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Market News

 May 09, 2007
Most Companies Would Benefit from a 'Chief Energy Officer'

 New York, USA -- New research from Hill & Knowlton finds that the majority of companies do not have an energy strategy for dealing with global warming, and creating a CNO position would help them better manage energy needs.

Although 82 percent of senior technology leaders from around the globe said they "closely monitor" global warming news, only 35 percent have a concrete energy strategy to deal with it.

The study found that more than three quarters of business decision makers surveyed (77 percent) believe there is a need to create a new position of Chief Energy Officer (CNO) to manage, implement and measure a company's return on investment in environmental technology, the so-called "Return on Environment."

Hill & Knowlton, the global communications consultancy, conducted the survey with polling partner Penn, Schoen & Berland Associates, by asking the viewpoints of 420 senior business decision makers involved in IT purchases from the United States, U.K., China and Canada to determine how they go about integrating economics and ethics when it comes to environmental issues.

"Despite the hype, few companies are plotting a measurable action plan to drive return on environment," said Joe Paluska, head of Hill & Knowlton's Worldwide Technology Practice. "While the overwhelming majority looks to the CEO to own the issue, nearly two-thirds of those polled said no one within their organizations is tasked with defining the company's energy strategy. We expect reputation, risk and return to suffer until companies really stand up and take charge and industry as a whole sets the standard for measuring return on environment."

Of those polled, 77 percent of Chinese respondents said their firms have not yet defined an energy strategy. The U.S. came in second at 67 percent, followed by Canada with 62 percent and the U.K. at 51 percent.

Survey respondents were similarly uncertain when it came to the question of who is in charge of defining a company's energy strategy. Sixty-five percent of those polled do not have anyone identified within their organization responsible for defining an energy strategy.

In China, such an organizational role is almost unheard of, with 82 percent of respondents indicating that no one in their company is responsible for developing an energy strategy. The United States fared only slightly better, with 70 percent, and the U.K. is farthest ahead with 57 percent of the companies polled having someone in place to define their energy strategy.

"The research suggests that there is an opportunity to expand the c-suite to include a Chief Energy Officer," Paluska said. "There's a growing need for corporate accountability on energy performance as companies grapple with increasing complexity and expectations of governments, customers, shareholders and employees. Ultimately, companies will need to quantify the return on the triple bottom line -- people, profits and planet -- or their reputation and valuation will suffer."

Managing the "Return on Environment"

When asked how best to measure Return on Environment, more than half of the survey respondents (52 percent) identified improved corporate reputation as the most important return on investment for environmental programs. Actual carbon emission reduction was the most important metric to 38 percent of respondents globally, and was rated number one in the U.K.

More traditional measurements -- including return on equity, total cost of ownership and internal rate of return -- also scored reasonably well. However, it is clear that much work still remains to be done to accurately determine Return on Environment in a way in which consumers, investors and policy-makers can universally validate.

While there are no clear winners in the race to reduce greenhouse gas emissions, the "green arms race," the United States, Japan and Germany were identified as the top three countries likely to contribute the most to clean tech breakthroughs in the coming years.

Not surprisingly, people believe it is their own country that is most likely to play the largest role in developing clean tech solutions. The exception to this nationalist trend was China, where 62 percent of those surveyed see the United States as leading the clean tech debate rather than their home nation.

Opinions on which industries are most likely to benefit from clean tech innovations also vary by country. More than half of the Canadian respondents (55 percent) view the transportation industry as having the most to gain, U.S. and British respondents view venture capitalists as benefiting, and executives from China think policy-makers will be the clean tech jackpot winners.

The full results of Hill & Knowlton's clean tech survey results are available online at Hill & Knowlton's website.