$2.4 Trillion in Green Investment Since 2007
The latest update of the Green Transition Scoreboard (GTS) was recently released, indicating that the private sector has invested over $2.4 trillion in green companies and technologies since 2007.
The GTS, which tracks the private sector investment in green markets, aims to produce 'a transparent line of sight towards the ethical progress of wealth building'. It calculates all non-government investments in green companies, technologies and other facets of the market, starting from 2007 to the present. The following sectors are covered: Renewable Energy, Efficiency and Green Construction, Cleantech, Smart Grid and Corporate R&D.
The GTS found that total investments, as of the second quarter of 2011, total $2,405,182,005,199 worldwide. Further, investments and commitments of $1 trillion annually until 2020 are anticipated - the amount many studies indicate is necessary to successfully accelerate a global transition to a green economy, and putting investment on track to reach $10 trillion by 2020.
The bulk of green investment is in the renewable energy sector, which accounts for over $1.5 trillion. However, most of the growth this year comes from cleantech mergers and acquisitions and corporate research and development (R&D). The growth in R&D, which represents a jump in R&D investment from $163b in February 2011 to $258b in August 2011, leads to several observations. First, it reflects greater awareness among businesses that redesigning products and services for greater efficiency and sustainability is not just good corporate citizenship, but also drives innovation and saves costs. Secondly, a growing emphasis on disclosure of environmental impact from both investors and regulators is improving reporting standards. It is also important to note that approximately $780 billion, or a third of the reported investment figure, represents commitments made in the green economy.
However, as this is the first GTS report that includes R&D under $100 million, it is possible that the growth in corporate R&D is being a little overestimated. Timothy Nash, who is the lead researcher, remarked that "Deals under $100 million, while barely moving a barometer tracking investments in trillions, are significant as they demonstrate how thousands of different companies believe in the economic soundness of greening industries. These diverse companies are all investing in making systems and products more effective, using less energy and generating less pollution throughout the life-cycle."
While sustainability still remains a challenge, the findings of the Green Transition Scoreboard provide some comfort. For the full report, including the details of investment in each sector, visit http://www.greentransitionscoreboard.com or download the report [PDF] here.
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