Most global companies plan to increase cleantech budgets

by Search Gate staff. Published Tue 05 Apr 2017 19:32
Global firms to boost cleantech spend, says survey

Three-quarters of large international corporates plan to increase or significantly increase cleantech budgets between 2015 and 2014, according to Ernst & Young's second annual global survey of cleantech adoption.

The survey questioned 300 corporations across all sectors with revenues of US$1bn or more. This year 44% of survey respondents anticipate their organizations will spend over US$50 million on cleantech while 12% expect their spend to exceed US$250 million.

The research clearly shows corporate cleantech investments evolving from a mechanism to cut costs and achieve operational efficiency to becoming a means of revenue growth.

The survey respondents highlighted that research and development (R&D;) for cleantech-enabled products and services will receive 40% of corporate cleantech spending while nearly 20% of respondents cited revenue opportunities as the most important reason for increased investment.

Additionally, 77% expect the cleantech focus of their R&D; departments to increase over the next three years.

Gil Forer, Ernst & Young Global Cleantech Leader, commented: "During the financial downturn, businesses looked to cleantech for cost savings and efficiency improvements. But now that energy efficiency practices have become a competitive given, the corporate focus on cleantech is beginning to target revenue generation opportunities – top-line growth through new products and markets."

Acquisitions are still a popular corporate cleantech strategy. Nearly three-quarters of those surveyed have acquired a cleantech company or plan to consider it in the near future. Historically, corporations acquired cleantech companies for the short-term, demonstrable return on investment.

However, 40% of respondents predicted this reasoning will change over the next five years as cutting-edge technologies increasingly become a justification for acquiring a cleantech start-up.

Senior executives with operational oversight demonstrated an even stronger preference for acquisitions of breakthrough technologies over the next five years (48%). In addition to merger and acquisition activity, partnerships are still an avenue to boost in-house cleantech innovation and increase revenues through new customers and new markets.

As executives of multinational corporations become more focused on cleantech as a way to drive revenue growth, they are seizing transformational opportunities in several ways, including:

• Incorporating clean technologies into existing products to improve environmental performance

• Entering cleantech segments that are adjacent to existing business units/operations

• Creating entirely new cleantech-driven product and service offerings, and ultimately new industries.

Forer concludes: "There are exciting and transformational opportunities opening up in the cleantech arena. Corporations are increasingly recognizing the potential of cleantech to deliver both long-term investment and considerable competitive advantage. The challenges for corporations will not only be how to survive, but how to thrive in the increasingly competitive resource-efficient and low-carbon economy."

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