Energy instability is threatening profitability and competitiveness – survey
Overall, businesses want to take proactive actions to address their energy challenges.
April 13, 2023 By Anthony Capkun
April 13, 2023 – Businesses around the world remain concerned about the impacts of energy security and prices which, according to a recent survey, “could be a catalyst for a range of environmental, social and economic ripple effects”.
92% of respondents to ABB’s Energy Insights Survey (January) indicate that the continuing instability of energy is threatening their profitability and competitiveness. Energy costs and insecurity are having a significant impact on the workforce with decreased investment in employees. Business leaders are also concerned about potential impacts of meeting their sustainability targets.
The key impacts on businesses due to rising energy costs in the last year include lower profit margins (34%), and spending cuts in some areas (34%). Over a third (38%) have reduced technology investment (or plan to), while a third (33%) expect to cut spending on infrastructure. 31% foresee a decline in marketing spend.
Businesses say they have reduced investment in their workforce in the last year because of increased energy costs and the need to implement mitigation measures. This is expected to continue over the next three to five years if energy challenges persist.
Three of the top five business areas highlighted for budget reductions are related to the workforce: 42% will spend less on recruitment; 38% will decrease spending on salaries, overtime and bonuses; and 37% will reduce investment in staff training and development.
Respondents further indicate that energy costs are considered more of a priority than meeting commitments to reduce carbon emissions. Over half (58%) of business leaders surveyed said the cost of energy could delay achieving their sustainability and carbon reduction targets by anywhere from 1 to 5 years. While reducing energy costs is the top priority for 61% of companies, only 40% currently have reducing carbon emissions within their overall business priorities.
83% of business leaders express concern about the security of their business’s energy supply. Over a third (36%) are worried about further rises in energy costs, 31% are concerned by power cuts and blackouts, and a quarter by energy rationing.
That said, many are taking action to address these concerns. 34% have already increased investment, specifically focusing on improving their energy efficiency, and 40% are looking to install onsite renewable energy generation.
“Investing in smart and sustainable onsite renewables and energy efficiency technology means businesses can simultaneously cut costs and reduce their emissions,” said Morten Wierod, president, ABB Electrification. “With the right approach, it is possible for industry to achieve cost savings without sacrificing competitiveness, workforces or the journey to decarbonization.”
Overall, businesses want to take proactive actions to address their energy challenges, but a third are put off by the perceived cost of implementing energy efficiency measures, and almost half (49%) feel they don’t have the know-how or resources to proceed.
About the survey
The ABB Energy Insights Survey (January 2023) involved 2300 decision-makers in large and small businesses from sectors such as manufacturing, IT and communications, retail, construction, education, engineering, healthcare, transportation and logistics, finance, food and beverage.
It was conducted from December 2022 to January 2023 by 3Gem Global Market Research & Insights, drawing responses from Australia, Brazil, China, Germany, India, Italy, Sweden, UAE, United Kingdom and United States.
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