Market research firm JD Power released a new sustainability index based on environmental, social and governance (ESG).
The index evaluates customer behavior around their local utility’s sustainability programs and goals. The results revealed how customers were unaware of sustainability initiatives in their community.
The JD Power 2020 Sustainability Index—Climate collected data from the 35 largest U.S. electricity utility providers, with a threshold of 500,000 or more residential customers.
The report comes in response to an institutional shift for implementing renewables in place of fossil fuels. Last week, House Democrats presented a new climate plan. Last year, New York and California committed to hit 100% renewable energy targets by 2050.
With both states and utility companies pushing more ambitious clean energy goals, it is important to evaluate and understand market responses at the consumer level. Based on the findings, electricity utility customers appear to possess a lower level of awareness about climate sustainability initiatives from their local utility providers.
JD Power 2020 Sustainability Index—Climate
Here are some of the key findings from the 2020 index according to JD Power’s website:
- Consumer awareness and engagement with utility climate initiatives are very low: The overall sustainability scores for electric utilities evaluated in the study, which are based on consumer awareness, support, engagement, and advocacy for their local utility’s climate initiatives, ranging from a high of 32 to a low of 19 on a 100-point scale.
- Most concerned cities: Utility customers in New York City (Con Edison), Los Angeles (Los Angeles Department of Water & Power) and Portland, Ore., (Portland General Electric) have the highest levels of concern regarding climate change.
- Climate change skeptics: Wyoming and Alabama have the largest percentages of climate change skeptics, with 15% and 11% of respondents, respectively, responding that “there is no climate change.”
- Business customers more engaged in sustainability than residential customers: On average, business utility customers are more aware and supportive of their local utility’s climate sustainability initiatives than residential customers.
- Highest-scoring utilities: NextEra Energy and Sacramento Municipal Utility District have the highest scores in 2020 with a score of 32 (on a 100-point scale).
|Sacramento Municipal Utility District||32|
|Portland General Electric||29|
|L. A. Dept. of Water & Power||28|
|Pacific Gas and Electric||27|
|Salt River Project||27|
|Berkshire Hathaway Energy||26|
|OGE Energy Corp.||25|
|WEC Energy Group||23|
Analyzing the results
There is a difference between caring about sustainability initiatives, and understanding them. One poll, one study, one survey after another reveals how American consumers feel concerned about environmental issues, but disconnected from activism.
Consumers may want to do their part, but how can we do their part? The answer is more complicated.
Maybe it’s a marketing problem for utility companies. Maybe it’s a bureaucracy problem for state governments.
In many ways, it seems like a consumer education and communication problem. For example, being in a densely populated area, my utility company is listed in this index. There was no informational tool in my inbox to breakdown online billing, or educational brochure in my mailbox about ways to conserve energy. These things probably exist, but consumers aren’t seeing them.
As a Con-Ed customer, I was not aware of my utility company’s initiative to transition to renewable energy. I just kind of… pay my bill, do what I can to take quick showers and turn the lights off when I can, reduce my data usage, and ignore my utility company at all costs.
Companies in traditional industries like electricity need to adapt marketing initiatives to match 21st-century tools to get the message across.
7/21/20 Update: I was watching an episode of Jeopardy, and sure enough a well-produced ConEd commercial came on. The ad was built around, you guessed it, a sustainability initiative.
Clearly, ConEd is paying attention to JD Power’s report. The commercial hit on everything I was looking for. Will customers respond with more responsible habits at home?
Companies need consumers to learn too
You may be saying, who cares? If the business is doing something positive for society, what difference does it make if consumers are aware of it or not?
Well, there are two perspectives. From a profit perspective, if consumers aren’t aware of your social good, then you are wasting effort attracting new customers with an initiative no one knows about. From an altruistic perspective, you need consumers to carry out your goal. Here’s why.
When a business is doing its part to push for a healthier environment, that’s great. However, in a consumer-centric business like power utility, consumer education — and subsequently consumer behavior — make up a critical component of your initiative’s results.
If you run a marketing campaign targeted at reducing energy use for your customers, transitioning to renewables doesn’t ensure efficient use of energy. As it stands in 2020, renewable energy derived through solar & wind is still less reliable than fossil fuel use, or else we would all be relying on renewable energy to power our homes, cars, and businesses. So, doing more on the business side isn’t enough. True energy efficiency will come from a combination of consumer awareness/action and institutional activism.
Consumers have to absorb and distill information about complicated subjects like sustainability before applying it to our daily routine. And it seems like we aren’t even good at the first part. Teaching consumers ways to practice energy-saving is critical to optimize any company impact.
That way, you can also accomplish what your marketing team set out to achieve.
For more information about the J.D. Power Sustainability Index—Climate, visit https://www.jdpower.com/business/utilities/jd-power-climate-leadership-program.