PREVIEW: I by IMD Issue 19 - September 2025 - Supercharging the energy transition

#19 Sept-Nov 2025 / 20 CHF

PLUG INTO EMERGING ECONOMIES In a rapidly developing energy landscape, Brazil, India, and Nigeria present opportunities for adventurous businesses.

INTUITION IS YOUR SUPERPOWER Even in the age of AI, making decisions based on a ‘hunch’ is a valuable and underrated skill that is well worth honing.

BUSTING THE MYTHS ON GEN Z One person’s digital native is another’s entitled disruptor. Find out how to get the best out of this misunderstood generation.

SUPERCHARGING THE ENERGY TRANSITION ibyimd.org

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[ Foreword ]

It’s vital to spend time and energy on thinking through net zero Navigating this complexity requires more than ambition; it demands pragmatic action and a dual-strategy approach, as detailed by Winter Nie and Ivy Buche in "VARO'S twin-engine strategy strikes a balance between old and new energy sources". Their analysis of the Swissbased energy group offers a powerful lesson: profitable conventional energy operations can fund decisive investments in green energy, creating a balanced and resilient business model. Meanwhile, Clara Camarasa, in "Efficiency equals smart strategy, so why the inertia?", reminds us that the fastest and cheapest way to cut emissions is often the most overlooked – doing more with less energy is crucial for making progress on climate targets and makes good business sense.

The transition is not without its challenges. Arturo Bris's "How to survive and thrive as political battles rage over the push for net zero" confronts the messy reality of partisan divides over climate policy.

He makes a compelling case for leaders to develop strategies that navigate this chaos, emphasizing that a strong, data-driven approach is essential to avoid being swayed by rhetoric. A similar dilemma is explored by Jad Mouawad and José Parra Moyano in their contribution, "Will AI become a catalyst for the net-zero transition or a drag on it?" They explore the paradox of artificial intelligence's immense energy consumption versus its potential to supercharge efficiency and optimization across industries.

The energy transition is more than a buzzword; it is a fundamental force reshaping global business and society. In its simplest form, it is the profound shift from a fossil fuel-dependent past to a future powered by clean, renewable sources. “While the US has turned its back on net zero, not all is lost”, writes Jerry Davis.

Illustration: Jörn Kaspuhl

The imperative for the energy transition remains a persistent and urgent reality for leaders. This issue of I by IMD is dedicated to exploring this vital topic, asserting that leaders cannot afford not to have an evidence-based opinion on the energy transition and must think through the short- and long-term implications for their organizations.

As the articles in this issue demonstrate, the stakes are higher than ever, and a nuanced understanding is paramount. In their article, "Energy transition: how to surf the wave of changes without being wiped out", Julia Binder and Knut Haanaes argue that organizations must embrace this transition or risk being left behind, highlighting the strategic shifts that are redefining competitiveness. This sentiment is echoed by Roberto Bocca, who, in his article "Why emerging economies are the next frontiers of the energy transition", shows us that future growth and influence will come from nations like Brazil, India, and Nigeria, which are pioneering their own unique pathways to a cleaner future.

Ultimately, the decisions made today will shape our future. This requires a new level of accountability, as highlighted by Sara Ratti in "Redesigning pay incentives can turn climate promises into action”.

By linking executive compensation to climate targets, boards can ensure that well-meaning but vague ambitions are translated into tangible, measurable results.

The conversations within these pages are not about what to think, but how to think about the energy transition. It's an invitation to move beyond reactive responses and embrace a leadership mindset that is grounded in evidence, agile in its approach, and committed to creating long-term value for both business and society.

Thought-provoking articles on leadership, board careers, family values, AI adoption, decoding Gen Z, and a new column in the Coaching Corner complement this September issue. ■ Happy reading,

Stefan Michel, Professor of Management, Dean of Faculty and Research

Sept-Nov 2025 • I by IMD 1

[ CONTENTS ] 19

04 [ In good company ] President Donald Trump has turned his back on net-zero targets, but the rest of the world has the financial leverage to keep the US on board, argues Jerry Davis.

