Sunshine Beyond the Peaks of the Energy Transition
Sunshine Beyond the Peaks of the Energy Transition

Wesley Johnson, January 2024 Can we power a planet hungry for electricity without succumbing to the dark allure of fossil fuels? Can we build a future where the wind whispers electricity through our homes and sunshine dances on our streets? The answers lie not in denial, but in innovation, collaboration, and a healthy dose of green grit. Leading up to the Global Energy Transition Congress taking place in Milan in July of this year, I have been sitting down with Europe’s leading energy professionals to dive into what is keeping them up at night concerning the Energy Transition. From the many challenges presented, I have highlighted my top three below with potential solutions. Who is going to fund the energy transition? Although renewable energy projects have low operating costs and can produce clean energy for many years, the high upfront cost can often be a barrier to investment, especially in developing countries. The energy transition is happening at a time when many countries are facing economic challenges. Although inflation rates are decreasing in some parts of the world, financial recovery from COVID-19 and the war in Ukraine have caused energy prices to soar and have put a strain on government budgets. This could make it difficult for governments to invest in clean energy, even though they are committed to climate action. As we know there are technical challenges that need to be addressed before clean energy can be deployed at scale. We need to develop better ways to store renewable energy and integrate it into the grid. These challenges are being addressed by researchers and engineers, but they will require additional investments. Regulatory hurdles Regulatory frameworks need to support the development and deployment of low-carbon technologies in industrial sectors, such as carbon capture and storage (CCS), hydrogen-based fuels, and energy-efficient industrial processes. Complex and outdated regulations can hinder the adoption of low-carbon technologies. Permitting processes for renewable energy projects may be lengthy and bureaucratic, and regulations may not adequately address the challenges of integrating renewable energy sources into the grid. NIMBYism (Not in my backyard) NIMBYism can hinder the energy transition in several ways, it can lead to delays or cancellations of renewable energy projects. Despite local communities seeing the broader benefits of the project, there is a growing concern about noise, visual impact, and property values. Furthermore, NIMBYism can increase the cost of renewable energy projects, as developers may need to invest more in mitigation measures to address local concerns or face permitting processes. It can also create a negative public perception of renewable energy, making it more challenging to gain widespread support for the energy transition. Possible solutions

  • Collaboration is key, especially across the hard-to-abate and energy sectors. Sharing expertise, knowledge and resources can expedite the development and implementation of innovative low-carbon technologies, such as CCS, advanced energy storage solutions, and low-carbon fuels including the likes of Hydrogen and Ammonia. Furthermore, there are additional benefits including the likes of cost reductions and maximizing efficiency when sharing existing or developing new infrastructure assets.
  • Governments can establish supportive policies and regulatory frameworks, such as carbon pricing, tax incentives, and renewable energy mandates, which can encourage investments in clean energy technologies.
  • Multilateral development banks can not only provide financial support but also technical support for clean energy projects in developing countries.
  • The private sector can invest in more clean energy projects including investment funds, venture capital firms and pension funds.
  • New financial products and services can be developed to support the energy transition, including the likes of green bonds, sustainability-linked loans, and carbon capture and storage investment funds.
  • Engaging the public in discussions about the energy transition and providing clear information about the benefits and potential impacts of new technologies can help to build trust and acceptance regarding NIMBYism.
It is evident that the role of innovative technologies and funding from both the public and private sectors will be key for us to ensure an efficient and cost-effective transition. However, what surfaced as a key component to our energy transition success was cross-sector collaboration and the fact that we are not seeing enough of it. I appreciate that there are cons including the likes of lack of trust and limited capacity, especially in developing countries and smaller businesses, but the pros are vast and strongly outweigh the cons. They include a long list such as accelerated innovation, reduced costs when sharing resources and expertise, and increased equity. By breaking down silos, fostering trust and investing in capacity-building, we can leverage the collective power of diverse stakeholders to build a clean, just, and sustainable energy future.

