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Market News

 November 10, 2009
Recession increases investment in clean technologies

 Two-thirds of large corporates indicated that the adoption of clean technologies was now undertaken at an enterprise-wide level

The global recession has increased large corporate interest in investing in clean technologies because of the opportunities they offer in boosting operational efficiency and reducing costs.

According to a study undertaken by professional services organisation Ernst & Young among 308 executives in global companies operating in the Americas, Europe and Asia-Pacific, clean tech expenditure has now risen to an average of between three and five per cent of annual revenues.

Two-thirds of those questioned indicated that the adoption of clean technologies was now undertaken at an enterprise-wide level, and that such initiatives were championed by senior managers.

A further 85 per cent said that their organisations were either "significantly" or "moderately" accelerating their strategic response to climate change compared with two years ago.

Most expected their companies to spend at least US $10m (£5.98m) on clean tech investments by 2010, with 22 per cent indicating that the figure would be more like US $100m (£59.89m).

Gil Forer, global director of Ccean tech at Ernst & Young, said that the rising interest in and activity of multibillion-dollar global companies in the clean tech arena underscored the increasing number of market opportunities available.

"Making good on those opportunities will likely depend on identifying new partnership models that enable corporations and emerging clean tech companies to meet their own objectives while facilitating the arrival of a low-carbon and resource-efficient economy," he added.

A key driver behind the move in this direction is the growing demand for finite natural resources as a result of rising population numbers and the increase in middle-class consumers in emerging market economies.

These factors, Forer said, were "driving the need for corporations to establish a resource-efficiency agenda to ensure sustainable long-term growth and competitive advantage".

This efficiency agenda was making itself most felt in areas of high energy consumption such as manufacturing, transportation, logistics and IT systems.

Ernst & Young's third annual study called Clean tech Matters indicated that the most important factor in formulating a clean tech strategy was " operational efficiency to reduce costs".

Second on the list was "meeting internal sustainability and climate change goals", while third was "increasing revenues through existing or new products and services".