With climate change quickly becoming a global emergency, businesses need to contribute in both cooperative and coordinated way to address it. The historic Paris Agreement, in which Bangladesh is one of the signatory countries, aims to reduce greenhouse gas emissions and limit the global average temperature rise to 1.5º C above pre-industrial levels. Businesses can contribute to this goal by not only reducing their direct emissions, but also by focusing on how they use energy to produce and distribute their goods and services.

However, business leaders must assess their energy transition activities with respect to the business value they can create for their stakeholders – including customers, employees, investors and regulators. They should analyse their energy usage by considering two aspects -- sources of energy and efficient consumption of energy. While the sources of energy should get switched out by greener options, the optimised use of energy to produce goods and services is also crucial. These steps would help businesses to be resilient against the shocks pertaining to rapid rise in energy prices.

Transformation of the energy supply from greener sources for businesses will require more energy from wind and solar farms. At the same time, businesses need to explore the possibility of using alternative sources of energy, such as green hydrogen and biofuels. These alternative energy sources have been in use in specialised applications – e.g. hydrogen has been used as rocket fuel for several decades now. Moreover, their commercial viability to produce and supply energy for business processes has improved significantly in the recent years. For example, hydrogen can now be used in the cooling and heating systems of homes and commercial premises. 

Businesses have an important role in catalysing the transformation of energy production and supply. By seeking to transition to the electricity produced from greener sources, businesses can influence energy suppliers to transform their production processes. Similarly, by adopting alternative fuels to run their business processes, businesses can catalyse the development of the alternative fuel market. In either scenario, businesses must conduct a cost-benefit analysis to understand how such energy transition is going to help their businesses commercially and deliver value to the stakeholders. A scientific assessment of the cost-benefit analysis – by estimating the energy supply mix and its cost – will help businesses to make prudent business decisions as well as make their business more resilient.

While the supply side of energy has been an area of focus from the beginning, it should also be noted that the effective management of demand is another important parameter of energy transition for businesses. From simple changes like changing the lighting within the entire factory or office from incandescent lamps to LED lamps, to a complete redesign of the business processes, there are ample opportunities to improve energy efficiency in most business operations.

According to a recent report published by the World Economic Forum in collaboration with PwC, improving energy efficiency at the demand side across buildings, factories and transportation can reduce the global energy intensity by up to 31 percent. Furthermore, the consequent monetary savings globally would be up to US$2 trillion. Evidently, businesses will be able to reap this benefit quickly by improving on their demand-side energy efficiency.

Apart from business leaders' collective focus, the policymakers and regulators also need to step in and catalyse the change. Promoting entrepreneurship for creating innovative sources of energy, incentivising the initiatives towards sustainable and transparent changes, and enabling the intersecting industries to collaborate and co-create innovative solutions for themselves and their stakeholders remain a few key focus areas where policymakers and regulators can help the businesses in their energy transition.

The need for rethinking business strategies in order to thrive post energy transition and stay relevant in the future is quickly becoming imperative. Therefore, the business leaders who are proactively embracing greener supply and pursuing efficient consumption of energy are going to set compelling examples for others to follow.

The writer is a partner with PwC. The views expressed here are his own