ABB announced the results of a survey showing energy costs and related issues are impacting businesses’ investments in their workforces, technology, and more.
In its Electrification Energy Insights survey of 2,300 business leaders in 10 nations, 92% of respondents believe rising energy costs and instability are threatening profitability and competitiveness, according to ABB’s news release.
Those surveyed said rising energy costs last year resulted in lower profit margins (34%) and cuts to spending in several areas, such as workforces, technology, and more (34%), leading to reduced investment in R&D and other growth and environmental initiatives.
Over a third (38%) have or plan to reduce technology investment, while a third (33%) expect to cut spending on infrastructure and 31% foresee a decline in marketing spend.
According to ABB, businesses said they have reduced investment in their workforce in the last year because of increased energy costs and the need to implement mitigation measures.
ABB added that this is expected to continue over the next three to five years if energy challenges persist. Three of the top five business areas highlighted for budget reductions are related to the workforce: 42 % will spend less on recruitment; 38% will decrease spending on salaries, overtime, and bonuses; and 37% will reduce investment in staff training and development.
Respondents further cited concerns that energy pricing and insecurity could delay progress on climate change, with meeting carbon reduction commitments currently considered less of a priority than reducing energy costs.
Over half (58%) of business leaders surveyed said the cost of energy could delay achieving their sustainability and carbon reduction targets by anywhere from one to five years. While reducing energy costs is the top priority for 61% of companies, only 40%t currently have reducing carbon emissions within their overall business priorities.
ABB’s survey showed 83% of business leaders expressed concern about the security of their business’s energy supply, and many are taking action to address this. Over a third (36%) are worried about further rises in energy costs, 31% are concerned by power cuts and blackouts, and a quarter by energy rationing.
In response, 34% have already increased investment specifically focusing on improving their energy efficiency and 40% are looking to install on-site renewable energy generation to become less dependent on the grid.
“Businesses say they need to insulate themselves from energy prices and insecurity and are re-evaluating current and future spending plans,” said Morten Wierod, president of ABB Electrification. “Taking action to mitigate this is a clear priority, but this doesn’t have to be a catalyst for the potential workforce or environmental impacts. Investing in smart and sustainable on-site renewables and energy efficiency technology means businesses can simultaneously cut costs and reduce their emissions. With the right approach, it is possible for industry to achieve cost savings without sacrificing competitiveness, workforces, or the journey to decarbonization.”