Three-quarters of large international corporates plan to increase or significantly increase cleantech budgets over the next few years to incorporating clean technologies into existing products to improve environmental performance; entering cleantech segments that are adjacent to existing business units/operations; or create entirely new cleantech-driven product and service offerings, and ultimately new industries.
After several years of being investing in efficient energy management, corporate cleantech investments have shifted to focus on cleantech revenue generation opportunities. According to Ernst & Young’s second annual global survey of cleantech adoption, three-quarters of large international corporates plan to increase or significantly increase cleantech budgets between 2012 and 2014. 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 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.
“During the financial downturn, businesses looked to cleantech for cost savings and efficiency improvements, said Gil Forer, Ernst & Young Global Cleantech Leader. “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.”
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.
“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,” said Forer. “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,” he added.
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