The latest report published by the IPCC on the measures needed for climate change mitigation, confirmed that we are vaguely advancing towards the sustainability of present and future generations. The message was one of urgency as well as hope, stating that we have little time to reverse the last few years of growing GHG emissions, but that not everything is lost just yet.
While regulations and national and international commitments regarding decarbonization continue to grow, so does investment in alternatives to replace current fossil fuel-based systems and economies, as the importance of ESG (environmental, social, governance) related investment is increasingly prioritized by financial actors.
As set out in the Paris Agreement in 2015, and recently confirmed during the COP26 in Glasgow, we need to reach a carbon neutral economy by 2050 in order to keep up with the 1.5ºC maximum temperature increase which will help prevent any further irreversible global warming and climate change risk and consequences. This is precisely where the energy transition comes in.
What does the energy transition imply?
The urgent goal for the decarbonization of worldwide economies, inevitably and directly needs to be followed up with an energy transition, this is, a global shift of the energy sector from fossil fuel-based systems to renewable energy sources such as wind or solar, among others. But, however big the challenge may appear, it’s valuable to remember this is not the first major energy transformation the world has ever seen. The 19th century marked the beginning of the use of coal, transitioning from wood, and in the 20th century coal was replaced with oil. The main difference between these latter transformations and today’s, is that of the urgency that ours carries within its definition.
But thanks to a growing societal awareness to push sustainability, and the necessary technological advancements, transitioning to renewable energy sources has not only become a feasible prospect for the future, but these factors have also made the market more affordable and cost-effective. In just one decade the cost of some major renewable technologies fell between 60% to 80%. Additionally, the still ongoing trend of declining costs and the growing popularity of renewable energy sources like wind power, have strengthened investment opportunities in the sector. In fact, the International Energy Agency estimates a 50% growth in renewable power by 2024.
However, the energy transition is not solely based upon slowly closing down or replacing fossil fuels with renewables, it is also about developing new technologies that can accelerate the process for storing energy, for the electrification of certain sectors or for digitalization of others, for example. This is clearly relevant regarding its benefits for the planet, but it is also important to note that advancements in such technologies have greatly helped shift the energy paradigm to one of renewable solutions and decarbonization.
Beyond the environment: SDG 7
Although the focus and urgency of the energy transition is primarily on the health and sustainability of the environment, it is also beneficial and crucial both for the economy and society. This is specifically and most clearly portrayed in SDG 7 regarding clean and affordable energy for all, as the main idea holding all indicators and objectives of the latter together is that of no one being left behind in the process of the transition.
In this regard, the energy transition offers a great window of opportunity for economic well-being, employment and social development. As renewable technologies keep growing, so does the creation of new green jobs and the investment that can help end energy poverty and procure clean energy in many areas of the world. With an inclusive and flexible perspective on the energy paradigm shift, a just transition could be achieved, where SDG objectives are a global reality.
In fact, if we closely analyze SDG 7 targets, we can almost see a pattern of priorities, number one being the ensurement of affordable, reliable and modern energy services for all, as a third of the world still relies on dangerous systems. The target that follows is concerned with increasing the share of renewable energy, and the next one with energy efficiency. It is almost as if the SDG was drafting an a-step-at-a-time kind of manual.
A comprehensive transition
Now that we have a bigger picture of what the energy transition encompasses, it is important to understand that it is a multifaceted challenge, and not a one size fits all solution. This is why the SDGs play such an important role in comprehending the world’s biggest challenges, such as decarbonization, because it paints a holistic picture of the problem, focusing on social and environmental concerns without forgetting economic complexities.
This is not only a great exemplary pattern for national governments and international cooperation bodies, but it is also a tool for companies and organizations to understand all of the parts that need to be touched upon when dealing with the energy transition or the road to decarbonization. Having a wider understanding of the impacts and implications of our goals and actions will undoubtedly help for the transformation to be more effective, efficient and organized, helping fight the fear and global risk of a disordered transition.
Engaging through transparency
In DoGood we believe that you can’t manage what you don’t measure, and we are convinced of the need to understand and manage efforts to achieve a sustainable transition inside an organization for the correct and efficient functioning of the business. We alone cannot achieve the substantial changes necessary, but we work on the basis of collaboration, transparency and accuracy in order to bring light to sustainable actions.
In this regard, it is essential to our work to promote good corporate governance, meaning that the processes of disclosure and transparency are followed so as to provide regulators and shareholders as well as the general public with precise and accurate information about the financial, operational and other aspects of the company, including a more accurate definition of the ESG performance.
We have developed a corporate government tool that helps establish ESG impact objectives for employees in regards to the sustainability strategy of the company. Through our technology we are able to activate and track employees’ impact, creating engagement that translates into improved ESG metrics, reputational value and an overall positive impact for the environment and society.
If you want to know more about how we work to create a positive social and environmental impact, click here.
