Navigating The Energy Transformation Journey - Step 5: Evaluate and Maintain Strategy
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Accelerating Savings & Procurement Performance.
The impending implementation requirements of the March 6 SEC ruling on emissions disclosures add urgency to the energy transformation journey for organizations. Joining adjacent pressures of increasing climate awareness, and investor and stakeholder expectations, all US organizations are on a complex journey of energy transition.???
In a 2023 Bloomberg Intelligence study, 70% of executives surveyed regard energy-transition efforts as a competitive advantage and acknowledge the revenue risk associated with failing to plan effectively for the transition; 75% of executives acknowledged the potential revenue loss risk of failing to plan for their energy transition.?
Despite these opportunities, pressures, and urgencies, only 49% of US companies have made net zero pledges, according to a June 2023 IEA report. Organizations face a variety of challenges to their progress in charting their respective journeys to energy transition; identifying and prioritizing initiatives along the path is the key challenge for executives accountable for driving this transformation. And, once established, the complexity and scope of implementation challenges presents intensive support and expertise requirements many organizations struggle to meet, despite investment and best effort.?
In the final edition of our series, “Navigating the Energy Transformation Journey”, we explore Step Five:? Evaluate and Maintain Strategy. Ensuring a continuous improvement approach to your energy transition is critical in order to achieve both short- and long-term objectives.?
This informative series started with an overall summary, offering perspective when embarking on the five-step journey, then delved into the first step, “Determine Goals and Objectives”, which can be an intensive process, reliant on external data, to establish internal metrics and success criteria. Step Two, “Gather Data and Measure”, offers recommendations to establish the critical foundation of collecting relevant data and conducting measurements. In Step Three, “Assess Information and Develop Strategy”, we explored how organizations must assemble and synthesize the building blocks of an energy management strategy.? Step Four, “Execute Strategy and Implement Projects”, which is often the culmination of the first three steps and intersection with activating the strategy, was the focus of our next edition covering the best practices and unforeseen pitfalls that occur in project implementation.? Our final edition, Step Five, outlines guidance for perhaps the most critical step, “Evaluate and Maintain Strategy”.?
Upon reaching Step Five, while much of the hard work may have been accomplished, it’s important to acknowledge that the overall success of this journey relies on ongoing support.? The long-term urgency and impact of energy transformation for any organization necessitates diligent focus and commitment of resources in this final and ongoing stage of the journey.?
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To ensure organizations stay on target, developing and following a clear plan of action to accompany any sustainability goals is critical. While a decarbonization roadmap, or Material Abatement Curve, might have been primarily used when setting environmental targets or starting the process, these tools should provide the year-by-year guide for which actions need to be taken to maintain progress. Best in class companies structure their internal meeting cadence around key milestones in their roadmap to ensure each year’s abatement goal is achieved.??
External reporting also provides a strong backbone to ensure progress is made. Internal stakeholders can leverage annual reports as a forcing function to garner support for incremental progress, ensuring delivery of new developments is provided to stakeholders. This public pressure helps keep these initiatives at the top of the priority list and can be leveraged to justify subsequent capital expenditures.??
This is the sixth edition in a series of “Energy Transformation Journey” newsletters dedicated to helping executives identify obstacles and clear the path on their journey to energy transformation.??