The energy transition will transform culture too, in ways we can’t yet imagine
The last century of energy was all about oil and coal. Black gold spewed up from the earth through an oil derrick or was chiseled out of mountains. Especially in the post-World War II boom as consumption shot up, the focus was on growth, and sustainability was not much of a concern. Today, however, as we’ve seen firsthand the effects climate change is having on our world, governments and corporations are putting sustainability at the forefront and investing in clean energy. This energy transition is also ushering in a broad cultural shift, even if many of us don’t immediately realize it.
Pew Research has found that 61% of Americans say climate change is affecting their communities and 69% support taking steps to making the U.S. carbon neutral by 2050. Yet even though so many acknowledge the threat of climate change and want to do something about it, they think they’re in the minority. “Specifically, 80–90% of Americans underestimate the prevalence of support for major climate change mitigation policies and climate concern. While 66-80% Americans support these policies, Americans estimate the prevalence to only be between 37-43% on average,” the authors of a study in Nature Communications wrote.
We don’t know exactly how this century of energy will end up, but we do know it will involve a lot of electric vehicles, maybe a lot that run on alternative fuels such as hydrogen, and is on track to see renewable energy surpass fossil fuels if not completely replace them. With that will come changes in culture most of us haven’t even thought of.
Marketing 101
Most Americans might not realize how many of their compatriots support climate action, but corporations that want to continue making money do. That’s why ESG efforts are continuing apace, with 88% of publicly owned companies and two thirds of privately held ones having ESG initiatives in place. That includes most companies in the energy sector. These corporations know that investors and consumers increasingly take sustainability into account when making financial decisions. As subsequent generations place more emphasis on sustainability and become the dominant consumers in markets, businesses will continue to cater more to their tastes.
“(G)rowing youth movements are voicing anger that their future is at stake and changing the minds of parents and relatives. They are also changing the corporations that want to hire them,” University of Michigan professor of sustainable enterprise Andrew Hoffman wrote on Foresight Climate & Energy.
That cultural shift presents an opportunity for businesses of all kinds, as all sorts of new markets will open up. That includes new markets in the energy industry, which had long been static.
In the short and medium terms, sustainable products and services are growing faster than traditional markets and companies that incorporate social and environmental impact into their core business outperform their competitors, Justin Bean, author of “What Could Go Right: Designing Our Ideal Future to Emerge from Continual Crises to a Thriving World,” told BOSS. They have higher revenues, higher margins, lower cost of capital and they attract and retain talent more easily.
“The companies that don’t get on board with this and think that they can continue to operate in a way that is completely unsustainable and or unethical, I think are in for a very rude awakening and will become the Blockbusters and Kodaks of the future that consumers will not want to be a part of. That’s just the way that consumers are expecting things to go.”
Seizing the Opportunity
The success of companies during and after the energy transition will be determined by their ability to adapt effectively and swiftly. To thrive in this changing landscape, leaders must embrace the opportunities that the transition offers and position themselves as pioneers in this new era.
“There is a huge opportunity ahead to have unbelievable impact. It’s the kind of opportunity that only arises once in a generation. We can change our country, we can change our region, we can contribute to global change. Realizing this opportunity will be monumental, and stepping away is unthinkable. This is what is inspiring us now,” the CEO of a European energy company told McKinsey for its survey on “Powering up new leadership for a changing energy environment.”
According to McKinsey, leaders must shift their traditional priorities and adopt a new approach. They should embrace a visionary mindset, envisioning the potential impact they and their company can make. It is crucial for leaders to foster a culture of co-creation and collaboration with their employees, working together to realize this vision. Additionally, leaders should authentically present themselves, serving as both a coach and a cheerleader for innovation within the organization.
“Own it. There are some things I know about the change, there are some things I don’t know, and perhaps we’re going to figure them out together and arrive at better answers than any one of us might get on our own,” change expert Curtis Bateman told BOSS.
The energy transition and ESG protocols also require new knowledge, like knowing and caring about Scope 3 emissions. With 80% of employees wanting to see significant changes in their company’ culture, according to Mercer, and the flow of history proving that change is both constant and inevitable, it’s better to get out front and position yourself as a champion of the transition.
We don’t know all the cultural shifts the energy transition will bring to our lives. Among other things, it could alter the designs of our cities.
“This shift will eventually mean fewer cars on the road (at any moment 95% of today’s auto fleet is idle) and a concurrent decline in petrol stations, parking garages, and some streets. This shift will be aided by greater attention to the redesign of urban centers to become more focused on human walkability than their present focus on car habitats,” Hoffman wrote.
We do know, however, that it’s coming, and those who don’t get on board will be left behind, relics of a bygone era.
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