Sustainability is a market revolution: Forrester

Government spending, regulations on risk reporting, sustainable finance, costs, and venture capital are all factors fuelling the green market revolution according to a new report from Forrester.

The Forrester Trends Report reveals that the global move towards sustainability is likely to follow a similar trajectory to the first and second industrial revolutions, which occurred between 1760 to 1830, and 1870 to 1914 respectively.

“Most countries and companies don’t expect to reach net-zero until around 2050. This means companies will have to reinvent themselves multiple times as the changes accumulate and then snowball, new innovations disrupt industries, and companies appear and disappear,” the report states.

Government

Governments will play a critical role in shaping the sustainability revolution, as they invest in climate action and infrastructure projects. The report points to the United States spending nearly half a trillion dollars on climate and infrastructure to reduce greenhouse gas (GHG) emissions and adapt to irreversible climate change effects.

Regulation

Regulations such as the Security and Exchange Commission’s (SEC) proposed rules to enhance and standardise climate-related disclosures for investors, require business to report on their scope 1, 2 and 3 emissions.

Europe’s plethora of risk reporting and sustainable finance regulations include the European Green Bond Standard, Sustainable Finance Disclosure Regulation, Taxonomy Regulation and Corporate Sustainability Reporting Directive.

 “Together, these initiatives and regulations will curb corporate greenwashing; provide standards for sustainable finance; force sketchy environmental, social, and governance (ESG) funds to come clean; and expand mandatory sustainability reporting requirements to nearly 50,000 European firms,” the report says.

Costs

According to the report, the improving cost differential between fossil fuels and renewable energy will provide commercial incentives to phase out coal and gas-fired electricity production. Russia’s invasion of the Ukraine has seen oil and gas prices soar, to their highest levels in over a decade, while the costs of large scale solar projects has dropped 85 percent between 2010 and 2020.

The report states, “Renewables — solar and offshore and onshore wind — are a cheaper option for generating electricity than the cheapest fossil fuels.”

Venture capital

Venture capital is pouring into the climate innovation ecosystem, with Forrester estimates predicting that global green tech VC funding will increases by 40 percent from 2021, reaching $24.5 billion in 2023. Climate tech network Climate Salad’s 2022 Climate Tech Industry Report revealed that in Australia and New Zealand alone, $1.4 billion has been raised in the climate tech sector, and over 4000 jobs already created in the sector with 2000 more expected in the next year.