Author: Aspectus Group

By: Chris Bowman

What do Shell and Arsenal football club have in common?

For one thing, they both face the wrath of an extinction rebellion. In Shell’s case, the network of committed climate change and social justice activists; In Arsenal’s case, the fans and players incandescent about the unceremonious axing of beloved mascot, Gunnersaurus.

But the parallels don’t end there – and Gunnersaurus is more relevant than you might think. They have both recently made remarkably similar comms missteps when announcing job cuts. What lessons can we tenuously draw from them?

Arsenal extinctions

Arsenal first (not in the table, regretfully). On 5th August, the club announced plans to make 55 non-playing staff redundant due to the coronavirus pandemic’s impact on revenues. This proved controversial, with the head coach and most of the playing staff having agreed to take a 12.5% wage cut in April. They were persuaded to do so, if players are to be believed, in large part because they were under the impression that it would safeguard the jobs of their non-playing colleagues and were unhappy to find this wasn’t the case. To rub salt in the wound,  the very next week Arsenal announced the signing of free transfer Willian, whose weekly wage alone is surely well north of £120,000 per week.

Fans and commentators were rightly incensed. A lot of PR efforts had been expended painting Arsenal as a family club and these actions seemed to contradict that. It was galling to be told that the club couldn’t afford the wages of the 55 non-playing staff – which have estimated to average £35,000 per year, only to then immediately be told the club could in fact sign an ageing player who earns nearly four times that figure every week.

However, in and among the ire there was also a decent degree of understanding across the fanbase that these are “unprecedented times” and that the pandemic represented an enormous hit to revenues at a club that always tried to only spend what it earns.

Whatever was left of that goodwill evaporated though, when sources in the club revealed that many of the job cuts were actually part of wider restructure on how the club was run and handled recruitment. The suggestion was that this had always been the model technical director Edu wanted to implement, and that COVID-19 merely gave him a convenient excuse to swing the axe.

And then, of course, came the fateful day shortly after where beloved mascot of over 25 years, Gunnersaurus, also faced a cost-cutting extinction event.

So, which was it? Were the job cuts a sad but necessary consequence of the pandemic? Or were they casualties of a long-sought restructure, necessary for the club’s future?

Shelling out

On the face of it, the international oil and gas supermajor Shell could hardly be more different to a Premier League Football Club – especially as Arsenal are one of the few top teams not running on petrodollars (cough, Man City, cough, Chelsea). However, there were some striking parallels with how it announced 9,000 global job cuts in September.

Like Arsenal, the company seemed to put out mixed messages on whether the cuts were driven by the virus, or by pre-existing organisational strategy.

Chief executive Ben van Beurden said: “It is very painful to know that you will end up saying goodbye to quite a few good people. […]But we are doing this because we have to, because it is the right thing to do for the future of the company,” before going on to discuss the firm’s pivot to a net-zero energy business and how that meant the firm would have to change the products it sold. Reading between the lines, it’s hard to miss the inference that job cuts in oil and gas were always going to be on the table.

So we can ask again:  which is it? Were the job cuts a sad but necessary consequence of the pandemic? Or were they casualties of a long-sought restructure, necessary for the energy company’s future?

Muddied waters

There is no easy or right way to announce job cuts. They entail families losing their livelihoods, lives upended and considerable hardship. However, at a time when no one is going to respond positively to the message, the best thing a company can do to protect its reputation is to communicate with honesty and integrity.

People can understand that the economic fallout of the pandemic can lead to job cuts. They can also understand that organisations sometimes make ruthless strategic pivots in how they operate – even if they don’t like either explanation. But by switching between the two explanations, or messily mixing up the two, the brand risks losing credibility. From the audience’s perspective, two half-truths add up to one whole lie – and no one likes being lied to.

No doubt both Arsenal and Shell have found themselves having to make unenviable decisions of late, and it’s easy to criticise from the sidelines and with hindsight. But it’s always best to deliver bad news straight: with integrity, clarity and honesty. Anything else is a disservice to the audience and an insult to their intelligence. Salt in the wound indeed.

