Green Spending by UK Firms Forecast to Grow 20 Times Faster Than GDP

Green Spending by UK Firms Forecast to Grow 20 Times Faster Than GDP

Sustainability spending by major firms in the United Kingdom is expected to grow 12 percent this year, 20 times faster than the country's GDP, according to a forecast by Verdantix.

The independent analyst firm also forecast that green spending will grow steadily, averaging 16 percent a year through at least 2015.

Verdantix based its market forecast on a study of spending by 421 UK firms with revenues of more than £750 million pounds (about $1.18 billion). The research found that green spending will grow from a projected £4.3 billion (about $6.8 billion) this year to £6.8 billion (about $10.7 billion) in 2015.

"Despite the sluggish economy, spending by large firms in the UK on energy, environment and sustainability initiatives is set to increase by 12 percent in 2012,"  said Verdantix analyst Susan Clarke, the author of the report, in a prepared statement. "By contrast the UK economy is only expected to grow by a paltry 0.6 percent."

In releasing the report yesterday, Verdantix highlighted some of the faster-growing areas of spending through 2015. Strategic energy management is expected to be a hotspot for spending, growing almost 55 percent from 2012 to 2015.

Here is a look at other areas where healthy spending increases are expected:

1. Smart meters, 23 percent
2. Electric vehicles, 22 percent
3. On-site renewable energy, 22 percent
4. Product stewardship, 21 percent
5. Marketing of sustainable solutions, 21 percent

Areas that are expected to grow, albeit slowly, include:
1. Social responsibility, 5 percent
2. Employee engagement, 5 percent
3. Environment, health and safety, 6 percent
4. Regulatory affairs and lobbying, 6 percent

Here is a further look at spending in major areas:



"The UK's sustainable business market is continuing to grow at a healthy rate because firms have aligned sustainability strategies with operational efficiency," Clarke said in her statement. "Energy cost savings and more efficient use of natural resources now underpin sustainability investments – not philanthropic commitments to fight climate change."

Rodolphe d'Arjuzon, the global head of research for Verdantix, cautioned that if the UK falls back into recession this year, "spending on capital intensive initiatives like waste-to-energy plants, electric van fleets or smart meter roll-outs will be delayed or cancelled. Nevertheless, he pointed to strategic energy management as being the "hottest market" as companies attempt reduce energy expenses by as much as 20 percent in the coming years.

Photo of London via Shutterstock.com. Chart courtesy of the Verdantix report on UK Sustainable Business Spending 2010-15.