Cool Investor Confidence in Energy Tech
Cool Investor Confidence in Energy Tech

Monthly deal round-up, April 2023- Renewable Energy & Oil and Gas, by Wesley Johnson Hello, loyal followers and newcomers, welcome to our monthly deal flow blog which offers a wrap-up of the energy industry’s most significant funding deals across the oil, gas and renewable energy space. Wow! What an exciting past month with a plethora of significant energy deals crossing over the finishing line. In the world of renewables and in APAC, ADB secured financing to develop the first cross-border wind power project in Asia and the largest onshore wind farm in South East Asia. Brookfield Renewable Partners soon followed by acquiring Origin Energy for $12.4 billion to create one of the world’s largest renewable energy companies. In Europe, Octopus Energy has earmarked plans to invest €1 billion in the French green energy market over the next 2 years in a move that seems to be a major vote of confidence in the French green energy sector. The investment will be deployed into accelerating the development of new solar and wind farms, and investing in energy storage and smart grid technologies. And in Africa, Actis and Mainstream Power have completed the sale of Lekela Power in Africa’s biggest renewable energy deal to date. The transaction which has an enterprise value of approximately $1.5 billion is a positive development for the continent and a sign that Africa is becoming a more attractive destination for renewable energy investment. The above suggests that the global trend towards renewable energy continues its merry way and investment appetite is on the rise thanks to a few factors including the likes of falling costs, government support, public demand and technological advances. However, I appreciate, there are still some yards for us to make up before we get there universally. In the oil & gas space, we witnessed some meaty deals being finalised including the likes of Baytex Energy Corp’s acquisition of Ranger Oil for $2.5 billion and TotalEnergies acquisition of Cepsa’s upstream assets for $ 4.6 billion. Equinor also decided to divest some of its working interests in the North Sea which suggests that the larger O&G companies continue to shed some of their non-core assets as part of their strategy to free up some cash flow. More on the above-mentioned deals including many others in my monthly wrap-up below.

Renewable Energy

 
  • ADB signs $692 million loan for largest wind power project in Southeast Asia
The Asian Development Bank and Monsoon Wind Power Company Limited signed a $692 million nonrecourse project financing package to build a 600-megawatt wind power plant in Lao PDR to export and sell power to Vietnam. This project will be the largest wind power farm in South East Asia. It’s expected to reduce greenhouse emissions by 2.4 million tons per year and generate enough electricity to power 600 000 homes, whilst they look to diversify their hydro generation. Read more  
  • Brookfield Renewable to acquire Origin Energy
Brookfield Renewable Partners, a global leader in renewable energy, has agreed to acquire Origin Energy, one of Australia's largest energy companies, for $12.4 billion. The deal, which is still subject to regulatory approval, will create one of the world's largest renewable energy companies. The deal will give the company a significant presence in the Australian market, and it will also add a diversified portfolio of assets to its portfolio. Read more  
  • Actis and Mainstream have completed a record transaction to sell Lekela Power to Infinity Power
The deal, which values Lekela at $1.5 billion sees Lekela sold to Infinity Power, a joint venture between Egypt's Infinity and UAE's Masdar. The sale of Lekela is a positive development for Africa. It will help to accelerate the development of renewable energy projects in Africa, which will help the continent to meet its climate targets. The investment will also create jobs and boost the economy. Read more  
  • OYA Renewables secures financing for 100MW of New York Community Solar
OYA Renewables has secured a total of $216 million in financial backing for the construction of a slate of 15 community solar development projects throughout New York State. The projects are part of OYA's 2023 pipeline for New York community solar works state wide. Community solar is a program that allows individuals and businesses to subscribe to a portion of a solar project, even if they do not own or lease the land on which the project is located. Subscribers receive a credit on their electric bill for their share of the solar power generated by the project Read more  
  • Enel to sell Romanian assets to Greece’s PPC for $1.3 billion
The sale of Enel's Romanian assets is part of the company's plans to reduce its debt and focus on its core businesses. In November 2022, Enel announced that it would sell around €21 billion of assets over the 2023-2025 period. The sale is expected to close in Q3 of 2023 and is still subject to regulatory approval. Read more  
  • Origis Energy has closed a deal to get a $750 million credit facility
Origis Energy, one of America’s leading renewable energy platforms, has announced the close of an upsizing amendment to their development finance facility doubling capacity to $750 million. With enhanced flexibility and increased capacity, the credit facility will support further expansion of its solar and energy storage project pipeline. This financing round follows a $375 million facility announced in May 2022 Read more  
  • Neoen secures €750 million for capex plans
The financing is a mix of debt and equity and will be used to fund the development of new renewable energy projects in Europe and Australia. The financing will allow Neoen to continue to grow its renewable energy portfolio and meet its ambitious growth targets. Neoen is targeting to reach 10 GW of installed capacity by 2025 and 20 GW by 2030. Read more  
  • Silfab Solar raises $125 million to build third US Cell factory
The company has secured $125 million in investment from ARC Financial Corp, Manulife Financial Corporation, and Ontario Power Generation Inc. Pension Plan. The funding will be used to build a new solar cell manufacturing facility in the US. Read more  
  • Scale Microgrids raises $225 million to scale up its distributed energy solutions.
The debt financing was led by KeyBanc Capital Markets and included participation from other leading financial institutions. The financing will be used to support Scale Microgrids growth plans, including the development of new distributed energy projects and the expansion of its existing portfolio Read more

