CSR Issue
Energy Crisis: Impact and Sustainable
Solutions [Learner Name]
Capella University
May 25, 2022
Introduction
Resilient companies avoid making corporate social responsibility (CSR) an add-on to their regular operations.
Accounting for stakeholder interests should be integral to a company’s transformation efforts (Kaplan, 2020).
In the context of its entry into the European electric vehicle (EV) market, Tesla’s key strength is its core purpose— its exclusive focus on sustainable energy (Tesla, 2021).
Other automakers are mainly manufacturers of conventional cars and manufacture EVs to meet government regulations. Tesla, on the other hand, does not manufacture conventional cars.
The Problem
The CSR Issue Tesla’s Business Problem
• Europe has been facing a severe
energy crisis.
• Increasing energy costs impact
consumers and small businesses.
Driving the mission of transition to
sustainable energy in Europe
Impact of the
European
Energy Crisis
Impact on low-income households in the European Union (EU)
Low-income households in the EU are unable to afford energy bills and pay proportionately more for energy (Right to Energy Coalition, n.d.).
Energy poverty is expected to rise in the EU, making energy a social justice issue (Right to Energy Coalition, n.d.).
Impact on Germany
The electricity prices in Germany are among the highest in Europe (Appunn, 2022), with the poorest paying proportionally more (Wehrmann, 2022).
The German economy's reliance on Russian gas makes it particularly vulnerable (Chazan et al., 2022).
Advantages and Limitations of Possible
Solutions
Possible Solution Advantages Disadvantages
Sell power directly to low-
income households
Is feasible and can provide relief to
impacted households
May not be profitable for
Tesla
Set up virtual power plants
(VPPs)
Is feasible and sustainable for local
communities as well as for Tesla
May face competition
from local energy
companies
Carry out product donation in
worst-hit areas
Is impactful when the crisis is
localized and offers a sense of
purpose to employees
May not be profitable for
Tesla and may not impact
large-scale
transformation
substantially
Recommended
Solution
Setting up VPPs in Germany and impacted EU countries
Aligns strongly with Tesla’s sustainable energy goals
Bridges the affordability gap that keeps average
consumers from purchasing Tesla’s products
Could play a crucial role in accelerating decarbonization
efforts
Could help build clean energy ecosystems that boost the
use of Tesla products to their full potential
Provides a viable solution to the energy crisis
Could strengthen brand image and improve
shareholders’ market valuation
Sustainability of the CSR Solution
Tesla’s VPP in South Australia has established the model as a sustainable clean
energy solution that can be scaled up.
VPPs provide energy security and energy resilience to communities (Naval &
Yusta, 2021).
Lower costs for consumers make it sustainable for low-income homes
(Lambert, 2022).
Lower establishment costs and less reliance on big investments improve
profitability (Naval & Yusta, 2021).
Shared ownership in the form of stock-based compensation allows Tesla to
pass on financial benefits to its employees (Tesla, 2021).
Conclusion
Sustainability is integral to Tesla, not an expendable CSR agenda.
The factory in Berlin is an opportunity to drive EV sales and accelerate
decarbonization in Europe.
Responding to the energy crisis in Europe could deepen Tesla’s presence in the
continent.
The energy crisis impacts low-income households.
VPPs can address the current energy shortages while fulfilling Tesla’s mission
to accelerate the transition to sustainable energy.
References (1)
Appunn, K. (2022, February 24). The energy crunch – Effects on households and businesses and government’s reaction. Clean Energy Wire. https://www.cleanenergywire.org/factsheets/energy-crunch-effects-households-and-businesses-and-governments- reaction
Chazan, G., Miller, J., & Arnold, M. (2022, April 21). ‘Worst crisis since the second world war’: Germany prepares for a Russian gas embargo. Financial Times. https://www.ft.com/content/e82b11a1-cf1f-4543-9f9f-6ab70da6b746
Crispeels, P., Robertson, M., Somers, K., & Wiebes, E. (2022, April 21). Outsprinting the energy crisis. McKinsey & Company. https://www.mckinsey.com/business-functions/operations/our-insights/outsprinting-the-energy- crisis#:~:text=European%20energy%20markets%20are%20experiencing,higher%20than%20their%202021%20average.
