February 2014.- The recent publication of the “UN Global Compact-Accenture CEO Study on Sustainability 2013” offers an opportunity to examine the current perception from business leaders on the issue of Environment, while grasping, at the same time, the sectors or segments with the most potential for short to medium term growth.
The report, based on a survey on 1000 CEOs from 103 countries across 27 industries, jointly developed by the UN Global Compact (the UN’s branch to promote sustainability within global business) and Accenture, benefits from the extended portfolio of both institutions and of their capacity to reach a global audience, thus providing us with an invaluable insight into this topic.
Which is the scenario drawn in the report?
One of preoccupation: a relevant 63% of the surveyed CEOs “expect sustainability to transform their industry within five years” but, at the same time, “they are constrained by market expectations, and are struggling to quantify and capture value of sustainability...and see market failure hindering business efforts to tackle global challenges”. Therefore, as a result, sectors with high growth potential, such as wind, PV, energy efficiency, biofuels and electric mobility are experiencing a brake in their scale, speed and impact.
To an extent, the context of dwindling demand in the Western economies supports the above scenario. Two factors need to be emphasized here: on the one side, the financial crisis, which results in huge drops in capital investment; on the other side, the translation of rents from labour to capital, due mainly to technology and low cost competition from emerging markets. As economists have already stated, “Companies based in emerging markets can be sources of low-cost innovation that could disrupt entire industries, and many will set their sights on international expansion" (emerging markets companies are expected to account for more than 45% of the Fortune Global 500 by 2025, up from 26% currently, and just 5% in 2000). Hence, neither consumers nor firms seem to be willing to pay for the costs derived from sustainability.
All in all, then, the global solutions hitherto implemented are not keeping pace with the environmental challenges, both in supply of new clean energy sources and in reducing the demand of less energy by unit of output. Following the International Energy Agency (IEA), that scale means that “clean” electricity needs to jump to 28% of total energy demand by 2020 and 47% in 2035, from the current 16%. Public authorities in the western economies have been proactive to face this huge challenge.
An example is EU’s Europe 2020 strategy, which set as goals: “reduce greenhouse gas emissions by at least 20% compared to 1990 levels or by 30% if the conditions are right, increase the share of renewable energy in final energy consumption to 20%, and achieve a 20% increase in energy efficiency.
In the USA, the Obama administration launched in 2009 a Green Energy Stimulus. The programme, however, has faced major setbacks, such as the recent bankruptcy of Solyndra, receptor of half a billion USD in public loans, and the dire condition of Abound Solar and First Solar, two high-profile firms.
More intervention? Better intervention?
During the last decade the Spanish government has promoted an ambitious and costly programme to promote Cleantech sectors (CT). The programme, however, attained mixed results: the excessive flow of public money was used to finance imports of then expensive inputs (PV arrays, inverters or batteries). Today, most of these inputs are at a quarter of the costs of 5-10 years ago, making them almost competitive under current energy market prices. This “too early too much” has brought an additional burden on the treasury and very few local champions, mainly in wind and thermal power.
With this in mind, the “call for government intervention to align public policy with sustainability” pointed out in the report can be construed as more efficient intervention, that is, better intervention rather than more intervention, which means fair and transparent policies, with a focus on the correct targets and more realistic strategies.
Horizons for Catalonia
Catalonia has key elements to profit from this new scenario, which requires a full and balanced collaboration between companies, public bodies and research centres.
Catalonia is a solid actor in basic Cleantech research. It is one of the firsts regions in Spain in related patents for the period 2000-2012, with such international renowned centers as Catalonia’s Institute for Energy Research (IREC). It hosts an excellent Energy efficiency cluster, which gathers a wide range of firms and industrial sectors, from energy generation, to automotive or electrical and electronics. Finally, although the perspectives on some Cleantech segments such as Solar and Wind are uncertain, Catalonia has a huge and yet unexplored potential in other key segments, such as Biomass.
Business Intellligence Unit
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