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SDG #7: Ensure access to affordable, reliable, sustainable and modern energy

Sustainable Development Goals Blog Series

On January 1st, 2016, the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development officially came into force. Over the next 15 years, with these 17 goals, countries will combine efforts to end all forms of poverty, fight inequalities and tackle climate change. In this article we aim to familiarize you with SDG #7: Ensure access to affordable, reliable, sustainable and modern energy for all.

By Jennifer Muller en Erica Kostense Smit | 29-09-2017

What?

SDG Goal #7 focuses on ensuring energy accessibility. Right now, on a worldwide scale, one in five people do not have access to electricity, especially in Africa and Asia.

Having a SDG about energy accessibility might seem odd at first sight. A paradox even, since energy usage accounts for approximately 60% of global greenhouse gas emissions1. However, energy accessibility is often a prerequisite in achieving many other SDGs – it therefore makes sense to have a SDG dedicated to this topic. On top of that, SDG 7 is not only about energy accessibility. It is also about the energy transition where traditional fossil fuels will gradually be replaced by more sustainable, renewable energy sources.

Why?

Impact on societal health (example)
As previously mentioned, accessibility to sustainable energy contributes to the realisation of many other SDGs, such as SDG 3. This SDG focuses on ensuring healthy lives, which can be closely linked to sustainable energy. For example, access to energy can have a direct effect on societal health, since many essential facilities like hospitals cannot operate without energy2. Furthermore, the need for clean energy regarding societal health can be illustrated by the striking example that currently, 2.8 billion people rely on wood and coal for cooking and heating. This results into severe indoor air pollution, which is estimated to result in over 4 million premature deaths per year3.

Long term value and cost reduction (business case)
The list of societal benefits of access to clean energy is endless, and numerous other examples can be provided. In fact, many publications about the energy transition will confirm this4. However, the question that many organisations deal with is: “Why should I make this my problem?” Our answer is simple: “Because it makes good business sense to do so”.

First of all, we know that an energy transition is eminent. Although this is great news for SDG 7, this also goes hand in hand with new challenges for society and companies. For example, transitions from central to more local production and more off the grid solutions will result in a less controllable environment. This can impact businesses to great extent. In addition, energy prices are not high enough to stimulate organisations to invest in renewables, and prices for CO2 are not nearly in the range as it should to incorporate all real societal costs.

Secondly, we do not know exactly how the energy transition will influence companies since this relies on many factors. Examples are global energy demand, local taxes, stakeholders, and innovations.

Nevertheless, we know that:
• The transition is eminent and will pose new challenges for businesses.
• Fossil fuels will become scarcer and/or expensive but it will probably take some time before society can function without fossil fuels.
• The most sustainable energy, is energy which is not used.
• There is still a huge potential for energy reduction that still needs to be explored.

It is therefore essential that organisations take energy efficiency seriously. As it can help them to become less vulnerable, and to preserve fossil fuels for those who cannot afford to invest in alternatives. In fact, the business case for energy efficient products is acknowledged by many investors and businesses, which show that both value creation and cost reduction can be achieved. This has led to more investments being made in the field of energy, as discussed in Deloitte’s 2017 Renewable Energy Outlook5. To illustrate this: it is argued that for each dollar invested in energy-efficiency measures, around 2 dollars can be saved in investments in electricity supply, and up to 4 dollars in electricity costs of the life-cycle of a product. Demand for energy efficient products could grow 7-8% on an annual basis; reaching the value of 530 billion dollar in 20 years6. This shows that investing in energy efficiency can actually create, in addition to societal gains, also financial gains for businesses and organisations.

How?

Many might think enough has been said and done about energy reduction. However, we see that there is still a huge potential out there that is not utilised. We would like to illustrate this with two examples.

Primary processes
The first step organisations usually take is looking at their primary processes. We see that, especially in production environments, organisations are very familiar with measuring and controlling energy consumption. However, in less technical environments, this is still not common. Reasons for this could be that it is not clear who is responsible for energy reduction (governance issues), or that the changes made have only been incremental.

An example of a sector that has recently been taking serious steps towards energy efficiency, is the hospitality industry. Research has shown that electricity is more than half of the environmental impact hotel chains are causing7. Measures that are being taken are:

  • Contributing via construction: energy can already be saved by simple processes like creating larger windows with more natural light. This means that less electricity is needed to light rooms. 
  • Contributing via technology: by using more smart sensors, further reduction of energy can be used while enhancing user experience.

The two previously mentioned measures require investments in technology, and companies usually deploy a payback period on investments of 3-10 years. Combined with this are the intangible benefits often forgotten in the business case. For example, research has shown that the majority of the customers is more attracted to eco-friendly hotels. Especially measures in the field of energy are valued by hotel guests8.

Supply chain responsibility
In addition to looking at the primary processes, organisations are increasingly looking at their entire supply chain. This is in line with the trend regarding transparency on organisational impact9, whereby actual responsibility is being taken for the acts and activities of suppliers. When looking at the supply chain, organisations often seek for energy efficiency methods that decrease CO2 emissions.

For instance, one of our clients was able to reduce the CO2 footprint of a major product they have with as much as 30%. This by simply introducing a method to require suppliers to report their CO2 footprint, have them make plans about improving energy efficiency, and using this data when selecting suppliers. By benchmarking suppliers to peers one can identify possible “weak suppliers” and “strong suppliers”, and subsequently help them to improve their footprint.

Another example is, again, one from the hospitality sector. An upcoming trend in this sector is the substitution of meat for vegetables in meals. This substitution will reduce environmental impact, which consists for a large part out of CO2 emissions. In total the environmental impact of a meal, when substituting meat for vegetables, reduces with 25 percent10. This example also shows that multiple environmental goals can be achieved: serving more vegetables compared to meat also led to less food waste. In addition, if all hotels in the Netherlands would start with substituting more vegetables for meat, it could create a procurement advantage of 7 million Euros11.

The previously mentioned examples within different areas (technology, data analyses, food) demonstrate the diversity of possibilities there are to contribute to SDG 7. What they all have in common is that they contribute to society at large, but are also of benefit to the (financial) position of organisations.  

Sustainable Development Goals Blog Series

This blog is part of the Sustainable Development Blog Series: a blog series that highlights the 17 SDGs one by one on a biweekly basis. In these blogs you will find more information about each SDG, why it is important for your organisation to contribute to the achievement of it, and specific examples of how you can do that.

More information?

For more information about the Sustainable Development Goals and what your organisation can do to contribute, please contact Anne Huibrechtse-Truijens via ahuibrechtse@deloitte.nl / +31882882071

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