Electric supercars on a racetrack going through a tunnel

Driving Sustainability And Growth: Learning From Formula E's Success

6/17/2021
Electric supercars on a racetrack going through a tunnel
Credit: Courtesy of Formula E
The popularity of the all-electric racing series serves to highlight the benefits of being a bold pace setter

Boldness is one of The Art of Smart's four pillars underpinning smarter decision-making – the others being innovation, growth and diversity – and sometimes it takes people a while to catch up with truly pioneering concepts. When Formula E started its journey a decade ago, it was widely considered a courageous, if not highly risky, venture.

The motorsport, which promotes electric mobility and alternative energy solutions to reduce air pollution and combat climate change, was conceived in Paris by Jean Todt, President of the Fédération Internationale de l'Automobile (FIA), in 2011. Three years later, the inaugural racing series began in Beijing.

Fast forward to June 19 and 20, 2021, when the eighth and ninth rounds of the seventh season will take place in Puebla, Mexico, and there is a sense that Formula E's time has come.

Formula E's driving goal – "to race for better futures" – was admired from the outset. However, because it was naturally compared to Formula One, the favorite domain of petrolheads, it trailed behind in the popularity stakes for years. Indeed, it wasn't until the fifth campaign, which concluded in July 2019, that it generated a profit.

Consumer demand helping the race against climate disaster

Cruelly, just as momentum was gathering pace, and with more fans better understanding the distinction between F1 and the newer, more sustainable motorsport, the coronavirus crisis struck. The 2019-20 series was adversely affected, with spectators forbidden to attend races.

Ironically, because the pandemic has raised awareness around sustainability issues, interest in the sport has subsequently rocketed, according to Julia Pallé, Sustainability Director at Formula E. "Initially, when coronavirus hit, people were very much focused on personal health," she says, "but quite quickly they realized that planetary, economic, and human health are all interlinked. If the planet is damaged, it impacts people's lives, their activities, and the ability of businesses to thrive."

The London-based Frenchwoman, who has been with Formula E since 2014, continues: "Now more people understand that sustainability is essential and that it is business-critical. Just five years ago, most leaders viewed sustainability initiatives as 'nice to have' whereas it is increasingly a strategic goal."

Reflecting on her seven years with Formula E, Ms Pallé says the initial challenge was to deliver as many sustainable events as possible. With understandable pride, she states that Formula E remains the only motorsport to have obtained the ISO 20121 certification – the international standard for sustainable event management. It took the championship two-and-a-half years to reach the required standard, powered by a mindset of continual improvement, both during and after certification. Most crucially, staff with a passion for sustainability were recruited and partners with aligning values found, which helped speed up the process.

"The most important part of our evolution was managing to create a completely authentic culture of sustainability that is so strong and so embedded within the business and shared by the wider ecosystem," she says.

 Julia Pallé, Sustainability Director at Formula E

Just five years ago, most leaders viewed sustainability initiatives as 'nice to have' whereas it is increasingly a strategic goal – now more people understand that sustainability is essential and that it is business-critical.

 Julia Pallé, Sustainability Director at Formula E
Julia Pallé
Sustainability Director
Formula E

Green appeal: how sustainability attracts talent and partners

Formula E collaborates with other sports and sporting events – including the Olympics Games – about improving sustainability and also contributed to the draft of the United Nations' Sports for Climate Action framework. A spirit of openness has led to partnerships with other leading authorities and NGOs as well, including UNICEF. "We share best practices and challenges, as it's important that we all progress," says Ms Pallé. "It's interesting, as competition is usually the key element in sport. Here we are not competing against one another, but rather against the big threat that is the climate emergency."

Considering that Formula E's business model relies heavily on sponsorship, it is encouraging for the sport's prospects that large brands are lining up to be involved. "From a commercial perspective, all the Formula E ecosystem's key stakeholders are attracted by the sustainability value proposition," continues Ms Pallé.

