Energy crisis forcing companies to take extensive cost-cutting action, research finds

Businesses are fighting back against the energy crisis with sustainability at the core of the reaction, according to research from Ayming, the international innovation consultancy.

The sudden and dramatic increase in energy prices is causing companies to seek ways to bring costs down. In a survey of 846 businesses across 17 different countries, Ayming’s research found that 77 per cent of firms are changing their business to counter energy costs. Over a quarter (26 per cent) of total respondents described those changes as radical.

This has kickstarted a range of transformation and R&D programmes. The most popular tactic is to look for energy efficiency savings, which 44 per cent of businesses are doing. However, people are also turning to more advanced and drastic strategies, such as looking to alternative energy sources, which 33 per cent of businesses are doing, or looking for alternative materials – such as those not derived from fossil fuels – which 30 per cent of businesses are doing.

Similarly, businesses are rethinking supply chains, both in terms of where they source materials, with 30 per cent sourcing materials more locally, and how they transport them, with 30 per cent looking at their logistics.

Mark Smith, Partner: Innovation Incentives at Ayming UK, says, “The rise in energy costs is so significant that, in a matter of weeks, some businesses have gone from a reliable profit to losing money. You can’t simply wait and hope for costs to go down. Survival often now depends on minimising the damage to the bottom line, which has jolted companies into action. People are now evaluating every possible option and implementing significant changes both to bring their energy consumption down and to minimise their exposure to expensive fossil fuels.”

Njy Rios, Director: Innovation Incentives at Ayming UK, explains the significance, “Companies weren’t previously motivated to change at this scale due to the large upfront costs. Reducing your energy consumption can be really expensive, but the crisis has flipped that on its head. Now, the cost of doing nothing outweighs the cost of investment. In that way, the energy crisis is a natural catalyst for green action and sustainable innovation.”

Considering the vast upfront investments needed and the fact that profits are being squeezed, Governments have a responsibility to support businesses by providing funding. However, when asked if they believe they have sufficient funding, only half of respondents said they were receiving the funding necessary to navigate the crisis.

Smith says, “Governments must ensure they have a wide range of support mechanisms to stimulate the energy transition, including R&D tax credits, grants, and subsidies. However, in light of the crisis, there’s also an argument to expand funding to any and all projects that reduce a company’s carbon footprint. So not just technical R&D but straightforward re-organising like localising manufacturing. That will provide immediate benefits both to the economy and environment.”

Further data and insight can be found in the full report here: The International Innovation Barometer 2022/23.

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Notes to Editors

Methodology:

For this report, Ayming surveyed 846 R&D and innovation directors, Chief Financial Officers, Chief Executive Officers, and business owners, up from 585 last year. Our respondents are from the following 17 countries: Belgium, Canada, China, Czech Republic, France, Germany, Ireland, Italy, Hungary, The Netherlands, Poland, Portugal, Singapore, Slovakia, Spain, United Kingdom, United States. 

The findings have then been analysed by the following members of Ayming’s senior management team.      

About Ayming 

Ayming, the international innovation and performance consultancy, combines highly specialised knowledge – across a range of fields – with hands-on collaboration to enable our clients and their people to go further. 

We are 1300 employees operating in 15 countries across Europe, North America, and Asia. We have a proven track record of providing leadership and sharing insight for over 30 years. By focusing on innovation, finance and people, Ayming consistently delivers a strong return on investment. 

Innovation is fundamental to staying competitive, but funding and tax in this field are complex and often under-exploited, as is the importance of company-wide engagement. We open new possibilities. 

People are a company's most important resource. While R&D enhances products, our People, Performance and Development Consulting enhances teams, equally critical to business success. By finding new ways to engage and motivate employees, we help companies reach their potential. 

We base our work on a deep understanding of need and context because every case is different. We deliver real results by executing and implementing projects alongside our clients on the ground and seeing them through until they make a genuine impact. A collaborative, human approach mixed with digital efficiency brings new energy to organisations by helping improve decision making at all levels.  

We build trust and a supportive environment of continual improvement. Through extraordinary relationships, we achieve extraordinary results. In research and development funding alone, we generate €1bn a year for our clients. Together we go further.