In this year’s CEO Survey, the Energy industry had some interesting things to say about what is driving growth and areas of concern. The energy sector is rapidly transforming, with technology playing a big role. Energy CEOs are reaching out to new consumer markets around the world, and focusing on building trust with stakeholders. And they’re worried about how government actions will impact their business.
Technology, resource scarcity and climate change concerns are transforming the energy sector
80% of Energy CEOs believe that technological advances such as the digital economy, social media, mobile devices and big data will transform their business over the next five years. And nearly as many (76%) pointed to resource scarcity and response to climate change concerns –far more than across the sample as a whole. Nearly half strongly agree that it’s important to measure and try to reduce their environmental footprint.
Technology is increasingly helping address resource scarcity, for example innovation in the sector is opening up whole new sources of fuel. It’s helping decrease the impact on the climate too, by making energy production and distribution more efficient. Energy CEOs recognise the benefits; they are much less likely to see the speed of technological change as a threat to growth. Only 31% were concerned, compared to 47% of the overall sample. And fewer are concerned about protecting intellectual property too.
And regional demand patterns are changing
More than two-thirds of Energy CEOs see global shifts in economic power as another trend that will transform their business. Consumer demand is growing predominantly in emerging markets. The three countries that energy CEOs ranked as the most important to their business growth are China, Brazil and the US. Looking beyond the BRICS over the next 3-5 years, Mexico, Indonesia and Africa are viewed as important locations for growth.
Energy CEOs want to improve their public image and stakeholder trust
More than half of Energy CEOs (56%) are concerned that lack of trust in business could threaten growth. They’re taking sustainability seriously – 95% agree that it’s important to promote a culture of ethical behaviour, and 88% also see measuring and reducing their environmental footprint as important.
Energy CEOs indicate that stakeholder trust has improved among employees (51% vs 39% overall), and among customers and creditors. However, when it comes to the media and government/regulators, they acknowledge a decline in trust (36% vs 23% overall for the media and 42% vs 31% overall).
Governments have a big impact
More than half of energy CEOs are extremely concerned that excessive regulation (54% vs 38% overall) could negatively impact growth. Most don’t feel it’s helping improve production and/or service delivery quality standards. And energy executives are concerned about the impact government may have in other ways too. More Energy CEOs are extremely concerned that an increasing tax burden could slow down growth (49% vs 32%). In addition, energy CEOs are extremely concerned about government response to fiscal deficit and debt burden (42% vs 31% overall).
56%of Energy CEOs are concerned that lack of trust in business could threaten growth.
80%of Energy CEOs believe that technological advances such as the digital economy, social media, mobile devices and big data will transform their business over the next five years.
CEO, Petroleos Mexicanos (Pemex)
Managing Director, Crescent Group