Oil & Gas

 
  • QatarEnergy acquires stakes from ExxonMobil in Canada
QatarEnergy and ExxonMobil Canada announced a deal to acquire stakes in two Canadian offshore exploration blocks. The deal gives QatarEnergy a 28% interest in licence EL 1167 and a 40% interest in licence EL 1162. ExxonMobil Canada will continue to hold the remaining interests in both blocks. The deal is part of QatarEnergy's strategy to expand its global oil and gas portfolio. The company is looking to secure new sources of oil and gas to meet the growing demand for energy in Qatar and around the world. Read more  
  • Energy Transfer to acquire Lotus Midstream in a $1.45 billion cashback and stock deal
The deal will give Energy Transfer access to Lotus Midstream's extensive network of crude oil gathering and transportation pipelines in the Permian Basin. The acquisition of Lotus Midstream is part of Energy Transfer's strategy to expand its presence in the Permian Basin Read more  
  • Prax to acquire Hurricane Energy
Prax Exploration & Production (Prax) announced that it has agreed to acquire Hurricane Energy (Hurricane) in a deal valued at £249 million ($300.6 million). The acquisition of Hurricane is part of Prax's strategy to expand its upstream business in the North Sea. Read more  
  • OKEA to acquire stake from Equinor for $220 million
Equinor has sold a 28% stake in PL037 (Statfjord area) to OKEA. The total consideration is USD 220 million plus a contingent payment element based on oil and gas prices over a 3-year period. The sale is part of Equinor's strategy to focus on its core assets and to reduce its debt. The company has said that it is looking to sell $15 billion worth of assets by 2025. Read more  
  • Baytex Energy Corp has acquired Ranger Oil Corp in a cash & stock deal worth $2.5 billion
The acquisition of Ranger will give Baytex a significant presence in the Eagle Ford shale basin, one of the most prolific oil and gas-producing regions in the United States. Ranger has a large inventory of drilling locations in the Eagle Ford, and the acquisition will allow Baytex to accelerate its growth in the basin. Read more  
  • TotalEnergies acquires CEPSA’s upstream assets in the UAE for $4.6 billion
Under the terms of the deal, TotalEnergies will acquire a 20% stake in the Satah Al Razboot (SARB) and Umm Lulu offshore oil fields, as well as a 12.88% indirect interest in the Mubarraz concession held by Abu Dhabi Oil Company Ltd (ADOC). The Mubarraz concession is comprised of four producing offshore fields. Read more  
  • Equinor acquires Suncor Energy’s interests for $850 million
The deal included a non-operated interest in the producing Buzzard oil field, a 40% operated interest in the Rosebank development and the absorption of Suncor employees based in the UK who work with those assets. Equinor said the transaction was in line with its strategy of optimizing its oil & gas portfolio and deepening in its core countries Read more  
  • Equinor has signed an agreement to acquire an interest in five discoveries from Wellesley Petroleum.
Equinor has signed an agreement to acquire an equity interest in five discoveries in the Troll, Fram and Kvitebjørn area in the North Sea on the Norwegian continental shelf (NCS) from Wellesley Petroleum AS. The Troll, Fram and Kvitebjørn area is a prolific oil and gas province, and the five discoveries are all located in close proximity to existing infrastructure. This makes them well-placed to be developed quickly and cost-effectively. The acquisition is part of Equinor's strategy to grow its oil and gas production in Norway. Read more In conclusion, the past month has seen significant developments in both renewable energy and natural resources. There seems to be growing confidence from investors to deploy their mandates into renewable energy technologies and they are not shying away from emerging markets as we witnessed with Actis and the sale of Lekela Power in Africa. Further to the above, a recent report by IRENA(Global Landscape of Renewable Energy Finance 2023), highlighted that global investment in energy transition technologies last year, including energy efficiency reached $1.3 trillion which set a record high up 19% from 2021 investment levels, and 70% from before the pandemic in 2019. This provides further evidence that suggests investment in clean technology is on an upward trajectory and investors are settling in for the long haul. Major oil and gas companies continue to consolidate and shed non-core assets as part of their strategy to free up some cash flow, reduce debt and become more efficient as we witnessed with TotalEnergies acquisition of Cepsa’s upstream assets and Suncor offloading its assets to Equinor for $850 million, amongst a few other transactions. Stay tuned for more updates on the latest monthly energy investment deals and commentary, and don’t forget to follow me for regular updates. 😊  

