Sustainability investments reached a record $2.4 trillion last year with 90% of that money going to green energy, buildings and mobility, a new Bain & Co report found, spending that has helped the world avoid worst-case climate change scenarios.
I spoke about the study with Jean-Charles van den Branden, a report co-author and Bain partner based in Brussels. I came away both with some optimism and the realization that slowing global warming will depend much more on the actions of China and India than on the actions of Western countries.
Among the challenges: three sectors – Bain calls them "stranded sectors" – agriculture, manufacturing and materials, and natural capital - received less than 10% of investment while accounting for 37% of global greenhouse emissions.
While renewable energy has offered strong returns, things like alternative proteins, advanced chemical recycling or bio-based plastics haven't paid off as much. Yet. As the report states about another promising-but-not-breakthrough technology, green hydrogen:
"A breakthrough in electrolyzer technology (such as capillary-fed electrolysis) together with access to cheap renewable electricity could unlock competitively priced green hydrogen. This, in turn, would enable a step change in green steel, fertilizers, shipping fuels, and other downstream applications, potentially disrupting whole sectors such as industrials, agriculture, and transport."
Another finding: among 7,500 consumers surveyed, 85% said they worry about environmental sustainability, up from 79% last year. Extreme weather like floods, heatwaves and wildfires continue to drive concerns and have led people to "act sustainably but often don't describe their actions as sustainable," the report states. For instance, they limit home energy use to save money, not the planet. But those varied motivations lead to the same green results.
Bain's van den Branden said what could ultimately determine the outcome will be how quickly less-developed economies transition away from things like coal power, particularly in Asia.
"The swing factor is less in the U.S. or Europe. The swing factor is in India, China, and Southeast Asia. That's where the rate of electrification of things like electric vehicles will really lead us to a 2-degree world versus a 2.5-degree world," he said. (His figures refer to the level of warming expected over pre-industrial levels, expressed on the Centigrade scale.)
Technically, the report is written as recommendations for "Visionary CEOs" but in practice it's a good read for anyone concerned about corporate environmental strategy. A CEO's job, van den Branden said, is to be aware of the trends and to decide where to invest resources as technologies – even lagging ones – start to look more promising, and as severe weather events become more common.
