How businesses feel about the energy environment right now

An ABB Electrification survey found that rising energy costs and insecurity are forcing business leaders to rethink how they operate and where they invest. Photo: P&Q Staff

Results of a recent survey show that business leaders around the world are concerned about the impacts of energy security and prices, which could be a catalyst for a range of environmental, social and economic ripple effects.

According to an ABB Electrification survey of 2,300 leaders from small and large businesses across a range of sectors, 92 percent of respondents feel the continuing instability of energy is threatening their profitability and competitiveness. ABB Electrification says energy costs and insecurity are having a significant impact on the workforce, with lower investments in employees.

“Businesses say they need to insulate themselves from energy prices and insecurity and are reevaluating current and future spending plans,” says Morten Wierod, president of ABB Electrification, whose company’s survey was completed at the start of 2023. “Taking action to mitigate this is a clear priority, but this doesn’t have to be a catalyst for potential workforce or environmental impacts.”

The ABB Electrification survey found that business leaders are also concerned about the potential impacts of meeting their sustainability targets.

“Investing in smart and sustainable onsite renewables and energy efficiency technology means businesses can simultaneously cut costs and reduce their emissions,” Wierod says. “With the right approach, it is possible for industry to achieve cost savings without sacrificing competitiveness, workforces or the journey to decarbonization.” 

Restricting business investment and growth

According to ABB Electrification, rising energy costs and insecurity are forcing business leaders to rethink how they operate and where they invest in their businesses so they can grow and be competitive.

The survey found that the key impacts on businesses due to rising energy costs in the last year are lower profit margins (34 percent) and cuts to spending in some areas (34 percent). This all led to a shift away from investment in R&D and other business growth initiatives, according to ABB Electrification.

ABB Electrification says 38 percent of respondents have reduced or plan to reduce technology investments, while one-third (33 percent) expect to cut spending on infrastructure. Thirty-one percent foresee a decline in marketing spend.

Impact on employees

Additionally, businesses indicated in the ABB Electrification survey that they reduced investments 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.

According to ABB Electrification, three of the top five business areas highlighted for budget reductions are related to the workforce: 42 percent will spend less on recruitment; 38 percent will decrease spending on salaries, overtime and bonuses; and 37 percent will reduce investments in staff training and development.

Delaying decarbonization 

Survey respondents also cited concerns that energy pricing and insecurity could delay progress on climate change, with meeting carbon reduction commitments currently considered less a priority than reducing energy costs.

More than half (58 percent) of the business leaders ABB Electrification surveyed said the cost of energy could delay achieving their sustainability and carbon reduction targets by anywhere from one to five years. While reducing energy costs is the top priority for 61 percent of companies, only 40 percent currently have reducing carbon emissions within their overall business priorities.

Energy security

Additionally, 83 percent of business leaders expressed concerns about the security of their business’s energy supply, and many are taking action to address this.

More than one-third (36 percent) of ABB Electrification survey respondents are worried about additional rises in energy costs, and 31 percent are concerned by power cuts and blackouts.