What’s the future for investment in sustainable business?

You might think that governments and companies, under acute financial pressure and still recovering from a grim recession, would be quietly burying their commitments to sustainable business practices.

In fact, they're doing the reverse. Over the last few years major economies including the US, UK, China and Korea have announced detailed stimulus packages to support sustainable businesses as part of their recovery plans. In the UK the coalition government has announced plans for a green investment bank to support renewable energy businesses, (though these plans might be scaled back somewhat and replaced by an investment fund). Not only would this help to bridge short-term funding gaps of green technologies which might arise from the economic downturn, it would also pave the way for longer-term sustainable growth.

Climate change is financially significant to all companies. It presents a systemic risk: the threats posed to the economy and the financial impact of not addressing climate change are significant, as explained in the Stern Review. Increasingly, business are recognising that a long-term commitment is needed to address climate and other critical sustainability issues. Major companies such as M&S and Wallmart continue to invest in sustainability initiatives as they recognize the significant efficiencies to be gained in doing so.

Mandatory carbon reporting, the increased roll-out of emissions trading (once the EU's security issues are resolved) and a growing recognition amongst US policy makers that America needs to reduce its reliance on foreign imported oil without relying on existing stocks of polluting coal means will further boost demand for renewable energy, increase energy efficiency and encourage other industries to adopt more sustainable business practices.

It’s likely that governments, companies and investors will continue to provide the long-term support that’s needed to build a more sustainable global economy. This will continue to create opportunities for investors to both make money and make a difference by supporting businesses involved technologies.

- Mark Robertson