Energy. It is the basis of what allows us to not spend all our waking hours hunting or farming food – from early civilisations dependent on wood and biomass fuels sources to our modern oil / nuclear energy economy, low cost and freely available energy underpins economic growth, and both business and personal freedoms.
So now that we are in an era of resource scarcity or “peak resources”, with over 7 billion on the planet all wanting a better, more prosperous way of life, we are likely to have continued volatile and generally rising energy costs.
It is a historical fact that when oil prices spike, recession follows. While we have not again reached the zenith that oil prices reached in 2008, the impacts of those high prices are still reverberating around our economy.
Some, but not all, boards of national and multinational are looking at resources in general, and energy in particular as a key area of risk.
In the UK, the Carbon Reduction Commitment Energy Efficiency Scheme (CRC EES) has brought the idea of energy and energy efficiency to the attention of the board in two clever ways.
1) It’s a new levy, effectively a tax, and the board in general and the FD in particular do not like this. They want to find ways to mitigate this new levy. And are beginning to see that reducing energy intensity not only saves this new levy, but also can make a significant bottom line improvement.
2) A board level director MUST be named as the “Senior Officer” for the Carbon Reduction Commitment – and they must also sign off the mandated annual CRC Internal Audit
So, is it yet a board issue? If not, I expect it will not be long until it is. Energy will lead, sustainability will follow, and those organisations that do not put this close to the heart of their business will be at risk.
Cian
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