Businesses see competitive value of energy efficiency, but smaller firms struggle to access solutions – EQ

In Short : Businesses increasingly recognize energy efficiency as a competitive advantage, reducing operating costs and improving sustainability performance. However, small and medium-sized enterprises often face barriers including limited capital, lack of technical expertise, and fragmented solution providers. Addressing financing gaps, awareness challenges, and access to tailored technologies can help smaller firms adopt efficiency measures and strengthen resilience while supporting broader decarbonization goals.

In Detail : Energy efficiency drives competitiveness across all sectors, with select industries seeing outsized gains

Energy efficiency is a strategic asset for industrial competitiveness. For companies facing tight margins, volatile energy prices and intensifying global competition, reducing energy waste is not only a cost-saving measure, but also a way to protect productivity, manage risk and strengthen their position in global markets. Yet not all firms have the same capacity to quickly improve their energy efficiency.

New analysis of the 2025 IEA Industrial Competitiveness Survey – which covered 1 000 companies across 14 countries – shows that business leaders view energy efficiency as closely linked to their competitive performance. But the survey also highlights a persistent divide: while large companies are often well positioned to capture these benefits, many that are small and medium-sized face barriers that limit their ability to invest in efficiency and compete on the same terms.

Energy efficiency drives competitiveness across all sectors, with select industries seeing outsized gains
Across all sectors and regions, nearly 80% of companies surveyed recognised the value of energy efficiency in strengthening their competitive positions. And in sectors where energy makes up a larger share of total costs, like steel, chemicals and mining, views on the potential benefits of efficiency were even more pronounced.

The mining sector illustrated this clearly in their survey responses. With energy typically accounting for 20% to 40% of operating expenditures, mining companies reported the highest perceived impact of energy efficiency efforts on enhanced competitiveness. This was particularly evident in responses from mining companies in India and Indonesia, where reliance on relatively expensive off-grid diesel electricity generation makes reducing energy intensity especially valuable.

When businesses were asked how they would respond to higher energy costs, energy efficiency also emerged as the leading strategic response. Almost 40% of industry leaders ranked energy efficiency as the single most important measure they pursued to offset energy price increases, followed closely by investment in on-site renewables. Yet, as the survey indicated, intentions on energy efficiency do not always translate into action. In response to energy price fluctuations, nearly 30% of companies also said they either scaled back production or passed costs on to customers. These are measures that can erode competitiveness and signal constraints in companies’ ability to invest in efficiency.

Company size influences the uptake of energy efficiency measures

While the value of energy efficiency is broadly recognised across industries, companies differ in their capacity to implement supportive measures, with size shaping both the scope and speed of action. Large companies typically adopt long-term, comprehensive strategies backed by greater investment, in-house expertise and formalised energy management systems. Meanwhile, smaller companies, which have more limited resources, tend to implement individual measures incrementally.

In our survey, companies with more than 5 000 employees had the highest rate of implementation across every energy efficiency measure assessed, including process optimisation and investing in digital technologies. By contrast, small and medium-sized enterprises (SMEs) fell significantly behind, with 40% to 80% reporting an inability to implement any given efficiency improvement.

This implementation gap has consequences. Companies with fewer than 100 employees reported average savings of around 12% from efficiency actions, compared with average savings of nearly 20% among larger firms. Constrained financial and human resources, as well as less formalised approaches to energy management, limit smaller companies’ ability to identify and deliver improvements. This results in higher energy costs per unit of output and weaker competitiveness.

CEOs report numerous benefits beyond cost savings

Energy efficiency delivers more than just cost savings. More than half of companies surveyed reported that implementing energy efficiency measures reduced maintenance and operational costs, enhanced productivity, provided greater resilience against energy price fluctuations and improved brand reputation. Just under half also reported that energy efficiency actions had a high impact on domestic market access and export sales, and improved access to new customers and finance.

Here again, company size matters: two-thirds of companies with annual turnover of USD 1 billion to USD 5 billion said efficiency measures had a high impact on their productivity, compared with 43% of the companies with turnover below USD 100 million. This points to differences in companies’ capacity to translate efficiency investments into productivity gains.

Efficiency policies offer a key tool to boost competitiveness

Governments play a crucial role in helping industries of all sizes adopt and invest in energy efficiency measures that would support their competitive advantage. In designing enabling policies, government can:

• Use a policy package approach. Governments should combine regulation, information and financial incentives rather than relying on any single policy tool. This integrated approach is most effective at overcoming the diverse barriers that companies face.
• Target policies to specific needs and barriers. To address the highly heterogeneous nature of industry, governments can tailor policies to different segments. For example, to increase energy management in large companies, governments often turn to regulatory requirements such as mandatory energy audits and the implementation of cost-effective measures, as seen in the Netherlands. However, for SMEs, increasing energy management through information- and incentive-based programmes, as in Brazil, can be more effective given the limited capacity and resources of these firms.
• Use proven international examples and guidance. The IEA’s Energy Efficiency Policy Toolkit provides strategic principles and that governments can draw on to design effective policies suited to their national contexts.