Sustainability budgets set to rise in 2013, senior executives say

Sustainability budgets set to rise in 2013, senior executives say

Growing sustainability budgets

Corporate spending on sustainability, environmental and energy programs is likely to rise next year, despite a challenging economic backdrop, according to a new survey from analyst firm Verdantix.

The company polled 250 senior sustainability executives from around the world and found that almost half expect spending to increase by between one and nine percent next year, while nine percent expect spending to increase by between 10 and 25 percent. Three percent expect spending to increase by over 25 percent. In contrast, 39 percent expect sustainability spending to be flat and just four percent expect it to fall.

The picture is even more encouraging for British sustainability executives, with almost two-thirds of respondents from the U.K. saying that they expect spending to increase next year.

"The market is growing and we are in a good sector compared to the rest of the economy," said Verdantix chief executive David Metcalfe at the recent launch of the report. "It's not growing at the rate of a Facebook or Apple, but we still expect to see the U.K. market for energy, environment and sustainability programs have a compound annual growth rate of 14 percent between 2010 and 2015."

Image of growing graph provided by idel via Shutterstock. 

However, the survey also revealed that sustainability executives are still largely reliant on finance directors to authorize spending with between 30 and 50 percent of respondents admitting that they do not have direct budgetary control over activities their department is responsible for. "There's not much discretionary spend available," Metcalfe said, adding that a quarter of sustainability executives did not even have full control over the budget for corporate sustainability reporting efforts.

In addition, the survey found that only a fifth of green executives believe their chief executive understands the direct impact sustainability issues are having on the business, while around a half reckon their chief executive does not see sustainability as a top priority.

Metcalfe said that with most sustainability budgets due to rise by between one and nine percent next year, it was clear that only a small number of businesses were embarking on the kind of transformational programs necessary to slash greenhouse gas emissions and other environmental impacts.

However, he did highlight a number of areas that are well positioned for growth in the next year, predicting that smart grid, energy systems integration and distributed generation projects would all prove popular. In addition, he argued that sustainable product design, collaborative or shared consumption models and corporate reporting initiatives would also attract continued investment.

In contrast, Verdantix predicted that interest in electric vehicles, corporate water stewardship programs, carbon offset schemes and some forms of onsite renewables would remain sluggish.

This article first appeared on Business Green and is reprinted with permission.