Wednesday, 8 June 2011

Will the sustainable business market reach a tipping point in 2013? Verdantix thinks so.

The analyst firm Verdantix is predicting that the sustainable business market will reach a tipping point in 2013. It defines a tipping point as “A point in time when the adoption of an idea tips from incremental to exponential adoption”. Basically, Verdantix is saying that in 2013 the sustainable business market growth will accelerate and continue to accelerate.

According to firm there are three factors that drive a tipping point:

  • People and groups who are contagious. Chief Sustainability Officers (CSO) with budget and authority are agents for change, particularly because they network with each other through professional associations and standards bodies and articulate the business case for sustainability.

  • Convincing ideas that stick. The argument goes that global economic growth increases natural resource costs and causes risky environmental impacts and as a consequence changes the source of competitive advantage. This is a concept that sticks in the mind of CEOs much more than an ethical green argument.

  • A business context that is receptive. Verdantix believes that the proven benefits from cleantech innovation, evidence that sustainability offerings can drive top line growth and a toughening policy stance on energy and climate change will, by 2013, create a new business context that will make CEOs more receptive to bigger investments in sustainable business initiatives.

I agree that all of the above will help drive sustainable business, but it’s not clear to me, even after listening in to the company’s webinar on the subject, why it will result in sudden exponential growth starting in 2013. The date prediction seems to be based primarily on the third factor, i.e. the business context. It’s the coming together of a number of factors, including growth in global economies, increased business experience in cleantech technologies such as electric vehicles and smart meters, the introduction of more climate change legislation, growing environmental concerns, and companies that have already had some success in sustainable business looking for increased investment to accelerate growth.

I hope Verdantix is right, but we have already had false starts and its not clear that much has changed. If global economies were in sync on the above points I would agree, but they are not:

  • Countries (and industries) will emerge from the current economic slowdown at different times which will still be apparent in economic growth rates in 2013.

  • There will still be a wide divergence in climate change legislation around the world by 2013. To reinforce the point, just this week Reuters reported that Christiana Figueres, head of the UN's climate secretariat, had acknowledged that UN talks will not be able to put into place a binding successor to the Kyoto Protocol by 2013 (Kyoto runs out in 2012).

  • There remains varying public awareness and belief in the potential impact of climate change and it seems unlikely that the situation will change by 2013. That in itself creates differing sustainable business demands.

It’s clear that the growth in sustainable business will increase significantly in the coming years (it has to), but exactly how and when is not so clear. It seems to me it’s going to be patchy, which makes a dramatic tipping point unlikely. On the other hand, it depends on what you measure and how you identify a tipping point.

That’s my view anyway – I would be interested in what you think. Leave a comment and/or complete the poll on the web site.

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