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January 29, 20245 min read

How to Build the Business Case to Go Electric

This is a summary from the panel discussion by the same title at the Future of Electrification 2023 conference. It was moderated by Sustainability Consultant Keary Shandler and included Sarah MacKinnon, Co-CEO and CFO of Delta-Q Technologies, Laura Scorza Wade, Sustainability Director at PRfact AG and Geoff Olynyk, Sustainability Expert at McKinsey & Co. Watch the full session here:

During their discussion, the panel members provided insights into constructing a compelling business case for transitioning to electric operations. It's important to understand that when considering business cases there is no one-size-fits-all blueprint, as it is not a straightforward process. Sustainability, in particular, requires a tailored approach. The overall goal of the presentation was to offer valuable insights that can be applied to unique situations.

The discussion began with Olynyk, Sustainability Expert at McKinsey & Co., providing a macro perspective on government policy developments related to electrification. Two key drivers of the energy transition were emphasized: improving cheaper technology and the push from governments and individuals to reduce carbon emissions to mitigate climate change. Olynyk highlighted the large-scale government action in recent years, such as the Investment in Renewable Energy Act (IRA) in the United States, which provided significant funding for energy transition technologies, including electrification. Olynyk noted that this initiative has made electrification financially viable, leading to rapidly increasing demand, to the point that supply chains are struggling to keep up.

MacKinnon, Co-CEO and CFO at Delta-Q Technologies, then provided an industry perspective on these developments. She explained that with evolving circumstances and governments adopting policies, it is an exciting time for emerging markets. The new demands for electric vehicles and equipment stem directly from global policy changes addressing climate change. Government policies are proving effective in creating a demand for electric vehicles, prompting companies to accelerate their product roadmaps. One example is the growing interest in electrifying construction equipment due to advancements in technology, cost considerations, and government regulations and incentives. 

MacKinnon highlighted that a major challenge faced by Delta-Q, especially in recent years, is managing global supply chains. Some original equipment manufacturers (OEMs) are unable to keep up with the demand, creating a backlog. Previously, Delta-Q focused on manufacturing in one location. However, due to incentives and geopolitical factors, the company is now expanding its global footprint. 

Olynyk noted that the automotive industry is also affected by supply chain constraints. While it is responding to increased demand, the process takes time due to the multi-year planning involved in manufacturing. He further stated that the swift change in government policies has created a surge in demand for in-town delivery vehicles, which were previously deemed economically unviable. The challenge now is not only to convince businesses of the economic benefits but also to address concerns about the timing of actual vehicle availability. Despite the market experiencing a transitional phase where demand has outpaced supply, it is anticipated that over time the competitive market dynamics will normalize.

Next Scorza Wade, Sustainability Director at pRFACT AG spoke about regulations. For example, the EU's Green Claims Initiatives, aimed at curbing greenwashing. She explained that this initiative seeks to ensure companies substantiate their environmental claims with tangible actions and avoid misleading statements like "carbon neutral." Moving forward, it is imperative for companies to engage in transparent communication for various reasons, including the need to convey real targets to end customers. She commented that large end customers, such as Ikea, have been dropping suppliers not aligning with carbon targets since 2012, illustrating a long-standing trend. The impact of consumer pressure is significant for both B2B and consumer-facing companies. 

The moderator inquired about the cost associated with being open and communicative, especially when there may be pushback or hesitation from companies to discuss certain matters openly on social platforms or websites. Scorza Wade replied that the cost lies with the potential loss of significant contracts, highlighting the impact on the entire supply chain up to the end consumer. She also stressed the importance of being proactive, engaging with customers, and creating PR platforms and partnerships. She suggested that by openly discussing sustainability and proactively engaging with customers, companies can create opportunities that extend down the supply chain. She encouraged a shift in marketing approach, advocating for companies to become publishers, and utilizing their social media and websites to openly discuss sustainability efforts.

There is value in examining various scenarios such as momentum, downside, or inaction cases when working with clients on sustainability strategies, noted Olynyk. He highlighted a recent peak in commitments without necessarily having fully developed technical plans. This period, characterized by a surge in net-zero commitments, he likened to the "peak of inflated expectations." However, there has been a subsequent "trough of disillusionment" marked by challenges such as global events, including war and inflation. However, he views the current phase as more exciting and real, as companies are now focused on building tangible plans for electrification, recycling, circularity, and more. 

According to MacKinnon, on the industry side, participation in electrification is non-negotiable. OEM customers are demanding a push towards sustainability and greenwashing is unacceptable. She explained: “As Delta-Q continues to enter new markets, part of that activity is making sure these markets know who Delta-Q is and what our commitment to sustainability is. We ensure prospects can access that information throughout our marketing.”

Looking towards the future, considerable research and development efforts are dedicated to electrification. Advancements in technology, coupled with evolving government incentives, are continuing to drive industry growth. Although the sustainability supply chain is complex with no quick fixes or perfect answers, it is clear that heading towards electrification is the right direction. Building a strong case for going electric, the industry finds itself at a tipping point, brimming with new opportunities, making it an interesting and exciting time to be in the market. MacKinnon concluded the presentation by emphasizing, “At the end of the day, the move to sustainability and electrification is having a positive impact on the planet. While it is hard to put a dollar value on that directly as a business, it's a very important step forward for the entire planet. It's survival. Not only for the business but the ground we're walking on.”