The global sustainable business market will reach a tipping point in 2013 triggering rapid market expansion, according to new research findings from independent analyst firm Verdantix. Market forecasts analysing spending patterns of more than 2,500 global firms find that growth rates of investment in sustainable business programmes will be between 50% and 100% higher in 2013 than in 2011. Total spend on sustainable business programmes by $1bn revenues firms in Australia, Canada, the UK and the US markets alone will hit $60 billion in 2013.
“Spending on sustainable business initiatives such as energy efficiency, sustainability assurance and cleantech innovation is positively correlated with global economic growth” commented Verdantix Director, David Metcalfe. “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 cleantech innovators and struggling sustainability entrepreneurs.”
The Verdantix analysis of the sustainable business tipping point is based on 4 years of research on sustainable business market trends and the proprietary Critical Moments market size and forecast models. The tipping point analysis considers three factors: 1) People and groups who are contagious; 2) Convincing ideas that stick; 3) A business context that is receptive to the ideas.
People and groups who are contagious. Over the last 4 years Verdantix research has tracked the rise of the Chief Sustainability Officer (CSO) who leads the strategic development of an enterprise-wide sustainability programme. Firms as diverse as AECOM, Alcoa, Capgemini, Orange, SAP, Smithfield Foods, UPS and Vedanta Resources now have a CSO with budget and authority. This new cadre of sustainability executives spread ideas through new networks, professional associations and standards bodies. They articulate the business case for sustainability and act as change agents.
Convincing ideas that stick. The global recession killed the ethical argument to spend money simply to stop climate change. A new, more convincing idea — sustainable business — has gained traction with enlightened Board members. The core idea of sustainable business strategies is that global economic growth increases natural resource costs and causes risky environmental impacts and as a consequence changes the source of competitive advantage. When viewed through a business lens, energy and environment issues stick in the mind of CEOs.
A business context that is receptive. During the recession cost control topped the agenda and spending on sustainability moved sideways. Policy decisions were delayed or dropped. But today executives face a new business context: booming demand in Asia, proven benefits from cleantech innovation, evidence that sustainability offerings drive topline growth and a toughening policy stance on energy and climate change. By 2013 confirmation of this new business context will make CEOs more receptive to bigger investments in sustainable business initiatives.
“The last 4 years have been a roller-coaster ride for people working in sustainability and cleantech” commented Verdantix Senior Manager, Janet Lin based in the Verdantix New York City office. “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. 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.”