"Organizations want to be associated with the ethos and perceived to be helping the planet's health. We began very much as a start-up and partnered with many B2B companies that were leaders in their respective fields. But now that Formula E is recognized as a sustainable motorsport in the industry it is attracting high-profile partners and more B2C, mainstream brands."

When asked about the similarities or otherwise between Formula E and F1, aside from the former using electrification technology and the latter reliant on internal combustion engine technology, she says the two sports have forged distinct audiences and different purposes.

It is thought that because Formula E promotes sustainability it appeals to younger viewers. As such, the motorsport is packaged and marketed very differently to F1. Action is easily shareable on social media, for instance, and there are elements of gamification. For example, drivers can gain a five-second power surge, or FANBOOST, mid-race, as voted for by supporters via the Formula E app or website.

Sustainability: more than environmental issues

Pleasingly, and possibly inspired by Formula E, F1 is cleaning up its act. In November 2019, F1 announced an ambitious sustainability plan to have a net-zero carbon footprint by 2030. Ms Pallé believes that all sports bodies and businesses alike must drive change and, because of consumer expectations and market forces, those that don't will be left behind.

"In more cities around the world, we see this trend of electrification, with internal combustion engines being banned," she says. "It's a sign that electrification is a future technology that people want to adopt. It is good that F1 is finally developing its own strategy, too, because we need everyone driving in the same direction."

Sustainability is not simply about saving the planet, though: it is the "mix and the interface between environmental protection, social inclusivity and economic prosperity," suggests Ms Pallé. "I'm always thinking about this triangular approach. Sometimes it's going to be more important to focus on social inclusivity rather than on the environmental impact, and vice versa."

The authentic culture and passion for sustainability Ms Pallé talks about helped to persuade Jenn Babington to sign up as Operations Director and General Counsel at Envision Virgin Racing Formula E Team in February 2019. "I never had any aspirations to work at a race team," she concedes, "but I love it, and the appeal for me was the link to sustainability. Everyone involved wants to solve this big problem. The other draw is that it is smart racing. The batteries and chassis are the same, so it's all about how to make the cars as efficient as possible."

Green and profitable: the winning formula

Under Ms Babington’s leadership, the 39-person, British-based team has earned several sustainability accolades. In August 2020, Envision Virgin Racing became the first team in the ABB FIA Formula E World Championship to be certified carbon neutral by the Carbon Trust. Two months later, largely thanks to its Race Against Climate Change Initiative, it was awarded the FIA Three-Star Environmental Accreditation – the highest tier of environmental best practice in the governing body's sustainability framework.

Ms Babington's organization, whose headquarters is at Silverstone, where the British F1 Grand Prix is held, can claim to be the greenest team in the greenest motorsport. Of interest to business leaders looking to drive their sustainability agenda, those green credentials in no way weakened Envision Virgin Racing's competitiveness. Last season they finished fourth, out of 12, in the standings. "The challenge for all companies is how to be both green and profitable, but there shouldn't be a trade-off if you set things up correctly," she says. "Going green is the obvious and right decision."

On the eve of the Puebla events, Envision Virgin Racing's Dutch driver Robin Frijns sits top of the driver standings, while his team are fourth in their respective table. Success begets success, argues Ms Babington.

"Winning on the track helps in our mission to spread our message and will expand our global media reach," she adds. "The more that we can connect with people, even in a tiny way, to get them to do something a bit different in their lives, then the more we are helping to contribute in the fight against climate disaster and keeping the world on track."

Given the continued growth of Formula E, which is blazing an electric trail, it is clear that opting to be bold and being guided by a sustainable mission will pay off, winning hearts and minds sooner rather than later.