PLUG INTO EMERGING ECONOMIES In a rapidly developing energy landscape, Brazil, India, and Nigeria present opportunities for adventurous businesses.

INTUITION IS YOUR SUPERPOWER Even in the age of AI, making decisions based on a ‘hunch’ is a valuable and underrated skill that is well worth honing.

BUSTING THE MYTHS ON GEN Z One person’s digital native is another’s entitled disruptor. Find out how to get the best out of this misunderstood generation.

SUPERCHARGING THE ENERGY TRANSITION ibyimd.org

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[ Energy transition ] The move toward a renewable energy future is facing strong headwinds.

Investor pushback and political antipathy threaten to slow and, in some cases, reverse progress. In this issue, our team of experts explores what must be done to keep the green energy transition on track.

Cover: Image generated using Midjourney V7 @ paulandcat

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06 Organizations need to embrace the energy transition or

42 Business leaders will be instrumental in ensuring that power-

risk being left behind. Julia Binder and Knut Haanaes suggest practical ways to get ‘future ready’.

hungry AI helps, not hinders, the push for net zero, say Jad Mouawad and José Parra Moyano.

14 Emerging economies are the next frontiers of the energy transition, says Roberto Bocca. Companies should tailor their approaches to tap into growth markets.

[ Leadership ] 46 In the age of AI, intuition still has a vital role to play in decision-making. Heather Cairns-Lee and Eugene Sadler-Smith explain how best to use and develop your ‘sixth sense’.

19 VARO, the Swiss-based energy group, is pursuing a ‘twinengine’ approach to a renewables-focused future. Winter Nie and Ivy Buche explore the principles underpinning its success.

25 David Bach discusses the push for net-zero shipping with Maersk’s Morten Bo Christiansen and Bo Cerup-Simonsen of the Maersk Mc-Kinney Møller Center.

28 Doing more with less energy is the fastest way to cut emissions, writes Clara Camarasa. Business leaders must do more to translate words into action.

31 Business leaders need to build strategies that take into account the political divide over net zero while advancing the interests of their companies and society, suggests Arturo Bris.

34 Save the planet or save the economy? It doesn’t have to be a choice. Amy Lau and Amit Gulwadi address the dilemma facing many C-suite executives.

[ The human touch ] 51 Shelley Zalis introduces the ‘Rose Gold’ rule of leadership.

It’s no longer a case of ‘me’ but ‘we’, she says. [ Leadership ] 52 Jackie Cooper busts the myths surrounding Generation Z and shows how leaders can build meaningful connections with this cohort of digital natives.

56 [ Innovation ] The biological process of human aging is becoming better understood, and the longevity market is evolving fast.

Jennifer Borrer and Saule Serikova assess the benefits.

62 [ Governance ] When moving from the C-suite to a seat on the board, it’s vital to tune in to the prevailing culture, says Marie-France Tschudin.

CEO of ABB, explains to Jean-François Manzoni why ‘lean’ and ‘clean’ are perfect partners.

64 [ Family business ] Multi-generational, family-run enterprises can teach other organizations a great deal about survival and resilience, say Peter Vogel and Simon J Evenett.

39 Linking executive pay to climate change targets will help turn well-meaning but vague net-zero ambitions into tangible results, argues Sara Ratti.

68 [ Coaching corner ] Stuck in your comfort zone and fearful of taking risks?

Brenda Steinberg explains what you need to do.

36 In our CEO Dialogue series, Morten Wierod, President and

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#19 Sept-Nov 2025 / 20 CHF

Publisher International Institute for Management Development, Ch. de Bellerive 23, P.O. Box 915, CH-1001 Lausanne | Switzerland

Editorial Advisory Board Stefan Michel Professor of Management, Dean of Faculty and Research, IMD

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Christine Batruch Sustainability Advisor, Lundin Group; President, Bohdan Hawrylyshyn Family Foundation Vincent Bieri Co-Founder Nexthink; Member of the Board of Advisors Trust Valley Jean-Philippe Bonardi Professor of Strategic Management and former Dean at HEC Lausanne, University of Lausanne Kate Byrne, Chief Executive, Katapult X

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Des Dearlove, Co-founder at Thinkers50 Michel Demaré Chairman of IMD; Chair of the Board at AstraZeneca Plc and a member of the supervisory boards at Vodafone Group Plc and Louis-Dreyfus Company International Holdings B.V.