A version of this blog first appeared on Energy Digital

By Catherine Hunter

In January this year, electricity prices were on average half that of January 2019 due to the unseasonably warm weather. Since then, as a result of COVID-19, the grid has continued to be exposed to abnormal events; the disappearance of the difference between weekday and weekend daily profiles and demand spikes following our “clap for carers” on a Thursday evening to name just two.

With lockdown restrictions being relaxed at pace and recent transport stats showing signs of life returning to normal – will the grid also return to normal or has it given us a glimpse into what we might carry over to our new lives?

A gas bridge to nowhere

The first quarter of this year saw renewables make up 47% of the electricity mix – up from the previous record of 39%. Solar had its best ever month in May and as costs continue to fall and routes to market grow, renewable capacity will climb. The question remains over non-renewable sources. It’s clear the reign of coal has ended with 67 consecutive days of no-coal generation seen in 2020 already. Gas had been lying in wait, but has its moment already passed?

Gas is often hailed as the bridge fuel to our low carbon future, but it looks as though it’s becoming a bridge to nowhere. Gas’s prominence on the system has declined year on year already – at a time when fuel costs are low this is wholly unexpected. Despite the rise of gas peakers helping to offer flexibility to the grid, they won’t be running at full load, full time, so will be unable claw back some of the losses from traditional baseload gas generators. Rethink Technology Research has suggested by 2030 it will be cheaper to install and run renewables and storage – a sure sign that the gas bridge is quickly running out of ground. We may very well have already seen our last new combined cycled gas turbine.

How low can it go?

It’s no secret that renewables are intermittent. This lack in constant output has in part been the reason behind greater price volatility over the past few years. A case in point: over the late May bank holiday, unusually low demand met with the perfect conditions of a windy and sunny day to plunge prices negative. Although not the first time this has happened, the day ahead prices for 23rd May saw 16 consecutive hours of negative pricing – reaching a low of nearly -£55 per MWh.

This highly unusual quirk of the system saw Great Britain exporting electricity and some customers paid to consume – when usually we rely on importing around 7-10%. Demand side response is crucial during peaks in demand, but there’s been a subtle change. We’re now seeing National Grid ESO more frequently pulling levers to encourage people to consume electricity; this reached new territory when customers on Octopus’ agile tariff were paid to consume electricity on a domestic tariff.

There’s no doubting the industry will increasingly move to prices more reflective of real-time costs. The question will become how much of the savings will be passed onto consumers and how this is arranged. As demand creeps back up, extended periods of negative pricing are unlikely but until we create a demand profile that mirrors our generation profile, we’ll keep seeing prices dip negative.

Hidden costs

Despite the headline-grabbing detail of negative wholesale prices, the cost of balancing the grid has soared during lockdown. While National Grid had been developing products to help from 2025, it chose to launch one sooner than planned due to the unusual events: introduced in May 2020 through the Balancing Mechanism, Optional Downward Flexibility Management (ODFM) tackles the unusually low lockdown demand by paying distributed energy resources to turn down. While a smart move to keep the grid in check, this is another cost that must be borne by consumers.

Like a visit to a clairvoyant, the start of this year has given us a glimpse into the grid of 2025 when renewables will take up the lion’s share. Questions remain to what extent heat will be electrified or decarbonised through hydrogen moving forward, and the impact of vehicle-to-grid charging. But COVID-19 has shown for certain how flexible the grid can be. The energy transition is well underway in the power sector, with the many tests of 2020, and the many records being broken, this is a glimmer into the grid of the future.

And if there is one thing people value during times of change, it is knowing about it. The grid will continue to decarbonise but shifting behaviour will only occur if we demystify the impacts and give people the right information to make decisions to change their lives. But information isn’t all they need – they need to be brought with us on the decarbonisation journey. Our communications need to inform and engage to be impactful.

Get in touch with the team to find out how we can help you craft impactful campaigns to bring people on this journey with you.