Viewpoints from Crowe

Jean-Baptiste Cottenceau, Director, Crowe Sustainable Metrics
JB Cottenceau

Formula E, like any mechanical sport, aims to be at the cutting edge of technology. Competition is therefore a means of shaping the next electric vehicles. We expect increased energy efficiency, rapid recharging and battery re-employability. The carbon impact of a sporting event depends more on the travel of competitors and spectators. For example, some 2.1 million tonnes of CO2 was generated for the 2018 FIFA World Cup, with more than 70 percent linked to travel. We must also consider the mobility needs of our cities; because of environmental concerns, private cars are no longer a preferable solution to public transport, bicycles, carpooling, telecommuting, and so on. Technical innovations are not the only way to shift our models. Regarding competition, what about esports competitions generating impressive electricity consumption? Would a competition like the Shell Eco-marathon – one of the world’s leading student engineering competitions – present more of a real change in philosophy and therefore in model? Teams have a choice of energy types and need to innovate new ways to use the least amount of their chosen energy category. Finally, could the best contribution of Formula E be to make manufacturers and drivers drop fossil fuels, resources of an outdated age?

Daniela Arias, Senior Manager - Assurance and ESG Services, Crowe US
Daniela Arias

The applicability of Formula E’s success in creating a culture of sustainability is universal. Whether an organization is a UK-based cutting-edge car racing series that wants to lead through innovation and environmental stewardship, or a US-based financial institution aiming to manage organizational and portfolio risk, the course is broadly the same, though the approach may differ. Foresight, perceptiveness and the ability to manage positive and productive change are at the forefront and serve as differentiating factors in achieving success. Adopting a culture of sustainability speaks volumes about a company’s smart decision-making because it has become a global imperative. In the US, where the corporate sustainability dialogue is still in its infancy, some liken it to the advent of the digital revolution: it is coming, and it will touch and transform nearly every aspect of business, whether or not they plan and respond to it. In a world where change moves faster than the winning team at the Monaco E-Prix, it is wise to assume an organization’s key stakeholders won’t stay the same, or value the same things in the future. In responding to this global imperative, businesses must take great care to assess needs and consider what is material, both to the organization and stakeholders. The path to success will differ significantly based on industry, geography and company, but the broad steps remain the same. In embarking on this journey, a competent service provider and strategic partner will make a world of difference.

Conven Tang, CPA, CA Incorporated Partner, Crowe MacKay LLP

As we continue our pursuit to reduce our carbon footprint, sustainability will play an integral role. Formula E has shown that going green can still be profitable and, in some instances, be used to attract new talent, plus help strive for attaining higher goals. History has shown that many innovations in the automotive industry have come from motorsports. This will be no different with Formula E. We can expect technologies such as battery capacity, reduced battery size and faster charging time to be incorporated into future electric vehicles. Not only will the next generations of electric vehicles be environmentally friendly, but also operate more efficiently.

Luis Piacenza, COO, Crowe Spain 
Luis Piacenza, COO, Crowe Spain Growing up as a member of Gen X, and someone who trained as an engineer, motor racing for me was about men on the Formula One podium, spraying champagne and surrounded by models. It was an image of ultimate triumph, grouping together burning fossil fuels with gender stereotypes. Times have certainly changed – for the better.

The success of Formula E is yet another sign that the chequered flag has waved for the old ways of thinking, certainly from an environmental perspective. Its value proposition encompasses an encouraging global outlook: low carbon, gamification, and multiple-platform communications. Most importantly, it speeds into a new direction of respect. I am not sure if mobility will be fully electric, hydrogen-based or mixed with some fossil fuels. However, technology evolution goes beyond the physical aspect of things. The clear trend is that priorities have changed, and the market is validating the attributes of everything we buy. When I started working in sustainability, a CEO warned: “That is a fashion trend; let’s wait.” I thought: “OK, baby boomer.” Decarbonisation is without doubt an exciting feature of Formula E, and favorable comparisons with F1 are obvious. The beauty of this is the intentionally disruptive design, the point where design thinking meets sustainability, furnishing a clear signal to invest. Also, it might be the confirmation that a new generation with renewed values is reshaping the world we knew.