Australia’s short-termism costs sustainable business

With the Australian sustainable business market expected to grow from AUD 1.6 billion in 2010 to AUD 2.9 billion in 2014, new research published today (19 April) shows Australian companies may be missing out on these opportunities.

The report, published by independent analyst Verdantix, is a reminder to the Australian business sector of the potential benefits of becoming sustainable.

Verdantix expect a gradual increase in sustainability spending with AUD 1.8 billion expected in 2011 and 2.5 billion AUD by 2015.

Spending on smart grids and electric vehicles will grow fastest, particularly through public-private partnerships, according to the research.

Despite these positive signs, Susan Clarke, the report’s author and a Verdantix analyst, believes Australian businesses are still reluctant to commit to sustainability initiatives.

“Many Australian business leaders perceive climate change and sustainability trends as a break on growth and a cost to business but carbon regulations, rising energy prices and natural resource scarcity also create new market opportunities,” said Clarke.

In a business environment short-term profits can mask much greater long-term benefits.

Clarke believes: “A pure focus on blocking and tackling new energy and climate change regulations will protect margins in the short-term but misses out on big opportunities like bio-diesel refining.”

Aside from businesses themselves hindering progress on sustainability, the report highlights “the Australian government’s unclear direction on energy and climate change policy”.

This stifles business spending on energy and carbon efficiency initiatives and is an issue that has also impacted on the UK green economy.

Thanks to the developing Asian economy, as a country with vast mineral resources, Australia is benefiting from a boom in commodities.

Verdantix expect this to boost the Australian economy and according to their Director, David Metcalfe, sustainability spending is “positively correlated” with economic growth – their models expect more money for green initiatives during growth periods and less money when the economy is in decline.

According to Metcalfe, thanks to the commodities boom, they assume economic growth in Australia of 3 to 3.5 per cent between 2009 and 2014 hence the predicted growth in the sustainable business market.

The report analyses the spending of 139 Australian firms with revenues of over $1 billion (US) and looks at over 1,000 corporate sustainability initiatives.

 

For further information:

Australian Sustainable Business Spending 2009-2014 (Verdantix)

 

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