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Corporate R&D: Global Investments in Green Innovation

When companies compete to be the “greenest,” rapid innovation springs.

By Timothy Jack Nash

Corporate spending on Research & Development is an informative signal for the direction of the overall economy. R&D strategies and budgets are often laid out in a long-term horizon, so they give a good indication of a company’s heading. When companies in a sector start competing to be the ‘greenest’ company, it spurs rapid innovation. This can lead to advertising campaigns touting environmental benefits that increase consumer awareness, such as Audi’s Superbowl ad.

Since no global research has been conducted on the extent of private corporate “green” R&D, the Green Transition Scoreboard® (GTS) research team is, to our knowledge, the first to compile these figures. Our final total of $163,813,743,000 in investments and commitments to R&D since 2007 is by no means exhaustive, as R&D for green innovation is not always segregated and reported on its own by companies (although more than 1400 companies have produced GRI-compliant sustainability reports). Additionally, limited time for research challenged our team to look for big numbers first, counting commitments above $100 million. There are likely thousands more companies globally who are investing in green R&D that have not been included in this figure. Many do not report such R&D investments for competitive reasons. If you have access to press releases or audited statements for companies we have not listed, please email us.

These company case studies are illustrative:

LG Group – South Korean electronics giant LG Group has pledged investment of 20 trillion won (about $18 billion) through 2020. Half of the investment will go to R&D for eco-products that use fewer materials, are more energy efficient and reclaimed and recycled. The other half is slated for retrofits and new facilities that will cut 50 million metric tons of greenhouse gas emissions per year until 2020 (and save trillions of won in energy expenses).

IBM – Data centers are known power hogs, so IBM’s focus on efficiency and energy management systems is not surprising. Having invested $1 billion per year since 2007, IBM is positioning itself as a leader in the ‘Smart Planet’ revolution. By designing and selling components for intelligent systems, smart buildings and grids, IBM is banking that smart companies are going to be investing in green.

Audi – The automobile industry has certainly passed a ‘tipping point,’ with almost every company in the sector competing to create the greenest car. Audi’s strategy is to invest heavily in human capital and innovation, hiring 1200 experts in lightweight construction and electric vehicles this year and investing more than €9.5 billion in green R&D before 2015. If this photo of the Audi R-8 e-tron prototype is any indication, they’re hiring some good people: http://www.mygreentreasure.com/wp-content/uploads/2009/09/r8.jpg. 

The Green Transition Scoreboard® will continue its research into this key R&D component of the global green transition, digging deeper in our next report.

About Timothy Jack Nash

Timothy Jack Nash is President and Founder at Strategic Sustainable Investments, a consulting firm tailoring more sustainable portfolios. Timothy earned his Bachelor of Arts in Economics from Dalhousie University in Canada and his Master’s in Strategic Leadership Towards Sustainability from Blekinge Institute of Technology in Sweden. He has worked for Ethical Markets Media as a Senior Sustainability Advisor since 2008, and helped co-develop the Green Transition Scoreboard® with Hazel Henderson. He currently resides in Toronto, Canada.

About the Green Transition

Corporate R&D: Global Investments in Green Innovation” is part three of five exploring the sectors driving the Green Transition. Stay tuned for Green Transition Talkback posts on the Renewables sector and Consumer Demand, contributed by members of the Green Transition Scoreboard® research team. For part one in the series, read Hazel Henderson’s “Good News on the Green Transition;” and, part two by Rosalinda Sanquiche, “Efficiency: Bedrock of the Green Transition.” For more information, please view the associated press release.

Talkback Readers: How can ‘smart’ companies lead the way toward a Green Transition and push the overall sustainability movement forward? Tell us on Talkback!

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