Europe’s Oil & Gas industry receives it’s booster jab
Europe’s Oil & Gas industry receives it’s booster jab

Monthly Deal Round-up for June 2022 -  Oil & Gas deals, by Wesley Johnson
During April and May of 2022, the global oil and gas industry pocketed a generous $15.6bn worth of deals, according to GlobalData’s deals database. Europe seems to be at the forefront, seeing a rise of 45.83% in deal activity during May 2022 with a total of 35 oil and gas deals worth $7.1 bn, against a 12-month average of only 24 deals. Research suggests that Europe’s rise in deal activity is a result of their Usain Bolt-like sprint for alternative energy resources as they look to reduce their dependence on their Russian neighbours amid increasing tensions relating to the war in Ukraine. Russia cut gas flows by 60% in mid-June, citing technical issues, and halted supplies to several EU countries over payment disputes following European sanctions which as a result, has caused some supply challenges for Europe. Moreover, recently, Russia cited that they will be continuing to reduce supply due to planned maintenance work which is causing some concern for the BLOC regarding whether gas supplies could be reduced or even worse, cut off permanently. Returning to the monthly round-up below, I have highlighted a few of the oil and gas industry’s top deals for April and May of 2022, according to GlobalData’s deal database.  

                                                    Europe

Ithaca Energy acquires Siccar Point Energy for $1.46bn This acquisition will see Israeli-owned Ithaca acquire a majority stake in the controversial Cambo oil field, along with a package of other UK offshore assets. The overall impact of the acquisition is expected to double Ithaca's recoverable reserves and support the production of 80,000-90,000 b/d of oil equivalent (BOE/D) over the next decade, the company said, up from 56,500 BOE/D the previous year.
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Lanxess and Advent International join forces to acquire DEM from Dutch group Royal DSM Chemicals company LANXESS and Advent International (“Advent”), one of the largest and most experienced global private equity investors with a well-established track record in chemicals investing, established a joint venture for high-performance engineering polymers. The two companies signed an agreement to acquire the DSM Engineering Materials business (DEM) from the Dutch group Royal DSM, which will become part of the new joint venture. The purchase price is around EUR 3.7 billion and will be financed by the joint venture, via equity from Advent and external debt
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KNB Group Bhd to sell its stake in Borsig to GPR Siebzigste Verwaltungsgesellschaft for $223 Million In a stock exchange filing on Tuesday (May 24), the group announced that its wholly-owned indirect subsidiary Deutsche KNM GmbH entered into a conditional sale, purchase and transfer agreement with GSV. The proposed sale of 15 shares representing a 100% equity interest in Borsig to GSV may result in an estimated loss of approximately RM490.55 million for KNM, which includes part of the goodwill of RM355.74 million, which was impaired in December last year.
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Carbon Clean raises $150m in record carbon capture funding Carbon Clean, a global leader in cost-effective carbon capture solutions, has closed the largest ever equity funding round for a point source carbon capture company, taking a major step towards its goal of delivering industrial decarbonisation on a gigatonne scale by the mid-2030s. Carbon Clean has raised $150m from existing investor Chevron, who led the round, alongside CEMEX Ventures, Marubeni Corporation and WAVE Equity Partners and new investors, AXA IM Alts, Samsung Ventures, Saudi Aramco Energy Ventures and TC Energy. To date, Carbon Clean has raised $195m, having closed its $30m Series B investment round in August 2021
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Judges Scientific PLC acquires Geotek for $99.92m Judges Scientific, the group focused on acquiring and developing companies in the scientific instrument sector, announces that it has today acquired the entire issued share capital of Geotek Holding Limited and Geotek Coring Limited (together "Geotek" or the "Acquisition"), a world-leading developer and manufacturer of instruments used to measure and log various characteristics of geological cores and a supplier of related services. The Board expects the Acquisition to be materially earnings enhancing in the current financial year
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                                               North America

