Cash Doesn’t Follow Sustainability Commitments
Large US corporations’ spending on energy, environmental and sustainability initiatives will grow at just 5 percent per year until 2017, from $34.6 billion in 2012 to $43.6 billion in 2017, according to a Verdantix study.
Companies have no financial incentive to increase their sustainability investments beyond 5 percent annually, says Verdantix analyst Patty Satkiewicz, who authored the report. Satkiewicz blames this on US policies on energy, GHG reporting and environmental compliance, which she says will not change over the forecast period. Additionally, low natural gas prices will keep electricity prices down, which means CFOs won‚Äôt have any incentive to invest in energy management.
Corporate energy and environment market suppliers such as ABB, Eaton and SAIC should ‚Äúplan for mid single digit organic growth‚ÄĚ for the next four years, Satkiewicz says.
Other report findings include:
- Three industries dominate spending. In 2013 the oil and gas, utilities and retail sectors will account for 42 percent of total spending by US corporations on energy, EH&S and sustainability initiatives representing $15.4 billion. Technology, industrial engineering and pharmaceuticals are all $2 billion markets.
- Energy management is the largest category of spending. US corporations will spend $13.9 billion on all aspects of energy management in 2013, compared with $13.1 billion on EH&S management, and $5.3 billion on sustainability strategy, branding and risk management.
- Hidden spending on employees tops $12 billion. Cash-strapped firms are keeping a lot of activity in-house, resulting in a $12.1 billion wage bill for energy, environment and sustainability management. The consulting market represents $6.8 billion and program management $10.2 billion.
- Few industries will increase spending above 5 percent. Compound annual growth rates for virtually all industries are trapped in a 4-5 percent bracket for the 2012-2017 period. Only automotive (7 percent), food and beverage (6 percent) and chemicals (6 percent) will grow above the overall trend.
Verdantix CEO David Metcalfe says weather events like Hurricane Sandy and the Midwest drought were ‚Äúwake up calls without being cash calls.‚ÄĚ While CEOs ‚Äúlove to talk‚ÄĚ about sustainability and environmental protection commitments, they don‚Äôt follow up with cash commitments, Metcalfe says.
Editor’s Note: An earlier version of this story said “The consulting market represents $6.8 billion and program management $102 billion” due to a Verdantix error.¬†
Stay Up-to-Date On Environmental Management, Energy & Sustainability News with EL's Free Daily Newsletter
Energy Manager News
- Con Edison Development Procures GE Energy Storage System
- Courthouse Replaces Oversized Boiler
- Indoor Farming Company Works on HVAC with PUE 1.0
- Toolkits Designed to Help Health Care Facilities Reduce Energy
- San Antonio Macy‚Äôs Store Showcases Better Buildings Challenge Measures
- Natural Gas Gensets to Reach 27 GW of Installed Capacity by 2024
- Larson Releases a Solar Powered Generator with Manual Crank Mast
- Energy Efficiency in Food Service Businesses