While some governments from around the world struggle with the realization that the world needs to shift to a greener economy, it seems that the private sector is more than willing to ante up and lead the way.
Evidence of this positive Enviro News can be found in a report called The Green Transition Scoreboard which has been compiled and published by Ethical Markets Media, an organization that tracks private investments in creating cleaner, greener economies globally. The report, which is published annually notes that since 2007, approximately $3.6 Trillion dollars has been invested in a greener, global economy. The information is compiled through sustainability reports, company financial statements and media reports, and is claimed by the organization to be the most complete and comprehensive assessment of private global green investments in existence.
In August, a suppliment was added to the report that focused in on the amount of private investment dollars in the global green economy that was targeted specifically towards Research and Development. The suppliment noted that R&D accounted for $241 Billion or about 6.7% of the total GTS. However, this number may in fact be not a true representation of the actual amount of R&D dollars being invested. “I believe $241 billion understates by half real global R&D private investments,” says Rosalinda Sanquiche, Ethical Markets executive director. “R&D goes unreported for competitive reasons, international companies’ R&D not making it into the media, and because of the tens of thousands of middle-market and smaller companies with R&D budgets below reporting thresholds.”
Within the report are some interesting comparisons that note where the greatest concentration of R&D is happening with respect to both countries and industries. Perhaps not surprisingly, the automotive sector is leading the way globally when it comes to green R&D. The August suppliment notes the following in regards to the automotive sector:
The auto sector is more research intensive than otther sectors, with many companies spending more than 5% of revenues on R&D. From a marketing perspective, companies are competing to release the newest, greenest model. Toyota was the earliest adopter, spending billions developing their Prius line of hybrids. However, the field is getting crowded. The Renault/Nissan alliance announced a 4 Billion Euros push towards zero-emission mobility that started with the Nissan Leaf, and is now expanding into other vehicle classes. More recently, Volkswagen declared that 2013 will be the year of elctromobility and announced that they will invest upwards of 76.4 Billion Euros on R&D of efficient vehicles and greening production sites by 2016. Based on the trends we forsee 50% or more of this amount will be spent developing electric vehicles. Although the sector total of $133.5 Billion is impressive, it does not capture the entire amount. Many automobile companies, such as GM and Daimler do not publicly disclose how much of their R&D investments are directed towards hybrid and/or elctric vehicles.
On a nation by nation comparison, Germany is leading the way with Green R&D. The suppliment notes that the 9 German companies tracked in the report contributed more than $72 Billion. With companies like Volkswagen, Robert Bosch and BMW investing heavily in electric vehicles as well as companies like Siemens investing in smart grid technologies, the Germans are at the top of the international class. Also faring well in this area were Japan and China.
With regard to Canada’s contribution to global green R&D, Tim Nash who is Director of Sustainability Research for Ethical Markets, and a Canadian based in Toronto noted he felt the amount was “Not great.” While he acknowledged that the methodology used to acquire data was not as comprehensive as they would like, he was able to identify 5 companies and approximately $411 Million in Canadian green R&D. These companies were primarily involved in clean energy and green automotive. Mr. Nash did acknowledge that there is an active clean tech sector in Canada but most of the companies involved are not publicly traded and thus information on R&D amounts is not publicly available.
While the GTS report notes that approximately $1 Trillion is expected to be invetsted annually in greening the global economy, the authors still feel that there is much more room for growth. Part of the challenge will be to prove to investors that investing in a green enconomy is not only a socially responsible thing to do, but also a profitable one.
As the private sector continues to invest heavily into the opportunities found in an evolving and fundamentally changing economy, one can only hope that the political challenges that block many governments will soon disappear. The move towards a sustainable economy is vital for the future of humankind and the pace of change can only be enhanced when the private and public sectors work in tandem towards achieving the goal that ultimately must be achieved.