The COVID-19 pandemic led to a challenging year for energy and power. In 2020, global demand fell by 4% – representing the largest ever absolute decline. Companies, their leaders and their employees were forced to take a step back and reflect on a new reality – before swiftly adapting to that new reality.
Now they must learn from that adaptation to accelerate their progress as energy demand recovers to rise above pre-pandemic levels. In the short term, health policies and regulations related to the pandemic will remain a top priority. But, as time passes, the focus will shift to companies’ two biggest challenges: digital transformation and decarbonisation.
Businesses have faced unique pressures during the pandemic – not least exploring new ways to maintain productive operations while protecting the safety of their workforces. However, the unprecedented disruption has acted as a catalyst. It has sparked action and drastically increased the pace of change around digitalisation and sustainability.
And, as our latest research report “Under Pressure: Leading in Paradox Industries” shows, this all means that energy and power companies now feel better placed to tackle their next big challenges.
How the pandemic has accelerated change
Faced with unprecedented disruption during the pandemic, energy and power businesses reacted at speed. And, as highlighted by our survey of 300 global industrial decision makers, it’s helped them prepare for the future. In fact, 88% of leaders say that their experience during the pandemic means their companies are now better equipped to take on the challenges of digital transformation and decarbonisation.
The pace of the transformation has been truly remarkable. Eight out of ten leaders say they’ve seen up to 5 years’ worth of change related to decarbonisation take place during the pandemic. And 93% have seen the same change happen with regards to digital transformation.
Even more fascinating is that many have been able to increase their budgets in both these areas. During an incredibly challenging time, 55% of companies invested more in digital transformation – while 47% did the same for their decarbonisation efforts.
Why energy leaders can’t afford to be complacent
The crisis response from energy and power businesses puts them ahead of those in other industrial sectors, such as mining and agriculture. However, leaders can’t afford to be complacent. There are still areas where their confidence doesn’t match their investment plans.
Our research shows that digital transformation is an urgent priority for eight out of ten businesses – and that they already have plans in place to address it. But what happens if we look a little closer at those plans?
Let’s focus on digital skills as an example. Of the leaders we surveyed, 85% say that a digital skills gap will be a major future challenge for them. And, while 81% believe they’re already well-equipped to tackle that challenge, only half of them plan to increase their budgets in this area.
A similar issue exists when it comes to companies’ plans for decarbonisation. Here, 85% of leaders identify a lack of in-house skills and expertise in delivering sustainability initiatives as a major barrier to them achieving their long-term goals.
It’s just one of the contradictions that we’ve identified. And leaders need to be mindful of these as they develop their strategies and set their budgets.
Delivering change at pace to drive future success
Ultimately, our report shows that businesses have demonstrated great resilience during the pandemic, but there’s still work to do. Leaders have delivered rapid transformation, yet they cannot afford to ease off the pace now.
When it comes to addressing the next big challenges of digital transformation and decarbonisation, there’s a need for swift change. And businesses can’t afford to pick and choose between the two. Far from being “nice to have” objectives, both areas are intertwined and will be critical to a company’s future success.
To truly tackle their next big challenges and unlock value for their businesses, leaders must believe in the importance of digital transformation and decarbonisation. The hope is that they can learn from their experiences during the pandemic and continue to drive positive change at pace.
 IEA. “Global Energy Review 2021 – Economic impacts of Covid-19”. 2021. iea.org. (accessed 09 November 2021)
Mario Viarengo, Global Industry Marketing General Manager, Shell Lubricant Solutions.