Energy has a new price – responsibility

Atsuomi Obayashi, Professor at Keio Business School, looks into the skills, knowledge and competences future leaders should have in the energy sector.

Responsibility means return on investment for business and society

The energy industry has a long supply chain, often of global scale, and energy is used for a diversity of demands. It is in this context that leaders in this industry should have a long-term, wide-range view that goes beyond the necessary operating results of a company to look into the impact on the wider perspective and over time. Moreover, this entails combining business ethics and economics that would support a sense of social responsibility.

It may be added, and indeed stressed, that today it is within the financial interests of a company operating in the energy sector to take this wider perspective into account, events and conditions at opposite sides of the earth and forecasts of developments decades from now all having a potential impact on investments in the energy sector.

Care for your customers

Caring for your customers should be a priority for energy producers and providers – not only ona micro level but also macro. In this light, leaders should have a sense of responsibility to society, especially towards maintaining a stable energy supply as part of society’s infrastructure. If we drill down to the micro level, this responsibility remains just as important: disruptions in energy supply may bring about revenue loss for suppliers, though disruption is often followed by a surge in demand and a hike in price. However, it is often the case that energy consumers experience large losses, both financial and non-financial. Indeed, it is a sad truism that compensation for such loss generally goes unpaid. While contracts and regulations force suppliers to pay attention to keeping energy supplies steady, these are not incentivizing enough.  A sense of responsibility and leadership would make up the gap.

Education has a key role

Although energy-sector leaders have traditionally come from a technical, engineering background, the trend over the last ten years or so has been for future leaders to enter the industry via schools of management or business. In this light, business schools should foster international experience, including exchange programs between business schools, to help develop a long-term and wide-ranging view in future leader mindsets. Despite the fact that the energy industry is affected by global events, people’s careers are still prone to be local. International experience will therefore provide much-needed glimpses of business models that are different from those students are familiar with.

Furthermore, studying economic contract theory would clarify what kinds of duties are easily contractable, and what are not. But it is important to emphasise that we can only use contracts and regulations if they are effective. Where they are not effective, business ethics are important and business schools should make ethics and compliance a de facto element at the heart of their range of management and business courses. Leaders must have the ability to evaluate corporate ethical actions and educate themselves to plough back in results from their operations for the benefit of communities, the environments in which they work and society as a whole.

Useful links

The Council on Business & Society Global Alliance is an international alliance between four of the world’s leading business schools and an organiser of Forums focusing on issues at the crossroads of business and society – The Council Community helps bring together business leaders, academics, policy-makers, students and journalists from around the world. Follow us on Twitter #The_CoBS

 

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