Profit not image driving cleantech boom as business tackles climate change

The Bahrain World Trade Centre. (Source: Flickr/JustDONQUE.images)

A new study has revealed that the cleantech sector is being driven by real business demands rather than the pursuit of good publicity.

The report, by the Grant Thornton advisory group, also highlights the growing optimism within the industry.

“Companies once approached the cleantech sector – as buyers or sellers – because it was a good thing to do, a socially responsible corporate action,” said Randy Free, member of Grant Thornton’s global Cleantech group and tax partner in the United States. “But today, around the world, cleantech means reducing costs and increasing profits.”

The research looked at a number of areas from utilities and renewable energy to energy efficiency and construction.

When asked what was driving demand for clean technologies among businesses, the most common answer was cost reduction, which was cited by 52% of the companies surveyed. The least popular answer was to enhance their brand.

Optimism

Optimism in the clean tech sector is on the increase in 2011 with 37% saying they were optimistic about the next 12 months compared to 34% the previous year. The all-sector average fell from 24% to 22% during the same period.

We’re really on the cusp of something big,” said James Brice, sustainability service head, Grant Thornton South Africa.

“We’re not quite sure yet how big, because the government keeps on changing its tack, but we’re going through the first wave of our country’s renewable energy tendering process.”

The impact of policy is not limited to South Africa with Grant Thornton’s analysts in Russia, India, Canada and throughout Europe picking out the role of governments in driving the sector.

When asked to list the cleantech market drivers, Vivek Vikram Singh, associate director, Grant Thornton India said: “One to 10 would be government regulations – everything else is 11th.”

While there are plenty of reasons for the sector to celebrate, the report acknowledges that it is not immune to global financial constraints.

While the situation is improving, businesses taking part in the report continue to list the cost and availability of loans as a major constraint to their operations.


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