Department for Energy and Mining. (n.d.). South Australia’s virtual power plant. Government of South Australia. https://www.energymining.sa.gov.au/growth_and_low_carbon/virtual_power_plant
Eckert, V., Steitz, C., Käckenhoff, T., & Taylor, E. (2020, September 2). Tesla tests the circuits for German energy market push. Reuters. https://www.reuters.com/article/us-tesla-energy-germany-focus-idINKBN25T1S7
Euronews. (2022, February 10). Why is there an energy crisis in Europe? https://www.euronews.com/2022/02/03/europe-s- energy-crisis-why-are-natural-gas-prices-soaring-and-how-will-it-affect-europeans
Hanley, S. (2020, September 9). Tesla puts new emphasis on becoming an electricity supplier in Germany. CleanTechnica. https://cleantechnica.com/2020/09/09/tesla-puts-new-emphasis-on-becoming-an-electricity-supplier-in-germany/
Kaplan, S. (2020, August 20). Why social responsibility produces more resilient organizations. MIT Sloan Management Review, 62(1), 85–90. https://sloanreview.mit.edu/article/why-social-responsibility-produces-more-resilient-organizations/
Kuiper, G. (2022, March 21). Why virtual power plants are the future of electricity retailing. Renew Economy. https://reneweconomy.com.au/why-virtual-power-plants-are-the-future-of-electricity-retailing/
References (2)
Lambert, F. (2022, April 27). Tesla expands its virtual power plant to new regions in Australia. Electrek. https://electrek.co/2022/04/27/tesla-expands-virtual-power-plant-new-regions-australia/
Lee, J., & Kwon, H.-B. (2019). The synergistic effect of environmental sustainability and corporate reputation on market value added (MVA) in manufacturing firms. International Journal of Production Research, 57(22), 7123– 7141. https://doi.org/10.1080/00207543.2019.1578430
Naval, N., & Yusta, J. M. (2021). Virtual power plant models and electricity markets - A review. Renewable and Sustainable Energy Reviews, 149, 11393. https://doi.org/10.1016/j.rser.2021.111393
Nazaruk, Z., & Pedersen, M. (2022, March 1). Why energy poverty is rising among low-income households in the EU. Euronews Green. https://www.euronews.com/green/2022/02/23/why-energy-poverty-is-rising-among-low-income-households- in-the-eu
Next Kraftwerke. (n.d.). The power of many. https://www.next-kraftwerke.com/vpp
Ohnsmann, A. (2022, January 26). Sales surge–but EV competition is building. Forbes. https://www.forbes.com/sites/alanohnsman/2022/01/26/tesla-notches-record-profit-on-sales-surgebut-ev-competition-is- building/?sh=1eb6f22d1ef6
Right to Energy Coalition. (n.d.). About energy poverty. https://righttoenergy.org/about-energy-poverty/
Tesla. (2020). Impact report. https://www.tesla.com/ns_videos/2020-tesla-impact-report.pdf
Tesla. (2021). Impact report. https://www.tesla.com/ns_videos/2021-tesla-impact-report.pdf
References (3)
Wehrmann, K. (2022, January 12). Poorest households in Germany pay highest share of income on energy expenditures. Clean Energy Wire. https://www.cleanenergywire.org/news/poorest-households-germany-pay-highest-share-income-energy- expenditures
Wickert, C., & de Bakker, F. G. A. (2019, January 10). How CSR managers can inspire other leaders to act on sustainability. Harvard Business Review. https://hbr.org/2019/01/how-csr-managers-can-inspire-other-leaders-to-act-on-sustainability
Wilmot, S. (2022, March 22). Tesla could take back Europe’s EV market. Wall Street Journal. https://www.wsj.com/articles/tesla-could-take-back-europes-ev-market-11647969137