A new report out from Ethical Markets Media shows Green investments untouched by the Great Recession.
By Rosalinda Sanquiche, Executive Director, Ethical Markets Media
Green Transition Scoreboard® 2012, the latest findings from Ethical Markets Media, reports over $3.3 trillion invested or committed in privately financed green markets, specifically tracking five sectors: Renewable Energy, Green Construction and Efficiency, Cleantech, Smart Grid and Corporate R&D. That’s a 64 percent jump in investments over the previous year.
Our Green Transition Scoreboard (GTS) research team has expanded, now including regional experts for North America, Asia, Latin America and Europe. From 2007 to 2009, it found over $1.24 trillion total private investment and commitments in growing the green economy globally.
By December 2010, the total jumped to $2 trillion, a 60 percent increase in one year. While deeper methodology by our research team explains much of the 2010 leap, with the methodology verified and even in a global recession, to find a significant increase again from 2010 to 2011 is remarkable.
What accounts for this growth in the wake of continued financial crisis?
Driving The Growth In Green Investments
According to Timothy Nash, Ethical Markets' director of sustainability research, "a large amount of the new investments reported came from Asia. South Korean firms such as LG and Samsung are investing billions in green R&D, while excellent Japanese environmental accounting standards allow us to include much smaller investments from a large number of companies."
According to Hazel Henderson, president and founder of Ethical Markets Media and creator of the GTS, "since the 2011 report, we have seen a marked increase of concern by governments and United Nations agencies in promoting the global green transition, especially the 'leapfrog' technologies in developing countries."
The 2012 report has an appendix with over 100 such reports and articles reviewed by Henderson.
CSR Reporting Increases
The team also reviewed company financial and CSR reports. Attuned to shareholder and stakeholder concerns, companies have increased their CSR or integrated reporting. While 7,000 businesses in 140 countries signed the UN Global Compact, to ensure accountability, over 3,000 companies have been delisted for not meeting reporting standards, according to Executive Director Georg Kell. The EU, ISO 26000, GRI and many others have CSR reporting guidelines, giving CSR reports increasing weight.
With better reporting, our GTS team began compiling data from projects below the $100 million threshold previously used. While most data covers publicly traded companies, we now include research on the most efficient technologies of all: those employing the science of biomimicry (see, for example, our report's cover illustrating "Flower Power").
How does this greater depth add up within sectors?
Green Reporting Gets Granular, Shows Efficiency Up
Unlike before, GTS now divides Green Construction and Efficiency into subsectors. The magnitude of investment in each is useful for comparison.
Investments in Efficiency are more than $204 billion, 6 percent of the GTS total for 2011, and expected to rise. According to WWF and ECOFYS, by 2050, energy efficiency will become central to all economic activity, saving nearly £4 trillion a year through reduced costs.
Green Construction is expected to explode, with the green buildings material market projected to reach $406 billion a year by 2015.
Renewable Energy investments continued to soar in 2011, up 22 percent from 2010’s level. According to Tim Nash, "solar gained the most ground, although wind kept the largest market share, with the vast majority of investments continuing from asset financing for new projects."
Cleantech reflects the recent burst of activity in mergers and acquisitions. Companies hoarding cash since the 2009 credit crunch are finally deploying capital and expanding into the green space.
Green R&D Expands
In addition to developing R&D in-house, firms like Google, DuPont, and Toshiba are acquiring small and medium-sized cleantech companies.
A marked difference from 2011, Green Transition Scoreboard® 2012 includes over 100 companies with specific investments in corporate R&D – also showing specific commitments, though many publicly traded companies, such as Toyota and Ford, are not publishing their numbers into 2012 and beyond, in part to maintain a competitive edge.
In our 2012 report, about $19 billion worth of "Commitments" from 2010 shifted to actual investments in 2011.
The accelerated growth showing from 2009 to 2010 to 2011 is expected to continue, de-linked from conventional GDP-measured growth. As our barometer rises toward our projected $10 trillion by 2020, our research shows the Green Transition is well on track.