70 [ Brain circuits ] Your ‘secret shadow’ may be holding you back personally and professionally. Ginka Toegel explains how to tap into its latent energy.

Cynthia Hansen Managing Director of the Innovation Foundation, empowered by the Adecco Group

Photos: ABB, Midjourney V7 @ paulandcat, Novartis, Georgina Smith/CIAT, Illustration: Jörn Kaspuhl

71 [ Well-being ] In the era of burnout and quiet quitting, happiness is one often overlooked factor that can transform leadership resilience and team performance, argues Bülent Gögdün.

74 [ The forecaster ] Howard Yu explains why history shows us that slow and steady wins the race when it comes to adopting AI.

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76 [ Sustainability ] Staying committed to sustainability goals in the teeth of resistance from Donald Trump and others is the test of true leadership, argues Amanda Williams.

78 [ The questionnaire ] In our series The Final Word, Roy Twite, CEO of the engineering company IMI plc, reveals who he’d like to be for a day and his ideal dinner guest.

80 [ Afterword ] In his regular PS column, David Bach reflects on the triumphs and challenges of his first year as IMD President.

Prince Michael of Liechtenstein Founder and Chairman of Geopolitical Intelligence Services AG; Chairman of the European Centre of Austrian Economics Foundation in Vaduz; Member of STEP Ann-Marie Sevcsik​Catalyst of social change through innovative partnerships Michael Skapinker Financial Times contributing editor Ian Charles Stewart Executive in Residence, IMD; Main Board Director Trustee International Institute for Sustainable Development; Co-Founder of WiReD Magazine Su-Mei Thompson CEO at Media Trust Editorial Delia Fischer, Matt Falloon, Ken Toner Art Director Catharina De Gregorio Printing Copytrend SA Lausanne

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Sept-Nov 2025 • I by IMD 3

[ In good company ]

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he lurch toward authoritarianism in the US and elsewhere has brought effective climate action into question. The clean energy transition requires governments around the world to help finance and coordinate efforts toward decarbonization. But what happens when one of the major combatants in the war on climate change goes AWOL – or, worse still, aims to reverse course and double down on fossil fuels?

The transition from the Biden administration to the second Trump administration saw a radical change of course. In 2022, Joe Biden signed the most ambitious climate bill in history – the Inflation Reduction Act (IRA), which promised hundreds of billions in funding for the clean energy transition and environmental remediation. Less than three years later, Donald Trump effectively nullified the IRA, throwing into question the billions in business investment that had relied on a transition to net zero.

What are the prospects for that transition now? Will business give up on the clean energy transition? Or is the economics of clean energy too compelling to forsake?

Carbon and corporations

The US has turned its back on net zero, but all is not lost The success of the biggest American companies and pension funds depends on international markets. Perhaps this can give the world the leverage it needs to keep the US on board for the energy transition, argues Jerry Davis

It has been getting a lot hotter here on Earth. The 10 hottest years on record all occurred within the past decade, and the past few years saw a particular off-trend spike in year-round temperatures.

It’s no coincidence that the concentration of heat-trapping carbon dioxide in the atmosphere has risen dramatically over the past 65 years. The Keeling Curve shows the concentration of carbon dioxide parts per million (ppm) as measured at the Mauna Loa observatory in Hawaii, providing a consistent data series going back to 1960. In that year, carbon ppm was below 320. Today it stands at 425, a level unprecedented in human history.