Delek Logistics Partners acquires 3Bear Delaware Holding for $624.7m 3Bear’s asset base includes approximately 485 miles of pipelines, 88 million cubic feet per day of cryogenic natural gas processing capacity, 120 MBbl of crude storage capacity and 200 MBbl/d of water disposal capacity.
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Ergon acquires a 68% stake in Bluenight Energy Partners Blueknight Energy Partners, L.P. (“Blueknight” or the “Partnership”) (Nasdaq: BKEP and BKEPP) today announced that it has entered into a definitive agreement and plan of merger (“Merger Agreement”) according to which an affiliate of Ergon, Inc. (“Ergon”) would acquire all of the outstanding common and preferred units of the Partnership not already owned by Ergon and its affiliates (the “Public Common Units” and “Public Preferred Units”). The agreement follows the offer made by Ergon in October 2021 to acquire the Public Common Units and Public Preferred Units.
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SilverBow resources announce acquisitions of Sundance Energy and Sandpoint Resources SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the Company”) has entered into a definitive agreement to acquire substantially all of the assets of Sundance Energy, Inc. and certain affiliated entities (collectively, “Sundance”) for a total purchase price of $354 million and up to $15 million of contingent payments based on future commodity prices. The Sundance transaction, which is expected to close in the third quarter of 2022, has been unanimously approved by the Boards of Directors of both companies.
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                                              Asia-Pacific             

Adani Ports to acquire a 100% stake in Ocean Sparkle Adani Ports and Special Economic Zone (APSEZ) through its subsidiary, The Adani Harbour Services (TAHSL), has entered into a definitive agreement for the acquisition of a 100% stake in Ocean Sparkle (OSL), India's leading third-party marine services provider.
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Petronas Chemicals Group acquires Perstorp for $2.39bn PETRONAS Chemicals Group Berhad (PCG) signed a Securities Purchase Agreement on 14 May 2022 to acquire the entire equity interest in Perstorp Holding AB, a leading sustainability-driven global specialty chemicals company with Financière Forêt S.à.r.l, a company under PAI Partners, a European private equity firm. The acquisition values Perstorp Group at an enterprise value of EUR2,300.0 million, which is equivalent to RM10,496.1 million
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Although our dear friend Africa did not feature in this month’s round-up, they are sure not to be forgotten. As a result of the pandemic and the renewed interest in African natural resources on the back of the unfortunate war in Ukraine, there has been a plethora of activity on the continent this year. Higher for longer oil prices have unlocked the M&A market on the continent, especially for well-established players in the sector. Deals worth mentioning include the likes of Savannah Energy’s acquisition of the entire upstream and midstream asset portfolio of ExxonMobil and Petronas in Chad and Cameroon. These deals were valued at some $626m. Furthermore, earlier this year, Seplat Energy announced a proposed acquisition of Mobil producing Nigeria for $1,283bn, in what is set to be the biggest deal of the year globally once finalised. Although a focus on brownfield assets seems to be favoured, given the lower risk, don’t take your eyes off Namibia, Zimbabwe and South Africa who are quickly becoming exploration hotspots on the continent. Stay tuned for further deal updates and upcoming energy projects from around the globe.  

