Despite Sluggish Economy, Spending on Sustainability Forecast to Increase

Published on October 19th, 2010 | by

Based on a recent report published by sustainability analyst firm Verdantix, spending on sustainability by almost 2,000 businesses with revenues of over $1 billion will increase from $28 billion in 2010 to $60 billion in 2014.

Now, I know what you’re thinking. That’s barely anything in comparison to total revenue (1.4% up to 3.3%), but while an increase in absolute terms may not be substantial, I would posit that the percentage increase is somewhat impressive particularly in a period where businesses are barely (if at all) growing. It often seems that sustainability measures and CSR departments get the axe when the economy suffers but it appears that maybe we’ve found evidence that sustainability in business is finally around for the long haul.

For an industry that is highly focused on drivers and metrics, it’s important to understand where Verdantix’s research has come from. They believe that the move towards increased spending on sustainability is a result of a number of pressing issues and emerging technologies/options. “Growth in spending is driven by improved economic growth, risk drivers, competitive dynamics, innovation diffusion, higher oil prices, state-level GHG regulations and renewable energy policies.” Of course, like any financial prediction the drivers are subject to change (and most likely will). While improved economic growth seems like a given, it may be a little while before that turn around shows any impact. Also, we know how fickle public policy can be, particularly in the renewable energy arena.

29 metrics were used to compile this report and some of the most important are, spending on energy efficiency, carbon management, sustainability strategy, risk management, cleantech innovation, sustainable operations, human capital investments and industrial emission reductions. Many companies are already working on these issues so an increase in funding is encouraging.

However, as Tracey de Morsella at Green Economy Post points out, not all that glitters is gold. In the very short term (next two years), experts believe the investment will be mixed as a result of budget issues, organizational design and the life cycle of current projects and programs. These issues are expected to improve, as sustainability becomes more of an inherent part of business practices.

The fact that business are not only addressing these issues, but also increasing budgets to do so is a good sign. It will be interesting to keep an eye on this particular forecast, as there are a number of important, but inherently unpredictable variables on which this report relies.

Image Credit by didilamoroso via Flickr under a CC license


About the Author

Jonathan has worked in both journalism and various facets of small business development over the past eight years. Most recently, he graduated from the Monterey Institute of International Studies (graduate school of Middlebury College) in 2010 with an MBA and an MA in International Development Policy. His interests include SME development and its role in economic growth, particularly in Sub-Saharan Africa as well as how CSR/Sustainability measures impact both business operations and the communities in which businesses operate. While at MIIS he worked as a summer fellow involved in small business consulting in Accra, Ghana and was an active member of the MIIS Net Impact chapter. As a life long traveler, Jonathan has been fortunate to have lived in, worked in or visited over 20 countries on 5 continents and he truly hopes that he will be able to continue this trend.