Energy a bigger risk for business than health and safety

Businesses rank energy as a greater risk to them than health and safety, credit and security, according to a new white paper. And a key strand of that energy risk […]

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By Tom Gibson

Businesses rank energy as a greater risk to them than health and safety, credit and security, according to a new white paper.

And a key strand of that energy risk is reputation.

Dr Samuel Fankhauser of the London School of Economics, which put together the white paper with npower, said: “Reputation, as talked about in the white paper, points towards consumers being aware and demanding change, and this creates a risk for business.”

He said that in studies relating to the CRC, organisations were more concerned about the reputational value of the league table than they were about the financial penalties involved with the scheme.

David Midori, of the Home Retail Group, which owns Argos and Homebase, admitted reputation was becoming increasingly more important. “Cost always comes at the top of the agenda, but we don’t want to be behind our competitors. Our shoppers want to feel like they’re buying from a responsible retailer, so reputation has been pushed up the agenda.”

David Cockshott, head of industrial and commercial markets at npower, explained the thinking behind the white paper: “Our aim in commissioning the white paper was to reveal the risks energy poses to businesses, show how they are likely to change in the future and ultimately, how organisations can manage these risks.”

Dr Fankhauser told ELN: “For us at the LSE, energy management and carbon management is important and underated.”

He listed five risks to UK businesses: Increasing energy prices; increased volatility in energy prices; price risks from carbon regulation; inherent reputation risks from carbon regulation; and increasing regulatory and technological complexity.

The white paper suggests businesses make energy a high priority and create integrated strategies that bring together the top levels of management and energy procurement to plan ahead in order to combat such risks.

Mr Cockshott added: “Information changes behaviours. The question is, will we be able to act on it?”

Gerry Donnelly, an energy procurement manager at Shell, wanted certainty in regulation: “The main thing for me is to know where power places are going to be beyond 2015. The white paper’s relevant in that respect. One of my big frustrations is legislation. The whole thing’s upside down now.”

Leanne Broadbent of Powerisk, which provides energy risk management tools, agreed: “Our biggest risk is trying to keep on top of the regulatory changes. As a small consultancy, we don’t have massive resources for people to just be tracking papers that are coming out of government. That’s a challenge for us and it would be nice to see a level of stability coming into the regulatory arena.”