How an Energy Giant Failed to Comply with ESG Norms and Faced Repercussions & Revised Its Way Toward Sustainability?

A well-established UK-based corporation, through investment in wind, solar, electric car charging, hydrogen, and many other technologies, was working towards delivering more renewable and low-carbon energy options to its customers. However, the company failed to withhold to the promises it made and was sued. The Board of Directors is being personally charged with failing to take appropriate risk management measures in connection with the climate crisis. This has had a major impact on the reputation of the company and negatively affected the perception of stakeholders. In order to facilitate a smooth integration of the ESG solution into its policies and practices, the company approached Research Nester to draw up an action plan.

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An overview:

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The company has been in the market for a long time and has a strong position in terms of stability.

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The firm promised to offer renewable resource technology for meeting the worlds growing need for energy whilst keeping carbon emissions low in order to deal with climate change.

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As per reports issued by the company 1,377 million tons of CO2 equivalent emissions in 2020. It is estimated that up to 1.6 % of the world’s 1.5 C carbon budget will be spent on its projected emissions between 2018 and 2030.

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The organization is currently operating around 50 gigawatts of renewable electricity generation capacity, under construction and in the pipeline for potential projects.

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Despite all these environmentally friendly claims, the company’s directors were sued for not keeping up with their policies by an environmental activist group, backed by the institutional investors who together account for 12 million of the company’s 7 billion shares.

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After the lawsuit was filed, an investigation was done that identified the company’s failure to comply with ESG practices.

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The company wasn’t fined but its reputation was tarnished, resulting in loss of market share.

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The company's managing board asked for the help of Research Nester consultants to get through this crisis.

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The Story

The establishment dates back to the early 19th century, as a small shop in London, and now is a global giant in the energy sector. The company offers a wide variety of energy solutions. The firm mentions reducing greenhouse gas emissions by using lower-carbon energy products. Despite climate pledges, the company failed to stick to its motto. This led to legal charges against the board of directors. An investigation was set -up which concluded that the company does not have the ambition to achieve its short, medium, and long-term GHG reduction targets, which cover all its relevant emissions, both in terms of net zero and net zero-aligned. In 2021, when the company leadership found itself in a dilemma and totally unable to make up its mind about integrating ESG practices into sustainable growth and profitability, it sought advice from analysts at Research Nester.

Our Solution:

Research Nester analysts investigated the situation and came up with the conclusion that a lack of compliance with environmental, social, and corporate governance protocols was a major barrier to the firm's viability and growth. The consultants also provided a concise insight into the environmental, social, and governance (ESG) scenario in multiple sectors such as solar energy, onshore wind energy, electric cars and so much more. A customized solution was further devised in accordance with the situation. The analysts came up with a comprehensive solution that benefitted the company and was well-fitted with the environmental, social, and governance (ESG) norms. Further strategies for the implementation of ESG practices which were proposed by RNPL consultants are as follows:

  • To encourage participation in a number of ESG surveys.
  • Communication bridges to be mended (should openly talk to its investors).
  • Provide sustainability report prepared as per the global reporting initiatives standards.
  • Should get recommendations from the task force on climate-related financial disclosure.
  • Strictly monitoring emissions and other disposal systems.
  • Keeping track of changing consumer demands and preferences.
  • Position itself as a responsible and reliable agricultural company, committed to Environmental, Social, and Governance practices.
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Results

Till 2018, the company recorded a stable growth of around 12% YoY. However, the growth was derailed when the company faced heavy penalties for flouting ESG protocols. After complying with the suggestions of the analysts the company is replacing its previous targets on climate change. The company now aims to reduce the carbon intensity of its operations and the carbon intensity of its energy products by 6-8% by 2023, 20% by 2030, and 45% by 2035. The company is working towards rebuilding the brand and market standing consciously. The revenue for the year 2020 reached ~USD 20 billion, which doubled, and the company delivered a record of ~USD 40 billion profit in 2022. The company was finally able to bring its production and growth back on track and move towards sustainable and long-term expansion.

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Swara Keni

Head- Global Business Development

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