Sustainability Is Back - Will It Be Different This Time?
There is no denying that 2019 has witnessed the sweeping return of sustainability onto corporate and government agendas. Fuelled by the elevated profile and concerns around climate change, governments and organizations are making fresh new commitments to carbon neutrality and carbon positivity. For those of us with long-standing experience in this market, there may be some well-founded scepticism in interpreting these pledges. The previous wave of sustainability was at its peak in the late 2000s as firms wrestled with what to do with this wide-ranging concept. While Verdantix research found a selection of firms did fundamentally embed sustainability across their organization, for most, sustainability efforts suffocated under the weight of the great financial crisis.
With this latest pulse of sustainability, are there reasons to believe a broader swathe of firms will be driven to make more tangible changes to their organizations? This week, Goldman Sachs announced it will no longer finance oil exploration or drilling in the Arctic. Oil exploration in the Arctic remains largely cost prohibitive and so this decision is unlikely to drive major near-term change. More significantly, it will also refuse to finance new thermal coal mines, mountaintop-removal mines or coal-fired power plants. This is a more noteworthy milestone – if companies cannot access funding for certain carbon-intensive activities, this will force them to make material changes to these activities and/or look at entirely new business opportunities.
A number of software, services and consulting firms are watching these developments closely as they seek to identify fresh commercial opportunities. Our prior market size and forecast report into the sustainability solutions market identified 30 specific areas of opportunity. We have recently analyzed the competitive landscape for sustainability management software and the recent Sphera acquisition of sustainability consulting and software firm thinkstep is evidence of an appetite for sustainability transactions. We will be running deeper analysis into sustainability-driven opportunities in 2020 where we will look beyond the pledges and analyze the specific investments and business change which is taking place.