using energy management solutions at an ABB factory in Italy led to 30 per cent energy savings.
ABB also created the ABB Energy Efficiency Movement, a global forum of more than 300 companies sharing information to help help industry lower costs, mitigate energy challenges and accelerate climate action.
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