ESG Goals Pose Investment Challenges, Aggreko Finds
CEOs across major European cities are shifting their timescales and investment around Net Zero goals, according to research from Aggreko.
The report, Rebalancing the Energy Transition, finds companies are continuing to struggle with balancing profitability and sustainability in a turbulent energy market.
- 95% of surveyed leaders have adjusted their net zero timelines due to energy supply and pricing challenges
- 12% prioritise rapid decarbonisation, the majority focus on reducing energy costs and gaining commercial advantages
- 80% still plan to increase investment into their energy transitions over the next year
It surveyed 400 CEOs overseeing companies with a turnover above €200m (US$214.62m) from across the UK, Germany, France and Italy and found that intention to invest in energy transitions is still present, but balancing cost and commercial visibility with environmental, social and governance (ESG) continues to be a challenge.
Confronting the energy transition
Aggreko states that European industry is integral to accelerating the energy transition, suggesting that upgrading approaches to sustainability is necessary to success. However, there are many different aspects of this process to consider.
The report finds that the majority of CEO respondents (95%) have changed their Net Zero timescales as a result of energy supply and pricing issues. Likewise, as other pressures face leaders, only 12% of respondents claimed that speed of decarbonisation was their top priority, with most claiming reducing energy costs and delivering commercial advantage were among the top priorities instead.
“In a tough economic landscape, grid instability and connection delays, price uncertainty and looming ESG targets are impacting many businesses’ energy transitions.”
Whilst this is the case, Aggreko has found that the intention to invest in energy transitions is still present, with 80% of respondents highlighting in the report that they expect to increase investments in the next 12 months.
However, as balancing cost and commercial viability with ESG goals continues to pose a challenge, Aggreko states that most investment increases will only be marginal.
“It is not surprising that our research has uncovered leaders across Europe are looking for change when it comes to their energy supply chain. In a tough economic landscape, grid instability and connection delays, price uncertainty and looming ESG targets are impacting many businesses’ energy transitions,” highlights Robert Wells, Aggreko’s President of Europe.
“With appetite for decentralisation and alternative power agreements on the rise, we have launched our report to help leaders understand the market and how it is evolving, in addition to the procurement methods at their disposal. Key to this is providing access to solutions that ensure that high energy using industries can remain profitable during their energy transition without compromising on ESG commitments.”
Committing to sustainable data centre strategies
With access to finance being a challenge, Aggreko’s report is eager to highlight the need for companies to lean on their supply chains to help meet the requirements of the energy transition in the timescales needed – all while balancing profitability with ESG goals.
Supporting energy-intensive businesses across Europe with access to the latest renewable technologies, alternative procurement agreements and expertise to correctly implement it is central to Aggreko’s sustainability framework.
Referred to as Energising Change, the framework is designed to not only guide its own energy transition, but support the transition to a renewable energy infrastructure while enabling sectors such as manufacturing, construction, data centres, utilities and infrastructure to meet Net Zero goals.
Robert Wells adds: “We are a strategic supply chain partner to organisations across Europe. Working closely with many customers from energy intensive industries, we have already been working to develop renewable energy developments, establish alternative power agreements and make technologies available for projects imminently.
“Particularly when capital is at a premium, supporting customers with controlling costs and energy supply will remain a key part of ensuring a smooth energy transition.”
Europe in particular is facing unprecedented demand for AI and cloud services, which is placing a wide range of pressures on its data centre sector. McKinsey recently highlighted that the global AI boom could triple EU data centre demand by 2030, with growth reaching 35 gigawatts (GW) by 2030.
Hyperscalers, including major cloud service providers, are at the forefront of this growth, currently driving up to 70% of the anticipated demand by 2028.
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