President Reagan used to tell his staff a joke about twin boys with extreme personalities, one a total optimist and the other a total pessimist. You can find the long form of the joke here, but when the optimist is presented with a room filled to the ceiling with horse manure, he begins digging through it screaming with delight “Wow, there must be a pony in here!”

We recently conducted our sixth semi-annual “Green & the Economy” survey and the results have sent us scurrying to find a pony buried in all the data. We asked our more than 3,000-member GreenBiz Intelligence Panel for their views on key green economic indicators (you can join our panel here). Our most recent survey, conducted in mid-June, garnered 309 responses with 51 percent from companies with revenues of more than $1 billion (which we’ll refer to as “large companies”). 

As you’ll read below, it’s possible that the pony in the pile is a new stabilization, a plateauing after significant green economic gains over the past two years. As such, there are no red flags -- but no green ones, either. As with the rest of the economy, growth in green seems to have stalled, if only temporarily.

 

 

EH&S spending is down for the first time since mid-2009. For large companies  this represents the first time in two years that we’ve seen environmental, health and safety (EH&S) spending decline. If you remember back then, the Dow Jones Industrial Average (DJIA) had bottomed out at 8,146. At the same time, our survey recorded a dip, from 74 percent who said their EH&S spending would be equal to or greater than the previous year in January 2009 to 63 percent by June of that year. 

 

Since then, spending equal to or greater than the previous year has been on a steady rise (see Figure 1), reaching 89 percent in January 2011 (44 percent and 45 percent respectively). By June, this dropped three points to 86 percent (with 40 percent equal to last year and 46 percent greater than last year). While there’s no cause to sound the alarms (the DJIA is still hovering above 12,000), it may point to stagnation in the green economy, or at least in large company activities.

Green product development dips. Companies have been steadily funding green product development since a low point in mid-2009, when 76 percent cited investment equal to or greater than the previous year (23 percent and 53 percent respectively). Since that point, continued investment has hovered above 80 percent. In our most recent survey, funding eased back to 76 percent, but this time the composition changed: 28 percent maintained investments in green product development equal to last year while 48 percent increased their spend. That last number represents a drop of 7 percentage points compared to earlier this year, when 55 percent of respondents cited increased funding for green products.

Plus ça Change. One of the key events (or, more properly, non-events) contributing to the stall in the green economy is the gridlock in Washington around environmental, energy and climate change policy. In this case, no news is bad news as large and small companies alike look to the federal government to establish long-term policy that will guide greener capital investment. 

But in a dramatic drop-off, businesses have lost faith in any action in the short term. When we asked what year greenhouse gas (GHG) emissions regulations would be passed in the U.S., 46 percent replied they don’t expect any emissions regulations to be passed. Large companies were even more dismissive, with only 49 percent expecting comprehensive GHG emissions regulations. As illustrated in Figure 2, this represents a steady decrease from last year (82 percent) to six months ago (61 percent) to today (49 percent), a twelve-month swing of 33 points.

Even more telling is the panel’s response when we asked if they expect increased environmental regulations over the next four years (not including regulations associated with GHG emissions legislation such as cap and trade). For the past two and a half years, approximately 90 percent have expected increased regulation. In our latest survey, that number has dropped to 71 percent. Clearly, this signals that when it comes to environmental regulation, there’s little change to believe in.

Jobs, but Not New Jobs. There’s good news and sobering news on the job front as 52 percent of large companies say they have open requisitions to hire. And only 2 percent of companies have eliminated or reassigned EHS or sustainability headcount, much lower than the 6 percent seen in early 2009.

But don’t break out that resume yet. Hiring freezes are reported by 8 percent of large companies, double the number six months ago, though not even close to the 27 percent of companies with freezes in early 2009. And while 52 percent of large companies are hiring, 30 percent represent replacement hires while 22 percent represent increased departmental headcount. That’s the lowest departmental increase since mid-2009.

Size Drives Strategy. When we asked what is impacting your company most in terms of environmental issues, there were no dramatic swings in terms of what is driving corporate strategy (see Figure 3). What is interesting is that the biggest driver for large companies is customer requirements (31 percent), with the current state of the economy a distant second (at 22 percent). 

For companies under $1 billion in revenue, 46 percent responded that the current state of the economy is clearly impacting their company’s environmental initiatives while 18 percent cite company leadership and only 14 percent identify customer requirements as having an impact.

Be the Pony. We took a slightly longer view and asked our panel whether the economic pressures over the past two years helped or hindered their environmental and sustainability commitments and activities. Forty-eight percent from large companies replied that economic pressures caused their companies to invest more in environmental and sustainability activities while 31 percent say they were forced to cut back; the other 21 percent just didn’t know.

This was reflected when we asked what the number-one initiative was at large companies. For the sixth consecutive survey, their reply was “reducing energy use through efficiency,” which at 40 percent is a significant surge over the 31 percent reported six months ago (see Figure 4). Much of this increase came at the expense of green product development, down from 24 percent six months ago to 18 percent now.

Reducing energy use is also the number-one priority for 26 percent of smaller companies, compared to 23 percent six months ago. “Making sure that green stays on the agenda is equally important for smaller firms, with 27 percent picking that as their top-ranked initiative.

So what’s left in that room of manure? We’ll have to see. There’s certainly no major retrenchment in the green economy. Instead, it seems to be as steady and as slow as the general economy. For now, that may be just as good as a pony.

_{Binoculars image CC-licensed by gerlos/Flickr}