Insight into the European Energy Crisis
The long-standing threat of cutting our main source of energy delivery into Europe may soon become reality, after the official shut down of taps to the Nordstream 1 pipeline. This is predicted to cause benchmark gas prices to further surge by another 35%, propelling the country into not just a political crisis, but an economic one.
Fearful of the consequence of this economic crisis, business owners and government officials have taken the spotlight away from Environmental, Social and Governmental (ESG) goals to focus on economic remediation plans. The task of reducing global reliance on fossil fuels as heavily emphasised in the 2021 COP26 Climate Conference, becomes even more challenging as governments are increasingly turning to non-renewables to reduce dependence on Russian gas, 6 months into the Russo-Ukrainian war. Inevitably, this has prompted concern amongst individuals within the sustainability sector, as the threat of economic downfall has pushed the ESG agenda into the back seat.
What does this mean for the UK?
Shifting priorities can again be evidenced by the UK’s plan to place a temporary removal of the green levy on energy bills. This levy is a price component of an energy bill, used predominantly to fund energy efficiency schemes such as Energy Company Obligation (ECO Scheme). Such schemes have been key in the reduction of household CO2 emissions and have supported energy efficiency improvements in both homes and businesses. As calculated by The Insulation Assurance Agency (IAA), 6.2 million property holders use green schemes like ECO, which has led to a profound reduction of 26.2 million tonnes of carbon emissions. Removal of the levy that funds these schemes (in efforts to relieve economic pressure from consumer pocket) can seemingly only be considered a resisting force to the progression of the UK’s climate commitments to reach net-zero.
What can we do to remedy these impacts?
The only victors of the soaring wholesale energy prices are multinational energy companies such as BP, Shell and Centrica, who have earned staggering profits throughout 2022. With these profits, the energy industry holds the potential to make substantial investments in sustainable practices and remove ESG from the backseat. Typically, these practices emphasise decarbonisation, such as investing into the development of emerging clean energy sources or even powering pipelines with renewable energy. Shell, for example, currently invest $1 billion every year in low-carbon energy such as charging for electric vehicles, hydrogen, biofuels and electricity generated by wind and solar power. But the opportunity doesn’t stop at ‘E’. Focusing more on the ‘S’ and the ‘G’, there is also an opportunity to invest more into enablement technology, sustainable recruitment, training materials and policy rollouts.
If the demand for sustainable investing remains, the incentive for these companies to pursue these practices will only grow and the initial impacts of the energy crisis on sustainability could be remedied in the long-term.
How DC can help?
Delta Capita offers ESG Consulting and Technology Services that provide insight, capacity and expertise to help companies maintain their commitment to the global sustainability objectives in the height of a crisis and its financial challenges.
DC can assist with business strategy and transformation, process implementation and improvement, as well as monitoring and reporting ESG metrics in line with regulatory demands. We additionally have a Structured Products practice (inSPire Due Diligence utility service) that will support manufacturers and distributors in the capture and exchange of the ESG data points for each Distributor Due Diligence Questionnaire and annual refresh.
To find out more about Delta Capita’s Structured Products offerings or Sustainable Finance Consulting Services, contact us today.
This article was written by Diane Eshleman, Chief Sustainability Officer, Delta Capita and Catrin Davies, Consultant, Consulting and solutions, Delta Capita.