3 Simple ways your business can work towards a greener future
3 Simple ways your business can work towards a greener future

Wesley Johnson, Energy Knect Adapting a green practice is rapidly becoming a leading trend for companies of all sizes. According to the KPMG Survey of Sustainability Reporting, 80% of companies worldwide are now reporting on sustainability, around 40% of companies now acknowledge the financial risks of climate change and one in five companies are reporting climate risk in line with TCFD recommendations. Research is indicating that businesses who are adopting sustainability practices are taking advantage of a plethora of benefits including the likes of a competitive advantage over their peers, reduction of costs, new revenue opportunities and forging stronger relationships with clients, according to McKinsey. I have highlighted a few popular “green” practices below that companies are currently adopting. Calculate your carbon footprint Calculating your carbon footprint at the first instance is a great place to start in order to obtain an idea of what areas need improvement and where you can prioritize your efforts. Thanks to the growing trend in businesses wanting to do their part to save the planet, there are now many useful and user-friendly online tools available for companies to calculate their carbon footprint. A few popular options amongst businesses right now are the Carbon Footprint, WWF Carbon Footprint Calculator and Climate Care. Depending on the complexity and size of your business, another option would be to seek support from an environmental and sustainability consultancy. They will not only calculate your net carbon output but also help you develop a plan to decrease it by providing you with a tailored and easy to follow management system to achieve your objectives. Furthermore, they typically provide the necessary training and are able to either request or offer you sustainability and environmental certifications to enhance your marketing efforts. According to a recent survey by KPMG, GRI remains the most commonly used reporting standard or framework used by businesses for sustainability. If you do decide to go down the consultancy route, it’s advisable to research firms that specialise in your field or market segment, as they are typically better equipped to understand your situation and needs. For example, the SME Centre is an advisory firm that supports SME’s with sustainability and carbon management systems and certifications. Their management systems are already tailored to suit SME’s which in turn could save your business time and money from unnecessary consulting fees. For the larger, more complex business types, top tier firms like Accenture, Bain and PWC are well-positioned to offer your business sustainability and carbon management support. Renewable energy source One of the most effective and easiest ways in which your business can reduce its carbon footprint is by switching to a green or renewable business energy tariff. As companies start to embrace their shift towards a lower-carbon future, the process of opting for a greener energy provider has become more efficient and cost-effective than ever before. Research suggests that this is a result of many challenger brands competing for their place in the market as well as the likes of low carbon technology advancements, accelerated investment into infrastructure, and concerns around climate change and fossil fuels. According to research by Forbes, right now, the big six “green” energy suppliers in the UK are British Gas, EDF Energy, E-ON, Npower, Scottish Power and SSE. There are also a few smaller, independent providers such as Bulb, Ecotricity and Octopus Energy that provide renewable business energy tariffs. The smaller independents often market cheaper tariffs for your business which as a result, could help your business save on your existing tariffs. If your business is interested in making the switch there are plenty of online comparison tools like U switch or Forbes Advisor that can help you explore what options are best for your business, budget and needs. Carbon offsetting Whilst most businesses do their very best in trying to reduce their carbon footprint, some forms of emissions are just unavoidable in order to remain competitive. As a solution to this roadblock, businesses can offset their unavoidable emissions, by purchasing carbon credits, which are then used to support environmental projects around the world that either reduce greenhouse gas emissions or absorb carbon dioxide from the atmosphere. Despite some controversy around the lack of transparency and concerns over the quality and integrity of offsetting schemes there still seems to be a growing trend of companies around the world flocking to purchase offsets. Gold Standard, for example, issued 151 million carbon credits from over 900 projects in 2020 according to their most recent market report and Bloomberg quoted that the number of offsets sold in the past two years has doubled. Perhaps the reason for the increased uptake is the growing perception that voluntary carbon credits can play a vital role in accelerating the transition to a global decarbonized economy and that avoiding emissions is typically the most cost-efficient way to address atmospheric greenhouse gas concentrations, according to McKinsey. The verdict In the past, companies typically shied away from green initiatives, as the return on investment was often difficult to quantify. However, with more companies incorporating green initiatives, it is now becoming evident that we are seeing positive and measurable impacts including the likes of improved efficiency, employee retention, cost savings and revenue growth, along with a competitive advantage and good brand reputation. Is your business taking advantage of the "green opportunity"?

