Spending by large businesses on sustainability initiatives such as energy efficiency and clean-tech innovation could double in the next two years, according to analysis firm Verdantix.
Business sustainability spending to double by 2013? (Photo credit: Keith Ramsey)
For large companies, with annual revenues of more than $1 billion, in Australia, North America, the UK and the US, spending on these programmes will reach $60 billion, the London-based research house estimates.
However, the firm was not able to provide Environmental Finance with a worldwide estimate of current spending around the world, or the projected amount to be invested in the crucial year of 2013.
Verdantix director David Metcalfe said: “By 2013, a powerful mix of market drivers, led by the forecasted global economic rebound, will significantly increase strategic investment in sustainability programmes. The arrival of the 2013 tipping point will be good news for cash-strapped clean-tech innovators and struggling sustainability entrepreneurs.”
A ‘perfect storm’ of three factors will create the tipping point, according to Verdantix.
Green execs and tougher policy to drive expenditure
These are the rise of ‘sustainability executives’ who act as agents of change in their businesses; the acceptance of the concept of sustainable business, viewing environment and energy issues in terms of natural resource costs, risky environmental impacts and changing sources of competitive advantage; and a receptive business context, as executives look to rising demand in Asia, tougher policy and evidence of the impacts of sustainability on business growth.
The conclusions are based on four years of research into sustainability markets, Verdantix said. 2013 is also the starting year of the third phase of the EU’s Emissions Trading System, which will set tougher caps for emitters in the bloc, and it is the first year after the Kyoto Protocol’s first commitment period comes to a close.
Janet Lin, New York-based senior manager of Verdantix, noted that attitudes to sustainability and clean-tech have changed tremendously the last four years. “In 2007, many investors and executives believed global policy on climate change would create a vast new carbon market and consumers would demand ‘green’ brands,” she said.
“Today, the perspective is more complex and the market opportunity is more significant. Executives who have taken on board the sustainable business belief system will benefit when the 2013 tipping point kicks in.”
Verdantix defines business sustainability investments as: “Spending on employees, equipment, consulting, implementation and support services directly linked to a firm’s strategic, operational and commercial objectives to achieve sustainable business goals linked to resource efficiency, risk management, innovation and competitive advantage.”
As such, the analysis doesn’t include energy consumption, investment flows, mergers and acquisitions, utility-scale renewable energy projects, trading in environmental assets such as carbon credits, or public sector spending.
By. Jess McCabe