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Geopolitical Movements Put Carbon Management on the Executive Agenda

The last few months, geopolitically, have had dramatic impact on energy markets, which in turn have had a significant effect on businesses. Our energy management and risk teams at Schneider Electric have seen prices surge globally as the world grapples with the intersections of COVID recovery, the Russian-Ukraine conflict, and skyrocketing inflation. Many in the financial markets are predicting a recession.

These turning economic tides no longer operate in isolation when it comes to energy. Once relegated to management at the facility level, more and more multinational corporations are managing energy centrally, given its importance to resilient operations and the potential impacts of pricing volatility.

Energy can no longer be managed as merely a commodity – it’s too closely tied to how businesses manage their carbon footprint. And that, without a doubt, is the new imperative for every executive, everywhere.

The energy-carbon linkage is clear in the EU, where member states have published their REPowerEU plan, which will accelerate energy security in the region alongside the transition to a more renewable and resilient grid.

But energy isn’t the only place where geopolitics is playing a role on how companies manage their carbon footprints. In the US, the Securities and Exchange Commission (SEC) has pushed back its deadline for responses to its proposed rule on climate risk and emissions disclosures, which would require all publicly traded companies to increase data management and transparency.

The extended deadline delays what is likely inevitable – and the SEC isn’t alone. Numerous European regulations are already advancing the carbon mitigation imperative. In November, the Hong Kong exchange (HKEX) published similar guidance, and in December, the Singapore exchange (SGX) released its own climate disclosure rules.

Corporate actions on energy and climate have been largely voluntary until now. However, it’s clear that geopolitical pressures and compliance expectations will drive considerable future actions that must be managed at an enterprise-level.

Given the importance and growing complexity of energy management and emissions reporting, business leaders can no longer afford not to be involved.

Our global team of experts are helping companies of all shapes and sizes navigate through these increasingly choppy waters of carbon and energy management. We would welcome the opportunity to exchange with you as well.