The world’s largest companies are planning to boost their spending on cutting carbon emissions by an average of 22%, according to new research.
The study, a collaboration between East & Partners, a global business research firm, and Impact & Influence, a communications consulting firm, examined the largest 1320 firms by revenue in the Americas, Europe, and Asia Pacific.
According to the research, companies in every region are planning to increase their net zero investments, with UK firms planning the largest increase globally at 36%, followed by a 32% hike by Australian businesses.
Companies in the world’s most carbon emitting countries also planned to spend more to work towards net zero, with US-based firms allocating a 28% investment increase, followed by increases of 18% and 12% respectively from Chinese and Indian businesses.
Kenyan companies planned the lowest average increase in net zero spending among the markets included in the research, at 7.7%, which the research says might suggest that Africa may be being left behind in terms of access to sustainable finance.
Companies in carbon intensive industries plan to increase their net zero spending the most: manufacturing (26.9%), logistics & transport (24.3%), and resources & mining (22%).
Paul Dowling, Co-Founder and Principal Analyst of East & Partners, said: “It’s encouraging that the world’s largest companies are planning to dial up their capital investment to reduce their carbon emissions, which will be critical to combating global climate change.
“Most leading transaction banks are targeting net zero financing as a growth revenue stream, and they account for just under half of this large corporate lending market, but at the same time alternative sustainable finance providers are rapidly capturing market share.”
Just under a half (44.5%) of surveyed businesses plan to access this net zero finance from their current primary transaction bank, with 17.7% reporting that they plan to use a different provider than their main lender, and a similar number (18%) saying that they intend to use a specialist sustainability lender.
“Companies are putting their money where their mouth is in terms of boosting investment to get to net zero,” commented Rishi Bhattacharya, CEO and Founder of Impact & Influence. “This surge in spending will be driven by a host of different factors including compelling climate change science, industry, business and supply chain risks, investor appetite, public and political pressure – and, of course, commercial opportunity.
“Whatever their motivations, action, and innovation by these businesses will be pivotal to protecting the planet.”
The research also found that specialist sustainability lenders have made stronger inroads into the UK, US and Japanese net zero finance markets, with 27%, 26% and 26% of companies based respectively in those countries expecting to use their services. Accessing sustainable finance via capital markets is most likely in the US (22.1%), followed by Australia (20.8%).
A recent Gartner study found that the majority of public companies will update their investment methodologies to include sustainability as a key part of their return on investment. This is likely because research has shown that companies with the highest sustainable capital expenditure and R&D in the green economy outperform those without by almost three to one.
About East & Partners
East & Partners is a global business financial research firm that provides insights and analysis on the financial markets, with a focus on sustainable finance. They do this by conducting research, publishing reports, and hosting events. Their research covers a wide range of topics, including green bonds, impact investing, and climate finance.
About Impact & Influence
Impact & Influence is a communications consultancy that helps businesses communicate their sustainability strategies to their stakeholders by developing communication plans, writing content, and managing social media campaigns. Their clients include a wide range of organisations, from small businesses to multinational corporations.
