How Energy & Utilities are strengthening their sustainability efforts

As a sector transitioning from carbon-intensive operations to increasingly renewables-based generation, the Energy & Utilities industry is increasingly focusing on sustainability and decarbonisation. According to the EY State of Sustainability study, 72% of respondents within the sector described their organisation's sustainability focus as either established or industry leading. Organisations in this sector must lead by example in their own sustainability practices to instil broader stakeholder confidence in their roles as enablers of a just energy transition for all.

In the context of an evolving regulatory landscape and ambitious decarbonisation targets, 85% of companies reported a significant increase in sustainability efforts over the past year, according to the study. This shift highlights a growing commitment to addressing environmental challenges while aligning with global climate objectives.

Strategic Alignment with Corporate Goals

Two-thirds (66%) of organisations in the Energy & Utilities sector have successfully implemented a sustainability strategy, and, encouragingly, 68% of these strategies are aligned with their broader corporate vision. Integrating sustainability into the core business strategy is a critical step towards long-term success and resilience, particularly in a rapidly changing regulatory environment.

External Expertise and Risk Assessments

Almost half (49%) of the organisations surveyed plan to consult external sustainability and ESG advisors within the next six to 12 months to enhance their sustainability initiatives. Additionally, 77% have already conducted risk and materiality assessments to identify key sustainability challenges and opportunities. These proactive steps reflect a growing recognition that external expertise and comprehensive assessments are vital to meeting the sector’s sustainability objectives. "Companies that proactively assess their risks and opportunities will be best positioned to meet future sustainability challenges head-on," adds Casey.

C-Suite Leadership and Accountability

A significant 72% of Energy & Utilities companies addressing sustainability at the C-suite level have assigned responsibility for sustainability to top executives such as the CEO or Managing Director. This clear allocation of responsibility at the highest levels underscores the critical importance of sustainability for the sector and signals a shift toward more accountable, top-down leadership in tackling environmental goals.

Realism and Progress Towards Net Zero

Despite these positive developments, there is a recognition of challenges that exist within the industry. Around one-third (31%) of respondents expressed concerns that their companies are not doing enough to address sustainability, while 25% felt that their organisations are not taking the issue seriously enough. This underlines the need for continuous improvement and the identification of barriers to more aggressive sustainability practices.

Somewhat surprisingly, less than half of organisations (47%) have adopted a net-zero science-based target, while just 35% of them have a clear roadmap to net zero. While the path to net zero will be unique for each organisation, key actors in the energy and utilities sector must have a clear understanding of where they’re headed; efforts are needed now to refocus on achieving the net-zero goal in an achievable timeframe. "The path to net-zero will be different for every organisation, but what’s critical is a clear roadmap and decisive action to drive meaningful change," notes Casey.

He further emphasises, "Achieving net-zero is not just about setting ambitious targets; it requires a shift in operational models, strategic investments in new technologies, and a willingness to collaborate across industries and governments. Companies that take a structured and proactive approach to emissions reduction will be the ones that lead the energy transition."

Motivation and Drivers

One key driver behind the momentum towards decarbonisation is customer perception, with 83% of organisations stating that the sustainability of their products and services is extremely or very important to customers. Additionally, 81% emphasised the importance of sustainable business operations in the eyes of their customers.

Stakeholder demands and access to capital are also cited as critical factors driving sustainability efforts. More than two-thirds (66%) of respondents report increased enquiries from stakeholders regarding their sustainability practices, while 52% believe that demonstrating sustainability is essential for securing investment and financing.

Interestingly, compliance concerns ranked lower, with only 21% of organisations stating that their sustainability efforts are driven by the need to meet regulatory requirements. Nevertheless, respondents highlighted the importance of complying with major regulatory factors such as the EU Emissions Trading Scheme (60%), the EU Deforestation Regulation (60%), and the Corporate Sustainability Due Diligence Directive (CSDDD).

Stakeholder Engagement and Regulatory Compliance

In February 2025, the European Commission introduced the "Simplification Omnibus" proposal, aiming to reduce the administrative burden of sustainability reporting and due diligence requirements for businesses operating within the EU. This proposal significantly alters the scope of the Corporate Sustainability Reporting Directive (CSRD) by raising the reporting threshold from companies with more than 250 employees to those with more than 1,000 employees. As a result, the number of companies required to comply with CSRD reporting obligations is expected to decrease by approximately 80%.

It’s important to note that this research was conducted prior to the introduction of the Omnibus package. However, despite these simplifications, the proposal maintains stringent requirements for the companies that remain within scope. According to the research, 66% of businesses in the Energy & Utilities sector believe that once they are compliant with Irish Government and EU-related sustainability standards, they have sufficiently addressed sustainability concerns. This perspective may need reassessment in light of the evolving regulatory landscape, as the Omnibus proposal continues to emphasise comprehensive reporting and due diligence obligations for larger entities.

The preparedness of organisations at the time the research was conducted appears mixed. While 53% of respondents rated their preparedness for CSRD and ISSB reporting as established or industry-leading, 12% felt unprepared, and 13% assessed their readiness as basic.

Less than one-third (32%) of organisations had implemented systems for greenhouse gas calculations, and only one-third (33%) felt prepared for both voluntary and mandatory ESG regulatory reporting. "As regulatory requirements evolve, companies must stay ahead by investing in their reporting and compliance capabilities," advises Derarca Dennis, EY Ireland Partner and Sustainability Services Lead.

Looking Ahead: The Role of Mergers and Acquisitions

Looking to the future, 38% of respondents indicated that they plan to improve their sustainability position through mergers or acquisitions, with 19% already evaluating the sustainability status of potential targets. This trend is likely to increase as the energy sector seeks to consolidate sustainability practices and enhance overall performance.

Conclusion: Navigating the Transition to a Sustainable Future

As the Energy & Utilities sector continues to evolve in response to sustainability and decarbonisation challenges, it is clear that organisations are making substantial progress. However, the journey is far from complete. There is an ongoing need for increased stakeholder engagement, enhanced data management capabilities, and a more aggressive commitment to achieving net-zero targets.

Organisations that invest in strategic sustainability initiatives, robust reporting systems, and external expertise will be better positioned to navigate the evolving regulatory landscape, meet stakeholder expectations, and deliver long-term value for both the environment and their business.