Chapter 1
The transformation “long game” for the energy industry
A more sustainable energy industry will rely on investments in new technologies and building new skills.
Calls for smarter energy delivery and consumption have flowed with renewed urgency in recent years. Geopolitical uncertainty around sources of crude oil and natural gas has driven diplomatic agendas and domestic welfare planning, as well as putting increased pressure on household and private sector budgets.
Analysis from the OECD shows multiple European countries have announced or implemented support packages of up to 2% of GDP to cushion high energy prices and food costs, with 66% of aid being price support, and nearly all being untargeted. Such measures to blunt prices tend to support demand, rather than curb it, which may manage acute situations without helping in the longer term.
The success of any true transformation of the energy industry, as it is for the world, relies on finding the sustainability levers whose effects ripple far beyond single or even cyclical market events. This includes safeguarding and investing in a workforce which has the skills now and can gain the skills needed later.
Sustainability is a concern and opportunity for all.
The lead-up to the COP27 climate conference reflected familiar calls for bold action to combat the myriad challenges of climate change, and big investments are already being made toward energy transition. In 2022, the International Energy Agency (IEA) estimated that $1.4 trillion would be invested in clean energy, accounting for over three-quarters of the growth in overall energy investment.
But efforts to cut greenhouse gas emissions to achieve net zero by 2050 will require substantially more. IEA analysis concluded that annual investments in clean energy would have to reach $4 trillion by 2030 to meet those goals, and that substantial capital would have to be redeployed from fossil fuel industries in favor of renewable energy. Capital previously destined for oilfields has been, and will increasingly be, put into windmills, solar panels and green hydrogen production plants.
Those investments will come not only in the form of assets, but also in retraining, retooling and reorganizing companies’ workforces.
Chapter 2
Enabling a needed transition
The energy industry is at a capability crossroads of reskilling and upskilling its way to the future.
It’s in this climate that the energy industry will require different kinds of workers, with diverse skill sets, and distinctive priorities for work, to transform into a more digitized, data-driven and efficient industry.
Oil and gas executives in 2020 estimated that 60% of the existing workforce needed to be reskilled or upskilled, but nearly half (49%) didn’t believe their organization was good at teaching the in-demand skills they need. EY survey data shows that a further 85% of power and utilities employers believe having a reskilling strategy is critical to business success, but only 57% actually have a well-defined strategy in place.
Power and utilities reskilling
57%of power and utilities employers have a well-defined reskilling strategy in place
The COVID-19 pandemic only further underscored the need for organizations to have a clear plan for upskilling and reskilling.
The 2022 EY Work Reimagined Survey reveals employer attitudes through the initial waves of the pandemic. A vast majority (72%) of employers in the oil and gas, mining and metals, and power and utilities industries said developing a workforce strategy and plan to ensure necessary talent and skills match future business needs was critical to a sustainable future of work for their organization. Employers in those industries also cited a need to review how work gets done from a people, process and technology perspective, and investing in upskilling and reskilling, as vital to the sustainable future of work.
The need to invest in the skills and adaptability of the workforce is especially heightened amid economic uncertainty and high inflation, and it’s already underway. The World Economic Forum’s Future of Jobs report in 2023 (pdf) showed employers expected 61% of employees would require retraining by 2027, based on current training strategies. Of those, 18% of employees would be upskilled by 2027, and 16% would be reskilled and redeployed.
Sustainable future of work
72%of employers in oil and gas, mining and metals, and power and utilities see workforce strategy to align talent and skills as critical
Previously, the WEF found companies hoped to internally redeploy nearly 50% of workers who might be displaced by technological automation and augmentation, as opposed to laying off those workers. Employers also cited the value of soft skills like critical thinking and analysis, problem-solving, and resilience as being critical to fill skills gaps through 2025. Recognizing the skills gap is only part of the process, as different industries have different training time horizons. The WEF report said the share of workers who can be reskilled within six months is lower in the energy industry, as well as financial services, where employers expect a need for more time-intensive reskilling of the workforce.
Organizations would require an alignment of their internal metrics systems to accurately report human and social capital, not only to assess their capabilities, but also to ensure their workforce is reflecting commitments to diversity, equity and inclusion. The energy industry is one of the worst for women in leadership, according to the World Economic Forum, with only one in five leadership roles being held by women. The wage gap for women in the energy industry is also higher than in others, earning an average 19% less than men, according to data from the International Energy Agency.
This is an inflection point for sustainability in the energy industry: a global transition to new technologies and processes to power society is converging with the need to transition toward a more equitable, skilled and value-driven workforce.
Chapter 3
How resilience and trust fuel energy’s workforce transformation
Sustainability and resilience are interconnected, as organizations walk a non-linear path through transformative times.
The energy industry’s challenges — to innovate technologically, while empowering and upskilling a workforce built for the future — require an adaptable mindset to cope with inevitable ebbs and flows of momentum for the transitions in progress. This momentum is fueled by regulators, investors, individuals and organizations, all contributing in their own ways to the stakeholder ecosystem.
The path to net zero is not linear, nor is the path to a value-driven and future-proofed workforce. Value-led sustainability is a root to better resilience. An integrated sustainability program across an organization, that is focused on building capabilities and trust across stakeholders, can deliver long-term value for the business, for people and for the planet.
This is a process of constant transformation.
Research from EY and the University of Oxford’s Saïd Business School revealed the six levers addressing the rational and emotional journey of the workforce that helped improve transformation success rates by 2.6 times, compared to transformations not employing the levers.
Organizations looking to invest in their people and talent resilience amid the transition to a more sustainable future might consider these four areas of focus:
Ultimately, the sustainability conversation is about better quality of life beyond tomorrow, in our homes, communities, governments and organizations. Transforming the energy industry’s approach to broader sustainability will bear heavily on whether the world will thrive in a sustainable way.
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Summary
The energy industry is well-positioned to be a leader in implementing sustainable policy and practice in multiple ways. Organizations aligning their sustainability and people strategies will be best placed to future-proof their workforces and outpace competitors, while also demonstrating their values in decisive action. Stakeholders with common values can then collaborate in an ecosystem of diverse but aligned voices needed for a regenerative approach to sustainability.