About 80% of annual carbon emissions come from the use of fossil fuels. Burning coal throws off 15 gigatons a year, oil produces 12, and burning gas is responsible for eight. All of these sources of carbon have increased without interruption for generations, save for a modest (and brief) decline during the early part of the COVID-19 pandemic.

The source of these emissions is remarkably concentrated in a small number of “carbon majors". In 2019, The Guardian reported that just 20 firms were responsible for one-third of the carbon emissions since 1965. By 2023, emissions were even more concentrated.

One might say, “Great! If we can just persuade these 20 companies to transition to a fossil-free energy future, our problem is mostly solved.” (If you said this to yourself, I admire your optimism.) Unfortunately, this would misunderstand the nature of for-profit business enterprises. It would also miss the fact that 16 of the 20 biggest fossil companies are owned by their governments, most of which are autoc-

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Illustration: Jörn Kaspuhl

How hard can it be to change 20 companies?

racies. The five biggest emitters were state-owned: Aramco (Saudi Arabia), Coal India (India), CHN Energy (China), NIOC (Iran), and Jinneng Group (China) – all but one in authoritarian states. Meanwhile, the top investor-owned emitters were ExxonMobil (US), Chevron (US), Shell (UK), Total (France), and BP (UK). The prospects for fundamental transformation in highly profitable corporations owned by their revenue-hungry governments are, let's say, modest.

Perhaps we can solve the problem on the demand side by taxing carbon and letting the wonder of the free market fix things. Unfortunately, we do not have much time. Markets may be magical, but we need action now. Consider a parallel: imagine that an unnamed nation has invaded Poland, Denmark, Norway, Belgium, the Netherlands, Luxembourg, France, and Greece. Would reasonable people say, “Let's let the market and entrepreneurs come up with a bold solution”? Not if we hoped to survive. Environmentalist Bill McKibben made this parallel explicit almost a decade ago, when he argued that the war against climate change really was a war – in effect, a third world war. “The question is not, are we in a world war?

The question is, will we fight back? And if we do, can we defeat an enemy as powerful and inexorable as the laws of physics?” His prognosis was stark: we had the tools and materials we needed to take on this challenge, but it would require society-wide mobilization.

The arsenal of democracy It seems the only plausible pathway is to get the major emitting nations to create coordinated decarbonization blueprints that work within their own economies. Specifically, the five biggest emitters are China (32% of the world's “market share” for carbon emissions), the US (13%), India (8%), Russia (5%), and Japan (2.6%). Unfortunately, one of them has experienced a bit of a reversal lately, and its prospects for leading the charge on addressing climate change are in serious doubt.

The US takes justified pride in its national projects. When the goal is inspiring, such as landing a man on the Moon, or existential like preserving democracy and ending the threat of fascism in Europe, America and its government can accomplish the impossible.

As McKibben pointed out, the mobilization for the Second World War is the closest parallel to the climate crisis. The US joined the war late, after the attack on Pearl Harbor in December 1941, but the federal government rapidly coordinated a vast, economy-wide effort to win the war. It created the War Production Board and the Office of Price Administration to coordinate industry for wartime production and stabilize the economy. Major manufacturers such as Ford and General Motors converted to the production of tanks and planes, creating the “arsenal of democracy”. Millions of men were drafted into the military, and millions of women joined the workforce in manufacturing and elsewhere, while the government standardized labor practices across the economy. War bonds turned households into investors in the war effort. And science and technology were mobilized on an unprecedented scale, including the Manhattan Project that yielded the atomic bomb. Four years later, the war was over. Western Europe

‘Businesses are reeling as they seek to find solid ground for their climate investments. Entire industries are put at risk by policies that read as a photo negative of the previous administration’ began reconstruction on a (mostly) democratic footing, and America's economy and society had been transformed forever.