4 Reasons to join the Green Revolution
4 Reasons to join the Green Revolution

Wesley Johnson, Energy Knect The pressure to shift towards a low carbon future is certainly not a novel concept. Pressures to save our planet from ‘doomsday’ has been around for decades and the discovery of global warming dates back to the late 18th century. So why the sudden change? The events of the past year have sharpened investors interests in sustainable and resilient assets, including renewables, according to the International Renewable Energy Agency.  Moreover, climate change has now been listed among the top 10 risks to global businesses according to the Allianz Risk Barometer 2021. Consequently, carbon management and ESG( Environmental, Social and Governance) has now become a crucial strategy for any business that is looking to remain competitive and stay ahead in today’s economy. Deploying effective ESG and carbon management strategies boasts a plethora of benefits and opportunities for companies including the likes of accessing large pools of capital, robust relations with clients, development of a stronger brand and achieve sustainable long-term growth. We have listed a few of our favourites below. Gives your company a competitive advantage According to a report by KMPG, companies with a higher ESG performance are likely to have better financial performance, talent retention and long-term value creation. 3M’s Pollution Prevention Pays initiative(3P) is a great example of how companies can gain a competitive advantage through the deployment of effective ESG strategies. 3P prevents pollution at the source, in product and in manufacturing. 3P was introduced in 1975 and to date, has resulted in the elimination of more than 3 billion pounds of pollution and saved them nearly $1.4 billion. Supports revenue growth An effective ESG strategy that differentiates your business in the market by providing climate leadership, can lead to new client acquisition, an increase of profitability and the development of new products and services which will allow your business to tap into new markets. According to McKinsey, they found that upward of 70 per cent of consumers would pay an additional 5 per cent for a green product than for a comparable non-green alternative. Furthermore, according to multiple research reports, it is evident that sustainable investing and superior investment returns are positively correlated. Reduces costs According to McKinsey, effectively executing an ESG strategy can help reduce rising operating expenses including the true costs of raw materials, water or carbon. One of their studies found that by reducing resource costs, businesses can improve operating profits by up to 60 per cent. Brewing company Heineken, for example, is heavily reliant on quality water for their products and to sustain their business. Their latest finance and sustainability report revealed that they reduced their water consumption by 33 per cent in water-stressed areas since 2008 including a 51 per cent drop in carbon emissions from production. Consequently, this has saved the company €15 Million since 2009. Mitigates risks ESG has become an essential management tool for businesses to identify and proactively mitigate risks. According to EY, Investors increasingly believe that companies that perform well on ESG are less risky, better positioned for long growth and better prepared for uncertainty. For investors, ESG reporting is helping them avoid companies that might pose a greater financial risk due to their ESG performance. For businesses, ESG reporting is helping them shift away from traditional compliance-based thinking and reactive mindsets, helping them focus on a more proactive risk mitigation approach. Furthermore, according to KPMG, ESG reporting is challenging organisations to be more transparent about the risks and opportunities it faces which in turn pushes for more robust processes and enhances the credibility of what’s been reported. Ignoring these risks can be detrimental to businesses in the long term, as it can lead to a lack of funding, have an adverse effect on brand reputation, stagnate business growth and potentially see yourself fall behind your peers. With the increasing pressures from investors and stakeholders for businesses to disclose consistent, comparable and reliable data and the plethora of benefits attached to joining the green revolution, it probably doesn’t seem like a bad idea to hop onto the ESG train to set your business up for a fruitful and long-term growth journey, like so many businesses are already doing.