The Energy Transition Will Create a Whole New Economy. Is Your Business Prepared to Capitalise on It?

With the transition to sustainable energy set to redeploy trillions of dollars in the next 10 years, there’s an enormous opportunity for businesses. But first, they need to get their house in order.

Across the globe, the transition from fossil fuels to renewable energy is resulting in the biggest redeployment of capital ever seen with estimates in the range of $120 – $170 trillion over the coming decade. 

This represents a huge opportunity for businesses. If they aren’t already, companies should be thinking about how they can take advantage of this. 

Such a monumental shift will create a new economy. Organisations that start thinking now about how they can position themselves for growth in this global investment landscape will prosper.

But first, we must get our own house in order.

Eyes Off the Climate Ball

The Australian Institute of Company Directors (AIDC) Climate Governance Study indicates 60% of public company boards are not paying enough attention to climate. This is a figure that needs to change quickly, particularly in light of proposed legislation requiring companies to disclose climate-related information as part of their general financial reporting as early as July 2024.

While the Australian Government has committed to achieving net zero emissions by 2050, this is a challenge that can’t be deferred. The release of a UN report this week that confirms 2023 was the hottest year on record highlights the urgency of the issue. 

As it stands, the energy transition is a walk-and-chew-gum challenge. How do companies reduce their emissions, influence those of their suppliers and customers, maintain their BAU, meet rigorous new reporting standards, manage growing stakeholder interest and find new sources of renewable supply that offer security and affordability?

Adapt to Survive

Companies already making progress are doing so by founding their response in effective risk management and a whole-of-business strategic response. Seeing it as something to talk about annually in a sustainability report or as a “reputation” issue won’t come close to the effort required. 

As this pressure grows, and mandatory reporting deadlines loom, management will be expected to develop achievable transition plans. How many executive teams have this work completed or underway? And how many of these plans will deliver their company’s stated carbon reduction goals?

The imperative for businesses to adapt is clear while the opportunity cannot be overstated. The urgency of the situation demands companies not only recognise the need for change but also take concrete steps to integrate sustainability into their core strategies. 

Boards must prioritise climate governance, recognising it not as a peripheral issue but as fundamental to their long-term viability.

Businesses that rise to this challenge, developing robust transition plans and committing to tangible carbon reduction goals, will not only weather the storm of the energy transition but emerge stronger and more resilient on the other side, potentially with new revenue streams.

The time for action is now yet the question remains: is your business prepared to seize the opportunities of this new economy?

I look forward to discussing this further with the panellists at the 2024 Annual Asia-Pacific CFO & CPO Forum.

Register here: https://www.procurious.com/events/annual-asia-pacific-cfo-cpo-forum.