America can be highly adept at mobilizing at a society-wide level to take on existential challenges. The Biden administration aimed to build on this precedent to take on the climate crisis. The centerpiece of its effort was the Inflation Reduction Act, a misleadingly named bill that was widely recognized as the most significant piece of climate legislation in American history. The bill was ambitious, and its provisions wide-ranging, including hundreds of billions for investment in clean energy (solar, wind, geothermal, batteries, etc.), massive tax credits for renewable energy installation and electric vehicles, credits for clean energy manufacturing and infrastructure upgrades, funding for remediation, especially for disadvantaged communities, and support for sustainable agriculture and rural clean energy production. At long last, the US had joined the fight in earnest.

How do you solve a problem like America?

Was it all just a dream? Just three years ago, the US was poised to help lead the clean energy transition with aggressive investment in renewables, batteries, infrastructure, and remediation. New enterprises opened across the land, and existing businesses such as Ford and General Motors joined the fight, rolling out new products and going all in on the green transition – much as they had transformed 80 years earlier. As for me, I bought a Ford Mach-E electric car, installed a vehicle charger at my house, replaced my furnace and central air conditioner with a heat pump, put solar panels on the roof, and bought a whole-house battery. (These last two required getting a new roof as well.) Thanks in part to generous tax breaks, my household made a big leap toward decarbonization over the past two years.

Today, those incentives are gone. Trump has withdrawn the US from the Paris Agreement, renounced the UN's Sustainable Development Goals, rescinded large swaths of climate regulation, voided the funding opportunities from the IRA, crippled the Environmental Protection Agency, and suppressed and defunded climate science. On his first day in office, he declared a “National Energy Emergency” as a pretext to expand domestic coal, oil, and gas production in an effort to achieve so-called “energy dominance”. »

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[ In good company ]

Businesses are reeling as they seek to find solid ground for their climate investments. Entire industries are put at risk by policies that read as a photo negative of the previous administration. The world's second-largest carbon emitter has made a rapid U-turn back to the past. Meanwhile, the US-centered AI industry is investing hundreds of billions of dollars in energy and water-hungry data centers in an apparent effort to replicate the Easter Island experience (where it has long been thought that society collapsed due to environmental degradation, although new research has called this narrative into question).

And yet, the US is not the only government (or market) that matters when it comes to climate change. Among S&P 500 companies that report their international revenues, 36% come from outside the US, and for the “Magnificent Seven”, it’s over half. Just over 50% of Alphabet’s revenues are from non-US sources. For Microsoft, it’s 49%, Tesla, 51%, Nvidia, 53%, Apple, 57%, and Meta, 62%. Even Amazon, the most domestically oriented of the seven, earns nearly 40% of its revenues outside North America.

This may just be the wedge the world needs to prevent one rogue nation from walking away from the climate battle. At the time of writing, the Magnificent Seven make up more than one-third of the value of the S&P 500. Three in five American families are invested in the stock market, and their pensions are almost exclusively betting on shares – mostly via index funds. Whatever threatens the market valuations of these seven companies also puts at risk the college and retirement savings of half of America, and the current US administration is highly attentive to the performance of the stock market. Perhaps this provides the EU just the leverage it needs to keep the battle against climate change on track. ■

JERRY DAVIS is the Gilbert and Ruth Whitaker Professor of Business Administration and Professor of Sociology at the University of Michigan’s Ross School of Business. He has published widely on management, sociology, and finance. His latest book is Taming Corporate Power in the 21st Century (Cambridge University Press, 2022).

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Photo: Midjourney V7 @ paulandcat

As my co-authors and I argued in the Stanford Social Innovation Review in 2008, this situation creates an opportunity. Multinational corporations are subject to regulation wherever they do business, and for many of them – particularly Big Tech – the European Union is a vast and profitable market that they cannot afford to lose. We argued that the EU sets the standards for environmental impact and product safety: its regulations (such as the Corporate Sustainability Reporting Directive) tend to be the most demanding, and it’s easier for multinationals to simply adopt a single standard across their product portfolio – making the EU in effect their global regulator. Anu Bradford at Columbia University calls this the “Brussels Effect". The EU's Carbon Border Adjustment Mechanism provides another potent tool to prevent carbon leakage by multinational corporations.

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