New Ashurst Study Shows Growing Investor Awareness to Speed the Energy Transition
A just-released study from the global law firm Ashurst indicates that the global energy economy is transitioning to cleaner fuels. Powering Change: Energy in Transition examines corporate attitudes towards and investment behaviors in renewable energy systems and decarbonization technologies. To better understand the impact on investment strategies in depth, Ashurst polled 2,090 executives across the G20 who make energy investment decisions at their businesses. It is clear that the energy transition will bring both opportunities and challenges for all market participants, and addressing these dynamics will call for considerable focus in the coming years. There is also a variety of ways in which companies can invest in the energy transition. And strategies depend on the political, economic, and social background of the country of operations. Ashurst examines themes that unite across the spectrum.
Looking at the world’s seven regions, Ashurst found that the energy transition is not just a fad but becoming the centerpiece investment strategy for many companies. Critical differences in geography, industry, and technology have created variations in approach that will have a knock-on effect on investment decisions. Simply put, climate change is no longer an issue that businesses can ignore. More and more companies are becoming aware of the role that they must play to achieve the energy transition and actions are now catching up with words. As a prime example:
- 82% of respondents said that they were under extreme or significant pressure to invest in the energy transition, with 87% reporting that pressure was coming from governments.
These attitudes represent a structural shift that will not change anytime soon. Particularly intriguing, especially since we have seen major heads of government publicly question the science of climate change, the 87% reflects the fact of intensifying pressure on businesses from government at every level, coming from cities, states, and opposition parties that echo the pulse of public sentiment. These bottom up as well as top down pressures to act on climate change are having a significant impact. Respondents report that the needed energy transition will continue to transform their investment strategies, offering confidence of an outlook resonating with corporate leadership.
Ashurst still holds concerns, however, that there is a general lack of a joined-up approach from many governments. This could push companies to take a disorganized path that lacks any long-term direction. There must be more clarity to help investors make better decisions to unleash the energy transition worldwide. The risks to not act are growing every year. The research shows that companies are ready to invest if the conditions are right. Most are already either actively investing today or have plans to do so. The energy transition was never supposed to be easy, but the desire to make it happen is becoming increasingly clear. In fact, investing in tackling climate change is going to be a vital differentiator for businesses through the 2020s.
Some important regional conclusions from Ashurst’s Powering Change: Energy in Transition:
- The picture across Asia is a mixed one, with China and India still having a long way to go.
- Governments are seen as the biggest driver in Europe.
- Political upheaval in Latin America is making executives regularly change their investment strategies.
- Established oil and gas driven growth poses a unique challenge for decarbonizing MENA.
- North American drivers are proven technology and corporate opportunities.
- Sub-Saharan Africa’s focus is more on delivering energy as opposed to changing sources.
- Solar power (12) sparks the most interest among the G20, with hydro (4) and onshore wind (4) second.
Read the full Ashurst study here.