Seize the opportunity to build utility brands in a decarbonizing world
The shift to clean energy isn't as simple as flipping a switch. Utilities face a web of financial, regulatory, and operational complexities. In our utility executive survey conducted last year, ICF found that while 88% of respondents said greenhouse gas emissions reduction or decarbonization were high or moderate priorities for their utility, only 38% currently have a strategy in place and are executing on it.
It's crucial that utilities do not overlook an important opportunity. This is the moment to build deeper brand trust with customers, regulators, investors, and employees during the clean energy transition.
Customers tell us they are increasingly concerned about the environment and are expecting more from their energy companies. In a Gallup poll last year, 71% of Americans say they worry about the quality of the environment and 75% of Americans says they specifically want CEOs to make progress on reducing carbon emissions, according to Deloitte.
So, a utility has an important story to tell stakeholders about what’s important to the company and what actions it’s taking. That is a signal to refresh the utility’s brand and sharpen the conversation around what the company stands for, as well as its priorities and values.
Brand trust delivers benefits to utilities
Given the strong potential for customers to increasingly have more control and more energy choices, the need for utilities to invest in brand trust is a muscle that should be regularly exercised. This is not only preparation for the future; earning brand trust now can deliver these six benefits to utilities as they evolve to meet new zero emissions targets.
- Investor preference: Use the brand to support a clearly defined long-term value proposition and unique position in the marketplace.
- Permission to operate: Maintain favor with regulators, legislators, and the public to continue to earn rate increases, invest in infrastructure improvements, and influence public policy decisions.
- Community understanding: Receive greater patience from customers and communities during changing or disruptive times.
- Customer engagement: Increase customer interest and adoption of time-of-use rates, storage, flexible load management, energy efficiency products and programs, and future services not yet imagined. The data clearly show that utility program participation and adoption increase as brand trust rises.
- Reaching underserved communities: Trust is a significant gap that needs to be closed to build more energy equity in your community. Low income and minority customer groups are more likely to participate in energy efficiency and other programs if utilities engage more at the community level, speak in their language, and commit more time to understanding their needs and showing how the utility can help.
- Talent attraction and retention: Demonstrate a clear employee value proposition that aligns internal culture and behaviors, so your utility is a preferred place to work.
Actions of other companies matter
Utilities are always competing with other companies to get the best employees. What’s new in today’s market is that those workers are increasingly tuned into a company’s purpose. They have been watching a wide range of employers making strong environmental commitments. When companies such as Patagonia, Unilever, and Schnitzer Steel take bold action on sustainability and the environment—that becomes the norm and stakeholders start to expect those behaviors from all the companies with whom they engage.
In exchange, customers reward them with their loyalty and their business. A recent McKinsey-Nielsen IQ study shows consumers are shifting their spending toward companies and products with environmental, social, and governance claims.
During the decarbonization process, utilities have the opportunity to define and repeatedly share their vision. This can help to win the trust that is often needed to improve customer satisfaction and maintain favor with regulators and community leaders. Here’s how to do that.
Four considerations for utility brands during the decarbonization process
- Define an energy transition vision: Explain what you are doing and why. Articulate a purpose and educate stakeholders about the benefits and investments required to execute decarbonization.
- Demonstrate how customer programs benefit the planet as well as wallets: Show how current programs are beneficial to your long-term sustainability vision and to meeting the environmental aspirations of stakeholders.
- Prioritize action that accelerates environmental commitments: Elevate existing or make new commitments that support your sustainability plans. Putting programs in place to better align with company vision shows your commitments in action.
- Prepare for reputational resilience: Anticipate challenges and proactively frame issues. New business and operating models are likely to require rate hikes that may not sit well with stakeholders. And we have seen some renewable energy companies attempt to undermine utilities as they fight to earn a bigger piece of the energy market. So, a flexible and evolving reputation management strategy becomes a necessary part of the toolbox.
Navigating a brand refresh requires a trusted partner with a thorough and proven process that not only focuses on external constituents, but more importantly has a discovery and execution process that focuses heavily on educating and engaging people inside the company. The time to build a deeper relationship with your customers and stakeholders is now.